How much does it cost to release a film in the UK?
This week, I'm taking a look at the true cost to release a film the UK. Every few months a new article does the rounds on Facebook purporting to show the "most profitable films of all time". The majority of these perform a simple calculation using the ratio of production budget to box office. But this type of maths doesn't factor in distribution costs such as marketing, advertising, percentage of box office paid to big stars and other additional costs to the studio after they pick up a film (music licensing, reshoots, etc). Most of these costs fall under the term 'Prints and Advertising' (known as P&A). The 'Prints' here are the film prints that the cinema projects to the public, traditionally on 35mm film, now via Digital Cinema Prints (DCPs).
In summary:
The physical costs of distribution are around £1,000 for each screen
The Virtual Print Fee has prevented digital distribution from being cheaper than 35mm celluloid
The average film budgeted over £10 million costs £2.4million to distribute
The average film budgeted under £500,000 costs £40,000 to distribute
The total amount spent on advertising film in the UK has not grown much in the last few years
Television accounts for almost half of all the money spent promoting films in the UK
An overview of the cost to release a film
Studios and distributors don't publish their P&A costs but we can use other information to get a sense of their scale. We can split the costs of distributing a film into two types of costs - 'fixed' and 'variable'. The 'fixed' cost to release a film are dictated by the number of screens a film is released into whereas the amount spent on the advertising campaign (i.e. the 'variable' cost) varies wildly for each release.
The 'fixed' costs of distribution (aka "Prints")
The cost of the 'Prints' part of P&A is mostly dependent on the number of screens the film is released to. In the weeks before a film is released, the distributor needs to send every site (i.e cinema) press materials such as posters and standees. Then, just prior to release, they send a film print to be screened. The average cost of a 35mm print, including delivery to a cinema, is around £1,000. The recent boom in digital projection (90% of UK screens are now digital) has reduced some costs while adding others. A 'Digital Cinema Print' (DCP) is basically a hard drive, meaning that it's much cheaper to produce than a 35mm print and is reuseable on future films. They are also much smaller than 35mm prints, lowering delivery costs.
These lower costs benefit distributors but it was the cinemas who bore the brunt of the cost of upgrading to expensive digital projectors. To help share the load the film industry has created the 'Virtual Print Fee', which is a fee paid by distributors to cinemas for each week they screen a film digitally. The theory is great but sadly the reality disproportionately affects smaller films, as the VPF is a fixed amount per week, not taking into account the number of screenings or how many people bought tickets. Recently there has been pressure from some quarters of the industry to update the VPF model, but only time will tell what happens.
The end result is that the cost of a 'Print' has not changed much in the change from celluloid to digital, staying at around £1,000 per screen (according to the BFI).
How many sites are films distributed in?
Two thirds of all films released in the UK are shown in fewer than 50 sites at their widest point of release.
The 'variable' cost of distribution (aka "Advertising")
Distributors and studios don't publish how much they spend on advertising, partly to protect their business secrets but mostly in order to protect their image when a film flops. The press is quick to jump on a film for performing badly, such as Noel Clarke's recent film 'Storage 42' which grossed just $72 in America, and so one can only imagine how embarrassing it would be if they compared it to the film's true cost, rather than just the production budget.
Based on data from Nielsen Media Research we can see that the majority of advertising costs are spent on TV (47%) and Outdoor (36%).
What's the average cost to release a film?
As shown above, the total amount spent on advertising films in the UK hasn't risen much in the last few years (up from £180m in 2007 to £189m in 2012). However, the number of films released in each year has fluctuated, resulting in changes in the 'per film' average.
The most relevant way to calculate a 'per film' average is to look at the number of sites a film is released in at its widest point of release (which is almost always the opening weekend).
Cinema audiences don't spend much time worrying about the budget of the film before buying a ticket, but the industry seems to feel it's an important figure so here is the 'per film' average calculated based on film budgets.
Epilogue
The data for today's blog came from the BFI's Research and Statistics Unit, Nielsen Media Research and Rentrak.
I have a big project launching soon that I think will be of interest for anyone reading this blog. Stay tuned and all will be revealed imminently.
