every Monday, the New York Times, Wall Street Journal,
Variety and other newspapers publish the weekly
box-office grosses in an authoritative-looking table.
Unlike the bygone era when Hollywood studios owned their
own theaters, nowadays these dazzling box-office grosses
have little if any, relation to the profits of Hollywood
studios. For one thing, these “grosses”
are not that of the studios but that of the independently-owned
movie houses. The movie houses eventually remit–after
deducting their share and the so-called “house
allowance”– between 40 and 50 percent of
the gross in America. Overseas, the studios get even
studios have to pay the entire bill for the advertising
and other inducements required to lure the ticket-buyers
for the theaters. Last year, studios spent an average
of $39 million per film on advertising and prints in
America but only recovered $20.6 million per film from
the theaters. So, on average, they paid more to get
people to buy tickets than they got back from the theaters.
(And this dismal calculation did not include the cost
of making the film.) This year advertising bills are
even higher: According to the New York Times,
Warner Bros committed $60 million to marketing Alexander
The Great in the U.S. If so, Warner Bros share
of even a $100 million “box-office gross”
will not pay the advertising bill.
How do studios make money?