Movies are expensive to produce and market. According to IMDb,the most expensive film on record is Pirates of the Caribbean: AtWorlds End, with a total budget of $336 million. This movie and itsbudget were widely publicized prior to the premire of the film, andmoviegoers were eager to see the results of this massive moviebudget. Like other larger projects, movies have budgets. Potentialfinanciers look at the budget, the script, and other factors todecide whether to invest in the movie. Several categories of costswill be in a movie's budget, including:
- Story rights
- Screenplay
- Producers and directors
- Cast
- Production costs
- Special Effects
- Music
The typical film budget your read about in the press includesonly expenses. The movies budgets released to the general public donot include estimated box office receipts or other revenue streams.In addition, movie budgets do not usually include marketing costs,which can be another 50% or more of the films publcized budget.
Producers and directors will frequently release budget figuresfor upcoming movies,a nd these budget figures will be reported inseveral news outlets. However, LA TImes writer Patrick Goldsteinstates that 'everyone" lies about their movie budgets. For example,it was reported intially that The Avengers, a Marvel Studios film,had an overall budget of $170 million. Another source indiciatedthat the budget for The Avengers was $260 million. Which one ofthese figures was the "correct" budget figure? No one outside ofthe management of the movies really knows.
Requirements
1.) Budgeting for a movies can be challenging.Frequently, budget items change as the movie producaiton progesses.If budgeting for a movie is difficult, why prepare a moviebudget?
2.) What reasons can a movie director have formisrepresenting the overall budget for a particular movie? Ismisrepresenting a movie budget unethical? Do you thinkmisrepresenting a movie's total budget expenditures to the publicharms anyone? Why or why not?
3.) "If Hollywood movie's box office numberexceeds its production budget, then that movie makes a profit."From reading the information given in the case, do you agree withthis statement? Why or why not?
4.) Sometimes actors, directors, and producersare asked to take a lower salery up front and instead receive apercentage of the film's overall gross profits 9from box officereceipts, DVD sales, and similar revenue streams). Why might thefilm company propose this arangement? Why might the actors,directors, and producers accept this arrangement? Would this typeof arrangement (lower salary up front with a percentage of thefilm's gross profts later) make the budgeting process easier ormore challenging? Why/
Thanks so much in advance!
