Game of Collections : From 100 days to 100 Crore Clubs, What fraction of a movie ticket actually goes to the Studio/Producers ?

Though the creative process of filmmaking begins from the writer itself But when a producer joins the team, thoughts get materialized and economic dynamics come into the picture (actual picture).

Producer, The person who invests in films. The money that a Producer invests in making a film is called the “Budget”. It includes everything from the remuneration of the actors, technicians and other crew members to transportation and other costs. Apart from this, once a film is complete, it has to be marketed and that calls for “PA (Promotion & Advertisement)” expenses.

                  Cost of Film = Budget + Promotion & Advertisement Expenses

The Producer also raises revenue from royalties, like Digital rights, Satellite rights, Music rights, etc, and also some countries give tax rebates or subsidies for screening movies in their country. All this depends on the Hype movie gets through promotions and advertisements.

                  Non Theatrical Revenues = Digital & Satellite Rights + Music Rights + Overseas subsidy etc.

All the above expenses and earnings are prior to the theatrical release of the movie. A theatrical release is the first official outing of a movie. When the movie is ready the producer can either sell the movie to a distributor or he/she themselves can wear the distributor hat.

The Distributor forms the most vital link in this money chain by acting as a medium between Producers and Theatres. The Producer has to deal out their film to the All India Distributors. The price at which the producer sells his film to the distributors is termed as “Theatrical Rights”. The producer can either directly sell the Theatrical Rights to Distributors or make a contract with any Third Party which in turn has the responsibility to deal with Distributors. In that case, the Producer will get his share from the third-party even before his film releases and all Profit/Loss will be incurred by third-party only. For example, Yash Raj Films distribute their films themselves, while Nadiadwala Grandson’s had a contract with EROS. Indian film industry is majorly distributed in 14 circuits and each has its distributors to represent them :- Mumbai, Delhi/UP, East Punjab, CI (Central India), CP Berar (Central Provinces), Rajasthan, Bihar, West Bengal, Nizam, Mysore, Tamil Nadu, Assam, Orissa and Kerala.

                   Theatrical value = Amount Paid by Distributer to Producer = Budget + Promotion & Advertisement Expenses + Producer Profit.

Now the distributor with the help of his sub-distributors rents Theatres or sells rights to exhibitors on a weekly or daily basis.

In layman terms, Exhibitor (Theatre) is nothing but a theatre owner. The theatres form the end of the box office model. On pre-defined agreements with the exhibitors, the distributors hire their theatres to showcase films.

There are two types of theatres in India: (i) Single Screens (ii) Multiplex Chains and both have a different kind of agreements with distributors. This agreement focuses mainly on “Number of Screens” and “Monetary Returns” to be paid back by theatres to Distributors. Entertainment Tax (All India average of 30% approx) is deducted from the total collections at the ticket window. This tax is enforced by individual state governments and thus differs from circuit to circuit. After taxes, a percentage of the total nett gross is paid back to the Distributors. This return is known as “Distributor Share”.

Theatrical Run Hit/ Flop Calculation

• • Theatrical value = Amount Paid by Distributer to Producer = Budget + Promotion & Advertisement Expenses + Producer Profit.
• •  Footfalls/Ticket Sales = Total number of tickets Sold
• •  Gross Collections = Total money collected from ticket sales
• •  Net Collections = [Gross collections – Entertainment Tax and others]
• •  If a movie gets Tax exemption, Net Collections = Gross Collections
• •  Distributor Share is generally calculated as below:

This means 50% of the collections (after entertainment taxes) goes to the Distributor in the first week of release and so on.

• •  Profit/Hit, if Distributor share > Theatrical value
• •  Loss/Flop, if Distributor share < Theatrical value

Glossary of Common Movie Trade Terminologies

• • Double Blockbuster: when the movie returns 100 % or above profits of Theatrical value in Distributor share.
• • Blockbuster: when the movie returns 50 % or above profits of Theatrical value in Distributor share.
• • Super hit: when movie returns 25 to 50 % profits of Theatrical value in Distributor share.
• • Hit: when the movie returns up to 25% profits of Theatrical value in Distributor share.
• • Above average: when the movie just breaks even with Theatrical value in Distributor share.
• • Average: when movie recovers above 75 % of Theatrical value in Distributor share
• • Flop: when movie recovers 50 % or above of Theatrical value in Distributor share.
• • Disaster: when the movie recovers less than 50 % of Theatrical value in Distributor share.