This is not legal, investment, financial or career advice. I am not an expert on film financing, so please don’t assume it.
Nothing in this article should be construed as a solicitation or offer, or recommendation to acquire or dispose of any investment or to engage in any other transaction. The information should not be construed as personal investment advice or financial planning advice. Please consult your accountant, and/or local and country laws before taking any action.
The information contained herein is for informational purposes only as a service to the public, and is not legal advice or a substitute for legal counsel. Please consult with your attorney before taking any action.
You are liable for your own actions and dealings. We are not responsible if something bad happens. If you’re not sure, or don’t agree, stop reading and don’t act on the information.
Sometimes we go to film schools, show one of our films, and answer some of the questions the students might have. But they tend to be very specific questions, which rarely have to do with the craft itself. Most of the time, really, film students are looking for advice on how to raise money – Joel Coen, in the Moviemakers’ Master Class, by Laurent Tirard.
Film (digital video, really) isn’t cheap, even if you’re shooting on an iPhone. Only those who have actually shot a few movies appreciate that the camera and gear budget is a small fraction of the overall budget.
You might be able to get away and earn money on one movie on a shoe-string (read: zero) budget, but try that over the course of ten movies or a career. Here’s the reality: NOBODY HAS DONE THAT, EVER.
If not today, then tomorrow, you will have to face the reality of finding funding. This article is my best attempt to explain just that: How to finance a film?
It is divided into three parts:
This part will deal with the realities of the business.
First, why write about how to finance a film?
Yeah, why? I’m like you. I don’t have the finances to produce a movie, don’t know any rich people who love my work, and know squat about global financing and distribution models.
But when was the last time any of the people who knew the answers and had walked the talk actually gave you advice on how to raise money?
There are a lot of articles and books on how to finance a film, but how many stories exist of people who have raised money following exactly what is outlined in those articles or books? It’s easy to say: It’s not what you do, but whom you know – but how many people would the average person know?
Actually, how many people could you know? I’ll look into this in detail in Part Two.
I am writing this because this is what I know, right or wrong, helpful or otherwise. Have the time? Read, and form your own opinions. It’s only worth the pixels it is displayed on.
Whatever you do, don’t let the negatives get you down.
Who is your audience?
Your work of art, your film, your movie – who is it for? Everyone? When was the last time you saw ‘everyone’ together? Or, when was the last time you heard any company successfully sell one product to the entire population of a –
Nobody gets the whole pie. That’s how it works.
I’ll make it easy. Want your movie seen by the widest audience possible? Let’s look at some numbers:
There are about 40,000 cinema screens in the US. However, many of these are multiplexes, and the total number of cinema sites in the US is about 6,000.
The number of MacDonald’s outlets in the US is about 19,000. Just saying.
The audience count (admissions) in the US is about 1.3 billion per year (3.5 million per day). The number of people per screen is about 32,500 for the entire year. That’s 625 per week. If the average size of a cinema auditorium is 350 seats, then the numbers indicate only two shows are filled in a week. If there are four shows a day per screen, that’s only 7% occupancy! Obviously, the screens that do well are a small percentage of the 40,000.
Earlier, there used to be a count on the number of film prints shipped. For a major Hollywood release, the number of prints in the US alone can be about 4,000 (World War Z opened in 3,607 screens). Today, a vast majority of this number is digital prints, or copies. Let’s assume the number is 5,000 copies – that go out to 5,000 digital screens. That’s only 12.5% of the total percentage of screens, or about 8 blockbusters playing every day. Why, then, is there no place for the indie movie? Even if four blockbusters released at the same time in 5,000 screens, we still have 20,000 screens left.
Okay, let’s say the average movie with a proper release gets (or should get) 500 screens. That’s 80 movies playing per day. If the average movie gets to play for 14 days, 160 movies play per month, or 1,920 per year. That means, about 2,000 movies can rotate across cinema screens and each movie will get 500 screens and play for 14 days. So, how many movies are being produced in the US?
The total official number of movies produced in the US every year is about 500. Judging by the submissions to Sundance though, the number is probably around 2,000.
Why then, aren’t indie films getting their ‘due’? The answer is simple, and thoroughly depressing: the market doesn’t really want to see your movie. If a Hollywood blockbuster costs 200 million, and spends half that for marketing, the audience is going to prefer it to your movie, no matter what you’re movie is about. In fact, your movie could be an exact replica (the same movie even) of the blockbuster, with just the title changed, and it would still bomb.
Okay, how many screens can a indie film aspire to? Let’s look at some ‘big indie’ films (opening week, compare it to World War Z):
The reality is that you will be lucky to get more than 1 screen. That first screen can be four-walled, and it doesn’t count.
Sundance gets about 2,000 or more submissions per year. Out of this, less than 0.3% find distribution. That’s about 5-10 movies. Out of these, about 3% turn a profit. That’s one movie or less.
The number of television sets in the US is about 96% of the number of US households (about 120 million), which results in a figure greater than 100 million. The average viewership of 174 series finales is about 13.5 million.
The number of broadband internet subscriptions is about 70 million, of which the average speed is 7.4 Mbps. The global average is about 3 Mbps. In most households, people share broadband connections. Youtube gets about 100 million visitors every day from the US.
For a full HD stream (1080p), the data rate is about 8 Mbps, and the total number of internet connections that are above 10 Mbps in the US is about 15 Million.
You can reach 3.5 million cinema-goers per day, if you could control distribution in the US.
You can reach 13.5 million television viewers per day, if you could control television distribution in the US.
You can reach 70 million Internet viewers per day, if you could control Internet distribution in the US.
If the average cost of watching your movie is $9.99, which market would you want to target? Which gives you the best odds to recover your money?
So, who is your audience? Here’s a hint: It’s not human beings. It’s either an air-conditioned seat in a dark cinema hall, a spot on a couch, a computer, or a smartphone. How many of these can you reach? How many of these can you occupy?
Who funds movies?
The answer is simple, but totally not helpful. People with money funds movies. Financing your film is the process of getting funds out of these people’s accounts into yours (or an escrow account).
Banks won’t fund an indie filmmaker with no collateral to lose in return. Smart investors only put money down on a deal that already guarantees profits. You could ‘package’ your movie to reduce the risks, but unless you have a massively bankable actor, no sane investor will fund you. They know that money is lost forever.
What about friends or relatives? They know that money is lost forever too, and they also know that your making a movie isn’t going to help you learn the value of that money, either. They know you too well. If they don’t know these things, and want to help you out of the kindness of their heart, it is your (the filmmaker’s) responsibility to tell them that the chances of recovering their money are so close to zero that it is invisible.
Hollywood studios? Nope.
But people are making movies every day, right? 3,650 movies a year means about 10 movies delivered (to somebody) per day. That’s about 6 movies per State per month. That’s nothing. Even if you triple the number of movies per year it’s about 20 movies per State per month. Rhode Island has about 40 cities, so the number of movies per city for Rhode Island is 0.5, or one movie per two cities if 10,000 movies are made every year. That’s about 5 per city a year – going by 10,000 movies. In reality, it’s about 1 per city a year. One lucky individual gets to make a movie.
Before you say: more movies are made in major cities, the average filmmaker who aspires to making movies will never live in a major city. Still, that movie must be made.
The same statistical analysis bears for any country or area. I’ve used figures for the US because they are widely available. Try finding the same numbers for other major movie industries like China or India.
Faced with such depressing and dismal odds, it’s no wonder that investors are wary of putting money into film. It’s a losing proposition for most people.
The question, then, is not how much money your movie should cost, but how much it can make.
See where this is going? You have two things you can find out right now:
How many people can you influence?
How much money will your movie make?
In Part Two we’ll try to answer this second question, and study the concept of ‘leverage’, which will help you answer the first.