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Question about movie rentals and studios


Feb 5 2013, 3:32pm

Post #1 of 4 (285 views)
Question about movie rentals and studios Can't Post


Q: Once a movie is obtained by Netflix or your corner rental store, does the studio still get a % of the rental fee?

Q: Is there a site that shows cumulative movie box office, sales and rental receipts?

Some movies do far better in rental or sales than at the box office. In the story above, John Carter is an example. I did not see it at the theatre but I did rent it. The same for Bourne Legacy, Taken 2 etc. etc.

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Feb 6 2013, 4:11am

Post #2 of 4 (189 views)
Partial answer [In reply to] Can't Post

for your first question. It's not so much the studio that gets paid, but the distributor. Some studios act as the distributor for their own movies, but in some cases they sell the distribution rights to someone else. The Hobbit movies are somewhat similar in that WB (as parent company of New Line) had the rights to make The Hobbit, but MGM had the rights to distribute The Hobbit. In that scenario, MGM would negotiate with the theater chains, Blockbuster, Red Box and Netflix on how much all those distribution channels would pay MGM and how that payment would be calculated. WB and MGM had to come to agreement because WB was on the hook for the costs of making the movie, without any method to make revenue since MGM held the distribution rights. Conversely, MGM needed WB to make the movie in order to get any revenue from distributing the movie. Fortunately for us, WB and MGM came to agreement! Smile

So to answer your question, Blockbuster, for example, might pay MGM $100,000 plus 5 cents for every movie sold after the first 1,000,000. (I'm making these numbers up as an example). Then MGM might have a contact with Netflix so that MGM gets $50,000 up front, and then 1.5 cents for every rental. And so on. In return, MGM might have to pay WB (as part of their agreement) 10 cents for every movie that leaves the door, regardless of where it will end up. Obviously, everyone wants to make money, and everyone probably did, but it's not easy to figure out how much ends up flowing back to the studio.

In response to your second question, there is no "official" method for collecting the total revenue realized by a movie. There's also the rights to cable and network TV. The "official" count is theater receipts, but that's only one way to make money from a movie. People guess at the revenue from DVDs and Blu Rays, but it's an estimate.


Feb 6 2013, 5:25am

Post #3 of 4 (181 views)
Thanks, it gets very complicated... [In reply to] Can't Post


3.4 Home Video: The Great Chimera.

".... A Hollywood blockbuster opening with a 2000 screen break will generate more than enough sales in the after-market to pay for its production and theatrical losses, if any. That's why the industry spends more than a third of a film's production costs on promotion. In fact, Hollywood counts on the "after-market" of international sales, DVD sales, television and digital distribution, along with related action figures, tee-shirts, product placement, promotional tie-ins, etc for the majority of its profits...."

Interesting. The theatrical release is often just a "loss leader" per the above discussion.

The old model with Blockbuster was:
The standard business model for video rental stores was that they would pay a large flat fee per video, approximately US$65, and have unlimited rentals for the lifetime of the cassette itself. It was Sumner Redstone, whose Viacom conglomerate then owned Blockbuster, who personally pioneered a new revenue-sharing arrangement for video, in the mid-1990s. Blockbuster obtained videos for little cost and kept 60 percent rental fee, paying the other 40 percent to the studio, and reporting rental information through Rentrak....."

Read more: Do rights holders get royalties each time a video is rented, or just when a video rental store purchases a copy? | Answerbag http://www.answerbag.com/q_view/11921#ixzz2K5s6li1a

(This post was edited by Eruonen on Feb 6 2013, 5:29am)


Feb 6 2013, 5:19pm

Post #4 of 4 (223 views)
And it didn't save Blockbuster...// [In reply to] Can't Post



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