Making Money in Movies
Making money in the movies, secrets revealed By Chet Holmes, former Warner Brothers film producer
Let’s just look at movies as if they were any other product–a bicycle you want to sell, a new CD case you invented. Make no mistake, movies are products. But there are two important differences. First, this is a product that can be made in three months or less. And second, if it’s a good product, it can suddenly be thrust into a machine that can help that product reap hundreds of millions of dollars.
“My Big Fat Greek Wedding” was made for only $5 million. It was distributed in more than 100 countries and earned over $368 million in movie theaters alone. When it hit the DVD market, the DVD moved more than $50 million in its first day!
Imagine that. You make a product one time and it’s done. No re-tooling, no defects, no changing color, no ongoing salespeople needed. And that product returns not twice your investment, not ten times your investment, but SEVENTY SEVEN times your investment.
That’s what is possible in the movie business. And that’s why so many people take the gamble to get involved in the business. It is absolutely possible to put $1 million into a movie and end up with $20 million back.
Or to put $100,000 into a movie and end up with $2 million back for your trouble.
But of course there are many, many pitfalls. These waters are shark infested for sure. And if you aren’t careful, you can lose a limb in the process.
Here’s a brief formula.
1. The most important ingredient is the movie. It has to have some commercial appeal. And, of course, many Hollywood executives would argue over what is “commercial.” “Napoleon Dynamite,” a strange movie with a strange main character, has developed a hard-core cult following. The movie cost $70,000 to make and has grossed more than $100 million in theatrical and DVD sales. At my daughter’s homecoming celebration, one of the kids did the entire Napoleon Dynamite dance for their skit, and every kid in the audience knew what he was doing.
I’m quite sure that for each Hollywood executive who thought they SHOULD distribute Napoleon Dynamite, there were TEN saying it was a ridiculous movie and wouldn’t make a penny.
A good potential solution, therefore, is to make a more mainstream movie—something that has some elements of universal appeal. “My Big Fat Greek Wedding” did just that.
And that was my plan when I wrote a movie titled “Emily’s Song,” which I sold to Warner Brothers with Leann Rimes attached to play the lead. Here was a rags-to-riches story about a singer who goes from complete poverty (living out of her van) to superstardom. But that alone does not make a good movie.
What makes a great movie is a lot of conflict and a killer character arc. The best movies have a lot of conflict. That’s what keeps your interest. Even comedies, if they’re great, have a lot of conflict. Look at “Meet The Fockers” or, the original, “Meet The Parents.” There is tons of conflict all through both of those movies. Poor Gaylord Focker has nothing but trouble in both movies.
“It’s a Wonderful Life,” starring Jimmy Stewart and made in 1946, is perhaps the best example I can give you of a movie designed for the masses. The main character, George Bailey, spends his entire life trying to get out of this dusty little town, Bedford Falls. His life is fraught with conflict and disappointment. He is unhappy in most of the movie. The movie begins with him telling of how he’s going to see the world, to travel everywhere.
His brother goes off to the war, his high-school friend goes off to become rich, and poor George is stuck in this one-horse town.
You know the story, but the point is that, by the end of the movie, he’s not only thrilled to be in that little town, we’re thrilled with him. His character does such a beautiful and satisfying arc that we’re all crying like a baby in the final scene of the movie.
That’s my idea of entertainment, and I will prove that movies like that still sell like crazy if only Hollywood were smart enough to make them. I actually bought my movie back from Warner Brothers and at 2.5 times the amount they paid me in the first place (yes, I lost money on that deal). I got tired of trying to make the movie in the Hollywood system.
I had written a powerful drama fraught with conflict about this poor struggling singer who was abandoned by everyone she ever loved. But in the end, the movie comes to a joyous crescendo of an ending that will make people cry. In fact, it does make people cry, every time someone reads it. That’s how it got Leann Rimes attached and has since had about five other prominent stars attached…
And yet every Hollywood director who put his or her hands on it, wanted to turn it into almost a completely different movie than the one I wrote. In one case a very famous director altered the story so much from what I wrote, it was unrecognizable. So I said to the director: “Gee, that’s a great movie you’ve got there, but it’s not mine. So why not go make the movie YOU want to make and leave mine alone.”
The story was completely changed so many times by so many people that I decided NOT to make it with ANYONE in the Hollywood system. That’s right, I have deliberately avoided working with ANY big shot Hollywood types. So yes I am going the independent route, which leads to part two of my formula on making money with movies.
2. The second most important thing in making money in the movie business is to get a good deal in the distribution of your feature film. The best way to do that is to make a movie that every studio wants to buy. You’ve all heard about the Sundance Film Festival, the Toronto Film festival, etc.... These are festivals that showcase the independently financed and made films. “Million Dollar Baby” was financed independently and it earned over $200 million at the box office and won four academy awards.
But while that movie was financed independently, it was distributed by a heavy hitter studio—that being Warner Brothers. And that’s a great way to go if you can get a great deal.
Here’s the bad deal: “We love your movie. We’re going to distribute it for you and after we recoup all our expenses, we’re going to pay you 30% of the profits.”
The problem with that offer is the word “profits.” There have been landmark famous cases where a producer sued the studio, claiming that he should’ve received profits. The studios were able to PROVE that there were no profits. That’s because the studio can figure in so much for overhead that they can show that they never actually make a profit.
So the good deal is when you get something like: “We love your movie. We’re going to distribute it. We’ll put a cap on expenses at 20 million and we’ll split profits with you 50/50 after we take our standard distribution fee of 35%.
Let’s say you got a deal like that on “My Big Fat Greek Wedding.” The movie made $368 million. Of that amount, 60% went to the studio ($220 million), and of that 35% came off the top for the studio ($77 million). Of the remaining $143 million, you get HALF, KA-CHING. If the producer of the movie cut that deal, they would’ve made $71 million in profits before the movie even hit the DVD stores.
So that’s why some folks LOVE getting into the movie business. You can hit a home run like nobody’s business. If you’ve got a great eye for a commercial hit, you can actually see the product come out as good as the vision, and you can create a bidding war over your project so that you’re in a position to cut yourself a great deal.
That said, the above scenario includes using the studios for distribution. But you can distribute independently, too. Anyone can call up a movie theater chain and cut a deal to put your movie into their theaters. I know a producer who did this and he cut the theater chain in for 50% of the revenue (higher than the studios might do) and then he now gets to KEEP 93% of the money coming in after the theaters take their share. And his movie is going onto 2500 screens. That’s a fairly major release.
If his movie generates the kind of money that “My Big Fat Greek Wedding” did, he’d actually personally earn $180 million, not the paltry $71 million he’d make through the studio system.
So there’s the formula. Make a great movie and your choices are quite good. Let’s see how it works out. Stay tuned for the follow-up article. And please, by all means, watch the theaters for “Emily’s Song,” a sweeping epic drama with the happiest and most satisfying ending since “It’s a Wonderful Life.”
The end…
Chet Holmes has been called “America’s Greatest Marketing Executive” for his skills in being able to judge what would be considered commercially viable. As a consultant, Chet is one of the few, if any, who has personally sold to and secured more than 60 of the Fortune 500 as clients. He has designed more than 500 advertising campaigns and has 60 business training products selling in 23 countries. Chet has compiled a web seminar with greater details on his project and on making money in the movies. For more information about the “How to Make Money in Hollywood” webinar, please visit www.chetsmovie.com ###
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