John August

Film Industry

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Film Industry, Follow Up, Scriptnotes

One of the many reasons I’m lucky to be married to my husband Mike is that he used to manage a bunch of movie theaters in LA, so he knows a lot about exhibition.

After listening to the Scriptnotes podcast on [movie money](http://johnaugust.com/2011/how-movie-money-works), he had some additional figures to share.

first personFilm rentals depend on various factors including length of run (the storied 90/10 split in opening week, but perhaps 30/70 in week 15) and location (“showcase” locations like Hollywood may have average film rentals around 35-40% due to studios’ eagerness to have the film at the most-visited or most-visible locations).

When I left exhibition in 2001, our average ticket price was about $6. Our film rental cost percentage was usually in the mid-50s. Assuming 55%, we paid the distributor $3.30 out of that $6 average ticket and kept $2.70.

Meanwhile, our average concession revenues were about $5 per transaction. However, only about 40% of customers bought something at concession, so the concession “per head” (analog to the average ticket price) was $2. So, revenue-wise, ticket sales were 75% of total revenues while our concession revenues were 25%.

However, concession cost of goods was about 15%, so out of the $2 concession sale per head, we paid 30¢ in expenses and kept $1.70. Given that, concession profits were 39% of the combined ticket and concession net.

Expenses are enormous, so even with super-high concession profits, exhibition was (and still is) always strapped for cash. You have a lot to pay out:

* Facility costs. This includes rent for the building, plus maintaining and upgrading furniture, fixtures, equipment.

* Staff and management payroll. Around 80% of employees were making within $1.50 of minimum wage, but you also have salaried management at both the theater and national level.

* Utilities and supplies, all the way down to soap and toilet paper.

One expense mentioned in the podcast was co-op ads. Co-ops were always a line item on our theatre P&L, and I was told that the studios placed the ad, but then charged every theatre whose name was listed in the theatre-list box below its proportional amount for the cost of that ad.

In LA, there are “showcase” theatres in the most important parts of the market (Santa Monica, Century City, Hollywood, Westwood) whose names appear larger in the co-ops, and for which actual show times are listed. Accordingly, the co-op cost to those locations is higher than for others.

How movie money works

Film Industry, Scriptnotes, Transcribed

When you read articles claiming every Hollywood movie loses money, an obvious question arises: “Why do they keep making them, then?” In this installment, John and Craig explain how the film industry spends and makes money.

It’s a big and complicated topic. You could easily spend a semester studying it — John did — but this overview should give you a sense of how it all works.

The most important thing to understand is that each film is accounted for separately. Studios charge distribution fees that earn money for the company without paying down the investment in each movie. That’s how Theoretical Pictures can turn a profit even when each of the last 20 films it has released shows a loss.

Because we’re throwing a lot of terms around this episode, here’s a handy cheat sheet:

John couldn’t remember the name of it (The Paramount Decree) but it’s worth reading up on the 1948 court decision [barring studios from owning movie theaters](http://en.wikipedia.org/wiki/United_States_v._Paramount_Pictures,_Inc.). Not only is it a fascinating anti-trust case, but it greatly influenced how the modern film industry works.

LINKS:

* Intro: [Mister T cartoon intro](http://www.youtube.com/watch?v=W4WAG0z-hDo)
* Outro: [Fatback Band – (Are You Ready) Do The Bus Stop](http://www.youtube.com/watch?v=PeeOPR8bxac)

You can download the episode here: [AAC](http://traffic.libsyn.com/scriptnotes/scriptnotes_ep_11.m4a).

UPDATE 11-17-11: The transcript of this episode can be found [here](http://johnaugust.com/2011/scriptnotes-ep-11-how-movie-money-works-transcript).

Your projectionist and you

Film Industry, Geek Alert

Witney Seibold has an extremely useful explanation of what a projectionist does, and [why filmmakers should care](http://www.craveonline.com/film/articles/177245-free-film-school-20-your-projectionist-and-you):

> There is, however, one person in the film industry who always, without exception, has final cut: The projectionist at the movie theater. It is they, after all, who are exhibiting the film on a ground level. It is the theater projectionist who is the final arbiter on how a film looks, how much lighting it has, how well displayed it is. The chef may have made a great meal, but it’s the polite waitress that you’ll remember.

On next week’s podcast, Craig and I will talk about exhibition (among other things), and how all parties involved want better projection systems — and why no one wants to pay for it.

If you read nothing else, keep this in mind:

> Also, never yell “Focus!” while sitting in the theater. The projection booth is way up above the audience, and is usually sealed off, with no direct access to the theater. The projectionist is standing next to a hot, noisy machine. They cannot hear you. If there is a projection problem, leave the theater to talk to someone immediately. Yes, you actually have to be that a**hole. It’s worth it, though, to keep the film going, isn’t it?

Motion picture film cameras, 1888-2011

Film Industry, Tools

Matt Zoller Seitz looks at the [end of an era](http://www.salon.com/2011/10/13/r_i_p_the_movie_camera_1888_2011/singleton/):

> [T]he three major manufacturers of motion picture film cameras — Aaton, ARRI and Panavision — have all ceased production of new cameras within the last year, and will only make digital movie cameras from now on. […]

> What this means is that, even though purists may continue to shoot movies on film, film itself will may become increasingly hard to come by, use, develop and preserve. It also means that the film camera — invented in 1888 by Louis Augustin Le Prince — will become to cinema what typewriters are to literature. Anybody who still uses a Smith-Corona or IBM Selectric typewriter knows what that means: if your beloved machine breaks, you can’t just take it to the local repair shop, you have to track down some old hermit in another town who advertises on Craigslist and stockpiles spare parts in his basement.

Typewriters are a tempting but imperfect analogy. Motion picture cameras have traditionally been a rental rather than a retail business, which means Panavision will have the parts and expertise to repair its cameras for quite a long time.

And film isn’t going away tomorrow. It’s still a better choice than video in many situations, for both technical and artistic reasons. A few weeks ago, I visited the set of R.I.P.D in Boston, where they were happily shooting digitally. But director Robert Schwentke told me there were still film cameras on set for high-speed work.

Other filmmakers will choose film for its look or its ruggedness. And they’ll keep having that choice. Film cameras last a long time. Part of the reason Aaton, ARRI and Panavision can stop making new ones is that they already have plenty, and can keep them running.

Still, it’s a moment worth noting. In an [article at Creative Cow](http://magazine.creativecow.net/article/film-fading-to-black), Debra Kaufman observes that we’re not talking about something that *will* happen; it’s already done:

> “Someone, somewhere in the world is now holding the last film camera ever to roll off the line.”