Why Do Hollywood Movies Cost so Much to Make?

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.