Film Value Chain Introduction
The film industry's value chain starts from development, moving through production, distribution, and finally to exhibition. Each stage is integral to the flow of revenue and contributes to the film's financial success.
Development: Funding Origins
Development involves scriptwriting, pitching, and securing funds. Surprisingly, funding may come from diverse sources like film grants, private investors, or pre-sales based on the script and attached talent.
Production: Budget Allocation
Production expenses vary widely, from millions for blockbusters to thousands for indies. Notably, 'below-the-line' costs like crew and equipment often exceed 'above-the-line' costs like talent fees.
Distribution: Revenue Streams
Distributors negotiate terms with producers and exhibitors. They aim to maximize revenue from theatrical releases, streaming, TV rights, and home media. Digital distribution has significantly changed revenue models, reducing physical media sales.
Exhibition: Box Office Split
Box office revenues are split between exhibitors and distributors, with percentages varying over a film's run. Initially, distributors may take a larger share, but it often evens out over time.
Ancillary Markets Impact
Revenue from merchandise, licensing, and tie-ins can surpass box office earnings. 'Frozen,' for example, generated massive revenue from merchandise, dwarfing its box office success.
International Markets Significance
Global sales can contribute more to a film's revenue than domestic earnings. For instance, Hollywood blockbusters often earn more from overseas markets, sometimes tailoring content for better international appeal.
What initiates the film value chain?
Scriptwriting and funding
Box office release
Marketing and promotion
Company
