GUEST EDITORIAL: Movies Make Money Beyond the Box Office

Movies Make Money Beyond the Box Office

by Kevin Gardner

Movies are considered successes based on how much money they earn in ticket sales. Within the first two weeks—and often after the first weekend—movies are judged on a scale somewhere between “blockbuster” and “flop.” A common assumption is that motion pictures that die at the box office are simply forgotten and written off by the studio's accounting department, which is really not the case. Even the worst stinker at the local cinema has a streaming service waiting for it somewhere. Beyond streaming, other revenue sources spin forth from movies as well. You might assume that movies are all about fantasy, about distracting the movie-goer from the problematic real world for 90 minutes. In reality, motion pictures make up an incredibly profitable industry that interfaces with other big-ticket industries as well.

The Box Office is Just the Beginning

George Lucas is not simply regarded as a cinematic creative genius because he brought Star Wars movies to the screen. He is also regarded as a pioneer because he retained the royalty rights to toys based upon his movies. Merchandising is only one form of the lucrative financial arrangements—they are a type of enterprise sales—arising from bestseller movies. Licensing is an offshoot of merchandising. When a movie becomes popular, logo apparel and other items that have no connection with the movie other than a character’s name become hot sellers. Streaming services find audiences for films of every genre and quality. Streaming itself comes in several varieties. There are well-known streaming companies like Netflix and Amazon. Along with them are video-on-demand (VOD) outfits such as Hulu and Tubi. Traditional television also picks up movies for streaming. Then there are the overseas movie markets. Sometimes, duds in the US do very well in movie-loving nations like India and Japan.

The Local Theater is Changing Too

For years, theater ticket sales have stagnated in the US movie market. The primary reason for this, according to many in the industry, is the advent of streaming services. In order to create loyalty and increase attendance among theatergoers, thus improving the bottom line, theaters have responded in a variety of ways. Most theater chains now have subscription services that provide perks for viewers who sign up. These bonuses range from advance showing to free concessions. The actual theater buildings experience makeovers as well. Seating capacity in many of them has been reduced and the old folding seats have been replaced by automatic recliners with built-in features like heaters and glow-in-the-dark locators. Moviegoers can purchase tickets from theater chain websites or from outsourced sites like Fandango. Customers can select showtimes and seats well in advance of the movie’s actual screening. You may notice a reserved room filled with tables and chairs the next time you take in a movie at the theater. This is where customers hold parties prior to viewing a movie.

The Truth Behind Sequels

For film producers, distributors and theaters, the catchphrase must surely be, “sequels mean money.” In recent years, the top-grossing movies have primarily been remakes, offshoots, sequels and reboots of previously profitable motion pictures. This seeming lack of creativity is actually a Hollywood formula for success. Executives already know that certain stars, certain thematic elements and certain outcomes will draw viewers back to the theater. This allows rebooting of merchandise as well. When studios release a big-budget movie these days, the intent going in is to create a series of sequels.

The Entire Entertainment Industry Is Changing

Clearly, the motion picture industry has changed greatly over the past several decades. The entire category of entertainment industries, likewise, is undergoing dramatic changes. Two particular aspects of this are pertinent to those who are interested in the direction of motion pictures. First, real progress has been made toward inclusivity and democratization of entertainment. In particular, women and individuals of color have made dramatic leadership gains. Second, fan-based entertainment ideas along with crowd-sourced productions for movies show signs of spurring new creativity in filmmaking.