Financing Your Film For Distribution

I’m working with a client right now who is getting his business plan ready to start approaching investors for his million dollar budgeted film. Problem is, he decided he wanted to do a film for $1 million without WORKING BACKWARDS to see if his film can even support that budget. Not good!

So I worked with him to come up with a few different scenarios — remember, name CAST or DIRECTOR is usually the only way to justify a higher budget in this market so I recommend for everyone to come up with a few different scenarios for your potential investors — Plan A with NO NAME cast, and Plan B with NAME cast. A film with no name cast can rarely justify a budget of over a few hundred thousand dollars. The exception being if the film is high-concept OR has a very niche targeted audience that you have direct ACCESS to (in order to market and sell DVD’s, Downloads, and other merchandise).

Next, we had to some up with some revenue projections for the film based on both Plan A and Plan B. In a previous post BUDGETING FOR DISTRIBUTION we talked about how to use sales projections in your business plan, but a few things have changed since then and there are actually now about 5 revenue components that make up DOMESTIC revenue alone. They are:

• Traditional DVD
• Broadcast
• Cable VOD
• Direct-to-Consumer VOD
• Internet VOD

Notice I did NOT include THEATRICAL as a component of Domestic Revenue because any way you slice it, it’s usually a break even proposition at best.

When figuring out your Domestic revenue projections I suggest you do low, medium and high end approaches so that your potential investors can see what’s the worst, average, and best case scenarios. What happened with this particular client I’m referring to is that after we did these numbers, he saw in plain black and white that not even his HIGH projections show a profit on a million dollar budget. OK, maybe a small profit once we add in tax incentives and a spot of foreign revenue — but his film is a Comedy, which traditionally doesn’t translate into much foreign revenue (unless of course you’ve got Jack Black or someone of that caliber in your film!). So it’s back to the drawing board.

Now we’re at where he should have been all along which is figuring out the potential REVENUE part first, based on the type of film, target audience, and level of cast in the project, and THEN backing into the budget. As it turns out, I think he’ll be making the film for half of what he originally envisioned, and now we’re going through the steps of figuring out where to cut things in the budget. It’s not as awful as it sounds either — we actually INCREASED the budget for cast (to one third to one half the entire budget) and DECREASED shooting days and other bits and bobs he didn’t need (like over-inflated props, post, hair & makeup, etc.)

Backing into your films budget and hence financing for your film for distribution is a methodical process that NO filmmaker should ignore. In fact, it’s so important I spend all 6 sessions in my DISTRIBUTION IN REVERSE 2.0 GROUP COACHING INTENSIVE on walking you through the very detailed process of financing your film for distribution — and how to actually plan for distribution from the very beginning stages of production.

What have been your experiences in budgeting and financing for distribution? For those of you who have made films that never recouped their budgets, how would you do things differently next time?

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