There are several factors to consider when determining where movies are made for global consumption. Locations, talent, tax breaks, and financing are all factors. Consider all of these factors before selecting a location for your movie. You may be surprised to learn that the U.S. is one of the top producers of movies for global consumption. However, Chinese movies are the second-most popular ones, with the U.S. still enjoying an upper hand at the global box office.
Locations
Filming on location has numerous benefits for the local community. Filming creates jobs, generates revenue and develops local infrastructure. Film production also boosts local tourism. In the United States alone, more than $27 billion is generated annually by the film industry, which employs approximately 110,000 people and 359,000 businesses. According to a recent study, ninety-eight percent of businesses employ fewer than 10 people. Filming on location can pump $250,000 into local economies every day. The tourism boost it provides can be worth millions of dollars.
Financing
There are no clear-cut answers to the question of financing movies for global consumption. In recent years, there has been a tremendous growth in the film industry, and many affluent individuals and organizations have put their money to good use by sponsoring films. Ticket sales at cinemas have been rising every year, and more people are turning to streaming services such as Netflix to view movies. But despite these growths, there is no definite answer to the question of how to finance movies for global consumption.
There are three main types of funding for movies. One type is equity financing, which involves a loan. It is often provided by a prominent film studio. In exchange for equity investment, these investors will receive a portion of the profits from the film. The other type of funding is debt, in which the investor pays interest on the loan. If the film is not a profitable commercial venture, the investor loses money.
Tax breaks
A bipartisan tax credit program for movie production created by Congress was extended until 2012 and is meant to help create jobs and expand industries. Original film tax credits were limited to productions costing up to $15 million, but were later extended to all movies and TV shows, up to $20 million in low-income areas. The program also extends to each episode of a TV series. The film industry is expected to grow, as do tax credits from film productions.
Producers can sell tax credits from their films to larger entities that will lessen their burden and benefit from the additional money. In return, the buyers will receive a discount on the cost of the film, allowing the independent company to receive cash faster and minimize risk. The producer will want to consult with an experienced entertainment attorney to figure out the best corporate structure and the tax implications of selling the credits. Here are some of the steps to take:
Product placements
One of the most popular marketing strategies used by the film industry is product placement. The movie industry has been using this tactic since the early 1990s, when companies like Reeses Pieces and Bing were featured in the first E.T. movie. In Breakfast at Tiffany’s, Audrey Hepburn wore Givenchy clothing. Seinfeld featured a favorite cereal brand in the first season of “Castaway.”
To place products in movies, film producers often ask for no payment. The filmmakers need props for their scenes and will contact product companies and advertising agencies to provide these props. A successful product placement will result in complimentary products and services for moviegoers. Among these is a Turkish Airlines sponsorship of the new Batman film. The tie-in is expected to break the record for most product placements. Product placements in movies made for global consumption may be a key part of the film marketing strategy.
Economics
Filmmaking is a massive business, requiring considerable investment and creativity. In addition to paying for the rights to the film, movies require hundreds or even thousands of people to be involved in the project. Filmmakers also need to hire actors, crew, and special effects to create a finished product that will be marketed. This can lead to an immediate boost to the local economy. In the United States alone, $27 billion is paid to 110,000 businesses, and nearly all of them employ fewer than ten people. Even a single movie released in another country can boost the local economy by as much as $250,000 a day.
The growth of the global movie market has had an impact on Hollywood’s domestic business. While domestic ticket sales have long been the cornerstone of the Hollywood studio system, overseas markets have become increasingly important, generating almost seventy percent of the studios’ annual revenue. A recent report by Ernst & Young notes that Hollywood has been rewriting its business model to take advantage of this growing global audience. The implication is that global movie audiences are more valuable to Hollywood than domestic filmmakers.
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