How movies make money

[Barry]

  When I read in the paper how much a movie cost and how much they made, it seems to me that all Movie Studios should be out of business by now. It seems that all movies (except Avatar) have lost money.  But reading the business, not entertainment section, I get a different view.
 
Let us use Black Adam as a pretend example, and I shall make up some numbers so I do not have to do math. So let’s pretend the movie cost $200,000,000 to make and there was $25,000,000 in ads.
 
And let us say Box office was $400,000,000. And studios get about 50% of that money, so Warner Brothers gets about $200,000,000.
 
Well, it cost $200 million to make but that it not how much the studio paid.  New York, Georgia  and many other states and other countries gives studios checks for 30% of their costs  for doing production there.  So Warner’s might have paid only $140,000,000.
 
Advertising is listed at $25 million. BUT Warners places some pf those ads on the channels they actually own: TBS, CNN, TNT, the CW and stations I don’t even know. So some of that budget is just money changing pockets.
 
Then Warner’s then makes it available for streaming.  Not just on HBO plus, where this becomes a “free” movie for them. but cables “On Demand” and Amazon’s pay as you go. And Warners does make their movies available to other streamers, although a bit later. These rights are often sold in advance, so even if a movie “bombs” they get money.
There are still, DVD, Blu Rays and 4ks to be sold.  And to airlines, hotels and foreign markets.
 
Warner then places the movie on their cable stations, TNT and TBS, where they receive advertising money, but do not pay for the product, they own it. It is then syndicated to Broadcast  stations and  other cable stations, such as Showtime.
 
There is also merchandizing for this sort of movie, whose rights are also sold in advance. And while this is now “Discovery-Warner” Disney, Paramount, Universal now all have similar structures.
 
I am sure I left out a lot but these movies do make money and they keep making movies.  But the structure you need to make big profits has evolved over the years.
 

[David Vaughn]

Well said Barry. There was a great article in the Hollywood Reporter regarding the streaming services, which aren't turning out to be the cash cows the studios initially thought they would become:

https://www.hollywoodreporter.com/business/business-news/wall-street-streaming-guidance-2023-1235302958/

[Barry]

Great article. Future of streaming is something that we should discuss. If I have any predictions it will be that there will be a great deal of mergers taking place. One already has. That is discovery has acquired HBO and Time Warner. The New York Times had a great article on this.

https://www.nytimes.com/2022/11/19/business/media/att-time-warner-deal.html

[bmoney]

Interetsing. I didn’t read the article. But is disc sales (or the lack there of now) part of the equation 

[AVSCraig]

Great article. Future of streaming is something that we should discuss. If I have any predictions it will be that there will be a great deal of mergers taking place. One already has. That is discovery has acquired HBO and Time Warner. The New York Times had a great article on this.

https://www.nytimes.com/2022/11/19/business/media/att-time-warner-deal.html

That's behind a paywall - can't read it. 

[AVSCraig]

Interetsing. I didn’t read the article. But is disc sales (or the lack there of now) part of the equation

Still plenty of disc sales, which I would have to guess add to a movies bottom line over time. 

[Paul Heroy]

That's behind a paywall - can't read it.

It's not easy, but I was able to do a Ctrl-A / Ctrl-C to copy the text and paste to a text editor. Have to be quick. It's also a VERY long and tedious article, even to skim. Essentially, AT&T acquired media companies it had no understanding of and a corporate culture conflict with, so utterly failed. 

[Barry]

That's behind a paywall - can't read it.

When I get on my main computer, I will try to copy it and send it to you