CMC Econ. Darren Filson Professor Explains Movie Theater and Studio RelationsAlthough I generally spend most summer working hard, I've been known to indulge myself by in watching more than a few movies over the summer. Mostly I just sit back after a day's work and pop in a DVD, but I also go to the cinemas more than I should.
I don't know what I love more -- the chilling A.C., the surround sound system, the buddies who go with me, or the fast-paced plots on giant screens.
In the past month, I've seen Iron Man and The Incredible Hulk opening day. Apparently, I wasn't alone. Both movies are huge summer blockbusters. As ex-liberal Robert Downey Jr. described being behind a summer block buster to Jay Leno, "For one minute, you're God." After Iron Man, I was about ready to build him a temple.
When I saw Hulk on Friday, I noticed that the old Marvel logo had "Marvel Studios" written underneath it.
My friend, Doc, told me about how Marvel wants "creative control" and so they are going to became their own studio.
This explanation got me thinking. Couldn't Marvel just find a sympathetic director to do its bidding? I'm sure more than a few L.A. director read comic books.
More likely, it was all about the Benjamins and how much more Marvel could take in, if they were their own studio with all the negotiating power that brings to the table. Sure enough, Townhall.com explained,
Seeking more creative control and a bigger cut of the receipts, Marvel plans to make future films itself and hire studios to distribute them for a fee.Associate Professor Darren Filson explains just what that relationship might look like in a working paper he co-authored titled "Coming Soon to a Theater Near You? A Proposal For Simplifying Movie Exhibition Contracts." (You can read the paper here.)
In tomorrow's Austin-American Statesman, Professor Filson explains how much money each theater keeps for every dollar spent there.
On average, 46 percent, according to Darren Filson, associate professor of economics at Claremont McKenna College in California and co-author of an article on the economics of the movie industry. The split between the studios and theaters varies depending on the film, with movies expected to be bigger hits typically resulting in larger shares for the studio. Filson also points out that contracts are shifting from "sliding scale" deals, in which shares of ticket revenue vary depending on how long a movie has been in release, to contracts in which the share stays the same the entire time the movie runs.
