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Friday, August 21, 2015

How to actually MAKE MONEY releasing films to theatres!

Greetings HHSE Friends & Followers - BONOBOS is beginning its theatrical rollout today with special promotions in place by KUAF-RADIO and the Fayetteville Boys & Girls Clubs with our Walmart opening in N.W. Arkansas.

Some theatrical distributors skip opening a market like DMA #100 / N.W. Arkansas because they're not thinking past their own departmental priorities... and recognizing that WALMART and SAMS command a 50% market share of DVD and BluRay sales. But at HHSE we never ignore our key customers.  We know that it's important to have our films playing in N.W. Arkansas for the Walmart team to see and attend - to experience the film on the big-screen and with Dolby surround-sound impact!  Does this help our ancillary sales?  We think so - because on several occasions, titles that were previously a "pass" became "accepted" for Walmart... and titles that previously were "DVD Only" got upgraded to the more profitable BluRay format as additional shelf placements.

The opening of "BONOBOS: BACK TO THE WILD" at the AMC Fiesta 16 in Fayetteville is launching solid - currently the # 1 film in the multiplex.  We owe much of this momentum and success to the support of two local sponsors, KUAF Radio, and the Donald W. Reynolds / Fayetteville Boys and Girls Club - and their companion ticket promotions to encourage kids to attend.

"BONOBOS" will probably end up # 1 for the weekend amongst all films at that location... but don't be looking for some mega-impressive release announcement.  Why?  Because #1 at that particular theatre could be achieved with only $4,000 in ticket sales.  AMC is happy, HHSE is happy, but would some outside the industry recognize that this means that HHSE actually MADE MONEY?

We suspect that some non-industry outsiders look at a box office number purely by the GROSS generated, without taking into account the COST to achieve the gross.  For instance, "FANTASTIC FOUR" opened August 7 to a weekend gross of $25.6-Million Dollars.  Yaay, party, right?  $25-mm, Ka-Ching, right??  Wrong.  Why?  Because Fox (reportedly) spent over $32-million in Advertising, Promotion and releasing costs. Oh, some might say.  That shouldn't be a problem because after 12 days in the theatres, the film is now up to a gross of $45-mm.  Ka-Ching, now, right??  Wrong. Why?  Because the theatres keep 50% to 65% of the gross box office as the exhibitor's share of ticket sales (the lower percentages apply to Manhattan and L.A. central / westside... MOST of the rest of the country settles with the studio earning 40% to 45% - and bigger releases grossing over $5,000 per screen can be settled at 50% splits).  SO - Fox can expect to collect about 42% of the current grosses on "FANTASTIC FOUR" - or about $18.9-MM.  When compared to the $32-mm spent to RELEASE the film, it's NOT party-time at all in Century City.  Forget about the $100-mm investment in the film's PRODUCTION COSTS... I think many at Fox would be ecstatic just to recover the film's RELEASING investment!

So when you get a gross of $4,000 on a single screen with "BONOBOS" and you calculate that it cost HHSE about $1,000 in DCP and VPF costs, you can see that the film is actually generating "net overages" per theatre - positive (not negative) revenue.  That's good.  Not huge amounts, but not losses at all. What's even BETTER is that the true motivation for HHSE in releasing films on a limited theatrical basis is to prime the DVD / BluRay sales - as well as to qualify for the lucrative Netflix and Showtime licensing deals.

Sure, it would be exciting to have a movie gross $10-mm or more at theatres for Hannover House.  But if achieving that gross cost the company more than $4-mm in releasing costs, then the venture would be a losing proposition... and after having already invested $4-mm in such an experiment (with "TWELVE") our attitude is "let's make money" instead of "let's impress limited-knowledge, industry-outsiders with a big box office number at any cost."  That would be a stupid goal, with no benefit to HHSE. Instead, we're making money and doing it "under the radar" a few theatres at a time.  We're achieving our goal of profits and ancillary market enhancement.

"BONOBOS" will add 10-more markets on Sept. 4, and 10-more on Sept. 18.  Previous markets have been NEW YORK, WASHINGTON, DC, OKLAHOMA CITY, OMAHA, KANSAS CITY and PHOENIX.  Pittsburgh and St. Louis were moved to 9/4 (from this weekend).