The film making and film distribution world has changed dramatically. Gone are the days when screenwriters could easily sell their screenplays to Hollywood producers for a million bucks. The modern sobering reality is that screenwriters must now play some role in getting their movies produced. They need to become bona fide movie producers.
After you’ve dazzled the screenwriting world with your script writing, you need some development capital to set up your film. This should be around 2-3% of your budget; higher for film budget under $1 million.
Film Pre-production Team
Here are some key people to include in your movie’s pre-production team to get the film finance ball rolling.
LINE PRODUCER – They create budgets and schedules. The fees for both typically range from $2-5k.
CASTING DIRECTOR – They check actor availability and make provisional offers to them. Depending on the size of the cast, the fees typically range from $2-5k.
EXECUTIVE PRODUCER – Is in charge of raising finance, securing distribution, pre-sales, obtaining rights and licenses; all the business stuff. Fees vary wildly. Some payment is upfront while some is paid on the back end, either as deferred payment and/or profit.
ENTERTAINMENT ATTORNEY – One of the most critical roles in the process to vet and write all the contracts. Hire the best legal representation you can afford. Fees range around the $2-5K depending on the amount of work involved.
POST-PRODUCTION SUPERVISOR – This person ensures that all film deliverables are produced to specifications for festivals, sales agents and distributors. Their fees range from $1-5K.
SALES AGENTS – Make sure you hire one for both North American (U.S and Canada) and International territories. They are often initially hired as consultants to provide sales estimates for their territories of expertise.
MARKETING – Marketing expenses are incurred throughout the life of a film. Such fees are typically around 5% of a film’s budget (more if budget are under $1 million). Film marketers also command a commission of around 20-30% of profits.
Types of Film Financing
EQUITY – Investors own a portion of the film and all future profits.
DEBT – These are generally loans that are paid back with interest. These investors are not entitled to any future film profits once they are paid off. However, they recoup their investments before equity funding.
Types of Film Cashflow
HARD MONEY – This is the cold hard cash in your film’s LLC bank account.
SOFT MONEY – This is less tangible money such as film tax credits. They can be monetized into cash, usually at a cost of around 20%
MINIMUM GUARANTEE – This financing comes from sales agents and distributors and is mainly based on the film genre, cast and director. Sorry screenwriters. Apparently we don’t count. A typical minimum guarantee figure is 50% of the low range of sales estimates. Once again, this guarantee can be monetized at a fee of around 20-25%.
PRE-SALES – These are direct sales made to sales agents in anticipation of projected film profits. Once a producer sells the rights to a film to a territory, they generally lose the rights to recoup future profits. Apart from a few high profile pre-sales at Sundance, Cannes, Venice, AFM, Toronto and Berlin markets, these deals are not as sweet as they once were.
What To Do Before You Start Filming
Set your production dates, especially Day 1 of principal photography. Post-production schedules aren’t so critical unless you’re contractually obligated to deliver a film to a distributor by a certain date.
Open an LLC bank account in the name of the film; not your personal bank account or your production company’s.
Have at least 20-30% of the production budget in a bank account before you start start raising the remaining budget.
Have proof of funds, either as letter for contingent or earmarked funds from potential investors and also bank statements.
Set up an escrow account when making provisional offers. Once accepted, the funds will be transferred into talent’s regular bank accounts.
Types of Film Releases
There are so many ways to recoup your film’s investment.
ONLINE (primary) – video on demand, streaming, cable, free to air
PHYSICAL (secondary) – DVDs, Blue Rays etc.
ANCILLARY (tertiary) – hotels, airplanes, cruise ships etc.
Types Of Theatrical Releases
REGULAR – This is either a wide (3000+ cinemas), limited (usually a few hundred screens) or narrow (under 100 cinemas). A distributor and exhibitor are entitled to a share of the box office (sometimes over 50%). However, they put up a significant amount of a film’s P&A (prints and advertising) budget.
FOUR WALLING – A producer strikes one or two prints and rents a theater to screen their movie. They are entitled to retain the gross box office.
DAY AND DATE RELEASE – This is essentially a sequential four walling release. A producer books around 10 theaters around the country, including key market cities such as Los Angeles, New York, Austin and Chicago. They then roll out their film in one city at a time.
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