1. A film studio makes money by the percentage of royalties that it has for every DVD, VCR and Cinema ticket sold. Merchandise and pre-sales can also be a method of gaining money for a studio after the film has been produced.
2. The money mainly comes from the audience themselves, which is why an institutions needs to make sure that their film is suitable for the targeted audience and that their advertising is sufficient. If not, then the film will not be sold and profit will not be made.
3. The producer is the person that has the idea for a film, but it is the director and financers that carry the project ahead.
4. Financing can be one of the most difficult stages of film production. Many methods to raise funding can be done such as: pre-sales, money from the parent company (if in a conglomerate), government grants, tax shelters or individual investors.
5. If for example Working Title were to produce a new idea for a film, they can gain funding by using the profits from a previous successful film and carry that money over to the next project. This method would ensure some money because they know exactly how much they have made previously and also can use the film’s success to judge which ideas work best for the targeted audience. It would be a better idea to have more than one investor/funding source so that one investor does not own a too large percent of the film and so that if one drops out then the production can still fall back onto the remaining ones.
6. In the 1920s and 1930s, some studios started achieving vertical integration by constructing theatre chains. Paramount, Warner and Fox were some of the studios that owned the “Big-Five” theatre chains.
7. In 1948, these chains were broken up due to the US Supreme Court’s antitrust case called the United States V. Paramount Pictures, Inc. case.
8. The studios make money from DVD and Video sales by the percentage of royalties that they get from each sale. Each product is given extra value as it goes down the chain of production (manufacturer of product – studio royalty – shipping and transport – place of retail’s profit). That is why if the audience by a DVD from Amazon, they can get it for a cheaper price as the product is sent straight from the warehouse to your address via a currier rather than it being sent to the shops. The laws revolving around copyright surround DVD rentals so that they cannot be copied – because this does not give the studio any money for what they have produced.
9. The main way that a studio can ensure that they make profit from a film is by pre-sales and making sure that their advertising is good enough to promote a film. Also, including famous cast/directors gives the film extra promotion to the audience. Creating a moral panic can also promote the film to the audience by using the hypodermic needle model (like 2012 did through billboards).
10. Studios can also make money by using synergy methods (like Orange Wednesdays) or creating merchandise associated with the film. Film awards/festivals can also promote the film because the audience will be able to see which films are worth going to see. Toys could be created (for children’s films such as Shrek) in order to make extra money and profit for the studio because of the copyright of the idea/characters.
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