I've got a question for you guys.

When a movie has a budget of $10 Million, what does that mean, exactly?

Does it mean that $10 Million has been put togther by investors, and that money is used to make the film and pay everyone involved with it, based on what everyone agrees to take for their services?

Does it include marketing/advertsing costs, or is that something that the Distribution Company takes care of?

Bottom line...if a movie with a $10 Million budget makes $15 Million domestically, does that mean it made a $5 Million profit? And if so, where does that $5 Million in profit go?  To the Production Company?  To the Producers/Investors?  Backend agreements to above the line talent?

Thanks.

It's a good question, but I think very hard to answer. It depends on what contracts people have too, I think. Mainly, accountants get paid huge amounts of money to keep everyone confused about this.


Did I make myself clear?  ;D

Quoted from Grandma Bear Did I make myself clear?  ;D

You did, to me anyway. I'd say that's right. The budget, as far as I'm aware, can mean whatever the folks in charge think it means.

Very clear, Pia.  In fact, I'd say I'm about exactly as clear as I was when I wrote this question.

I'm not sure how it works with features, but I would imagine most "entertainment" budgets are at least similar. I have spent months and months working on the budget for a reality show and it is a nightmare and involves a LOT of people all getting different amounts and percentages. I honestly still don't understand it. It's a very tricky think to figure out what the exact profit is.

I know we read that such and such movie cost this much to make and took in this much at the box office. That's simple math everyone can do that, but in reality I have a feeling it's much more complex than that.  I could be totally wrong of course and just dense.  

I remember reading an article about the writer of Forrest Gump trying to get paid. The accountants massaged the figures so much that it appeared, on paper at least, as if the movie made no net profit, so they didn't owe him a cent.

Those were some accountants, cause Gump costs $55 Million, and took in $677 Million WW!!!!!!  This math seems a bit off, and someone got SCREWED!

Not where I read it but I flicked through, tells the same tale.

http://www.redballoon.net/humor/gump.txt

I would image if it costs 10 Mill they take in 5 M, but I don't know how it works.

Rendevous...that's some wild shit there.  Where's that from?  What year was it written in?

It's unreal, if that's even remotely true...it was a film from 15 years ago, though also.

The math isn't right there either, though.  It said that Hanks and Zemekis each had a guarrantee of roughly 8% of the gross receipts, which wuold be over $50 Million each, and that's not what it said the actually received.

Hmmm, very interesting though for sure.

I read about that a long time ago, maybe a decade or so. I think it was a magazine called Sight & Sound, a real film 'head' serious type doodah. Of course it could have been Empire.
I was only a mere toddler at the time. :-/

The math(s) is way off. They ripped those guys good and proper. Fact is, they got away with it.
I do remember the story about how Hanks got paid too. He got his cut off gross profit. Wise man, but that's a doddle when you're big enough to have fellas sort this stuff out for you.

You see what Me means regarding this budget business? It's as big as they say it is... The reality is probably nowhere near.

Go and read this blog post at Dev S-S Simen's site:

http://webfilmschool.blogspot.com/

I would be of the belief that the production company/studio would get the majority of the profits since they foot the bill for the cost of the film in the first place.

In some cases varying contractual obligations like an actor demanding percentages of the gross profit would account for some but I reckon it's the studios that take the biggest slice. Of course I could be totally wrong.

I'm hardly an expert on the business, but I'll post what I've learned about the money aspects of filmmaking. If I've made any errors, please correct me.

The film budget refers to the costs of producing the film only, which includes the above-the-line cost (money spent on the source materials and the creative talent) and the below-the-line cost (money spent on the physical production, such as sets or special effects). This is sometimes referred to as the negative cost, as it includes all money spent to produce the finished negative of the film. The film budget does not include the prints and advertising cost (money spent on physically producing copies of the film stock and on all marketing efforts).

To determine a film's profit or loss can be tricky as there are a lot of revenue streams and expenses to account for. Film studios generally only keep about half of the box office take (studios can often negotiate better deals when they are distributing surefire hits, such as the Harry Potter films; a savvy executive can secure as much as 90% of the opening weekend box office take for these productions). Plus, we have to account for ancillary revenues such as Bluray/DVD sales and rentals, broadcast and cable rights, marketing tie-ins, and so on.

A rough guide to determine a film's profitability would be:

Box Office Receipts x 50%
+ Ancillary Revenue
- Negative Cost
- Prints and Advertising
= Net Profit/Loss.

We'll never be sure about those last three figures, so most people who follow the business from the outside use a different rule of thumb. A film is considered to have broken even when its box office take is twice its budget, and is considered a hit when its box office revenue is three times its budget. In other words, a $30 million film must make $60 million to break even and $90 million to be considered a hit.

The reason films such as Forrest Gump can make hundreds of millions of dollars only for the studio to claim it loses money comes down to what is referred to as Hollywood accounting. Basically, the studio takes the profits from a successful film and reallocates the revenue to other corporate entities under its umbrella. The studio keeps the money but, for accounting purposes, records a loss on this specific project. This is very important if, like Forrest Gump author Winston Groom, you have signed a deal to earn a share of the net revenue instead of the gross revenue. This is why those in the business always prefer to sign a deal for a little gross revenue instead of a larger share of the net revenue. One percent of something is better than twenty percent of nothing.

Abel, that's some great info.  How do you know this?

Good stuff...thanks!!!!

Picture the bidding war for movies the same as it would be for a general contractor for a building project.

They say they can wrap the movie up with 10 million  -- The contractor says he can wrap the construction up with 500,000.  

This means they can pay for everything and everyone.  Keep in mind, you often run over budget on both ends of the business and often have to reach back into the well... Meaning, you make less in the end.

Hope this helps.

Lots of info online about film budgets.

Here's another one.  The Tolkien family is suing because they have yet to see a dime from the Lord Of The Rings movies.   Apparently they haven't turned a profit yet!

http://www.salon.com/ent/movies/btm/?last_story=/ent/movies/btm/feature/2009/07/28/hobbit/

That's very interersting, Seamus.  Unbeleivable how this shit goes down on a routine basis in Hollywood, isn't it?  $6 Billion in revenue and no profit.  Frankly, it really pisses me off.

Good find!

Quoted from Dreamscale That's very interersting, Seamus.  Unbeleivable how this shit goes down on a routine basis in Hollywood, isn't it?  $6 Billion in revenue and no profit.  Frankly, it really pisses me off. Good find!

It's shocking. The files are so complicated as well that you need to employ about 100 accountants just to be able to work out what's going on.

In other words, you have to risk a few million pounds in legal fees just to try and see if they are being unlawful. Unless you have very deep pockets you're up against it.

That's why all the musician's cry about the royalties system. SNAFU.

I remember Jim Thomas (one of the producer/writers of Predator) said in "the Making of Predator" documentary from 2001, that he had just gotten his first net point check from the studio - that was 14 years after the movie was released!

That movie had a budget of USD 15,000,000 and grossed just under USD 100,000,000.

The published figures regarding budgets mean as much as pond water.

The numbers are released by the producer or production company and can include or not include what ever they like.

They can include marketing costs but often as not, particularly for Indy Productions with a separate distribution deal, they will not.

The current production of my screenplay “The Darkness” has an initial budget of $4.5mil to produce the movie. The distributors, who are also one of the producers will bear the marketing costs but in doing so take a larger percentage of the pie, if it makes one.

Distribution of profits are based on a points basis agreed at the time of a contract, for example with the Director, lead actors (if included), DOP, writer, Exc. Producers, producers, etc ,etc.

The big chunk of the budget is used to pay the crew, location, writer’s fee, director and producer’s fees, travelling costs, insurance, lighting, film stock, editing and post.

Outside investors often make the largest return, but also take the greatest risk.

Remember the Gross Box-Office numbers are distorted by the percentage the cinemas make for showing the movie and that varies according to their location, first weekend, second weekend and so on, or the contracted price from the Studio if it is a Studio controlled project.

Distorting all the figures are the Tax Credits and Off Sets within a trading group on other movies.

Just an example, the original Richard Donner movie, The Omen cost $2.8mil to make and the marketing spend was $15mil. The marketing figure is not included as part of the budget because Twentieth Century-Fox Corporation were the distributors (who spent the $15mil) and Twentieth Century-Fox Productions were the producers.

The numbers are always massaged to suit the needs

SO when all is said and done, how much is going to cost you to have your screenplay produced?   ;)

Ron, this is good info, but not that clear.  Maybe that's just the nature of the beast, when it comes to budget and what exactly it means.

When you mention your screenplay "The Darkness", are you referring to the comic book story?  Has production begun yet?  Are we talking about a theatrical release, or DTV?

What is your info on the original Omen, based on?  I have the DVD, and I remember a special feature discussing the budget, etc, but it's packed away, as I'm moving very soon. I seem to remember something different.

Thanks for the info.

Dream

The screenplay is one I wrote as an assignment for a UK producer / director in January 2006.

Shooting is scheduled for January 2010 and yes it has a theatrical and DVD distribution contract.

It is not based on any other story.

I understand if it is a successful film DreamWorks are interested in a follow up TV series.

The info on The Omen came from a TV documentary on British TV just before the release of the remake.

Sounds good, bud.  Best of luck to you with your project.  Are they sticking with the title?  I see there are a number of "The Darkness" out there already.

Take care.

Ron Aberdeen - now that's what I call a name.

Andrew

Quoted from Ron Aberdeen The published figures regarding budgets mean as much as pond water. The numbers are released by the producer or production company and can include or not include what ever they like. They can include marketing costs but often as not, particularly for Indy Productions with a separate distribution deal, they will not. The current production of my screenplay “The Darkness” has an initial budget of $4.5mil to produce the movie. The distributors, who are also one of the producers will bear the marketing costs but in doing so take a larger percentage of the pie, if it makes one. Distribution of profits are based on a points basis agreed at the time of a contract, for example with the Director, lead actors (if included), DOP, writer, Exc. Producers, producers, etc ,etc. The big chunk of the budget is used to pay the crew, location, writer’s fee, director and producer’s fees, travelling costs, insurance, lighting, film stock, editing and post. Outside investors often make the largest return, but also take the greatest risk. Remember the Gross Box-Office numbers are distorted by the percentage the cinemas make for showing the movie and that varies according to their location, first weekend, second weekend and so on, or the contracted price from the Studio if it is a Studio controlled project. Distorting all the figures are the Tax Credits and Off Sets within a trading group on other movies. Just an example, the original Richard Donner movie, The Omen cost $2.8mil to make and the marketing spend was $15mil. The marketing figure is not included as part of the budget because Twentieth Century-Fox Corporation were the distributors (who spent the $15mil) and Twentieth Century-Fox Productions were the producers. The numbers are always massaged to suit the needs

The Darkness sounds interesting. I'll look out for it.

"Signs meets Pitch Black" is the logline I came across. How close is that to the truth?

Anyway, I hope you stick around. I reckon your advice on marketing scripts would be invaluable for a lot of members.

Rick.

Quoted from Scar Tissue Films "Signs meets Pitch Black" is the logline I came across. How close is that to the truth? Rick.

Family of four go on a vacation to Grandma’s remote cottage. When they wake in the morning there is no sunlight and it doesn’t return.

When the producer/director offered me the job, I asked him, “Why is there no sunlight”. He replied, “If you take the job it’s your problem to come up with a logical solution”.

Obviously I did.

The sun, like, blew up and shit?

Or the moon ate the sun?

Or an ice age happened overnight on the sun?

Or the sun "wanted something more" and fucked off to some other cooler galaxy with better air conditioning?

It's gotta be one of them.

Please tell me I am correct Mr Ron.

Quoted from Ron Aberdeen Family of four go on a vacation to Grandma’s remote cottage. When they wake in the morning there is no sunlight and it doesn’t return. When the producer/director offered me the job, I asked him, “Why is there no sunlight”. He replied, “If you take the job it’s your problem to come up with a logical solution”. Obviously I did.

Very interesting hook. Look forward to see what you came up with. Without knowing the genre of the film, the only really logical solution (if life still exists on Earth) that I can think of, would be something blocking the sun (and that could be anything really).

Or maybe time stands still (but then it wouldn't really be morning when they wake up).

Haven't you seen Flash Gordon?  It's obviously Ming's return, and he's bored again.

Quoted from Shelton Haven't you seen Flash Gordon?  It's obviously Ming's return, and he's bored again.

Sheldon! I love you! But we have only 24 hours to save the Earth!!!

Quoted from sniper Very interesting hook. Look forward to see what you came up with. Without knowing the genre of the film, the only really logical solution (if life still exists on Earth) that I can think of, would be something blocking the sun (and that could be anything really). Or maybe time stands still (but then it wouldn't really be morning when they wake up).

Well going off the Signs and Pitch black logline I cam across, maybe it suggests an alien influence? Or at least some kind of creepy critter interference...

Tommyp

The reason is perfectly plausible and could scientifically happen.

If it did it would not affect the orbiting path of the moon or the earth and the world would be in darkness completely not in just one location.

So it is not something that covers the sun.

The genre is Sci Fi / Horror

Sounds good Ron.

Just to be clear, I was making a joke, not bagging out your concept.

Will look forward to its release :)

Tommyp

I realised that, but I am so pleased with the concept I would like to say more, but the project is no longer mine.

That does sound like a really compelling idea, Ron.

With a budget of $4.5 million, are we to suspect it is more drama than action focused?

Andrew

My money is on it being a VEI-8 eruption of a super-volcano (say, the caldera in Yellowstone National Park), which would eject thousands of cubic kilometers of material into the atmosphere and provoke a volcanic winter. Both plausible and 100% scientifically possible. Although whether that would actually cover the world in darkness, I don't know...

Jonny

You are miles away from the concept.

And Andrew, although the budget is $4.5mil the second half of the second act and the third act are all action.

To keep the costs down there are only six actors and it has limited locations.

The good news I had yesterday is that a possible co-producer wants to lift the budget to $15mil to get two top ‘A’ listed actors.

Sweet!!!!!  Sounds cool, Ron.

Quoted from Ron Aberdeen Jonny You are miles away from the concept.

Ah! So it's something to do with distance...the Earth has moved away from the sun, meaning that no light can now reach us? Or...the family are actually miles away from where they thought they were, in a different time zone in fact, so when they go outside there's no light because it's actually still night?

I'm only joking. I know I'll never guess it. Sounds exciting, Ron! I'm sure I'm not the only one who'd really enjoy running updates on the progress of the project - to hear about it coming together from the early stages would be very interesting.