Year book of motion pictures (1925)

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theater costing $2, 000, 000 has just been completed in Milwaukee. There are picture-houses costing from $500,000 to a million or more in nearly every large city. More than $100,000,000 was spent in 1923 on new theater construction, and, according to architects' estimates, that amount will be largely increased in 1924." The net profits from the movies is what occupies the writer's attention in Article 4, who after careful study of the subject over a period of years, arrives at the following figures: Actors' salaries $ .25 Directors, cameramen and assistants . . .10 Scenarios and stories 10 Sets (manufactured) 19 Studio overhead (including management, cutting, assembling and titling of the film) ' 20 Costumes, gowns, etc 03 Locations (rent of grounds and properties and transportation) 08 Raw film •. . .05 Total ...$1.00 Now as to income. Every dollar represents, on the average, 75 cents received in rentals of pictures to theaters in the United States, and 25 cents received from foreign countries. Expenditures and Profits Following tabulation shows how the dollar is spent and the profit : Negative cost $ .40 Distribution (American and foreign) ... .30 Cost of positives 10 Administration and taxes 05 Profit ; .15 Total $1.00 Article 5 deals for the most part with the relationship of the Will Hays organization to the film industry. Here, the author shows how the public is made a partner, starting with this thought : "* * * The influence of the public on the screen and the influence of the screen on the public ought, plainly, therefore, to be made to dovetail — as a matter of business organization and for the specific purpose of cementing good-will. The dovetailing of the two spheres of influence provides the final step in guaranteeing stability. It is a big job of organization, and it is being done. On March 6, 1922, the leading producers and distributors called Will H. Hays into the industry to undertake this job of organization and to gal vanize the relations of the industry with the public. * * * * * * The Hays organization started with nine producing and distributing companies. It now has twenty-two in its membership, and these represent 90% of the production and distribution of motion pictures in America. It has definitely mobilized goodwill on the part of the public." THE LIFE OF A PICTURE What is the life of a picture? This question is discussed from the accounting viewpoint, by R. J. Watterston, C. P. A., in a recent issue of "The Certified Public Accountant". He writes: "It will be seen from the following table that the estimated life of a picture is eighteen months, and it is assumed that 80% of its revenue will be derived from domestic territory, or the United States and Canada, and 20% from foreign territory. "From the domestic revenue, the following percentages of total negative, and positive cost are deducted monthly. In the case of the negative cost, the total for this purpose represents 80% of the total cost of the negative as the remaining 20% is allocated to sales in foriegn territories. The positive cost, however, represents 100'% of the cost as positive prints are not supplied to foreign countries. Total Total Negative Positive Cost Cost 1st Month 10% 12% 2nd Month 16% 18% 3rd Month 15% 15% 4th Month 12% 12% 5th Month 9% 10% 6th Month 8% 8% 7th Month 6% 6% 8th Month 4% 5% 9th Month 3% 5% 10th Month 3% 4% 11th Month 3% 3% 12th Month 2% 2% 13th Month 2% 14th Month 2% 15th Month 2% 16th Month 1% 17th 1% 18th Month 1% Total 100% 100% "The above percentages are arrived at by taking the monthly earnings of a large number of representative pictures and calculating the ratio which the average revenue for each month bears to the total revenue." A BANKING ENDORSEMENT OF THE INDUSTRY Under the heading of "The Stabilization of the Motion Picture Industry," the National Bank of Commerce, in the September issue of its official organ, The Commerce Monthly, writes: The motion picture industry is slowly getting out of the class of a game and more in the class of a business. On this point the public and the industry are in agreement. The evolution is not yet complete, but to its progress the events of 1922 and 1923 have contributed notably. They amount to an admission of the fact that the industry cannot realize its greatest possibilities under the former spectacular financial methods and that it must inevitably conform to normal standards and requirements of business. A settling-down process has been taking place during the past two years, resulting in the establishment of three fundamental principles: first, (hat production costs cannot be enlarged indefinitely without straining the financial basis of production to the breaking point; second, that sound financial methods are indispensable for the progress of the industry; and third, that public approval and good will are its most valuable assets. * * * Activity in picture production at present is devoted in overwhelming proportion to amusement. * * * * * * Industries are gradually learning to use motion pictures in a great variety of ways, such as sales demonstration, instruction of employes and building up of good will. A railroad in the Middle West reduced its outlay for loss and damages by $1,000,000 in less than a year through visual instruction to its employes in proper methods of freight handling. A number of the largest manufacturers in the United States have their own film departments and distribution sytems. # * * The motion picture is for all practical purposes an amusement enterprise, yet it has attracted a capital investment as large as that of many great staple producers. The industry's best estimates of its position include the following figures : 1922-23 Approximate cost of pictures produced annually $200,000,000 Taxable motion picture property in the United States 720,000,000 55