How $100m tentpoles make money!

$100m+ budget movies are known as tentpoles for a simple reason: no company can afford too many consecutive flops at this level.

So why, as Elberse argues they all should, do the big 5 all focus on tentpole or (as Elberse calls them) blockbuster productions?

Remember too that the prints & marketing spend is typically about the same as the production budget which is why, with cinema's cut factored in, box office needs to hit triple the production budget to start making money!!

This excellent stephenfellows feature breaks it down.

So - the true costs of a $100m tentpole actually go MUCH higher.

How on earth do they make money then?!

Well, these days they have a wide range of revenue sources and distribution/exchange outlets.

FUNDING Baby Driver part of £415m tax relief benefit bill

For Indies such as Warp government finance through the BFI (previously the UK Film Council) and the still-operating regional arms of the old UKFC such as EM Media and Screen Yorkshire (significant distributors of EU finance which will soon disappear thanks to Brexit) are absolutely central to their ability to produce feature films. Without money in the form of non-repayable grants there would be no '71, This is England, Tyrannosaur and so forth.

The BBC and Film4, terrestrial public service broadcasters (with Sky, and its Sky Atlantic channel key to Warp's high-budget TV series The Last Panthers) are also crucial at this level of budget, very rarely exceeding £5m ('71 did, at £8m).

For the big six, and their subsidiary production arms, such as Working Title, just as crucial is tax relief, which will typically far exceed the entire budget of Indie films. 20 years after the Tory free market PM Thatcher scrapped the quota system that ensured cinemas screened a minimum proportion of British films (most European countries, notably france, still have such laws in place), the Labour government recognised the struggles of the industry with a range of tax relief measures, that the current Tory government has (reluctantly) kept in place.

The extent of this varies across the UK, with additional relief available in Northern Ireland (though even more is available in the Republic of Ireland), and indeed there is fierce international competition to attract film productions through tax deductions, including several US states offering high levels of relief.

The scale of this tax relief is clear from the report on 2016 payments, hitting £600m in 2016, including WT's Baby Driver. The tests for determining the 'Britishness' of productions are controversial, with minimal cultural consideration, more raw economic factors determining eligibility. If you read the BFI's annual reports (you should - an amazing source of learning) you'll find many clearly American films accordingly categorised as British.


Big-budget films receive increase in tax relief to almost £600m.

The government paid out almost £600m in tax relief last year to the makers of blockbusters including Baby Driver, Star Wars and T2: Trainspotting, as well as big-budget TV dramas including The Crown. 

The payouts were part of £751m that the Treasury awarded in tax relief to films, high-end dramas, video games, animations, children’s TV shows and theatre productions that passed a “cultural test” that qualified them as British. 

The government’s figures showed that the total awarded in tax relief in the creative sector rose by a third year-on-year from £564m in 2015. The test includes criteria such as the cultural content of a production, how much of it is shot in the UK and the proportion of stars and crew who are from Britain or Europe. 

The government’s tax credit system has proved hugely successful in stopping big-budget film and TV productions, as well as talent such as games makers and special effects workers, going to cheaper locations such as eastern Europe or to other countries offering bigger incentives.

It has also helped attract investment from the deep-pocketed newer arrivals on the film and TV scene, such as Netflix and Amazon, which have backed productions in the UK including The Crown, which had a total budget of £100m, and fashion drama series The Collection. 

Last year there were 175 films completed in the UK that claimed tax relief, with the Treasury paying out £415m, up from £339m the previous year. Relief payouts for high-end TV – dramas that cost £1m or more per episode – rose from £104m to £163m. 

BUDGET Cost of IP rights and screenplay

I'll add to this in time; first up a $5m novel rights example with Scorsese and DiCaprio attached - screenplay adaptation could cost the same again depending on how many writers are contracted to draft it:

Rights to Flower Moon – as it’s known to industry insiders – were snapped up by Imperative last year for a reported $5 million, and a script has reportedly been drafted by veteran Oscar-winning scribe Eric Roth of Forrest Gump and The Curious Case of Benjamin Button fame.

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WT's relationship with NBC-Universal reduced to first look

UPDATE, MARCH 2015: Seems apparent that this has severely dented WT's ambitions; they'll now have to be smarter and try to create hits (it seems) with sub-$20m budgets, a long way from the tentpole level of Green Zone: About Time ($15m), Theory of Everything ($12m) - the Oscar bait strategy of the latter (with top class production values) has worked well.

I might later consolidate several past posts on this, but for now: WT has an ongoing production deal with Universal running to 2015 (the arrangement was due to end in 2013). Signed in April 2012, the new deal sees a significant change which gives WT back some of the freedom they lost when initially hooking up with Hollywood majors back in 1992 (Polygram, who sold out to Universal in 1999), but means they're not so sure of getting distribution for WT productions in future:

Universal Pictures has re-upped Working Title Films partners Tim Bevan and Eric Fellner through 2015. This comes after the studio re-upped Imagine Entertainment in January, keeping the studio’s most tenured production companies in the fold. Like Universal chairman Adam Fogelson and co-chairman Donna Langley did with Imagine, Working Title’s deal has been scaled back; instead of exclusive, it is now a first-look deal. The Working Title pact was due to expire next year. Working Title’s films at the studio have grossed $4.25 billion since they began with Universal in 1999, and Bevan and Fellner bring a British sensibility and a supply of prestige to the studio. [emphasis added]

Researching and analysing budgets

This post links into a lesson looking at production practices, especially with regards to budget and digitisation, and impact on 'box office'.

You could try a quiz on film flops...

You will be tasked with researching actual budgets and box office yourselves, and perhaps looking up some further figures to help with a pitch of your own idea later...
Use 1 or more of the sites below to help with this - click on the TEXT link to go to the link, holding in the CMD key so it opens in a new tab:

IMDB.com

Eric Fellner pre-WT: sleazy pop vids?

Co-founder Sarah Radclyffe left WT in 1992 when they effectively became a Polygram subsidiary (albeit with operational independence), and Eric Fellner stepped in to join the other co-founder Tim Bevan, an immensely successful partnership that continues to tower over British cinema 2 decades on.
Here's the incomparable Indie auteur Alex Cox* on Fellner, who he crossed paths with around the time (1985) Bevans and WT were releasing My Beautiful Laundrette, the company's 1st feature. Cox was in pre-production for Love Kills, later renamed Sid and Nancy, a typically warped, slightly surreal biopic of Sid Vicious and Nancy Spungen ...

Are stars vital for cinema success?

The simple answer is yes ... and no!
Most of the big hit movies are to some degree 'star vehicles', but then there are plenty of counter examples too, from Paranormal Activity to Bridesmaids, or Billy Elliot for that matter!
More and more films US and UK films are funded by pre-selling distribution rights to foreign markets, a strategy UK social realist filmmakers such as Ken Loach and Mike Leigh relied upon for most of their careers. In their case, they could pre-sell to European markets where they were held in very high regard as auteur filmmakers. More mainstream films, even at the low budget level, will frequently encounter foreign distributors demanding the presence of some star with appeal in their territory, reinforcing the position of stars as vital to a film's prospects even if the evidence of success is very questionable.
At the tentpole level there is also a yes and no answer: big name stars with wide international crossover appeal help sell the movie, and their appearances on major TV shows across different territories/markets, their presence at red-carpet openings, usually helps generate buzz. However, technology can be just as big a factor: Avatar wasn't reliant on big names but rather the combination of groundbreaking CGI/SFX and the brand of director James Cameron, just as Michael Bay's name and the associated guarantee of lots of spectacular explosions that the producer of such successful bilge as the Transformers franchise brings is at least as important as any star name attached.
Here's a few links for further reading on this - useful for reflecting on your own target audience too.

Michael Bay gets narked at Transformers star slagging off the movie!

After enduring the unenthused gripes of his two leads, Shia LaBeouf and Megan Fox, Bay has apparently been forced to his breaking point by the recent comments from Hugo Weaving, who called his voice-acting gig as Transformers villain Megatron a "meaningless" job that he "didn't care about."

EC McMullen Jr gets rather cross at the very idea that stars sell pictures, specifically horror...

Two major factors will sell your genre movie to the fans. One is someone and something they've never seen before (so if you're dry-humping NIGHT OF THE LIVING DEAD, ALIEN, or SAW, you lose). Two is fan recognition. Fans are more apt to go to a movie made by a director, writer, or producer (even a freaking