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February 16 at 8:18am

The New Model Of Indie Film Finance, v2011.1, Foreign Value

By Ted Hope

Today continues my efforts to try to define the takeaway from the two most recent and robust US acquisition markets of Sundance & Toronto.  I (and hopefully we) will try to extrapolate from them where we are today.  How can we use our most recent experiences to determine the reality of our filmed dreams today?  How can we move to a more realistic model of indie film finance?

Foreign estimates still set the initial value for films, and it is CAST that is the predominate determinator for this value.  Before a film is shot, there are three types of actors that mean something to foreign buyers:

  • 1) stars that have been in big hits in the relevant territories;
  • 2) stars that have been in popular television shows in those territories;
  • 3) stars that can be expected to generate a great deal of publicity everywhere.

Other than stars, there are a few other aspects of a film that create foreign value.  Stars are another entity altogether from cast or actors — and it is really the stars that determine foreign value.

Are there any other factors that help shape what your project is determined to be worth overseas? Fortunately, yes!  The track record of the collaborators have impact on a distributor’s willingness to consider a project.  Experienced directors and producers have more foreign value, provided they have made films that have fairly recently been well received, either commercially or critically.  Similarly, proven cinematographers, designers, editors, composers, and vfx supervisors can mean something.

When the foreign markets were more hungry for US product, it was partially due to their paid and free television’s appetite for it.  Although that has been vastly diminished, if your film will fit well into foreign television programming, you have some security.  It is generally thought that comedies and “urban” (i.e. non-white) content doesn’t travel.  Nonetheless I have had buyers get excited about an office place comedy precisely because they feel like television but aren’t.  Similarly, as new niche channels develop, new audiences aggregate.  I still remain confident that as much as hip-hop transcended music to become a global lifestyle, “urban” programming can get some international  legs once it gets its foot in the door.

Every international territory struggles with the same challenges of expensive marketing.  When a project comes even with the hopes of decreasing some of those costs, buyers perk up. I have seen those results come both from aggregated audience action (i.e. twitter followers, facebook friends, and data lists) and transmedia builds.  Although there is not yet the model that can be used to demonstrate success, let alone predict it, these first efforts still increase the appetite for acquisition among buyers, and thus potentially also the value.

For there to be foreign value, you need to have the potential to sell.  The things that increase that potential also increase a film’s foreign value.  At acquisition markets you see this phenomenon in full play as film’s that appear to be headed to a subsequent (and more major) festival, get snapped up far more readily.

Tomorrow Friday, we will look at why a film might hope to get acquired in the USA and where else can funding come from in the states.

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9 Comments

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  1. Bill Cunningham / Feb 16 at 8:18am

    Ted –

    While I don't disagree with what you are saying here, I feel I must point out that what you're saying is that stars have value in foreign territories if you use the TRADITIONAL motion picture financing/distribution/marketing system.

    But really what's needed (IMO) is a focus on the FUTURE distribution systems. If we don't try and get a handle on our future it's going to slip form our grasp. We're already seeing the birth spasms of a new distribution system that is more focused on the content and not who's in it.

    Genre is the star of the future.

  2. Jason Brubaker / Feb 16 at 8:18am

    Bill,

    Great comment. I totally agree. And to address what you write, I think we really need to take a look at other industries. The question we need to ask is, how do other industries compete when cheaply produced products (oftentimes produced overseas) flood the market?

    Some companies go out of business. Other companies adapt. I have given this a lot of thought and my thinking is, we need to focus less on the freelance system, geared towards the production of ONE movie and instead focus on forming mini-production companies, populated by long-term employees, aimed at creating a slate of movies – geared towards a consistent target audience.

    Compensation in this regard would come from multi-year contracts with core employees. And over time, in theory, these companies would focus much time sourcing a loyal audience.

    Back in October 2010 I recorded a pod-cast outlining some of my ideas. Here is a link if you care to listen. http://bit.ly/ejGSlx – This is not to serve as gospel. But again, I'm also not reinventing the wheel. I'm simply looking to other industries for models that worked.

    Jason Brubaker
    http://www.FilmmakingStuff.com

  3. Nicholas Jayanty / Feb 16 at 8:18am

    Hey Ted! How do we as producers educate foreign buyers about the power and value of reach and strategic partners? For example, if you're a film that has a huge Americana theme, and you strategically partner with a Japanese Americana Fan Mag with a reach in Japan in the six figures to millions, that is a line item the distributor may or may not have to pay for that promotional support to a key target audience.

    I know you do a lot of product placement, how does the ability to quantify impressions for a brand translate to selling movies overseas?

  4. Bill Cunningham / Feb 16 at 8:18am

    jason -

    Whenever someone from another industry looks at film finance, they either A – run away in sheer terror, or B – realize that there's a lot of money to be scamm… er, made from financing movies. For too long it's been a house of cards made from rice paper.

    I have long been an advocate of long term employees and a steady stream of products. What Jeffrey Katzenberg used to call “base hits” in his famous Disney memo. Will this happen in the traditional Hollywood system ? No. As you surmise I think it has to come from way outside.

    I think small b-movie companies like The Asylum have a partial handle on it – but they are also beholden to traditional movie markets and sales structures.

    I think we need to look more toward direct consumer marketing, and I look forward to the day when film production outfits can make a healthy, consistent profit providing entertainment to their target market and never have to set foot within sight of “Hollywood.”

  5. Ted Hope / Feb 16 at 8:18am

    That's what we need Nicholas! Some way to both quantify the number of impressions that a work's various elements bring to a film, and the authority/influence level of those involved and somehow participating. Get me some funding, and we will get started on that!

  6. Nicholas Jayanty / Feb 16 at 8:18am

    I definitely get excited about the idea of going to market with a packet that displays a film's full domestic and world wide reach potential based on its intrinsic reach network and P&A in escrow. I think it could transform the relationship between distributor and producer from a traditional buyer/seller relationship to more of a partnership that maximizes collaboration. I know a little tool called Kickstarter that could help kick off a project that could help with that…do you think the demand is large enough for a free tool that empowers producers with a better data set? I know I am in, but are there others out there too?

  7. SinCityFinancier / Feb 16 at 8:18am

    It's amazing how people ask us for film or any other type finance but make excuses when we indicate what $ approval criteria is and how it may differ.
    But we do offer a complimentary consultation on 250+ finance topics/sources at http://SinCityFinancier.poster

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