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Why Do Hollywood Movies Cost so Much to Make?

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By Nathan B. Lawrence, Lawrence University 

Film is a big business. According to the Motion Picture Association of America’s Annual Report, movies rake in tens of billions of dollars at the box office every year, and this number is steadily increasing—but as they say, it takes money to make money, and Hollywood is certainly spending its fair share. Some of 2013's biggest movies had massive budgets: The Hunger Games: Catching Fire supposedly had a budget of more than $130 million, while Warner Brothers’ latest superhero epic, Man of Steel, had a price tag of $225 million.

Typically, the details of budget information are confidential, but there are a few examples floating around. This leaked budget for M. Night Shyamalan’s 2004 thriller The Village can provide a lot of interesting insight. Though its budget of around $70 million is smaller than a big summer blockbuster, the principles remain the same.

It's no surprise that lots of the cost of filming a big budget movie comes from the people in charge of making it. In the case of The Village, this was the case for its writer/director, who was paid more than $10 million for his services. However, these large fees are often attached to just about anyone who has significant creative influence over the film. For example, Robert Downey, Jr. was purportedly paid almost $50 million for his work on The Avengers.

Even for lesser-known actors, pay can only go so low. Guild rules mandate that actors be paid at least $859 per day. On top of this pay, the actors also need “fringes,” money paid in accordance with Screen Actors Guild instructions to provide for benefits and pensions, among other things. Also included are the other crew members who are needed to make production and post-production go smoothly and turn in a high quality finished product. Over a 30-day or longer shoot, paying the cast and crew alone can add up quickly. The number of people on a crew can be exceptionally high—but as things get more and more complicated, with the addition of effects like explosives or gunfire, every single person on that crew becomes necessary to make sure things run smoothly and efficiently. As it turns out, paying a very large crew to run on time tends to be much cheaper than paying a slightly smaller crew and having to worry about paying overtime.

The equipment and supplies needed to film the movie are very expensive, too. Standard 35mm color motion picture film runs about $45 per minute and a typical movie shoots about 15 times the amount of footage that winds up on screen, so a standard 120 minute movie could spend upwards of $80,000 on film stock alone—not to mention processing or the equipment to use it, which is usually rented for tens of thousands of dollars per week.

Set design and effects also take lots of money, especially in blockbuster action films. Blowing things up doesn’t come cheap; between safety regulations and the raw material itself, these costs can easily add up to millions. Even the stunts for The Village, a relatively tame film, wound up costing around $3.9 million. Visual effects add even more to these numbers; depending on the scale of a production, hundreds of VFX artists can spend months working on a film.

Marketing for films rounds out these numbers very nicely, typically adding an additional 50 percent to a film’s budget. 

The MPAA says that the film industry in the United States helps to contribute more than $100 billion in wages to the economy each year, and when you start to add these numbers up, it’s easy to see how that could be possible. Making a Hollywood blockbuster requires an enormous range of equipment and crew, and by the time it’s done, everybody has contributed a little piece to something much, much larger.

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Big Questions
Who Was Chuck Taylor?
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From Betty Crocker to Tommy Bahama, plenty of popular labels are "named" after fake people. But one product with a bona fide backstory to its moniker is Converse's Chuck Taylor All-Star sneakers. The durable gym shoes are beloved by everyone from jocks to hipsters. But who's the man behind the cursive signature on the trademark circular ankle patch?

As journalist Abraham Aamidor recounted in his 2006 book Chuck Taylor, All Star: The True Story of the Man behind the Most Famous Athletic Shoe in History, Chuck Taylor was a former pro basketball player-turned-Converse salesman whose personal brand and tireless salesmanship were instrumental to the shoes' success.

Charles Hollis Taylor was born on July 24, 1901, and raised in southern Indiana. Basketball—the brand-new sport invented by James Naismith in 1891—was beginning to take the Hoosier State by storm. Taylor joined his high school team, the Columbus High School Bull Dogs, and was named captain.

After graduation, instead of heading off to college, Taylor launched his semi-pro career playing basketball with the Columbus Commercials. He’d go on to play for a handful of other teams across the Midwest, including the the Akron Firestone Non-Skids in Ohio, before finally moving to Chicago in 1922 to work as a sales representative for the Converse Rubber Shoe Co. (The company's name was eventually shortened to Converse, Inc.)

Founded in Malden, Massachusetts, in 1908 as a rubber shoe manufacturer, Converse first began producing canvas shoes in 1915, since there wasn't a year-round market for galoshes. They introduced their All-Star canvas sports shoes two years later, in 1917. It’s unclear whether Chuck was initially recruited to also play ball for Converse (by 1926, the brand was sponsoring a traveling team) or if he was simply employed to work in sales. However, we do know that he quickly proved himself to be indispensable to the company.

Taylor listened carefully to customer feedback, and passed on suggestions for shoe improvements—including more padding under the ball of the foot, a different rubber compound in the sole to avoid scuffs, and a patch to protect the ankle—to his regional office. He also relied on his basketball skills to impress prospective clients, hosting free Chuck Taylor basketball clinics around the country to teach high school and college players his signature moves on the court.

In addition to his myriad other job duties, Taylor played for and managed the All-Stars, a traveling team sponsored by Converse to promote their new All Star shoes, and launched and helped publish the Converse Basketball Yearbook, which covered the game of basketball on an annual basis.

After leaving the All-Stars, Taylor continued to publicize his shoe—and own personal brand—by hobnobbing with customers at small-town sporting goods stores and making “special appearances” at local basketball games. There, he’d be included in the starting lineup of a local team during a pivotal game.

Taylor’s star grew so bright that in 1932, Converse added his signature to the ankle patch of the All Star shoes. From that point on, they were known as Chuck Taylor All-Stars. Still, Taylor—who reportedly took shameless advantage of his expense account and earned a good salary—is believed to have never received royalties for the use of his name.

In 1969, Taylor was inducted into the Basketball Hall of Fame. The same year, he died from a heart attack on June 23, at the age of 67. Around this time, athletic shoes manufactured by companies like Adidas and Nike began replacing Converse on the court, and soon both Taylor and his namesake kicks were beloved by a different sort of customer.

Still, even though Taylor's star has faded over the decades, fans of his shoe continue to carry on his legacy: Today, Converse sells more than 270,000 pairs of Chuck Taylors a day, 365 days a year, to retro-loving customers who can't get enough of the athlete's looping cursive signature.

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Big Questions
What Is the Difference Between Generic and Name Brand Ibuprofen?
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What is the difference between generic ibuprofen vs. name brands?

Yali Friedman:

I just published a paper that answers this question: Are Generic Drugs Less Safe than their Branded Equivalents?

Here’s the tl;dr version:

Generic drugs are versions of drugs made by companies other than the company which originally developed the drug.

To gain FDA approval, a generic drug must:

  • Contain the same active ingredients as the innovator drug (inactive ingredients may vary)
  • Be identical in strength, dosage form, and route of administration
  • Have the same use indications
  • Be bioequivalent
  • Meet the same batch requirements for identity, strength, purity, and quality
  • Be manufactured under the same strict standards of FDA's good manufacturing practice regulations required for innovator products

I hope you found this answer useful. Feel free to reach out at For more on generic drugs, you can see our resources and whitepapers at Pharmaceutical strategic guidance and whitepapers

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