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Film Finance

Modern American Studio System

  • In current day America there are five major film studios, Universal, Paramount Pictures, Warner Bros. Pictures, The Walt Disney Studios, Sony Pictures.
  • Paramount is the only member of the big five that is still based in Hollywood.
  • Disney is the only studio that has been owned by the same conglomerate since its founding.
  • Most of today's Big Five also control subsidiaries with their own distribution networks that concentrate on arthouse pictures.
  • The Big Five have significant internal economies of scale (cost advantages) from their extensive and efficient distribution infrastructure.
  • It is nearly impossible for a film to reach a broad international theatrical audience without being first picked up by one of the majors for distribution.
  • All the Big Five studios are also members of the Motion Picture Association (MPA) and Alliance of Motion Picture and Television Producers (AMPTP).
  • The Big Five major studios are primarily financial backers and distributors of films whose actual production is largely handled by independent companies – either long-running entities or ones created for and dedicated to the making of a specific film.
  • Mini-major studios are the larger, independent film production companies that are smaller than the major studios and attempt to compete directly with them. These include A24 Films, Metro-Goldwyn-Mayer, Lionsgate, STX Films, Amblin Entertainment, Gaumont Film Company, Pathé Films, StudioCanal, Nordisk Film, and Constantin Film.

Is it better than the classical Hollywood system?

During the classical hollywood era, the original big five Hollywood studios had a monopoly over the production, distribution and exhibition of films. Films were churned out quickly through a sort of conveyor belt system, going from one stage of production to the next, with very little overlapping. This meant that the writer's original vision for a film would have been almost completely different to the finished product. The studios also had full control over every stage of a film's life, from production to distribution to exhibiting the film in cinemas owned by the studio. This business strategy of vertical integration only benefitted the major studios, so independant filmmakers found it very hard to get their movies made and seen by wider audiences. This changed in 1948 with the United States v. Paramount Pictures, Inc. case. This United States Supreme Court antitrust case resulted in major studios losing their ability to monopolize the entire movie making process. This was the paramount decree and it meant that they no longer owned studio specific cinemas so a wider range of studio movies could be shown in all cinemas. It also made the industry more accessible for smaller studios and indipendant filmmakers. Furthermore, it also meant that more foreign films were shown in American cinemas. This was a huge improvement for the industry, however as studios such as Disney and Warner Bros started to grow into huge entertainment companies and streaming services started to grow in popularity, the industry has seemingly started to shift back as the Paramount decree could not have known about these future developments. Moreover, as of August 2020 the paramount decree has been overturned. A better decision would have been to revise and update the decree to include newly powerful studios and streaming services. Hollywood is taking a turn for the worse.

British Film Industry

  • The most prominant contemporary British film production companies are BBC Studios, Working Title, Film 4, Altitude, Heyday Films, Warp Films, Vertigo Films.
  • Production, distribution and exhibition are all done by seperate companies. The studio will produce a movie and sell it to the distributors, who sell it to cinemas for exhibition.
  • This means that studios don't have a monopoly over the whole process and only make profit from selling to distributors. It does mean that studios have lower profits and therefore must have lower budgets, however it also means that a lot more indipendant films are pushed through.
  • Feature film production is booming in the UK due to increasing investment from the U.S.
  • Britain has a large amount of studio space that is used frequently for American films, such as Pinewood, Shepperton and Leavesden.
  • U.S. filmmakers are also attracted by the UK's film tax relief system which allows them to get back more than 20% of the cost of production. This system does however minimise corporation tax and the subsidy money that they make back is paid for by British tax payers. In a time of financial hardship for the people of the UK, I believe that this is a system that should be reconsidered.

UK Independant Film Funding

  • There are many organisations set up in the UK that offer funding for independant films. These include The National Lottery, Film London, Screen Scotland, Creative England and the Doc Society.
  • This increases the amount of high quality independant films that are made in the UK
  • Independant filmmakers must apply for funding from these organisations which runs the risk of being rejected for funding.
  • Another route they can take is crowdfunding. Crowd funding campaigns draw funding from backers online.
  • Anyone can contribute as much as they like to a crowd funding campaign, but often campaigns will have reward tiers to encourage backers to invest more money.
  • Popular crowdfunding sites include Kickstarter, Indiegogo, Crowdfunder, Patreon and GoFundMe.
  • Crowdfunding does not come without its challenges however.
  • It can be hard to stand out amongst a sea of other campaigns.
  • Campaigns may not reach their funding goal within the limited time you are given.