Vol 2 Chapter 803: Is the box office profitable?

The success and influence of the Harry Potter series is unquestionable. With the end of the screening of "Harry Potter and the Deathly Hallows", this series has temporarily come to an end. As a huge production chain, many people and companies I think I can continue to get a share of this series, especially those who are directly involved in film production.
Although it hasn’t been downgrades in overseas markets,
Under Harry Potter and the Deathly Hallows
has gone from a global box office of nearly 1.4 billion US dollars and a North American box office of nearly 400 million US dollars. "The Deathly Hallows" has more than $1 billion in the box office, and just the final piece has won the global box office of $2.4 billion.
This is undoubtedly a huge number. Anyone would think that the combination of the upper and lower box office of "Harry Potter and the Deathly Hallows" will inevitably generate huge profits.
However, what is the production cost of the film? How much does the promotion cost? What is the issuance cost?
The outside world does not know the exact number. Only the executives of Duke and Warner Bros. know how much this part of the two films actually cost.
Is the box office profitable?
"Of course it is profitable,"
In an office of Warner Bros., Jamie Johnson 6∮, who is in charge of the company’s publicity and distribution business, said straightforwardly to Duke and others,
and it’s a huge profit.

Duke sat on the sofa, frowning and thinking, barely speaking.
Robin Grand, who was actually in charge of this series, reminded, "According to the contract we signed with actors such as Daniel Radcliffe and Emma Watson, they can enjoy the box office profit share of this film. "
Because the "Harry Potter and the Deathly Hallows" was split into two parts, and the two were filmed and produced together, Harry Potter Studios has not paid the actors any box office share, but waited until "Ha After the screening of "Lee Potter and the Deathly Hallows", they will be calculated together.
Warner Bros’ CEO, Doug Walter, has an unpleasant face.
If we do in accordance with the contract, we will lose more than $150 million in revenue.

Anyone who sees his company being divided up with such a large profit will not look good.
"We do it in accordance with the contract,"
Breaching the contract is against the law. Duke knocked on the armrest of the sofa and said, "But how to do it..."
He did not go on. They just looked at Doug Walter, Robin Grand and Jamie Johnson, who were present here, and they nodded tacitly at the same time.
As early as the signing of the box office profit sharing contract, they formulated relevant strategies.
There are many sources of income for a film, and the box office split is only a small part, but on the top and bottom of the two films of "Harry Potter and the Deathly Hallows", this figure is also amazing enough.
In fact, according to Warner Bros’s budget and estimates, any one of the two films "Harry Potter and the Deathly Hallows" will have a global box office of more than $526 million. Can be recovered through the box office.
It can be said that $526 million is the break-even point of "Harry Potter and the Deathly Hallows Part 1" or "Harry Potter and the Deathly Hallows Part II".
The break-even point is an important indicator of the major Hollywood studios when formulating their budgets. They will estimate the possible income range of the film based on factors such as the investment, type, and line-up of the film, and then roll out where the investment of the film should be controlled. To a certain extent, but if investment is limited, many celebrities and marketing resources may not be available, which will directly affect income.
Therefore, studios need to repeatedly consider between budget and estimated revenue. Find the best break-even point.
In fact, in the two films of "Harry Potter and the Deathly Hallows", the biggest investment is the promotion and marketing expenses.
Hollywood now. The distribution of mainstream films has shifted to a wide-ranging and intensive mode, often spreading out on thousands of screens at the same time, but the time for uploading is usually only a dozen weeks. In order to match this mode of distribution, distributors have to carry out violent The advertising campaign drove the audience to the theater in a short time.
According to a report by the American Film Association, in 2010, the average advertising cost per movie by Hollywood studios has reached 35 million US dollars. Television advertisements, newspapers and magazines, billboards, and the Internet have all become the propaganda positions for Hollywood movies.
Production costs are another major expenditure of Hollywood movies. This cost is usually divided into offline costs (mainly refer to the remuneration paid to technicians and the logistics, equipment and maintenance costs required for production) and online costs (mainly refer to Remuneration paid by film managers and creative workers, including producers, screenwriters, directors, actors, etc.).
In the two films of "Harry Potter and the Deathly Hallows", director David Yates and the main actors are paid in the form of "advance payment + box office profit sharing", and each can receive a sum of money first Expensive advance payment. Follow-up will be divided according to the profitability of the film box office.
Take director David Yates as an example. As a director, he can get an advance payment of 10 million US dollars and get 4 to 8% of the profitable part of the film. The level of the share depends on the film’s profitability. The level of profitability, just like Duke's contract, is also a tiered share contract.
The difference is that Duke's contract involves the entire income of the film, and David Yates is only a share of the box office profit.
In addition, when the film reaches the break-even point, David Yates can also receive a reward of US$500,000. This stepped revenue sharing method for core creators has become a common practice in Hollywood blockbusters because it can encourage the creators More dedicated investment, on the other hand, can also avoid excessive early investment.
However, the Harry Potter studio signed such a contract with them more not to avoid excessive upfront investment.
In addition to these, another part will also be calculated into the total cost of the film, and that is the union bonus.
According to the agreements reached between the Producers Union and major Hollywood guilds, the filmmakers must pay a certain fee and share to the actors’ union, director’s union, screenwriter’s union and other related associations every time they use film works and obtain income from it.
This is not only in terms of box office, but also all income from film re-shows and TV broadcasts.
In the history of Hollywood, at first ordinary film workers could not get a share of the follow-up income of movies, although after the 1950s, the re-screening of movies on television has created considerable economic benefits.
Hollywood can have such a situation. Actors and people in other industries have to thank one person. Under the leadership of Ronald Reagan, then chairman of the Screen Actors Guild, Hollywood actors have obtained the right to share the income from film re-screening. And then expanded to other unions.
In the following years, with the continuous emergence of new distribution channels, peripheral bonuses have repeatedly become the focus of controversy between union organizations and the producer league representing the interests of major Hollywood studios. In order to increase the ratio of bonuses, Hollywood unions even spared no expense. Strikes have been launched many times.
For example, the famous 2008 screenwriter strike.
Nowadays, the contracts signed between various regions of the world and Hollywood distributors are different, but in general, the total box office of the two films of "Harry Potter and the Deathly Hallows" generated 2.4 billion US dollars, as the distributor’s Warner Bros. can get around $800 million.
Of course, this is not the entire income of the two films "Harry Potter and the Deathly Hallows", but only a small part.
Hollywood movies are huge, and hundreds of millions of dollars in production costs are commonplace, but risks can be effectively mitigated through multiple recovery channels.
Nowadays, Hollywood has a very mature film operation mechanism, and has developed a set of "window distribution" model, that is, films are distributed sequentially along different theaters, audiovisual, television, new media and overseas markets, giving way to The windows in the front row can enjoy a certain period of exclusivity.
A typical Hollywood movie will be released in the theater market for a few months. Although box office revenue is no longer the largest source of income for Hollywood movies, it plays a pivotal and even critical role. The higher the box office of the movie, the higher the movie’s subsequent window release. The greater the value.
After the theater screening is over, the studio will release the audio-visual products of the movie in the form of DVDs, Blu-ray discs, etc. As early as 1986, the income of the major Hollywood studios from the film and audio rental and sales exceeded the box office income and became the most An important source of income.
After the release of audio and video, Hollywood movies will enter the TV window for distribution. Last year, the six major Hollywood studios obtained 37.7 billion US dollars in revenue by licensing movies and TV shows to TV stations.
And according to the profit rate from high to low, the TV window can be subdivided into several levels.
First is pay-per-view on demand, then pay-per-view cable TV, such as major paid movie channels such as hbo, showtime, starz, which will start broadcasting about 9 months after the theater is released, and the film producer charges the channel an authorization fee based on the movie’s box office revenue , The average movie is about 7 million US dollars, and the blockbuster may be as high as 20 to 35 million US dollars.
The film will then be licensed to television networks for broadcast. The window period lasts for several years. Usually, the license fee for a commercial film is between 3 million and 15 million US dollars, depending on the film’s investment scale, box office performance and number of rebroadcasts. .
In the end, the movie will enter the syndicate market and be licensed to local TV channels to broadcast. In the largest local TV market, a blockbuster film can earn up to 5 million U.S. dollars during the 5-year license period.
The overseas distribution of Hollywood movies generally follows this window, and it is precisely relying on such a mature window expansion system that a movie can create huge broadcasting income.
This has also allowed many movies that hit the street at the box office to retrieve their investment through other channels.
The income in this area is huge, so Duke and Warner Bros. have always refused to sign a non-box office sharing agreement with the actors of the Harry Potter crew. In the actual contract, except for the ratio stipulated by the producer union and the union agreement, Actors and even director David Yates can't enjoy this profit sharing.
The price the Harry Potter Studio paid for this was to greatly increase their box office profit share.
However, Harry Potter Studio has long become an independent company with independent financial accounting, and it has also prepared a special accounting loss method. (To be continued.)
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