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A sample lesson from our Producing Course...
THE SECRETS OF FILM FINANCING
If you are looking to make a feature film, this lesson will be a real eye-opener. We will examine the secrets of film financing the way successful producers go about it.
The approach is probably not what you expect (nor want to hear). On hindsight, however, you may come to appreciate it. Especially if it helps you avoid the mistakes that countless filmmakers make.
Typical Approach
Virtually all aspiring filmmakers and film school grads want to make a feature film. One of the first things they do is try to raise financing.
Film financing is a difficult task because of the risk investors are expected to take. Despite this, some budding filmmakers actually achieve it. The money can come from a variety of sources: friends, relatives, businessmen, or an "angel" venture capitalist.
After completion, the film is rolled out on the festival circuit in search of a distributor for theatrical and DVD release.
This is the typical route a novice filmmaker takes. Seems reasonable, right?
Wrong. There is an inherent flaw that will doom the film to failure. Read the approach again and try to find it.
The problem with this approach is that it is backwards. Securing distribution should be the first step, not the last.
Securing distribution is the first step
in making a feature film, not the last.Crucial Link
You may be asking yourself, "What does distribution have to do with financing?" The answer is: everything!
The distribution deal is how you raise financing. By pre-selling distribution rights, you can raise anywhere from seed money to virtually the entire budget. These rights include:
Domestic theatrical
International theatrical
DVD
TV
Syndication
Pre-selling distribution rights is how all the real players in the industry get their projects off the ground.
Recall the countless Cinderella stories about how a project was pitched to everyone in Hollywood before it was finally picked up, launching the filmmaker's career. Well, that filmmaker used exactly the approach recommended here.
Do you think that an unknown Sylvester Stallone made Rocky with his own money? Or that Mark Burnett used his personal savings to produce the first season of Survivor? Of course not. They went around Tinsel town pitching the idea until someone bought it.
Mark Burnett's BrainchildThe person or company that buys the distribution rights to a project may not be a distributor per se, but can guarantee distribution by virtue of a prearranged deal with a distributor. It boils down to the same thing.
Also, the various rights can be sold to different parties. That's why you often see many companies listed in credits of a film, depending on the complexity of the deals involved.
First Step
In film school, there is an old saying that you should use OPM to make your movie. OPM means "other people's money."
So the first thing newly minted filmmakers do when they graduate is run out to get OPM to make a movie. Big deal. So you make a film using OPM. What's the point if you can't get it in front of an audience?
The truth is, with today's affordable broadcast quality equipment, anyone can make a film. I am not saying that it's easy, but rather: it's only half the battle. The other half is distribution, and it should come first, before spending time and money on anything else.
Completing the film is only half the battle
(the second half).In the development stage, all your effort must be geared to securing a distributor. This is accomplished by putting together a viable package (script, talent, production team) and pitching it to parties interested in buying the distribution rights. This is what successful producers spend most of their time doing.
Look at it this way. You must find a distributor eventually, so why not do it the way the pros do--before the movie is made. By doing it correctly, you will waste less time and radically increase your chances of success.
Additional Benefits
Not only will this approach enable you to film, but there are additional benefits as well:
The distributor has a vested interest your project and will make every effort to see that it turns a profit.
Distributors know what audiences are looking for at any given time and can help you develop the project in terms of story choice and actors.
Sale of distribution rights imparts credibility to the project and can help secure additional financing if needed.
Festival Route, Poor Odds
Winning a major film festival is the only thing that can save a film without a distribution deal. This is more difficult than it sounds. Festivals are supremely political and only consider a narrow range of genres. Generally, films that win festivals contain a blend of comedy, drama, and political/social relevance. If you like horror, westerns, or cop movies, forget about it.
It is virtually impossible to get into a major film festival, let alone win one. It is like hitting the lottery, without exaggeration. Spike Lee hit the Cannes Film Festival jackpot with She's Gotta Have It. The same for Steven Soderbergh with Sex, Lies, and Videotape. Yes, they are talented filmmakers, and yes, the movies are excellent. Still, these fellows were very very lucky. Without those wins, Spike Lee and Steven Soderbergh would probably not be where they are today.
The road to Cannes and Sundance is littered with films that did not win. I have seen too many filmmakers (friends and graduates) fail in their quest to win a major festival. They never found distribution and their movies died a quiet death. These talented filmmakers never received dividends on the "blood, sweat, and tears" they invested, not to mention the years and money spent. Successful producers do not make movies without distribution in place.
Financial Suicide and Other Woes
Is the remote chance of winning a festival worth gambling your career and life savings on (even OPM)? I think not. In fact, it is financial suicide to make a film without distribution in place. If you have spare time and equipment, and want to make a film for fun, be my guest. However, if you are serious about making a feature, do not use savings, home equity, or credit cards, especially if you have no guaranteed distribution. Film hopefuls often risk their family assets and later regret it.
If this is not enough to convince you, consider this. When you make a film without distribution in place, you are putting yourself at a disadvantage when it comes to negotiating with a prospective distributor. They know you are between a rock and a hard place, and will squeeze the best deal out of you they can.
Another problem is that when you make a deal with a distributor who does not have a vested interest in the project, you are at their mercy in terms of the priority the give your project. If they are distributing a similar film, they may push that movie first if they are inclined to. Worst case scenario, your film winds up on a shelf until the distribution contract expires. This may take years and there nothing you can do about it.
There are techniques for negotiating a good distribution deal for a finished film, but it is best not to get into this jam in the first place. An El Mariachi only comes along once in a generation. Again, successful producers do not make movies without distribution in place. Have I convinced you yet?
Rejection
As simple as this approach to financing is, it is difficult to do it successfully. The reason is because so much of the entertainment business is subject to personal tastes.
Simon Cowell is one of the wealthiest personalities in the music business thanks to lucrative American Idol deals with Fox Broadcasting and Sony BMG. However, his first effort to sell the show was a failure. All the major network's passed on it. Rupert Murdoch did not like the idea and rejected it for Fox. His daughter, who happened to be at the pitch, liked the show and talked her father into picking it up.
The moral of the story? Assuming that you have a solid pitch and package, rejection is not a function of the project's worthiness, but rather, the personal taste of the executive you are pitching to. That's why it is important to develop a thick skin and be persistent.
If you are interested in learning more about the movies used in this
lesson, click on the title or picture (courtesy 20th Century Fox,
MCA/Universal, Paramount, TCM, and Warner Brothers).Copyright © Film School Direct, Film School Online
