Download THE NEW WORLD ORDER: THE PACKAGE

THE NEW WORLD ORDER: THE PACKAGE-UNIT SYSTEM
I.
THE PACKAGE-UNIT SYSTEM
A.
Replaced earlier systems of management in late 40s & early 50s
B.
This came about for a number of reasons:
C.
1.
The Paramount Case
2.
Tax laws favoring independent production
3.
Changing demographics
4.
The advent of TV, etc.
Rather than mass production & systematic run-zone-clearance
distribution, phases more flexible & pragmatic
II.
DECREASE IN PRODUCTION
A.
REASONS
1.
Studios no longer had their own theaters to supply with films
2.
Attendance was decreasing
3.
Studios wanted fewer, usually more expensive films, making
more money on each (through longer runs in theaters)
B.
THE DECREASE
1.
# of films produced & distributed by the majors fell 80% from
1930s (50 films/year/studio) to 1970s (10/year/studio)
2.
III.
Production increased in the 1980s to 18-25 films/year/studio
THE PRESENT STATUS OF THE MAJORS
A.
The studios have shrunk in both size & operations
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B.
1.
They have lost their independence
2.
They are all parts of much larger conglomerates
Contract system no longer in practice, & films are results of
extensive negotiations & packaging
C.
IV.
Primary function of Majors today is distribution
INDEPENDENT or “PACKAGE-UNIT” PRODUCTION
A.
INTRODUCTION
1.
Not “personal” or avant-garde cinema, but all productions
outside of major studios; typical of film production today
2.
Independent producer works in association with a studio, not
under the authority of the studio
3.
No longer a contract system, & producers can’t rely on profits
from previous productions, so film’s creation & financing must
be “packaged” & negotiated
B.
The “package” consists of 4 major components
1.
2.
SCRIPT
a)
Commissioned by producer from professional scriptwriter
b)
Or it may be provided by a free-lance author
PERSONNEL
a)
Contracts negotiated individually for all members of the
cast & the director, involving numerous agents
b)
Contracts negotiated for technical crew, involving unions
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c)
3.
4.
C.
Arrangements made for feeding, transporting, etc.
DISTRIBUTOR
a)
Usually, distributor must agree in advance
b)
For film to make $, distributor should be 1 of the Majors
FACILITIES
a)
Sets, costumes, cameras, lights, etc. must be rented
b)
Usually rented from studio that agrees to distribute film
FINANCING THE INDEPENDENT PRODUCTION
1.
Often, the production corporation is created for 1 movie &
then dissolved (mostly for tax reasons)
2.
The company must go into debt to finance its film
3.
THE SOURCES OF FINANCING
a)
1ST MONEY
(1)
1st money contributes about 60% of the budget
(2)
Most often obtained from high-finance banks
(3)
REPAYMENT
(a)
Producer pays back principal plus interest
(b)
Interest usually about 8-10% above
standard rates, or about 20-22%
b)
2ND MONEY
(1)
2nd money contributes about 40% of the budget
(2)
Sources:
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(a)
Direct investment & sale of stock in the
prod. co.
(b)
(i)
Outside investors
(ii)
Producer, director, etc.
(iii)
Distributing studio
Deferred salaries of writers, actors,
director, etc.; for tax purposes, take
POINTS of film’s gross income
(3)
Unlike 1st money, 2nd money earns a share of
the profits
c)
3RD MONEY
(1)
Completion guarantee, covers costs over
projected budget
(2)
Provided by insurance company, finance
companies that specialize in completion bonds,
or sometimes the producer himself
(3)
d)
3rd money earns a share of the profits
Terms 1st, 2nd, & 3rd money refer to the order in which
the money is PAID BACK, not the order it is obtained!
D.
COMMERCIAL RELEASE
1.
Ave. negative cost (cost of film production) in 1998, US $39.8
million (from $9.3 million in 1980); ave. cost of advertising &
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prints $19.8 million ($4.3 million in 1980)
2.
Most movies must make back 2½-4 times their initial
investment to be considered profitable (to the producer)
3.
DISTRIBUTION OF THE BOX-OFFICE $
a)
50¢ goes to the exhibitor
b)
25-30¢ goes to the distributor (for prints & advertising, &
the DISTRIBUTION FEE)
c)
20-25¢ goes to the producer (from which he must repay
the money he borrowed to make the film)
V.
70% of films lose money in theatrical release, may make money from TV,
videocassettes, etc.; blockbusters may make up for losses on losers
VI.
A.
1987, box office US $4.3 billion, video $5.2 billion
B.
1996, box office US $5.91 billion, video $16.3 billion
THE ROLE OF THE MAJORS
A.
FINANCE: Help to finance independent prod. (2nd money)
B.
TECHNICAL FACILITIES: They rent these to independent producers
C.
DISTRIBUTION: Most important aspect
1.
DISTRIBUTION SYSTEM
a)
The Majors already have a sophisticated, nationwide
system of distribution offices & personnel
b)
Since each film is independently sold, it is prohibitively
expensive & complicated for independents
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2.
ADMISSION CHECKS
a)
After the film has opened, distributor checks on
admissions at certain theaters
b)
3.
Cheating is easiest at the box-office
ADVERTISING CAMPAIGN
a)
Distributor designs the advertising campaign, which can
make or break the film
b)
Each film is sold separately, so advertising must be
designed for each film individually
4.
DISTRIBUTION SCHEDULE
a)
Distributor designs schedules to fit the type of film
b)
EXAMPLES
(1)
SLEEPERS: Booked in a few strategic theaters to
test audience & critical response, later booked
in more theaters as word-of-mouth spreads
(2)
TURKEYS: Booked into as many theaters as
possible with much advance publicity in order to
cash in before word-of-mouth spreads
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