Presentation on

Film Finance

ByM. V. Sai Sunil

13M080

Film Finance

• Aims: to gain an understanding of how Film studio and independent film gets made.

• To research the production process of a film.

Film finance is an aspect of film production that occurs during the development

stage prior to pre-production, and is concerned with determining the potential value

of a proposed film.

Film finance is a subset of project finance, meaning the film project's generated

cash flows rather than external sources are used to repay investors. The main factors

determining the commercial success of a film include public taste, artistic merit,

competition from other films released at the same time, the quality of the script, the

quality of the cast, the quality of the director and other parties, etc. Even if a film

looks like it will be a commercial success "on paper", there is still no accurate

method of determining the levels of revenue the film will generate.

Film FinanceFilm is a medium where creativity and business are forced tomeet.

There is no such thing as a safe bet because each film is tosome extent a one-off prototype.

However, Hollywood studios try to reduce the high risks of filmproduction by recombining / repackaging successful elements.

This is another way of saying that Hollywood works to a set ofgeneric conventions. Successful formulas make money.

Task: in 2 minutes brainstorm all the sequels, remakes andTV/comic book adaptations that you have seen in the last year.

‘The Package’• The film package is put together by the producer. • It is presented to potential investors, financers and

distributors. • It must include the following key elements and

selling points:– Script Treatment– Generic Characteristics.– A Proposed Budget.– Storyboard of Key Scenes.– Established director / writer with proven track record to

attract target audience and reassure investors.

The Pitch

Term used for the presentation of thepackage by the producer to potentialfinancial backers.

The producer may say their film is a hybrid of two successful movies.

“It’s Terminator meets Dirty Harry.” - Hollywood Producer

‘High – Concept Films’

• Made famous by Don Simpson and Jerry Bruckheimer as a response to high risk film production.

• The repackaging of previously successful elements, such as big name stars and directors.

• Remaking past hits or extending franchises (sequels).• Often ‘high octane’ action/disaster movies.• Made for a PG or 12 rating so appealing to a mass audience.

The summer blockbuster• For many years film industry

has made mass market films for the summer.

• Many of these films will be released with merchandise tie ins and big marketing budgets.

Commitment to Invest

Investors will only commit to a package when they have a clear presentation of the target audience for the film. This is done through extensive market research. Which includes?

If a return on the investment is possible then the project will be give the ‘green light’, meaning that the studio will fund the next stage, which would consist of the writing / finishing off of the screenplay.

Funding for Independent Films

• Independent film production is developed and realised outside major studio settings.

• Sources of finance:- Banks- Investment Companies- Rich Private Investors- The Government: the national lottery.

Independent filmmakers finance

• Example: Maruthi

• Maruthi the director of “E Rojulo” and “Bus Stop” financed his first film one of his friend by borrowing several family member’s credit cards.

• He financed the whole thing for 80 lakhs with most of the actors working for free.

• He also made some of his own camera equipment to avoid expensive hiring.

Financing a film• What do producers have to consider when working out the

costing of a film?

• Star’s fees• Other supporting cast• Crew• Post production• Film stock• Travel/shipping and catering• Mise-en-scene (set building, hiring props, vehicles etc)• Film taxes• Hiring/compensating

Bankability• A Select group of stars who can guarantee a film’s

international success on the strength of their name alone.

• Bankability is the ability of a star’s name to: raise money for a film

- attract support from major studios- pull in cinemas-goers at the box office

- Task: brainstorm a list of the world’s most ‘bankable’ actors.

- How many are women? - How many are black/Asian?- Select two and list 5 of their films? Were they all

successful?

Stars Involvement in Film’s Production • Gives them greater control over their career. • Sometimes it is they who get the script first and get

to choose who will direct the film.• Example: Tom Cruise• As well as being a huge ‘bankable’ star, Cruise is also

a producer with the influence to get film made. • He co-produced ‘Mission Impossible 2’ and Minority

Report• Cruise chose John Woo as Mi2’s director and JJ

Abram for Mi3. • Stars are now a franchise or a brand rather than

actors.

What is a film distributer?• An independent company, which secures the placement of a producers

film. Eg: Waner Brothers, Film 4, Lionsgate.

• “Distribution” refers to the marketing and circulation of movies in theatres and for home viewing.

• Distribution is finding out the identify and deliver the largest possible audience for a film.

What is a Film Distribution?

A Film Distributor is either a company or individual that advertises a film.The term “distribution” is the marketing and circulation aspect of movies in theatres.Home viewing the best examples of this would be through (DVD, Video-On-Demand, Download, Television etc).Attempt to sell it to theatres and television which include terrestrial, cable and satellite, airlines.The distribution may be done independently or through other theatrical exhibitors.Release date will be set along with where it will be available for viewings.

What is the objective of a Distributor?

• The main objective to persuade exhibitor to buy the film, to rent or book the film for a short time at their cinema.

• The distributor will set up industry screenings so that the exhibitors have an idea of the film.

• other advertisement methods such as posters and videos which can be done online or on television also.

• After the film is released the distributor’s take is how to distribute the released film, this is usually done through DVDs, Blu-rays, online streaming/downloading or via TV.

The process of Film Distribution

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What may the Distributor consider?

Some considerations:• The first three days are important,

30% of films make their biggest profit during these days.

• Enough advertisement as been done.• Target audience what age and what

gender will want to watch the film.• The ideology, genre, characters and

settings so they can base this around attracting the audience to the film?

• Will the film deliver and justifies the cost and risk of a theatrical release?

• What type of audience have been attracted by similar films?

Considerations continued • What competition Is there competition Will this

effect the profit?• Which films are being released at the same time?• Are the other films of a similar target audience?• Will there be any need to change the dates of

release because of competition? • Star Power-• Is there any star power among the cast? • What were the leads stars last roles and how

successful were they? • Will cast members be availed to attend a premiere

or for UK/ international publicity of the film.• Is the film made by a well known director? So that

they can use this as promotion.

Different films and

screenings?

• Different films have different releases in varied ways, the size and profit of the film depends on what kind of film it is.

• Films receive the largest screens and profit.

• Foreign films normally have smaller screenings and sometimes even go straight to DVD.

• 2/3 of the films in France are French films, it gives the French film industry more of a chance to make larger profit.

Buyers Involved…

• DistributorsEROS ENTERTAINMENT -- B.O.: $6.6 million YASH RAJ FILMS -- B.O.: $4.3 million BIG PICTURES -- B.O.: $3.7 million

• ExhibitorsBIG Cinemas

CineMAXPVR Cinemas

INOX

Buyers Involved…

• Satellite Rights• SET Max aired two of the film industry’s

biggest hits, 3 Idiots and Rajnikanth’s Robot, and also Band Baaja Baraat

• Star Gold has the rights of SRK’s Ra.One, Zoya Akhtar’s Zindagi Na Milegi Dobara,

• Zee Cinema will screen Shaitan and Pyar Ka Punchnama

• Music Rights

Indian Film Industry Size

Current Market Situation• Bollywood is the largest film

producer in the world. They produce roughly 1000 movies a year. Hollywood only produces 500 and Japan produces 400 movies a year

• The Bollywood industry had a revenue of US$ 2.5 billion in 2008, and has been growing at approx. 9% a year. The revenue is expected to reach US$ 4.1bn by 2013

Bodyguard• Release date : August 31, 2011

• Release ( In India) : 2,250 screens in 70 Indian cities ( Abroad ) : 482 prints

• Budget: Rs 60 crore ( Marketing and Print Budget ) : Rs 22

crores( marketed by Reliance Entertainment)

• Box office : 215 crore 

• Distribution ( In INDIA): Reel Life Production Pvt. Ltd, was bought by Reliance Entertainment for  64 crore. This earned Reliance the co-producer status and an equal share in the IPR for perpetuity

( ABROAD) : Released in Dolby Surround 7.1

• Soundtrack :The music rights were sold to T-Series for 6 crore.

• Satellite Rights : STAR network for  27 crore for seven years

• Release date : September 10 , 2010

• Release ( In India) : 1,584 screens ( Abroad ) : 300 screens (screened

in Norway at an international film festival) (DVD & VCD launch) : Reliance Big Home

Video ( 12th October , 2010) ( Internet release ) : YouTube ( 28th

January , 2011 )

• Budget: Rs 42 crore  

Dabangg

• Box office : Rs 213 crore 

• Distribution ( In INDIA): Shree Ashtavinayak Cine Vision Ltd Arbaaz Khan Productions

( ABROAD) : Released in Dolby Surround 7.1

• Soundtrack :The music rights were sold to T-Series for Rs 9.5 crore.

• Satellite Rights : Pre owned by COLORS for  Rs 10 crores

ZINDAGI NA MILEGI DOBARA• Release date : July 15, 2011

• Release (worldwide) : 1800 screens ( game launch) : Launched by Jump Games on ‘ La

Tomatino Fest ‘ ( tie-ups) :  Excel Entertainment tied up with Aircel to

make the promos of the film available on mobile and Internet

• Budget: Rs 55 crore 

• Box office : Rs 145 crore  

• Distribution : Eros International Media Ltd. Excel Entartainment• Soundtrack : Sold at Rs 7 crores to T-

Series ( Released on June 3, 2011 )

• Satellite Rights : Rs 31 crore

• Release : 13 July 2011 (2011-07-13) (International) 15 July 2011 (2011-07-15) (United Kingdom & United States) Special edition DVD as well as a fullscreen

and a widescreen edition of the film released in 2007.

• Budget: $250 million 

Harry Potter and the deathly hallows -2

• Box office  : $1,324,180,123

• Production: Warner Bros.• Soundtrack and DVD: Blue Ray-$20-40.

• Copyrights : The rights for the first four novels in the series were sold to Warner Bros. for £1,000,000 by J. K. Rowling.

Paa• Release date : December 4, 2009

• Budget: Rs. 15,00,00,000

• Box office : Rs. 39,00,00,000

• Distributors- Reliance big pictures MAD Entertainment Ltd. Amitabh bachchan corporation.

• Soundtrack : Owned by T- series

• Satellite Rights : Owned by SET MAX