Filmmaking is passion. Sure, but it's also a business

Prelude:

Even through a recession, the entertainment industry has thrived. Nothing can stop people's love of movies and TV. But Audiences are savvy too. They don't want the same old repackaged material constantly (Someone tell Hollywood this and kill the remake train!). They want new stories. New ideas. New characters to laugh and cheer with and cry and weep for. (Of which we have plenty)

They also don't need to have multi-million dollar price tags to get audiences excited.

Paranormal Activity was filmed for a mere $15,000 dollars (if you don't include post production, marketing and distribution costs) but turned profit with over $192,000,000 worldwide - just while in theaters.

Not every movie can expect this kind of return, but it's not hard to see how a more modest budget, focusing on story and audience expectation, internet marketing and word of mouth can make a generous profit.

Some Eze math:

Think about it this way.

The average ticket price to see a movie in a theater in America (Largest movie going country on the planet) is $10 dollars - $14 for 3D.

If you make a movie with a production cost of $100,000 dollars, and get it released in Theaters - Even if the distributor were to take 50% of the gross instead of the normal 30% - If it were shown in even a quarter of the 3,800 theaters in America, had three showings a day for six weeks and never once sold more than 100 tickets per screen a day - you would still take a gross of over $570,000. After fees and distribution costs you would still receive back around $220,000 dollars.

This is a worst case for a limited Theatrical release.

But wait, there's more:

Of course there is also TV. Pay-per-view. Game console stores. Netflix. Amazon prime. Dvd. Blu-Ray, etc.

The Average Blu-ray is sold for $14.99 at most stores in America (It's SRP is around $30!). Even if you lowered the price to $9.99 as a budget title. If you were to sell a copy to 0.5% of the 312 million American public, you would see a gross of $15,000,000. Even after production costs, distribution, merchandising, design, printing, etc. It is still a good start when Bulk Blu-rays can be produced for less than 5 cents each.

Then extrapolate this to the syndication costs for digital downloads. Netflix, Amazon prime, iTunes.

Then TV channels, usage and play rights.

Then expand this to Europe, Asia, Japan and the rest of the world.

Plus, Film grosses over time always get stronger

Despite a rough few years with the recession, the film market is stronger than ever.

In America alone.

2012: 10,957,245,054 in revenue domestic to America.

2002: 9,201,750,372 in revenue domestic to America.

Up over a billion dollars. Not including International, television, streaming services, etc. According to statistics, most movies make on average between 10% and 30% more from international markets over the US domestic, meaning for 2012 the overall revenue was likely 30 billion or more.

Sources: (2012 BOX OFFICE AMERICA) - (2002 BOX OFFICE AMERICA) - (2012 INTERNATIONAL RANKS)

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