As reported in The Independent:

City financiers have begun a European film-funding drive in an attempt to imitate Hollywood’s global blockbuster machine.

…

Early next month Stewart Till, the current chairman of the UK Film Council and former head of United International Pictures and PolyGram Filmed Entertainment, will hold talks with bankers from Dresdner Kleinwort. They will discuss the formation of a £100m investment fund, which he would lead, to back the distribution and marketing of UK and European films.

…

“This is not about transplanting the US model. There should be a balance between these culturally significant movies and those that can be globally appealing. We need to be able to match those ideas with the appropriate financing.”

Have foreign films, user-generated content, and the video game industry sent the major U.S. film studios into a death spiral?

Kirstin Thompson, writing from her homebase at the University of Wisconsin-Madison, nicely summarizes and critiques two recent articles that explore the demise of Hollywood.

Read her article on David Bordwell’s Website on Cinema. The full post is here.

Photo from davidbordwell.net

Pirates (not the Caribbean ones) are sending shockwaves through the motion picture industry. Hacker sites are reporting cracking the encryption on both formats of high definition DVD. This is a tremendously negative development for consumers. Already skittish about making high definition programming available due to piracy concerns, this news confirms the entertainment industry’s worst fears. I think we can look forward to even more stringent digital rights management (DRM) that limits available content and decreases consumer enjoyment of the latest movies and entertainment programming.

Here is a summary of the hack:

HD DVD and Blu-ray Now Completely Hacked, Cracked, Sacked

Gizmodo , February 13, 2007 Tuesday 11:15 AM EST

Feb. 13, 2007 ( delivered by Newstex) –

The guys at the Doom 9 forum are marking February 11, 2007 as the day when digital rights management was defeated on Blu-ray and HD DVD discs. It turns out that cracking the high definition disc formats was much easier than was originally thought. The processing key that can unravel the DRM on all HD DVD and Blu-ray discs has been found by a clever encryption fighter named arnezami.

It gets better:

The first-reported and Blu-ray discs were not completely effective, because each individual title had secret codes that were needed to unravel the rest of the encryption on that disc. But now this newly-found processing key is apparently the holy grail that unlocks the DRM on all HD DVD and Blu-ray discs released so far. The guy found it by simply watching his computer memory, where the secret code–which we won’t publish here for fear of doing jail time–simply appeared. Incredible. Let the free downloads begin! — Charlie White

[Doom9 Forum]

http://www.contentagenda.com/articleXml/LN570885857.html?industryid=45180

You can also check out this post on Boing Boing:
http://www.boingboing.net/2007/02/13/bluray_and_hddvd_bro.html

As this press release from 99 Ways Entertainment demonstrates, you have to think creatively if you want to raise film financing.

To get its own stories distributed 99 Ways has brought together a dynamic mix of music and film stars together with creative financing by NBA players, doing an end run around the traditional channel of seeking pick up by a separate film distribution company. Its first feature-length docudrama, Gangstresses, starring singers Mary J. Blige and Lil’ Kim, was produced for $25,000. Released straight-to-video, it spent 12 weeks on Billboard’s Top 40 Video Sales, earning revenues in excess of $1 million and garnering the Independent Film Project (IFP) Best Directorial Debut award for Davis. Six years later the film, which was also featured in pop culture venues such as BET, The Source and Interview Magazine, is still selling in the U.S. and internationally.

http://biz.yahoo.com/prnews/070206/nytu064.html?.v=75

What was the most profitable film release of 2006? It all depends on how you measure profit.

As the blog BizofShowbiz reports:

In the category of the most widely released movies for 2006, the most profitable movie of the year was surprisingly “Ice Age: The Meltdown,” which beat out what most thought would be the leader “Pirates of the Caribbean: Dead Man’s Chest.”

http://www.bizofshowbiz.com/2007/01/ice_age_most_profitable_film_of_2006.html

This is based on the 2006 Kagan Profitability Report that the Holllywood Reporter’s Paul Bond discusses in his recent article. http://news.yahoo.com/s/nm/20070119/media_nm/profits_dc_1

While Kagan does a great job with their profitability index, they exclude several key elements of production cost (because they are extremely difficult to estimate.) Distribution fees, profit participations (points), overhead allocations, and the cost of financing (interest charges) do not make it into Kagan’s calculations.

Based on the gross profit percentage, it is likely that Little Miss Sunshine would take the crown. However, if we look at total profit in dollar terms, I have no doubt that Pirates of the Caribbean: Dead Man’s Chest would be ranked first. With 15.1 million units of DVD sold and box office of over $400 million in the U.S. alone, the revenues were tremendous. While the participations and residuals were no doubt costly, the profitability of DVD would propel this title ahead of the others.

The truly interesting question is to look at the profitability of a film like this from different perspectives. The profit picture for the studio (Walt Disney Company: DIS), is very different from that of the other profit participants (such as the key talent or the film’s producers.) One difference is that Disney earns a distribution fee and receives the overhead allocations, adding revenues to its coffers. On the other side of the ledger, these items are costs to the profit participants.

Just out of beta, an interesting twist on financing your next film:

FilmTies.com is the world’s first Membership based, Social Network Interactive Film Financing Community. We provide the complete interactive tools to our members who visit the site to socialize, meet friends, classmates, and interact with the film and music industry. FilmTies.com is part of the AdFilmTies Film Finance Model it empowers screenwriters, musicians, actors, directors, producers, sponsors and most importantly the movie watching public.

http://www.filmties.com

Hedge fund money continues to flow to Hollywood. This deal is interesting in that the funding may go to support independent films, as opposed to the mega tentpole releases.

Lionsgate is wrapping up a $210 million slate financing pact led by Goldman Sachs — a sign that hedge funds remain attracted to Hollywood, or at least to particular deals, despite mixed results in 2006.

Lionsgate agreement covers 23 films, excluding the “Saw” movie franchise and pics from Tyler Perry of “Diary of a Mad Black Woman” and “Madea’s Family Reunion” fame. Perry’s next is “Daddy’s Little Girl,” due out in February.

Lionsgate will receive a distribution fee of 15% — on the high side for slate deals — showing just how the mini-studio has impressed Wall Street with its track record and its model of modestly priced pics.

http://www.variety.com/article/VR1117957559.html?categoryid=13&cs=1

Latest data from Hitwise, as presented by CNET:

http://news.com.com/YouTube+rivals+look+for+answers/2100-1025_3-6149004.html?tag=html.alert

Want to create media for the small screen?

A national Call for Entries for the Institute will be announced at the 2007 Sundance Film Festival. Through the Institute, eight production teams of up to 3 people each will be selected to come to BAVC’s San Francisco facility for ten days. Producers will participate in high-level industry roundtables, intense one-on-one project development with technical mentors, new media storytelling workshops, and hands-on prototyping of their ideas. The participants will be adapting and developing award-winning film and video content for delivery using interactive formats, including video game applications, interactive, web-based experiences, mobile streaming, multi-user communities, and new educational software. They may choose a range of delivery strategies, including cell phones, other hand-held devices, set-tops, Internet, portable software and more.

“The Producer’s Institute intends to provide a first-of-its kind incubator for independent filmmakers in new media technologies, and a unique opportunity for industry to greenlight innovative content for these new distribution models,” says Wendy Levy, BAVC’s Director of Media Arts and Education, who will oversee the Institute. The Institute will take place June 1 – 10, 2007 at BAVC in San Francisco. Applications will be available online beginning January 15th, with a February 15th deadline to apply. Institute participants will be notified by March 1st.

More info available at BAVC:
http://www.bavc.org/meet/news/e_news/010107/events/index.htm

Image from BAVC eNews January 2007, bavc.org

Want to stay current with popular culture? Bay Area Tech Wire reports on the most popular Google search terms in 2006:

“Bebo,” the U.K. social networking site, was the most-searched term on Google in 2006, the company has revealed. Other top 10 search terms included “MySpace,” “World Cup,” “Metacafe” and “Wikipedia.” The only band to crack the top 10 was “Rebelde,” which grew out of the Mexican telenovela of the same name produced by Televisa. Another notable term in the top 10 was “Mininova,” a site that lists files available for download on the BitTorrent file-sharing network. On Google News, which limits searches to news sources like newspapers and blogs, “Paris Hilton” was the top search term of 2006, followed by “Orlando Bloom,” “Cancer” and “Podcasting.”
http://www.google.com/intl/en/press/zeitgeist2006.html