As a result, the market for low budget films (with budget of $10 million or less) is relatively healthy because they can be potentially picked up for digital distribution with funding up … Thus, as a film’s budget increases, so do the prices distributors will pay for the film. (Witness anything done by James Cameron and Martin Scorsese.) As you create a distribution strategy for your horror film, remember that the key to success is good marketing. In this range, we see a lot of movies many would consider… well, pretty average. Distribution Costs Typically, the distribution costs of a film are not included in the budget breakdown. All Rights Reserved. Using real world examples, this 2 1/2 hour workshop explores the distribution process from the perspective of the Independent or Low-Budget filmmaker with an emphasis on common errors and assumptions that can prevent a film … Presented by Tim Morell of Morell Media. Step 3. Thus, the budget includes, for example, costs of acquiring the script, payments to talent, and production costs. The budget almost always includes an artificial mark-up referred to as “overhead,” usually approximately 10%-15% of the budget. The remaining $700,000 is the filmmaker's share of revenue. Don’t let your low-budget … I was an adjunct professor at both the UCLA Law School and the UCLA Anderson School of Management, teaching Entertainment Law and Finance for many years. Small. The first question asked by all distributors is: “What is the budget?” The higher the budget, the more the film sells for, so there is a perverse tendency to inflate the cost of films. For example, talent will charge far more on a big-budget film than they will for their identical services on a low-budget film. Again, the tentacles of the budget/sales corollary at work. In general, the budget includes all costs relating to the development, production, and post-production of a film. Unless the person preparing the initial budget has a firm grip on the director’s psychological predilections, the budget will be no more than a wild guess. There are several miscellaneous items that arguably should not be included as part of the budget, but are. Once I got my brain around this, the rest was easy. When all else fails, one irresistible tendency is to greatly exaggerate the true budget in order to jack up prices. info@multiplemedia.ca. I am a partner in the corporate entertainment department of Greenberg Glusker, practicing entertainment, corporate, and tax law. I soon learned that the budget was really $12 million, and the producer had received a “producer fee” of $2 million, which was included in the budget. Presented by Tim Morell of Morell Media. Filmmakers with a movie “in the can”, or close, looking for a distributor are encouraged to contact us via the filmbudget.com website Contact Page. The bigger the company, the bigger … The amount of the budget can vary widely depending on the neurosis of the director. As with producer fees, this is just a disguised way of making a profit on the film. The budget does include self-charged “producer fees” paid to the producer. Without a properly prepared budget… This document, which could be over 130 pages long, is used to secure financing for and lead to pre-production and production of the film. Every budget includes a contingency for potential excess costs, always expressed as a percentage of the budget—usually 10%. For example, if talent is paid $20 million up front, that amount will be included in the budget. Negotiating With a Film Booker. Director James Cameron ran over budget and offered his fee back to the studio. A film’s budget plays a dominant role throughout the film’s life cycle—with implications going far beyond the mere cost of the film. Theatrical, DVD, VOD. )… Using real word examples this 2 hour course explores the distribution process from the perspective of the Independent or Low Budget filmmaker with an emphasis on common errors and assumptions that can prevent a film … The average production budget of a major studio film in 2007 was $106 million [source: MPAA]. There may be slight variations, but not much. Perhaps the most tangible aspect of a film’s budget is that the amount that distributors will pay for a film is almost always calculated as a percentage of the budget (the “budget/sales corollary”), regardless of the script, the cast or anything else. Box 138 Toronto, ON M5K 1H1. Film Distribution & Marketing; Self-Distribution on a Micro-Budget: Releasing Your Film Worldwide Without Spending a Dime by Josh Folan. However, the cost of delivery of the film print to distributors is typically treated as a distribution cost, and is generally not included in the budget. I am a partner in the corporate entertainment department of Greenberg Glusker, practicing entertainment, corporate, and tax law. We are accepting for consideration indie films in post production or in the film festival circuit. (Photographer: Dimas Ardian/Bloomberg), EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change, Michigan Economic Development Corporation With Forbes Insights. But suppose that in the domestic territory, … The lender will, in turn, hand it to the completion guarantor with a request to guarantee that the film can be made for that budget. Multiple Media Entertainment Size. Film budgeting refers to the process by which a line producer, unit production manager, or production accountant prepares a budget for a film production. [citation needed]. Creating a film budget is an important beginning step in transferring the written words on a script to visually arresting images on the big screen. Dah. You have to do the research and hard work, even when you have a deal with a great distribution company. The Bigger the deal the less control you have. Address. It is not ideal, but few things are in the micro-to-low budget filmmaking process and the film … A lot of comedies fall in this range (most of Adam Sandler’s latest), as well as your average action movies (around half of the Fast & the Furious franchise), and some animation (lots of DreamWorks films). Types Of Films They Distribute. There are also several interesting inclusions and exclusions, discussed below. Good luck. Each studio (and each movie really) has a slightly different allocation of budgeted funds, but they all generally share common line items or categories: Trailers: theatrical and internet for both Domestic … A budget is typically divided into four sections: above the line (creative talent), below the line (direct production costs), post-production (editing, visual effects, etc. For example, if two identical films with the same script and stars were made, and one was made for $50 million and one was made for $10 million, the one made for $50 million would typically sell for five times more than the film made for $10 million. Smaller Budget and Different Films. THE FILMMAKER’S ULTIMATE GUIDE TO VIDEO & FILM DISTRIBUTION Short film distribution. [12], Movie production incentives in the United States, "Inside the WGA: Even at $400K a Week, a Million Insecurities", "DGA Rate Cards 2012 - 2013; Minimum Salary Schedule", "Forbes: DiCaprio Beats Depp for Title of Hollywood's Highest Paid Actor", "The Smoking Gun: Archive: The Sixth Sense", "Budget for Tomb Raider-2 With Angelina Jolie", https://en.wikipedia.org/w/index.php?title=Film_budgeting&oldid=992609273, Articles with unsourced statements from June 2014, Articles with unsourced statements from January 2016, Articles with unsourced statements from August 2018, Creative Commons Attribution-ShareAlike License, This page was last edited on 6 December 2020, at 05:09. Deferments and participations paid to talent are not included in the budget. And The Hollywood Reporter notes that the average cost of a feature film is even lower, spanning between$70 and $90 million. Note: Figures for 2020 are at an annualized rate. A Film Budget Breakdown (also called a Detailed Budget) is the financial blueprint for your project. But there are also some memo… In the leasing model, the distributor agrees to pay a fixed amount for the rights to distribute the film. Method Of Distribution. Film financing can be acquired from a private investor, sponsor, product placement, film studio, entertainment company, and out-of-pocket funds. Another impact of the budget is that many related costs rise and fall with the amount of the budget. A sales agent will be able to provide you with some sense of the estimated value of the film before he or she brings it to the film market and festival circuit. As you can guess, the buck stops with the completion guarantor, who is usually the first to seriously question the budget. No kidding. Prepare Your Independent Film for Distribution. Note: … When I first heard this, it really threw me. LOW-BUDGET FILM DISTRIBUTION: A PRIMER FOR INDEPENDENT FILMMAKERS. © 2020 Forbes Media LLC. The documents had become public domain after a lawsuit involving the film. These include all financing costs, including interest and fees, all legal fees relating to the film through completion, and the cost of the completion guarantee. The “traditional” distribution model (i.e a film’s rights being sold via a single sales agent at a film market to distributors purchasing … Make your film the best it can be. Distribution companies take care of this work, and they usually have a contract that charges a specific fee and a percentage of box office receipts. The good news was that because of the budget/sales corollary, the pre-sales increased by more than enough to cover the increased budget. Contact Phone (416) 515-2222. Director of photography Edi Santoso, right, during, the production of the film “Sin” in Jakarta, Indonesia, in February. On the other hand, if talent foregoes the upfront payment of $20 million in exchange for a much larger, albeit contingent, deferment or participation, the budget will be reduced by $20 million. CASTING ROLES! For example, the completion guarantor may request a reduction or deferment of fees to the producer or an increase to the contingency. Producers often increase the budget for a picture by tagging on additional inflated “producer fees” or “overhead charges” for themselves, which are nothing more than a mark-up to the true cost of the film. Above the Line, Below the Line, and Other. A budget is typically divided into four sections: above the line (creative talent), below the line (direct production costs), post-production(editing, visual effects, etc. Advertisement Marketing makes up a huge chunk of modern movie budgets -- $35.9 million on … The net result is that any proposed increase to a film’s budget has a ripple effect that can more than double the proposed increase. A few taps on my trusty calculator reveal that A$1.1 million is to be the average feature-film budget (including distribution and advertising) – if our film industry is to break even. I am the author of The Biz: The Basic Business, legal, and Financial Aspects of the Film Industry, a popular book in its 4th edition, Taxation of the Entertainment Industry, and What They Don’t Teach You in Law School. For example, above-the-line costs include the costs of acquiring the underlying rights, script costs, producer fees, and payments to key talent (director and main actors). While the US system is profitable and can afford to go over budget, some other countries' film industries tend to be financed through government subsidies. Even the contingency itself may exclude certain above-the-line costs. Securing traditional film distribution for your film is doable. Remember: 1. Also, the below-the-line costs are used as a rough indication of the value of production going “on the screen,” as opposed to payments for rights, talent, etc. The actual cost to produce Pixels, or the "grand total", was $129.6 million and the net budget for Sony came to $111 million after they received a government rebate in Canada that covered a portion of their gross spend (cost) in the amount of just over $18 million. Film budgeting refers to the process by which a line producer, unit production manager, or production accountant prepares a budget for a film production. I have been named (a) one of the top 100 entertainment lawyers by the Hollywood Reporter, (b) one of the top 25 entertainment lawyers by Variety, (c) one of the top 100 lawyers in California by the Daily Journal and (d) one of top 3 "Most Influential Lawyers" in media by the National Law Journal. Though movie studios are reluctant to release the precise details of their movies' budgets, it has occasionally been possible to obtain (clandestinely) details of the cost of films' breakdowns. A Business Plan, used for the purpose of raising funds from film … The Los Angeles Times presented an extensive special report, dissecting the budget of the 2005 film Sahara. There are no guarantees, but you should always give it your best shot. The completion guarantor will then make everyone sign in blood that they can live with the budget. Other costs include financing costs, the completion guarantee fee, and the contingency. Only in the rarest of situations or with the lowest of budgets will a filmmaker will be able to fund the production with a cash advance on a guaranteed distribution. By. [2] Even though Sony's out of pocket for the film was reduced because of the incentive, it does not negate the fact that the actual cost (amount spent during production to make the film) was still $129.6 million. What the sales projections say about what the film should cost to make, will suggest the right budget and the right distribution strategy to use for your level budget … The budget of (nearly) every movie ever made. I graduated from UCLA (Phi Beta Kappa. There was a time when companies such as Cannon Films would create one-sheets (theatrical advertising posters) that the company would exhibit at the international film markets. Formats Required for Theatrical Distribution. The distributor sells your film to retailers, but YOU have to sell it to the fans. Finally, all the guilds have fee structures that are higher for high-budget films. Market Share for Each Distributor 1995-2020 The preliminary film budget is created to raise financing and it isn’t generally detailed or extended. The contingency is included in the budget for purposes of the budget/sales corollary (i.e., upping prices), even though it may never be spent. By industry practice, the budget is divided into “above-the-line” costs, “below-the-line” costs, and “other” costs. For example, if the budget is really $10 million, the producer will charge and retain an additional $1.5 million to purportedly cover its overhead. The reason that these categories are relevant is that several items (such as insurance premiums and completion bond fees) are often calculated as a percentage of the budget, but excluding all or a portion of the above-the-line costs or other costs. 5600PRODUCTION FILM & LAB 1,150 5610Field Drives - LaCie Rugged Drives 42 TB Drives 250 1,000 (Assume max 4 hrs/~64 GB per day, 140 hrs total, need 2.5 TB total, x2 for mirror) 5620Tape Stock 0 … For example, if a film that really cost $10 million were sold for $12 million, to me, the budget was $10 million, and the producer had made a $2 million profit. Almost without exception, the completion guarantor demands an increase in the budget to give the completion guarantor more breathing room. [1] One of the consequences of the Sony hack was the release of budget information of many films or TV shows, including the 2015 Adam Sandler film Pixels. Short films have a life in the festival circuit and are a great way to create a “calling card.” Use a short film … These film … In other countries, producers who exceed their budget tend to eat the cost by receiving less of their producer's fees. Since … This was a presentation done for the Fairfax Filmmakers Club. A more honest approach would be to say that the budget is $10 million, but the producer wants to make at least $1.5 million of profit. It is critical that … However, the cost of delivery of the film print to distributors is typically treated as a distribution cost, and is generally not included in the budget. A film production budget identifies the costs for each phase of making the film, from development, pre-production, production, post-production through to marketing and distribution. This, in turn, will have the completely crazy impact of reducing the amount that the film can be sold for because of the budget/sales corollary. Contact Email. Multiple drafts of the budget may be required to whittle down costs. If the distributor and the studio have a profit-sharing relationship, on the other … Multiple drafts of the budget may be required to whittle down costs. if a film spent £1 million on marketing and went on to gross £3 … Once the upfront costs are paid and the film is released, … It often only provides the top … If the budget calls for Godzilla to be played by a ten-dollar hand puppet, the director better not come whining later to the completion guarantor requesting funding for a life-size model. If the director is a wild perfectionist, demanding absolutely perfect special effects and endless retakes, the budget will increase dramatically. If a film didn’t attract enou… Movie Budgets. I graduated from UCLA (Phi Beta Kappa, Summa Cum Laude) and UCLA Law School (first in class). As one stark example I worked on, a $20-million star was added to a $6-million film. Film budgeting usually occurs in two different phases. Filmmaking is a business, and with any business, planning how to spend available funds is vital. The budget excludes film promotion and marketing, which is the responsibility of the film distributor. Similarly, premiums paid to completion guarantors and insurance companies are calculated as a percentage of the budget, not flat amounts, and every film budget includes a contingency for possible excess costs, always expressed as a percentage of the budget—usually 10%. This document, which could be over 130 pages long, is used to secure financing for and lead to pre-production and production of the film. ), and other (insurance, completion bond, etc.) The conventional wisdom is that there just isn’t much short film distribution out there. The budget of the film did not go to $26 million—it went to over $40 million. Which distribution model is best for low budget films? Another way to view what is happening is that the producer is saying to whomever is financing the film, “Please increase the financing by the amount of my producer fees, so that I can take out at least some guaranteed level of profits up front. INDEPENDENT FILM DISTRIBUTION: A PRIMER FOR LOW-BUDGET FILMMAKERS. Go figure. We will increase the budget by this amount, which should increase sales necessary to repay you because of the budget/sales corollary.” Most financiers go along with this. However, if you are an independent filmmaker you don’t want to get caught out … Image via Flix.org.uk A booking agent, film buyer, or film booker negotiates the lease terms for films from the Big Six and beyond. I.e. The better your film… United States December 2020 Genuine movie/Tv serial/advertisement TVC shoot/Event/Print shoot/Script writer/Reference shoot and pilot … The film budget template takes you only to this level of funds, and so it is up to the filmmaker to use another form, such as the Film Financial Projections Template, to determine marketing, publicity, film festival and other post production costs. For low budget film with distribution. Exceptions have of course been made, one of the most notable examples being Titanic (1997). Sooner or later, the budget will be handed to the lender with a request to fund the budget. For an example of a budget for a $2 million independent feature, see Planning the Low-Budget Film by Robert Latham Brown. Many film budgets come in a bit lower, ranging from $100 – $150 million. If it was successful selling enough territories based on the poster, Cannon would contact the named talent and begin the process of producing the film. The above-the-line costs include the costs for the rights, producer, and talent. Insiders are always using this lingo, so you need to know it. Of course. 79 Wellington Street West Suite 1630, P.O. When it comes to reporting the budget of a film, the amount of the budget represents the gross budget, which is the grand total of actual spending to produce the project and not to be confused with net budget, which represents the final out of pocket for the producer after government incentives or rebates ("If you pay $50 for something but have a mail-in coupon for a $10 rebate, your gross spending still amounts to $50."). To illustrate this, I have calculated how much larger a film’s box office gross was as a multiple of the marketing spend. The below-the-line costs are basically all costs of production and post-production. Movie budgeting contains the key information that you must have for your production. In the US film production system, producers are typically not allowed to exceed the initial budget. Opinions expressed by Forbes Contributors are their own. The distributor is entitled to retain 20% of gross revenues, or $200,000, as a distribution fee. Variations, but you should always give it your best shot budget to give completion... Sponsor, product placement, film studio, entertainment company, and “other” costs 20-million star was added to film’s. I first heard this, it really threw me include the costs for the film “Sin” Jakarta. Insiders are always using this lingo, so you need to know it once I got my brain this... Any proposed increase photography Edi Santoso, right, during, the distribution costs Typically, the production of budget. Payments to talent, and talent don ’ t generally detailed or extended you have sell... 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