The Hollywood film industry relies on a production and distribution cycle involving production companies, distribution companies, and exhibitors to finance, produce, distribute, and exhibit films. Distribution companies play a key role in determining the number of film prints made, getting films access to theaters, and using their brand recognition and access to capital to help finance films. However, distribution is a costly process, with large distribution companies spending over $100 million to distribute blockbuster films. These companies aim to make a profit by receiving a percentage of box office revenues from theaters.

1. The Hollywood Film Industry Traditional Distribution Key Companies Profit making

2. The Production Cycle Production Company Distribution Company Exhibitors Audience Profit finance Returns TV/ DVD sales The Conglomerate

3. Film Production Cycle Pre production Production Post Production Distribution Exhibition Marketing!

4. Distribution The Invisible Art – process known only to those within the industry, barely written about and also imperceptible to everyone else. Producers Audience Distribution

5. What is it? Releasing and Sustaining a film in the market place Worked best when the three key stages (Production, Distribution, Exhibition) are linked or controlled by the same company – Vertical Integration UK system has more focus on marketing and sustaining a film in the local market Independent Studios don’t ‘do’ vertical integration

6. Independent Films Independent Studios don’t ‘do’ vertical integration No formal connection between Producers, distributors and exhibitors Collaboration – need to get a major company on side £££££££££££££$$$$$$$$$$$$$$

7. Distribution Companies Determine how many copies (prints) of a film to make Why might this be important? What might be some issues surrounding this?

8. Who are the big distribution companies? Viacom - $12.86 billion Paramount – one of the oldest (1912) United International Pictures (UIP) – covers 60 ‘territories’ Time Warner – have over 5700 films New Line Cinema – ‘independent’ and foreign films, home distribution Fox Entertainment Group – worth over $17.2 billion, 83% is owned by News Corp

9. Who are the big distribution companies The Walt Disney Company – another very old company Miramax – one of Americas largest internal distribution companies Buena Vista International – distributes all Disney films outside America Universal Studios Group – owned by the European version of Time Warner (who made their money from privatised water) The Sony Corporation – massive interests in electronics

10. Seems like a lot but….. Viacom owns Paramount and 33% of UIP Time Warner owns New Line Cinema Walt Disney owns Miramax and BVI Fox Universal/Vivendi Sony Horizontal Intergration

11. Distribution = Power Films can not be financed without the help of distributors They have clout with theatre owners (or are often the owners) Brand name recognition Own copyright Access to capital

12. It’s all about Money! Distribution Company and their conglomerate owners are profit driven so they must feel confident that they can make sufficient return on investment Films are expense to make

13. The Cost Unbreakable Story rights and Screenplay : $5,000,000 Producers : $1,878,260 Director ( M. Night Shyamalan & Assistant) : $5,081,749 Cast : $ 31,903,987 Bruce Willis : $20,000,000 Samuel L. Jackson : $7,000,000 Robin Wright Penn : $2,500,000 Rest of Cast, Casting, Stunts, & Travel: $5,568,388 Production costs : $26,214,709 Visual effects : $1,000,000 Music : $2,253,456 Total: $73,243,106

14. Lara Croft Tomb Raider: The Cradle of Life Story rights and screenplay : $4 million Producers : $4 million Director ( Jan de Bont ) : $5 million Cast : $17.25 million Angelina Jolie : $12 million Extras : $250,000 Other (inc. Angelina's perks) : $5 million Production costs : $67 million Set design and construction : $17.8 million Visual Effects : $13 million Music : $3.3 million Editing : $3 million Post Production costs : $1.5 million Total : $118 million

15. Terminator 3: Rise of the Machines Story rights ( Carolco and Gale Anne Hurd ) : $19.5 million Screenplay : $5.2 million John D. Brancato & Michael Ferris : $1 million Director ( Jonathan Mostow ) : $5 million Producers : $10 million Cast : $35 million Arnold Schwarzenegger : $29.25 million + 20% gross profits Arnold's perks : $1.5 million Rest of principal cast : $3.85 million Extras : $450,000 Production costs : $58 million Post-production costs : $4 million Visual effects : $20 million Music : $2 million Other costs : $33.6 million Total : $187.3 million [3]

16. Spider Man 2 Story rights : $20 million Screenplay : $10 million Producers : $15 million Director ( Sam Raimi ) : $10 million Cast : $30 million Tobey Maguire : $17 million Kirsten Dunst : $7 million Alfred Molina : $3 million Rest of cast : $3 million Production costs : $45 million Visual effects : $65 million Music : $5 million Composer ( Danny Elfman ) : $2 million. Total : $200 million

17. Other Costs Promotion – often higher than Production costs for a small $20 mill film but dies become less for a higer budget film Very hard to get accurate data Megamind cost between $130 - $145 m and estimated Promotiom budget of $65m

18. How do they make money?

19. % of revenue from tickets Front Loaded Deals – on the decline (bankruptcy and new revenue sources) ‘ Standard Cut’ – but what that cut is depends on the muscle of the distributor Around 50 – 55%

20. Other sources of money DVD’s – can add up to $100m and a higher % goes back to the company TV Rights Merchandising But in 2009 theatrical box office revenue was bigger than home video revenue – piracy, Netflix, cost of 3D tickets.