Film Financing

J412/512OCT. 10, 2013

The State of the Film IndustryWHAT DID YOU FIND?

Financing: Studio Films Generally financed by studio, or partnership between studios

Other: co-productions, tax incentives, cross-promotion, product placement, etc.

Titanic = ◦ Paramount ($65m) = North American box office;

home video◦ 20th Century Fox ($135m) = international

distribution

Financing: The Hobbit

http://visual.ly/hobbit-film-making-facts

Tax IncentivesExample: New Zealand

Large Budget Screen Production Grant; Post, Digital and Visual Effects Grant◦ 15% rebate on production expenditures (if over

NZ$15 million)

Screen Production Incentive Fund◦ To encourage significant NZ content; Grant of

40% of production expenditures

Official / Unofficial Co-Production Agreements

NZ$67 million (US$58 million) in tax breaks to Warner Bros.

Employment laws changed to accommodate production

$1.5 billion potential lost revenue if not filmed in NZ

Prime Minister John Key

14.5%

64.9%

19.0%

1.5%

% of New Zealanders polled by NZ Herald

Worth it even if sub-sidy is less than the wages and tax paid locallyWorth it only if the economy gets more than that backFilm productions should not receive taxpayer-funded incentives at allNone of the above

3,000 people employed during filming$100 million spent by studio marketing films

Another potential benefit:TOURISM!

http://tvnz.co.nz/hobbit-news/air-nz-reveals-plane-video-5235188 http://www.youtube.com/watch?v=NHLdJCT_jCY

Reading Quiz #2 What is unique about the Kickstarter campaign for

Veronica Mars?

In your opinion, what is the role of Kickstarter? Who should use this tool?

Financing: Independent FilmsNegative pickupsCompletion

guaranteesPrivate investorsBank loansPre-sales to

distribution outletsTV networks, pay cable,

home video, int’l

GrantsFamilyDeferralsEtc.

Kickstarter / Indiegogo

Behind the scenes = http://www.youtube.com/watch?v=0uiFIhxXeKI

Changing Dynamics in Independent Film FinancingOUT WITH THE OLD

Fewer “Indiewood” studios

Fewer hedge funds / private investors

Dried up arts funding

IN WITH THE NEW

“Crowd funding”

Corporate partnerships

Product placement

Feature Film Research Paper

Research Resources Internet Movie Database

Box Office Mojo

The Numbers

The New York Times

The Los Angeles Times

Hollywood Reporter

Variety

Real, live books in the library

When was your film produced?

You MUST consult sources that were written around the time that your film was produced.

◦ Example: Writing about Gone with the Wind? Consult articles written in newspapers from 1938-39.

Annotated Sources You must annotate all of the sources you use in your paper.

What does this mean?◦ In 1 sentence, provide a synopsis of the source’s content.◦ In 1 sentence, provide your reasoning for using this

source – why is it relevant? Why is it important? Why is it the best source for providing this information?

Task: Internet Movie Database

Get familiar with the IMDb profile for your film.

What company or companies produced your film?

Film Production

Pre-Production Casting, lining up crew Shooting script and shooting schedule finalized Read-throughs of script Equipment lined up Production design (sets, costumes, etc.) Cross-promotions, product placement, etc. Location scouting

Above-the-line & below-the-line

Location Scouting “Oregon’s incredibly varied locations are not only in close proximity to each other, but also within a two hour flight of Los Angeles. People living in LA can be on a plane in the morning, work a full day in Oregon and be back at home the same night.”

Production Principal photography Second unit shooting

A typical studio feature film

produced in LA spends an average

of $200,000per day.

Post-Production•Editing•Special effects•Sound editing•Color correction•Music•Etc.

Test Screenings ”Did you like it?” “What didn’t you like about it?”

“Would you recommend it to people?”

“If not, why not?”

Case Study: Sahara (2005)

An Average Hollywood Budget

Average Cost (in millions)

Initial Budget: $80 million

$37m P&A

$65m negative

costs

Budget for SaharaSource: LA Times

Cost BreakdownsCamels: $81,375Riders, grooms: $79,748Horses: $71,610Stabling, transport: $53,989Horse, camel master: $51,638Veterinarian: $9,184

Payment to stop a river improvement project: $40,688

“Political/Mayoral support”: $23,250

Sources of Revenue Theatrical release Video/DVD release International release Cable/Television release Other windows Product Placement Tie-ins & Cross-Promotions Merchandise

For Sahara:

Loss (as of 2007) = $78.3 million

Independent Filmmaking

Pre-Production & Production

Challenges: ◦ How much financing is in place?◦ How much time can cast and crew

commit to production?

Production eased:◦ Digital technologies (e.g., high-end

digital cameras like the Red One camera)

Post-Production Challenges:

◦ Has filmmaker adhered to budget?◦ Was budget realistic to complete movie?◦ Was movie financed for production only, or was post-

production included?

Post-production eased:◦ Again, digital tools: Avid, Final Cut Pro, Pro Tools