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The distinction between production and distribution in the movie industry is critical to understand. Film production firms are involved in coming up with story ideas, finding scriptwriters, hiring the personnel needed to make the movie, and making sure the work is carried out on time and on budget. Film distribution firms, in contrast, are responsible for finding theaters in which to show the movies around the world and for promoting the films to the public. Distribution firms often contribute money toward the production firms' costs of making the film.
The one generalization we can make is that when you see the phrase “a Warner Brothers release,” for example, you should be aware that it does not necessarily mean that the company's studio arm has fully financed and produced the movie. Although the Warner studio does fully produce movies that its distribution division circulates to theaters, most of the films that it deals with as a distributor come from separate production firms such as Darker Entertainment. It was one of the companies behind the 2009 thriller The Box that Warner Brothers released. Warner typically kicks in a portion of the money, but the production firm takes on a lot of the risk itself.
The Role of Independent Producers
Why don't the majors produce all the movies that they distribute? The reason is straightforward: for a distribution firm to maintain a strong relationship with theaters, it has to provide a strong roster of films to help fill theater seats. If a distributor offers theaters fewer than fifteen or twenty movies a year, theaters will not take the distributor seriously and it will not be an influential force in the movie industry. Yet movies are both very expensive and very risky to make. They typically cost tens of millions of dollars each, and many of them lose money. A firm such as Universal cannot afford to risk the amount of cash that would be required to fully fund many films. Consequently, Universal's own studio generates five to ten films itself, and the company picks up the rest of its distribution roster from independent producers—that is, from production firms that are not owned by distributors.
Consider the 2007 movie 3:10 to Yuma, which was released by the independent distributor Lionsgate. According to Variety it was mostly financed by its executive producer Ryan Kavanaugh and his company Relativity Media, with Lionsgate acting as a minority investor of $42.5 million on the $87.5 million-plus project.2
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