When Do You Submit A Project To A Financier?

I have been producing movies for about twenty-five years. And it still is a thrill when an executive asks me to submit a project. But does a simple request mean you should send the project you have slaved over on in to them?

I have never had a company actually finance a project that is not either already somewhat packaged with cast or has pre-sales done on it. I have to remind myself over and over. Good acquisitions execs craft all sorts of arguments of why I should submit my projects early -- and sometimes I fall for it. I think when they succeed in suckering me in they too honestly believe that they can get it made without already being fully realized (short of execution); but they soon learn they can't. Which is not to say that they can't get it set up, but that is often a far cry from getting it made.

Acquistions executives job is to bring projects in, period. So they ask. And often we comply. If the sign of insanity is to repeat the same action over and over, expecting the result to change, are we insane to keep doing this practice?

It would be wonderful if the corporately backed entities truly were able to climb aboard projects in the midst of becoming and enhance them with their status, capital, and expertise. I guess they do sometimes, provided the project is generated by one of the top ten or twenty directors who have produced a hit of recent times. But where does this leave the rest of us?

I understand the why though: we make movies because we are the type of people who believe magic can happen. Yet, as much as I believe we can engineer the likelihood of serendipity happening, I don't think we can summon it. I might test the waters along the way occasionally, sharing a taste with a well-chosen partner who has earned the offering somehow, but I am going to keep on trying to keep my cards close to my vest, until I know my hand can win. I do count the cards after all.

Why Good Films Don't Just Sell Themselves

I found that it never was just the film that drove sales, but very much a cocktail of:

  • relationships that the sales company & its executives had (and their product flow),
  • the marketing support/strategy the sales company created,
  • the passion by which the sales company communicates to position the film,
  • the prestige or urgency by which the film is launched,
  • the prestige/popularity of the collaborators,
  • the quality of the film, and
  • the critical response to the film at the time it is released.

If films are not reaching traditional foreign sales percentages, does this indicate that your film is not what you think it is, your sales agency is not serving your film, or that the industry has significantly changed?

Can we even compare apples and oranges?  As another sales agent recently said to me: "It’s very dangerous to compare movie deals in that spectrum of films where none of the films are really comparable."

And of course there is a much bigger question: Is there even a foreign sales business for indie or art film when 30% of the market vanished last year (Italy, Japan, Spain, & Greece)?

IndieFilmFinanceModelV2011.1 : The Ten Factors

Yesterday I went into some of the factors determining how the Model for IndieFilmFinanceV2011.1 may be set.  If you were taking notes you probably recognized that these are the factors, but I thought it was worth jotting them down for our cheat sheets:

  1. Price point / negative cost below $5M;
  2. "Estimated" Foreign Value at 80% or higher  of negative costs;
  3. Track record of collaborators in US Acquisition market to project 25% of negative costs;
  4. Utilization of Soft Money/Tax Benefits as revenue -- not enhancement;
  5. Manufacture desire: inject freshness & an ability to cut through the noise;
  6. Predetermined & Accessible Audience;
  7. Aura Of Inevitability= Polished Script+Show Reel or Look Book + _________?
  8. Urgency of the deal;
  9. Something old (proven genre)
  10. Something new (fresh scent).

What does this all add up to?  Is there a formula we can use?  I think so.  Why don't we just get to that tomorrow?

181 Renewed! Indie Filmmakers Rejoice!

Why does this matter? Zak Forsman tweeted it nicely: " if tax payer is in 35% tax bracket and the film's shot in a state with a 42% credit, investor's eligible to get 77% of her investment back."

To go a tad deeper, Zak Forsman posted it well:

Minutes ago, I received this email from my friend and fellow filmmaker, Justin Evans.

Dear Film Professionals -

Section 181 has finally been renewed! The new Tax Bill was signed into law by President Obama earlier today. The tax law includes Section 744, which includes language that replaces IRS Section 181's expiration date of December 31, 2009 with December 31, 2011.

http://www.gpo.gov/fdsys/pkg/BILLS-111hr4853enr/pdf/BILLS-111hr4853enr.pdf

Here is what this means:

  • Any money spent on qualifying domestic film production* in 2010 now qualifies for the Section 181 tax write-off.
  • Any money spent on qualifying domestic film production* in 2011 will also qualify for the Section 181 tax write-off.
  • There is no gap in Section 181 protection...which means all the fear and worry that someone might have begun a project in 2009, somehow didn't get the financing in place and investors invested in early 2010 can now breath a sigh of relief.

Read all of what Zak has to say about it here. Thanks Zak!

Simple Observation: One Reason It Is Hard To Finance Films

Movies don't have the same value as they used to, but they now cost much more to market. Okay, maybe this simple observation is not as simple as I first thought.

When I started out in the film business, it was considered reasonable to value North American rights on a feature at 50% of negative costs.   If I was asked to value such rights today, on the average, I would say they were either zero or they would be a negative.

When I started producing movies, a well packaged and developed project could anticipate get 80% of it's negative cost from licensing foreign rights.  The value of foreign rights has been dropping consistently for years.  What were once major territories in terms of revenue they returned, now seem virtually impossible to do deals in.  Television rights abroad supported acquisition prices for years, but now those slots are increasingly difficult to obtain everywhere.  If an independent film can piece together 50% of its negative cost from international, I think they are pretty fortunate.

When I started producing films, the luxury of making specialized films were that they were inexpensive to market.  Sure it required making good movies that people wanted to see, but the benefit of making "review driven" films meant that was all one needed to make the film begin to work: a good review from the NY Times.  Those days when everyone was reachable through a common source or soap box are long gone.  Audiences have fractured, dispersed, and become increasing distracted as thousands of opportunities compete for their leisure dollars.

Is it a bit clearer now?  What's the conclusion?

The formula doesn't work, granted.  Unfortunately it is not so easy as, say, lowering the cost of production, as that decreases the scope of stories that can be told and the methods one uses to tell them.  As much as everyone speaks about this wonderful tool of the internet, we still don't have many examples of filmmakers and their collaborators harnessing its power and increasing a film's reach while decreasing the costs.

Is there a way to increase the revenue that could be returned via a film or an artist so that their is greater reason for an entity to market them?  The music industry has explored "360 degree" deals with both big and small acts.  Yet film remains primarily a single product industry (one that is available in multiple formats) and the benefits of such an arrangement are a bit harder to see.

You can always design your movie so that the value vastly exceeds the cost of making it.   Simple, huh?  Isn't that how it used to be done.  That is actually still how the typical studio film is greenlit, but if it was so simple everyone would be doing it.

Where does this leave us, this simple observation?  I do think there are answers.  I do think it is worth pondering.  Yet the real necessity is recognizing that this is the present reality and most filmmakers are designing their work around an old model when it was reasonable to thing you could make something at a price point and market it at a cost that lead most people to assume there would be a profit at the end of the day.  The simple observation is that those days are gone.

Now what?