Motion Picture Production & Distribution have travelled a great distance in the past 110 years from the first motion picture in 1895 and have changed its shape, ideas appearance, marketings, investments and business as such. Now Film Financing and Marketing have become one the most risky and less predicable investments. The doors of Film Financing is only open for biggies like Spielberg and always closed for newcomers who waiting for a Helping Hand or struggling for an opportunity to release their first film and prove themselves.
Herewith we suggest few ways to arrange Funds / Finance for your
Films. Once you decide on a project, the film maker should choose the
distribution platform - Film, Television or Cable, Web and should
start the initial marketing and market studies. The most obvious
choice or avenues for Film Funding or getting the Finance are
Industry Financing, studio development production deals, independent
distributor financing, talent agency financing, end-user financing,
completion funds, regional film promotion commissions, grands and
foundations, Lender Financing, Production Loans, Negative Purchase
Commitment, Presale Financing Commitment....Also find a list of
Grants & Funds available yearly.
Industry Financing An in-house production will usually start as a development deal. A
filmmaker will first have to pitch the concept to a studio creative
executive and then submit a synopsis of the project to the creative
department. If the studio decides to finance the development,
production, and the distribution of your project, then the studio
will ultimately own most of the rights associated with the film.
When a studio gets involved in your project, the first phase will be
a "Development Deal Memo," which is a short form written contract
between you and the studio. The Development Deal Memo will simply
outline the agreement, salary, time schedules, screen credit, and
percentage points. The studio will make Development Deal Memo's
contingent on a "Step Deal." A Step Deal is when the people working
on the development of your project are paid incrementally as the
project develops. In addition, the development work is reviewed and
evaluated at each stage.
Independent Distributor Financing An Independent Distributor is a distributor who is not regularly or
substantially affiliated with a major studio. When submitting a
project to an Independent Distributor, you must have some financing
in place and be ready for principle photography. The reason being is
that Independent Distributors do not have the resources to develop,
produce, and distribute your project.
Talent Agency Financing A new Filmmaker could also obtain assistance in financing through
talent agencies. A talent agency will package your film with two or
more of their clients. Talent agencies will not fund the project
outright. Some agencies will help arrange financing through their
resources such as, below-the-line facilities deals, international co-
production deals, foreign government subsidies and presale
arrangements.
End-User Financing End-User financing is when a theater, cable or television station
will put up money in exchange for equity percentage participation in
the film's revenue generation for specific markets. Obtaining end-
user financing through video and cable companies is called ancillary
end-user financing. The foreign market may be another possibility to
acquire end-user financing.
Completion Funds Completion funds are designed to provide partial production financing
or post-production financing. These funds can be provided for films
that meet the following requirements: a) have completed principle
photography; b) are complete except for post-production; or c) are
complete through post-production, but can not be released from the
lab due to unpaid lab fees. If you are obtaining financing through a
lender, they will require a completion bond which will ensure the
project will be finished.
Regional Film Promotion Commissions There are lot of Grants, Subsidies and Incentives offered by Regional Film Promotion Councils and Commissions. A Film Maker should properly study the various incentives offered by regional film & toursim promotional authorieties.
For example, Florida recently adopted a P&A (prints and advertising)
Fund. Essentially, it is an incentive for filmmakers, such as yourself, to produce films in Florida. The Florida Film and Television Investment Trust Fund has the authority to invest three million dollars to be used on completing films that spent 40 percent or more of its production budget in Florida.
Grants & Foundations Grants & Foundations offer on an annual basis - assistance, completion or production funds, from which you can obtain financing for your project. The Funding through Grants & Foundations are more suitable for documentaries and educational films/videos.
Lender Financing Lender financing is one of the best ways for a filmmaker to secure funding for a picture without going through the studio system. Though lender financing is time-consuming and complicated, it is a great resource for independent producers.
Production Loans Lender financing is the process of obtaining a loan from a lending agency to finance the development, production, and/or distribution of your film. Third-party feature film development loans or non-bank loans may be secured by some form of hard asset and are usually recourse to the borrower. In other words, the lender may seek
repayment directly from the borrower, personally, in the event of a default. In equity investment, the lender actually becomes an investor whose investment is at risk. As a result, there may be no obligation for you to repay the loan.
Negative Purchase Commitment The term "negative purchase" refers to the commitment made by a distributor to a producer to either purchase or license a film's distribution rights from you, the producer. The distributor guarantees to pay an agreed-upon price when the distributor picks up the negative after delivery of the completed picture. When using the negative pickup method for financing your production, you will sell
and/or license the film to a distributor in exchange for the distributor's promise to pay an agreed-upon price. You can then take the negative pickup distributor commitment to a commercial bank, use the purchase letter as collateral, and borrow production funds from the bank. This same tactic can be used to secure funding from
investors.
Presale Financing Commitment Presale financing ("presales") is the funding of a film's production costs through the granting of a license for the film's rights by a producer to a distributor in a particular media or territory before the completion of a film. Presales can take the form of funds, guarantees, or commitments.
From: "Reel" contact: ajithkrs2001@yahoo.com
How does movie licensing present unique challenges to licensors, licensees and retailers?
