As per Economic Times : http://economictimes.indiatimes.com/...imum-guaranteeOriginally Posted by Bipolar
A minimum guarantee is an initial sum that is paid to the producer by the distributor irrespective of how the film performs.
Definition: A minimum guarantee is an initial sum that is paid to the producer by the distributor irrespective of how the film performs. Typically, large producers command a high sum due to their brand that pulls in crowds into theatres.
Description: The minimum guarantee is the minimum that is assured to the producer and a revenue sharing arrangement is worked out, whereby the producer will get a portion of the profits that the distributor makes.
This would mean that if the film gets a good response that the distributor recovers his costs in full, and on the overflow the producer will get a royalty.
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I still not sure what would happen for MG films when the movie is not generating the revenue as expected.
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