Will digital distribution be the savior of the independent film market? Steve Zeitchik sets out to explore this question, using indie producer Seth Caplan as a case study.  Caplan has produced numerous award-winning, festival screened features, but his only real financial success barely left the internet. “Flatland – The Movie,” a thirty minute animated featurette sold mainly via web streams, generated more profit than any of his other films due principally to a well-placed Google Ad.

With the advent of YouTube, distribution was democratized to the average Joe, but now its success is “trickling up.” Industry professionals, the big fish and the small, are increasingly taking advantage of all-access digital mediums.  But it’s those with limited resources, the indie players, who stand to gain the most. Where else but online could they reach so many people at so little cost?

Of course, this supposed Promised Land comes with a catch or two.  Many fear that, like in the digital music space, an “increased dependence on digital will mean similarly small profits and expectations.”  This has been the case so far for most films released digitally. However, theatrical avenues are drying up, and films are coming out of festivals without theatrical distribution, leaving filmmakers little choice but to turn to online.

Still, there are promising signs for those that take a strategic approach to digital. Major portals, including Amazon, Hulu, iTunes, and YouTube, now have their own indie businesses. Though the sites have yet to garner much revenue for filmmakers, they can cut out the middle-man, like they did for Seth Caplan. IndiePix president Bob Alexander elaborates:

“The problem with streaming is you need millions of views for what’s essentially a niche product…what streaming can do, however, is provide the visibility and platform to lead to transaction-based sales [i.e., dvd’s].”

[Disclaimer: Filmmakers Beware! To turn a profit this way, you can’t let your budget get away from you.  It’s more essential than ever to contain costs when margins are so low.]

As the way we consume media continues to evolve, streams and other online viewing have the potential to capture greater market share, so early adopters are well-positioned to benefit. But for now, caution is advised.

*Source: The Hollywood Reporter, “Clicking and Screaming”, pp 10-11, March 20, 2009, by Steven Zeitchik

To read the entire article, click here. (available only in plain text for non-subscribers)

Here is a video on film finacing you may want to take a look at:

Learn how to create a business plan for film making for a feature film in this free video series. Get movie producing tips from a producer.

http://www.youtube.com/watch?v=JPDLfbhCtEE

To close, we describe End-User Financing and Completion Funds Financing. Based on How to Fund Your Film by Robert C. DiGregorio, Jr. imageMATTE Executive Producer

Part III:

End-User Financing occurs when a theater, cable network, or television station contributes money for a project in exchange for an equity percentage in the film’s profit stream. The greatest advantage is that you are in the best position to generate profits because the end-user is creating revenue in its own familiar territory.

Lastly, Completion Funds provide partial financing based on a couple of requirements:

1. completion of principle photography,
2. entire project complete with the exception of post-production, or
3. everything complete except lab fees.

The financiers can have the upper hand in terms of negotiating a better deal for themselves because without them, production may never finish. The advantage to you is that you are able to spread some of the risk to the completion financier.

These are only some of the basic and popular ways of financing your film. There are a limitless number of ways to fund your film.

To get even more detailed descriptions on these financing methods, continue to the link below:

Download the .pdf file

Contributed by Christina Chen,
UC Berkeley student

The Tribeca Film Institute, financed by the MacArthur Foundation, is beginning to digitize and deliver films from indie documentary, foreign, and experimental filmmakers. It will be interesting to see if this takes off or not.

Hoping to launch a viable new revenue stream for a wide swath of independent films and filmmakers, the Tribeca Film Institute has unveiled Reframe, a curated online outlet with its sights set on filtering some 10,000 films and videos via the Internet.

[Executive Director]Newman added that he is not necessarily looking for new work that is just hitting the film festival circuit, but rather is hoping to lure filmmakers who have a library of content for which they already own the rights. More details on what Newman vows will be a “transparent” deal structure is available on the website. Reframe is covering the digitizing costs for work available in video format and providing a master to the filmmaker, while work originating on film can be digitized at a discounted cost.

http://www.indiewire.com/biz/2008/06/digital_revenue.html

Written by Lena McCauley, Wellesley College student

Continuing our description of forms of film financing, we now examine Independent Distributor Financing and Talent Agency Financing. Based on “How to Fund Your Film” by Robert C. DiGregorio, Jr. imageMATTE Executive Producer

Part II:

Independent Distributor Financing is a more co-dependent form of financing. Because these distributors are not affiliated with a major studio, when submitting a project to them, one must already have some form of financing available and be ready to take on principle photography. The benefit to independent distributors is that both parties are coming from the same level, so the negotiation of a better deal is significantly easier. And, there is a higher chance of receiving a larger portion of net profit.

Talent Agency Financing is using a talent agency to gain the resources needed to finance a project. A clear advantage is that there is clear access to actors, directors, and even a distributor. So while the financial means might be pulled from the talent agency’s own variety of resources, the one-stop shopping aspect might streamline the entire process.

Contributed by Christina Chen,
UC Berkeley student

First in a series of posts dedicated to describing the most common forms of film financing. Based on “How to Fund Your Film” by Robert C. DiGregorio, Jr. imageMATTE Executive Producer

Part I:

Soon after an idea for a project first comes to you, start thinking about distribution for the final film. Your hopes for distribution (film festivals, in theaters, television, DVD, online, cable/satellite, etc.) will shape where and how you seek funding. In addition to the distribution platforms, the next step is to consider the range of potential distributors. These options may range from major studios, to independent studios, television stations or cable networks.

The most common type of film funding is industry financing. This umbrella term can include several potential sources. Studio Development Production Deals are in-house studio production financing. A studio creative executive approves your pitch and then thus begins the long road towards production.

The studio production deal is a vanishing breed and almost impossible for first-time filmmakers to obtain. However, several of the indie film divisions of the major studios are on the lookout for new talent. They sponsor contests, screening programs, and workshops or labs. For example, take a look at Searchlab from Fox Searchlight.

Contributed by Christina Chen,
UC Berkeley student

Great post on Johanna Blakley’s blog over at the Norman Lear Center. She provides an account of the recent AFM Film Financing Conference held in Santa Monica. Some interesting insights into film funding trends:

How do you convince a financer that you’ve got a marketable film?
Once again, financers could care less who’s directing. The real gatekeeper in this business is . . . get this: the sales agent. If you’re a new filmmaker and a credible sales agent has decided to hawk your film, the financing is yours.

Isn’t it hard to get a film financed these days? Why, no! There’s so much “dumb money” out there (read: hedge funds) that the barriers to entry are lower than ever. This may come as a surprise to every indy filmmaking friend you have; their problem is that they probably haven’t made an expensive enough movie. Got a film under a million? Ask grandpa to fund it. Got a film over $10 million? Now you’re talking.

What genres of movies are the easiest to presell (i.e., to sell the rights before the film is made)? According to Nu Image CFO Trevor Short, generally action movies and thrillers are the best bets. Comedy and drama are tough because the quality of the film depends on (get this) the execution.

Get the full story

Readers of the Film Funding Blog often ask, “are studios and distributors spending marketing money wildly?” This really speaks to an underlying question, is theatrical distribution unprofitable for independent films?

To address this issue, I thought it might be helpful for me to contribute some perspective on the forces that can shape the P&A budget. My analysis is based on my years as a film distribution executive at Fox, Warner Bros., and New Line Cinema. I mention my background so that you can judge circumstances for yourself, without any undue spin.

(Photo by atp_tyreseus)

When a national theater chain decides to buy a picture, we usually consider that to be a good thing. But, one of two things may happen. First possibility is that the picture opens wide. This means that P&A is needed to support a large release (more prints, local newspapers, radio/TV, etc) and, before a single ticket is purchased, potentially millions of marketing dollars have been spent. If the film does not open well, the marketing spend will look hugely out of proportion to the results. Unfortunately, the final outcome is only knowable after most of the money has been spent.

Alternatively, it is possible to “platform” a film release. However, this usually works best in cases where you think the word of mouth will be very strong. Problem with a platform release is that you may never get a chance to open wider. Your theatrical distribution costs are lower, and your theatrical release may be profitable on a percentage basis, but you could wind up leaving millions in profit on the table.

Given the chance to open on say 500 screens (still far from a mega release), and a platform (2-20 screens), most people will choose to open wider because the revenue and profit tend to be higher (higher risk/higher return). Also, if a theater chain offers a wider release, if you suggest a smaller one you may be signaling a lack of faith in the motion picture.

Usually, as a producer/financier, you have almost no control over how the picture rolls out. Even if you pay the P&A cost, you are at the whims of the marketplace (actually, you are just facing more powerful players with stronger leverage). This means that your distribution strategy faces a complex set of dynamics, and you are forced to play the hand you are dealt.

As a footnote, the advertising for domestic releases is also tracked by the video retailers. They know that if the film did not have much market support, there is unlikely to be much awareness. This can limit the DVD sales.

There can be more upward pressure on a film’s marketing spend. Other ancillary markets (like airline sales) are frequently pegged to the US Box Office. It can often pay to buy a larger box office opening by spending more on theatrical marketing. Theatrical will run at a loss, but the goal is to build profit from DVD, television, and other distribution channels.

I would say that the typical film does not break even from theatrical. Even the most successful independent releases make only a very small profit from theaters. Could the marketing money be better spent? There is always the old adage that half the marketing budget fails to produce the desired result. It just isn’t that easy to figure out which half. Theatrical is not always a money loser, but it does tend to be a loss-leader.

Moving Pictures Magazine published a useful step-by-step overview covering how to sell your project at the AFM. The article summarizes the kind of coaching Sharp Angle provides to its clients. Here is the quick overview:

• “Identify the elements that constitute your package and be able to pitch it in a brief period of time.”
• “Of the 400 companies at the AFM, it’s unlikely that any film would suit any more than 25 or 30. Put together your list.”
• Utilize the screenings, pitch sessions, locations expo, and other resources
• With your research complete, buy a half-market badge and start making the rounds

Take a look at the full article for additional details. Moving Pictures Magazine

Visit ifta-online for more information on the American Film Market.

The 2007 AFM takes place October 31 - November 7, 2007.

Sebastian Michael’s film, “the study of bunkers & mounds in a temperate climate (relatively speaking),” pioneered an inventive new way of film funding. Cleverly named, “fund a frame”, this new approach to film financing paved its way to success by basically selling single frames of the film. On its main website, people are invited to fund a single frame, thus making this film “the first ever frame-by-frame funded film”.

The idea is pure ingenuity as it mimics the cool factor of the business of selling land on the moon. The filmmakers send out an email that describes the donor’s funded frame as “handpicked for you” along with the actual image of the frame as a high-resolution (HD) jpeg file with your name and the time code printed on it.

In additional, to add a more Hollywood-like collector’s item flavor to the donation, the frame can also be printed on high quality photographic paper, autographed and framed in a black wooden frame. As an additional incentive to get the program running, when funding for the film began, it was even possible for donors to get their names on the credits.

Check out the film’s website for more information:
http://www.optimistcreations.com/bunkersandmounds/fundaframe/bnm-fundaframe.html

Contributed by Christina Chen,
UC Berkeley student