Changing Movie Profit Dynamics

I'm not a big fan of movie making guru Dov SS Simons, but he wrote something the other day I totally agree with. Dov noted the change in which movies are profitable relative to their productions budgets. It used to be there were three levels of movie making budgets: The Mega-Budget from the big studios, The Medium Budget from the smaller independent producers and so-called Mini-Majors, and then the Mini-Budget from the real small Indy's with about a million dollars. The Big Boys tended to make the big money, but they had to have a big hit once in a while to offset their big bombs. The Mediums were a hit and miss, as were the Mini's. There was no such thing as a Micro-Budget (around $100K budget) until we saw the advent of the total digital production capability.

Now it seems the guys in the middle are finding it impossible to make a dollar. Their production costs are way too high if they have to go straight to DVD in order to make any profit. Most will have to go this route since the theatrical release space will always be dominated by the Majors...and even then, the Medium budget people were not going to get a very good split from the Exhibitors since they maybe a "one trick pony" and nothing else waiting in the wings to make the theater owners want to be competitive.

For a long time now, I've been predicting a new business model was about to emerge from the "Digital Download Revolution"... and Dov seems now to notice it also. The Micro-Budget movie maker is now able to be profitable, on their relative scale, with these small budget features, utilizing the web and social media as their main marketing tools. Keeping budgets around $100,000, a filmmaker may actually be able to realize profits in the 100% - 200% range. That should sound interesting to small investors too.

So perhaps a new "Golden Age" is upon us as movie makers. It certainly favors the younger generations who know how to leverage the Internet. Old Dogs like myself now have to get Social Media Smarts... I think I just Tweeted my Twitter.