The film industry has always proved how creative and resilient it is resulting in being one of the massive revenue-generating Industries known. Its artistic approach and dynamicity has made it a great way for investors to generate great returns through this.

If you are also one of those still wondering how this industry makes profit.

The reason why it is an important topic to discuss is that eventually, you would get an insight into Coin Investment but to get into it you have to understand how movies make their money and how much can you profit from it?

To do that you have to understand the flow of cash into this system.

Now, this is a very topical conversation to be having because right now in the world most of the cinema and theatre chains are closed. There is a lot of speculation about the future that might hold for studios and movie theatres.

Given these current events, the question comes to mind: are we witnessing the end of global cinema? Because now movies can not really do well on box office returns.

Well, pandemic or not there seems to be a topic that pops up every couple of years ever since the dawn of television. Since then people have been predicting the death of movie theatres with home video releases, streaming, with the advancements of home television. People are always worried that eventually people are gonna start growing out, cinemas will close and that will be the death of movie theatres. ‘

And yet through the years, this has never really happened. while industries have been hit because of this it seems to only ever impact it on the middle class or the films with budgets between 20 and 60 million dollars.

The cinemas will never really go away, and it never will be pandemic or not. Because their importance in the film industry is less to do with returning profits but more to do with marketing and creating marketplace relevance for future channels of distribution.

Let us take an example, say a movie costs 100 million to make and 65 million on the marketing of that film. Let’s say our movie went on and made 500 million dollars domestically at the box office. The theatre is going to keep 50% of that so we are left with 250 million dollars. After that distribution company is going to take a cut of the profits which is 25% and excluding the marketing cost we are left with 138 million dollars. Now we are gonna subtract the cost of production 100 million. Now we have 38 million left.

And a lot of times movies will have back endpoints going to directors, producers, actors. Let’s cut that out at 10 million.

Now the studio is left with 28 million.

If this is the reality according to the box office. Why are studios still getting everything on the line? Why are investors still investing in this?

The answer is the output deals and licensing agreements. These are the agreements made with the TV companies and streaming platforms, who agree to purchase the licence of the entire film every year. This is what allows studios to remain in business.

So if this is the case, the box office and theatrical releases are so ample and studious that they can’t even rely on box office revenue. What’s the point of releasing a movie in the cinema?

The answer is creating relevance. It is the reason why we see such shallow numbers when it comes to what these films cost and what they earned.

if a movie can brag about being no. 1 or making back its budget on its opening people pay attention to that and it adds value. When these occur, newspapers love to report about it.

So, the Box Office numbers are showing a red, it does not mean that a movie is also financially red.

The whole purpose of Box Office is as a marketing tool.

Now you know how profitable movies actually can be. Now, do you Want to Invest in the Film Industry but Don’t Know How?

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