A Producer funds the film. This includes the remunerations of cast and crew, erecting sets, printing, and publicity costs.
Say a producer spent ₹100 crore on making a film.
Once the post-production halts, he has a ready-for-sale product in hand, selling which he should recover his investment and, ideally, make profits. There are two ways this sale can be executed. They are
Theatrical Rights: The cost at which the producer sells the rights to run the film in theatres
Non-Theatrical Rights: The cost at which the producer sells the rights to broadcast or stream the film to TV chan
nels or streaming companies This is further divided into three kinds.
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- Satellite Rights: The cost at which the producer sells the rights to broadcast the film on television (to TV channels).
- Digital Rights: The cost at which the producer sells the rights to stream the film online(to video streaming companies ).
- Audio Rights: The cost at which the producer sells the rights to use the film’s songs Music label companies like T-Series buy these rights and release the songs on YouTube and other digital platforms like Spotify, Wync Music, etc.
Profit Producer Makes = (Total Production Cost of the Film) – (Theatrical + Non-Theatrical Rights)
Quite often than not, producers recover all their investment by the sale of these rights implying that prior to the film’s release itself, profits are made. Now, you might be wondering why producers dwell in losses when a film flops. Well, to understand this, you should see the way money flows in the Show Biz.
People who buy a film’s theatrical rights are called distributors. The valuation of T-rights varies from one region to another, and so does the distributer.
Say a film’s T-rights in Guntur are sold for ₹10 crore.
Any theatre across Guntur that wishes to run the film has to pay a negotiated amount to the regional distributor. Exhibitor is a formal name for the cinema theatre’s owner. Clearly, a producer recovers his investment from distributers, who recover from exhibitors. Now, how do the exhibitors make money? Yes, through the sale of cinema tickets. When a film performs well at the ticket window, everyone involved in the economy makes profits. And when a film doesn’t, exhibitors end up with losses, and in such cases, it’s common practice for them to pursue distributers for recoupment (which they do to a certain extent).
Clearly, when a film flops, the exhibitors, followed by distributers and producer make losses.
Needless to say, the better a film performs, the better the profits exhibitors make. On the flip side, the worse a film performs, the more fatal the losses.
