India is the country that makes the most significant number of movies. Indian movies are famous across the globe. It is a dream of many people to invest in the business of film making and become a producer. But many new investors are scared to spend their hard-earned money into film making seeing so many flops in a row.
It is because they don’t know the different ways through which Bollywood movies can make money. Believe it or not, the money-making of the film is much more than the ticket sale, and films can earn good revenue even if it didn’t do well in theatres. Here’ I have gathered in detail the ways movies in India make money. So, let’s start.
Theatrical distribution is the oldest way through which movies make money. After the film is complete producer hires a distributor for releasing his movie on theatre. Distributor, in turn, charges a commission on the total sale of the tickets. His commission may Range between 10-20%. To release the films in theatres, he hires exhibitors (owners of single or multiscreen theatres).
Any distributor or exhibitor will agree to sell or run the film based on the commercial value of the film. If the film lacks, good content, entertainment factors like action, romance, comedy or sex, or star values, then there are scarce chances for a film to get a theatrical release. That is why classical cinema is out of the picture these days. The formula for profit sharing is simple. Govt takes 40% as an entertainment tax on each ticket.
The remaining money is divided between the exhibitor and distributor equally. Finally, the exhibitor deducts his commission & gives the balance amount to the producers. But in a few cases, producers pre-sell the distribution rights to distributors. In such a case, the final amount goes to the distributor. Here’s is simple math of who gets how much money:
Revenue of the film = 3,50,00,000
Share of government= 40% of 3,50,00,000 = 14,000,000
Exhibitors share= 50% of 21,000,000 =10,500,000
Distributors share = 50% of 21,000,000 =10,500,000
Producers share = 10,500,000 – 2,100,000 (15% distributors commission) = 8,400,000
Satellite or television rights
Many people desperately wait for their favorite movies to release on television. Producers get good revenue from satellite rights. It is permission to let their film run on the television channels. The television rights are of two types one exclusive & another one is non-exclusive.
When any channel takes exclusive rights of the movie, it can run the film only on its network and cannot sell the rights to anyone further. Nonexclusive rights are just the opposite of the same. Indian audience is in love with south films, and they are currently on the highest demands on all the networks.
Digital satellite rights
Digital rights are the rights of running movies on various online platforms. Netflix, Amazon Prime, Youtube, Voot, Hotstar are the most popular digital platforms nowadays. Many other platforms are cropping up like mushrooms on the internet. The young generation prefers to watch movies on these platforms on their mobiles and laptops because their subscription is cheap.
To get the first hand on movie rights, many digital platforms are buying movies even before they get released. They either pay the upfront amount to producers, or the revenue is shared 50-50% between the digital platform & producer. Percentage of the revenue sharing may differ. Digital rights are excellent opportunities for low budget movies like Tumbbad or Masaan that were critically acclaimed, but couldn’t do well in theatres.
Music label companies like Saregama, T-series, Zee music, buy the music rights of the movies. Music companies and producers earn a lifetime from superhit songs. There are many flop movies with hit songs. Music companies buy song rights and sell them to online music stores and other platforms.
They share the revenue on every download of the songs from platforms like gaana.com, Saavan, Spotify. You must have scene film songs being played on your favorite tv shows, tv channels or makers of these serials pay hefty amounts to music labels for using these songs.
It may start from 5000 Rs to 25000 Rs per minute, and if they use the song without rights, they have to pay hefty fines to music label companies. Music companies charge for every single commercial use of the song.
When the exhibitors are not ready to buy the films or the distributor is not interested in sharing the ticket price with an exhibitor, he may take the theatres on hire. In this case, the distributor pays a flat fee for the run of the movie, and he keeps 100% of the ticket price.
It is a perfect opportunity for classical cinema, low budget movies, or movies with no star value. By purchasing their theatre, such a film gets a theatrical release.
Coke, popcorns, patties are our favorite companions while watching movies. That is the reason every cinema hall is full of snack stalls. You must also be aware of the recent buzz and a few protests about heavily priced snacks at cineplexes. But have you ever thought that these snack counters are significant contributors to the movie exhibition business?
Will you believe if I tell you that your favorite snacks saved a few theatres in the past. Well, Hollywood in the 1930s was rippled due to depression, and many theatres were forced to shut. But the theatres that sold snacks survived because people loved watching movies with cheap meals.
More than half of the popcorn in our country is consumed at theatres, and they play an essential role in the survival of the film business, especially if the film is a flop. So, now you know that when you are buying cooldrinks & popcorns, you are helping the movie business to survive.
Rent & sale of DVD’s, cassettes & blue rays
With every sale of the DVD’s and CD’s of movies, producers make money. They get the revenue share as per their deal with online stores like Amazon or Flipkart and even from the retail shops in the market.
Many movies are now being converted into video games; this is a culture more accessible in the west. But making a video game of film is a very profitable business. Angry Birds Rio, Kung Fu Panda, The Golden Compass, and G Force are some live examples of the video games that were made from movies and are extremely popular.
Government of Uttarakhand, Uttar Pradesh, Madhya Pradesh, and many other states pays subsidies to filmmakers. The criteria to get support from any government may vary. But essential criteria are that you must shoot 50% or more than 50% of the movie on the particular state, and they must have some cast that belongs to the specific state. It is a profitable deal for both governments and makers.
The percentage of subsidy can be from 50% of the total budget to 100%. Some state governments like Uttar Pradesh have a selection committee for the scrutiny of the film scripts and final movie, and based on final results; they approve the subsidy. Many foreign countries like Australia are offering enormous benefits for making movies in their countries. It is because movie making promotes tourism and also brings in the employment of various forms in their region.
Many movies with social causes get tax incentives, ‘Super 30’ of ‘Hrithik Roshan’ is a prominent example of the same. It was made tax free in states like Rajasthan, Uttar Pradesh, Gujarat, Maharashtra, Delhi, Jammu & Kashmir, and Haryana. Tax-free movies earn double profits than regular film.
You must have seen the toys of the characters from Disney movies and action figures from popular action movies, or the copy of t-shirts, shoes, caps, jewelry, dresses, etc. from the film being sold. Every youngster wore a cap from ‘Maine Pyar Kiya’ in the 1990s.
Television serials are also in competition with movies when it comes to merchandise. ‘Tulsi sarees’ from the serial ‘Saas Bhi Kabin Bahu Thi’ were sold on every shop. Micky mouse, & tom and jerry toys are another example of popular merchandise.
Many short films and non-commercial films can earn money if they send their films to festivals. Some of the award money is exceptionally good. Many films like ‘Love and Shukla’ promote their movies on different award event platforms before releasing them on theatres & on digital platforms. This activity helps them get more audiences that they otherwise couldn’t have gathered.
Many products are used by stars and other characters in movies, starting from mobiles to cars. All the product endorsements are a good source of earning. In the movie Bodyguard, Salman is using Audi Q7 himself. In Dabang’s super hit song, ‘Munni Badnaam Hui’ Zanddu Baam was used many times. Although later, there was a dispute between the brand & the producers. The brand issued a summon against makers by the brand for using their product without permission.
For the fans, everything related to their favorite stars matters, and thus, sometimes makers make money with auctions. They sell the clothes and props used by stars in auctions. Yellow sari of Madhuri Dixit from the ‘dhak-dhak’ song was sold for 80,000. Salman khan’s towel from ‘Mujhse Shadi Karogi’ was sold for 1.42 lakhs. Madhuri Dixit’s green Lehnga from ‘Devdas’ was sold at three crores.
Bollywood movies are popular across the world. They receive massive revenue through overseas rights. Sharukh, Salman, Akshay Kumar, and Amir Khan movies get the highest incomes through these rights because of their popularity.
These are a few of the ways movies make good money other than ticketing. If you did find this information useful for your future venture, don’t forget to share the article. Did we miss something? Do let us know through the comment section.