Show business is big business — there’s no doubt about that. The cost of making and marketing films for worldwide release continues to climb, and last year reached a new high, according to the film industry Organization, The Motion Picture Association of America.
The costs of making a feature-length Hollywood movie increases by 6.3% in 2007, to an average of $106.6 million per film. Much of that cost is due to the increase in computer-generated effects, backgrounds and even characters. The technology and expertise necessary to reproduce realistic computer-generated scenes requires a substantial investment, and with some releases accounts for as much as 50% of the film’s overall budget.
But another factor contributing to the skyrocketing costs associated with filmmaking is increased marketing. Television, theatrical and online marketing of films has reached record levels in the past few years, requiring even the most modest of film releases to spend millions in marketing in order to make a profit.
Because of the rising costs of marketing motion pictures, many filmmakers are turning to joint ventures as a way of defraying some of the advertising costs. Recent Hollywood films have joint ventured with Burger King, Kentucky Fried Chicken, McDonald’s, Sony and Hewlett-Packard, just to name a few of the major corporations jumping on board the Hollywood bandwagon.
But despite the rising costs of producing a film in Tinseltown, there is some good news: box office revenues reached a record high in 2007. In the United States, the motion picture industry reported its most profitable year ever. Sony’s “Spiderman 3” topped the list of the most profitable films of 2007, earning an estimated $336.5 million.
Internationally, box office receipts are also up. The Motion Picture Association of America is reporting that global receipts totaled over $26 billion in 2007, a new record.
The downside of the higher costs of producing films is that major studios are far more reluctant to take chances are unknown directors and independent filmmakers. With so much money at stake, the industry has become extremely conservative about the types of films released, a practice which many critics claim stifles creativity and innovation within the industry.
Even smaller and so-called “independent” films are costing more and more to produce and market. With average movie ticket prices increasing every year, independent films are finding it increasingly difficult to get distribution, and many opt for “direct to DVD” release as a way of bypassing the big Hollywood machine.
If this trend continues, groundbreaking and innovative films could soon become primarily associated with DVD releases, and bypass cinemas altogether.
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