In the not-too-distant past, movies made most of their income from box office takings. Yet times have changed, and with global audiences and online streaming, new revenues have arrived that can help movies recoup their initial investment. Even your favorite obscure action B movie from the eighties may now be found on Netflix, bringing in revenue for its creators. So how do movies make money long term?
How Long Does It Take for Movies to Recoup Costs?
Movies recoup the money in different ways, depending on how they are received by the paying public. This means each movie will have different lengths of time in which they make back costs. Some movies never recoup costs at all or may only do so after a long time. It all depends on how the film is released. So while a classic action film like Demolition Man performed adequately at its opening, by gaining a cult following in the years since it managed to maintain its revenue in the longer term.
Similarly, some films are slow burners. They take a while to get acceptance and to be released across the globe, so they gain money in small amounts over time. However, some movies can also get upfront deals. These are known as minimum guarantees and operate like a loan. No income is gained from them until that is paid back from revenues.
Where Do Movies Get Revenue After the Box Office?
As an example, take a huge blockbuster action movie like Terminator II. Released in 1991, it had a budget of $100 million and made approximately $519 million at the box office. Yet when it finished there, it continued to make money through video sales and later DVD. All this included licensing to television companies around the world, who will have wished to screen the movie on their channels.
The movie will have also made earnings through related licensing. Merchandise such as clothing, action figures, and even items like replica props bring in even more in terms of sales. Soon, the earning potential for a movie will have quickly gone beyond just the ticket sales made in a movie theatre.
In the modern age, new forms of entertainment have managed to push earning potential even further. Money from on-demand streaming to watch the movies increases, while games on consoles, PC, and mobile devices bring even more. Another big hitter is the iGaming sector, which uses action movie properties on many of its online slot games. Terminator II has joined movies like the Goonies and Ghostbusters in getting its own title. As new markets in the US, Asia, and New Zealand open up, so does the licensing revenue from these games. The trick is that the owners must ensure their intellectual property retains its brand awareness by only listing trustworthy, licensed companies to house the game. This is done by signing deals with the major developers who have also built a reputation so that the welcome offers and bonuses advertised can be seen as accurate and reliable.
The Power of the Sequel
All of this gets a massive boost when a sequel arrives. Not only does it make money at the box office and go on to do all the things its predecessor did, but it also gives them a leg up. When the new Rocky or Terminator movie is released, people go back to the old ones for a recap. Movies are downloaded again, merchandise is purchased, video games are played, and slot games have money deposited in them. Thus, it is no wonder Hollywood is obsessed with sequels, trilogies, and even remakes.
There are other ways movies make money, such as product placement and advertising. Yet these are the main ways revenue is earned over a longer period.
