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Movie Industry Explores Marketing Cuts

Kagan has a piece about the movie industry looking to cut costs. It is an interesting analysis. Basically the piece asserts that studios are looking to slash marketing budgets to maximize profitability. Studios tend to spend $15 to $50 million per flick to market them. That is on top of the $60 to $130 million that it takes to make the film. Studios are basically looking to trim money off of marketing budgets as they are the most nebulous.

However the article goes on to spell out the narrow range where marketing cuts will work. Studios will not cut budgets for blockbusters because they cannot risk underselling such huge investments. At the other end of the spectrum small budgets already have miniscule marketing budgets, so not much to be saved there. That leaves middle of the road productions, like comedies, romances etc.

Now within this small range, there is a lot to be lost by not marketing the films. These films are often the most profitable, because they are cheaper to make. These films have the biggest profit margins, which is a more important in rating a film's success than box office receipts. By not pushing these films, they risk missing out on the next "Austin Powers," "Elf," or "Wedding Crashers." So the cycle will continue, however with small, occasionally successful, cheap marketing gimmicks that will be hailed as marketing paradigm shifts, only to be proved to be a once only technique.

Personally, I believe that the number to attack for profitability is the production cost. There need to be more quality B films made. Good stories, with talented unknowns, with good marketing can be hugely successful. That's what we need more of, more films that are structured financially like "Napoleon Dynamite" and less like "Stealth." --Terrence Ryan


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Posted by on October 27, 2005 7:53 PM
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