Indicators of Film Profitability
There are 6 strategic variables which can be carefully controlled in order to make a film profitable:
1. Type of Film Produced. Much like any market, the film market cycles. Understanding these cycles and where the industry is in regard to each microeconomic cycle gives indication as to whether or not it is the “right time” for a specific genre of film.
2. Associated Talent. Every major actor, actress, and director are viewed as a “commodity” where the business side of film is concerned. While various indexing and research companies utilize different metrics, these “commodities” are ranked, measured, and assigned a set of values based upon their “demand” within the industry.
3. Budget. Over the past 10 years, the average film has earned just over $21 million worldwide. While the “Summer Blockbuster” may seem the ideal film investment, these often come with bloated budgets which can reach well into the hundreds of millions of dollars. Given the average film revenue, this can create a formidable climb to respectable profit margins. Contrast that with films whose budgets range between $5 million to $10 million.
4. Entertainment’s preferred budget space. It is also common to see mistakes in production budgets submitted with a film package. Miscalculations can stall or even bring an end to various stages of a film’s production. Even if the production overcomes an ill-prepared budgeting process, it may still have hurdles making a profit due to unforeseen cost associated with a blown budget.
5. Marketing. Much like any traditional market, the film industry must give its consumer knowledge of its product offerings in order to create desire. Knowing that a film package comes with good marketing can make the difference between a good film no one has ever seen, and a good film with good fiscal results.
6. Distribution. Equally as important as Marketing, Distribution involves the agreement which dictates who will be able to see the film. Knowing ahead of time that a decent film comes packaged with agreements for 600 theaters in the US with an additional 400 theaters in specified global regions, as an example, gives great advantage over a fantastic film which will premier in 80 theaters.
Maintaining an intense focus on these 6 important facets of a film give TriStar a distinct advantage when it comes to knowing what films to produce, and when to produce them. In addition, it is this focus on the business side of the film industry which provides TriStar with a competitive advantage and a desirable position within the market place. Application of a controlled, objective examination of all 6 important factors in film has also been taken by this new breed of film finance company in the form of its unique Green Light Process.