Dec 29, 2013

Genre & Comedy: What The Audience Pays For

Here's why we're doing what we're doing.

Straight to Video: Revenue Beyond Theatrical

We're making a horror movie here. We have no illusions about it - straight to video is a possibility. It could well help our chances to eschew a theatrical into a video release and look at deliberately seeking the DVD, the BluRay, the Video on Demand (VOD) route. If we can market it well enough in the various territories we release in, our lower demands with distribution may help us through the door.

A few years back, when the film school AFTRS was still in Melbourne, they held an event I was lucky enough to attend. The distro and marketing people from Paramount, Madman and I think Fox told us about a film they'd just released and a film they planned on releasing. They went into the detail of the marketing plan and spend, followed by their expectations and how/why they were/n't met. It was incredibly valuable information. Unfortunately, a lot of the audience was clearly made up of auteurs and precious people who despised the idea of money and marketing involved in filmmaking, but it did mean those of us who were serious about the business got some quality time.

The Vice President in charge of Distribution from Paramount Australia said some stuff I always remember. First, when asked what he wanted from directors, he said there was one thing he wished to hear but seldom did. He wanted a director to say, "I would like this film to make money." Second thing was outlining the types of films that sell. It was an unexpected but enlightening answer. Allow me to paraphrase.
"There are four types of films.
  1. A bad film that's hard to market;
  2. A great film that's hard to market;
  3. A bad film that's easy to market;
  4. A great film that's easy to market.
"I can sell three of those films. A bad film hard to market, well, no, that's difficult and should be abandoned. A great film that's easy to market, well, that's gold and will do well for everyone involved, but is exceedingly rare. I'll still buy a great film that's hard to market, because we'll believe in the project and the pathway will consist of critical and award recognition. The bad film that's easy to market, too, is just as desirable, because it may not be Oscar or Golden Globe worthy, but lots of people will watch it and buy it. It can still make money."
I came away from this session realising the power of genre and comedy. There are plenty of movies we love that are not critically acclaimed, but sit proudly in our DVD collections. A bad film that's easy to market is a genre film, a straight to DVD action movie, a gross out comedy. Hard Target, Universal Soldier, Hellraiser, Super Troopers, Definitely Maybe, Fools Rush In.

Now I needed data. Website The Numbers is a collection of box office and video data based out of LA. Pay enough money and you can get custom research. Sign up and you get access to a certain amount of information, searchable over decades, with at least domestic and international theatrical box office and production budgets available. In some films, there's information on domestic and international video sales. You get a month of free time when you first sign up, before you have to pay. I signed up and raided every type of dataset I could think of that might help me.

Setting the low bar I keep for realism, I went to the bottom 300 horror films the site had information on. There's a few bits and pieces I collected that will help us sell our concept in a business plan, but here's some good juice.
DVD Sales in the US among the 300 lowest performing horror films:
Minimum Average (bottom 100) $3.4 million made.
Mid-Range Average (all 300) $5.37 million made.
Highest Average (bottom 200) $7 million made.
The lowest average gives us $3.4 million. There are films that did far worse, and films like Paranormal Activity with tiny budgets and huge results. $3.4 million, compared to a budget of $250 thousand, is an impressive enough return for a first feature.

I also emailed Madman, asking them a few questions. Again, this was towards the end of the year, so I got a few quick answers with the promise of more detail in 2014. I was given the thumbs up for interest in straight to DVD and closing the gap on release windows, which I think is useful because it lets us put all our marketing effort into one concentrated period, and reap maximum return from multiple channels.

Finally, as I put this information together and built the case for placing less emphasis on theatrical release, this essay came out: 
Not at a Cinema Near You: Australia's Film Distribution Problem
"Only one in ten first-release films are now viewed at the cinema. 65% are viewed on video-on-demand and DVD/Blu-Ray. Audience behaviour is changing."
Not only is moving away from theatre (even though a DVD will enjoy a perception boost from a theatre release) something that economically makes sense, it's where the audience is shifting. Straight to DVD doesn't mean sucky, and with all the money and time that goes into theatrical, with such a shrinking payoff, video is clearly the future.

Revenue on Film and TV: The Mystery of Advances

I jumped into the start of my research on revenue and expenses as part of putting together a finance plan with our management accountant. After getting together some ideas of how theatrical box office is split up, I needed to go deeper, further backwards in the process. Box office is at the very end of the process, and we're all making a fairly high gamble that the movie will make any money at all, let alone enough to cover distro, P&A and exhibitor cuts enough to leave a decent chunk for us.

Here is the rough pathway I could put together for us. You'll see the question mark that signifies what I've hit up against.
The big question is whether an indy can get an advance.
There's a thing called an advance. When you're signing up with a distribution company, they might offer an advance, being a payment of funds up front. It's like in the publishing industry, where an author might get an advance they can use to fund their life while they write. If you're established as a filmmaker, producer or production company, you might get an advance. Every year the figures for advances shrink.

How much is that figure, then? What sort of advances are out there, even in the big leagues, as something we can bounce off of? This is the most difficult piece of information I've tried to find. I did manage to find a table of average advances to video paid in 1997, split up on a scale from A+ movies down to B-. Here's the link:

The Feature Film Distribution Deal

Take inflation into account and $50k becomes $75k. The industry isn't that good any more, though, so let's discount inflation and keep it at $50k. Let's also assume we suck, so take the lowest figure and split it in half. Even with these figures, from a $250k production budget, it suddenly seems possible to make not only make budget on presale advances, but to go into profit, too.

I doubted it, though. I needed more information, more recent data. Rummaging around some more, I found Mark David Ryan. Mark is a screen academic at Queensland University of Technology, who specialises in the study of Australian horror. Too perfect. I went through his two theses:
...and decided I needed to give him a call. He was really generous with his time, and we both seemed to agree a lot. It felt damn good speaking with someone who not only understood the business side of things, but could illuminate more of that world for me. Mark made me aware of Michael Robertson, a producer on Black Water, The Reef and Road Kill - all low budget Aussie horrors. According to Mark, Mr Robertson had been operating under this model I'd pinpointed: presales enough to get the film made. Keep budgets low, get money early so you aren't stuck waiting for the sales two, three years later. Mark also told me about another production company who had sold off their film's rights to subsequents (sequels, spin-offs and remakes) while overseas, in order to earn more money early. Turns out there are companies in the US that buy up these sorts of rights from foreign films as product for their own US versions.

From all of this emerged the skeleton of a finance strategy: take the money and run. I spoke with the above the line team about all I'd learned and put the outline to them.

Fuck long term return. Let's try and generate as much funding from the international and private markets as early as possible, and in doing so, sell off the rights and aspects that traditionally might generate long term profits. If the film is successful, we won't see much of it, but we'll have enough early enough to get paid for our efforts on The Lonely Hills and move on to our next one. Meanwhile, everyone else - distro, exhibitors, investors - makes money off of our efforts, hopefully generating returned interest in the next project.

I still had no idea what to expect in way of advances. Time to speak to Australian sales agents. I have connections with lifestyle TV, but not features, so I simply grabbed the Screen Australia list of international sales agents and worked my way down, marking those that might take our genre, and those in Australia. This was at the end of 2013, just before Xmas, so I only had the chance to contact one. He happened to also be the head of Screen Producers Association of Australia. I have to wait until the new year, but the short response I got helped: You won't get an advance at all without a name attached to the film, be it writer, director, or most preferably, talent.

So that's the latest challenge, and one we were prepared for: get a solid, internationally recognisable name on the picture.

Dec 28, 2013

How Do I Make Film and TV from Australia Profitable? The Backend

One of the first things I've been doing as producer is proving these two projects, the feature and the lifestyle show, are economically viable. We're not making these just because we feel the burning passion to create. I don't want my crew starving while their veins are full of fire. Without fuel, their fire'll die. Our industry's been running on just fire for too long.

I spoke to some accountants I know, lovely people, and asked them a question, "How do I make money for other people, using film and TV?" It's a simple question with an answer I'll spend my life trying to find. I need professionals in this department. My account pals spoke to me later, and it was a question that bounced around in their heads. One said he kept turning it over when he showered.

They've been incepted.

One chap is a management accountant. What he does frequently for other businesses - real businesses - is take a collection of assumptions about revenue, expenses, overheads and investment, run them through his processes and tell owners or idea holders how the project could be profitable. Assumptions! I can make those (from an educated position). I thought we'd need something more solid. Off I've gone, then, researching independent horror features and lifestyle programming.

Expenses are easy enough. That's budget for the production itself. Napkin maths on the horror gives us a target there, with 10% contingency. Lawyer and accountancy covered, too. Marketing thrown in to be safe. For the lifestyle show, I've got the original, detailed budget we put together for World's Greatest Cafes, the brand funded show we negotiated a year back. Can't give figures at this point, but if you're wondering, just work out how many days of shooting you'll require, add a few for safety, and speak to your fellow freelancers about day rates, or use standard rates from rental houses. Go higher to be safe.

Revenue's the hard bit. It requires some inside knowledge. For the feature, I'm a bit stuck. I started at Box Office Mojo, but their data is superficial at best - just grosses from the box office itself. I need to know what the prodco gets. What I did find was more detail on the breakdowns of where money goes.

Theatrical box office (the money audience gives the cinema for tickets) first gets split between a region's exhibitor (the movie cinema) and the distributor (Hoyts, Paramount, Madman), but the distributor also needs to take their P&A (print and advertising) spend. P&A is the cost of the actual printed spools of film, or the outlay on digital transmission these days, and the advertising within the regions the distro company is selling the film. The ad on the side of a bus or on a billboard or in your Spotify stream most likely came from the distribution company handling that film in your region. So, the distro get their money back on P&A, and it comes from the box office. They also take their cut, shared with the exhibitor or movie theatre chain. The leftover goes back down to the production company or producer (me) - BUT! I'll give a percentage of that to the sales agent I'm most likely to employ, who will get our film into the hands of the distributors in the first place.

Useful links I used:
Revenue and Making Money Out of Film

How Much Does a Movie Need To Make to be Profitable

That paragraph up there, that's the backend. People like pie charts and visual representations of text, so here's one showing you an incredibly inaccurate backend breakdown.
That's the very start of the rabbit hole. There's the mysterious and difficult to find advance from a distributor.
That's just theatrical. Theatrical isn't the main event any more. There's a whole other chunk of information I found about video revenue (DVDs, BluRay, VOD and digital).
Click the links to find that info. I'm dribbling it all out as I find it and make sense of it for myself.

Dec 18, 2013

The Movement To Make

Title sounds like I have to take a dump. And I do, but right now there are more important things to attend to.

I've attached myself to produce a feature film and a TV series, but it could only happen now. Since 2007, I've been getting good at producing video. Deakin and RMIT left a lot to be learned. We were taught how to make feature films, then entered the world realising we'd be fools to immediately make one. It's like finishing your MBA and then walking into Telstra, slapping your degree on the receptionist desk and declaring, "I'll take the CEO job, please." Hubris.

We started Green Rabbit, my first video production company, for a purpose. The film industry sucked, but my peers were simply complaining. We wanted to do something proactive. We wanted to get good at our craft. We wanted to embrace commerciality, making corporate video and commercials as a way to build contacts in the private sector. We wanted to learn how to work in teams, with hierarchies and zero tolerance of auteurs. We wanted to make content we were proud of.

I worked at Channel 10 for two years, taking notes on how studio television works, eyeing the producers and their roles, as well as everyone else's. Hearing where satisfaction and dissatisfaction lay. I went up and down the east coast on cooking lifestyle show Boys Weekend, learning about crewing on location. I edited a season of Good Chef Bad Chef, seeing the post-production process in action. I met a sales agent and discovered their crucial role in the business side.

I buried Green Rabbit, sold the assets, watched as our employees started the behemoth Jumbla, and restructured everything I'd learnt into The X Gene, my phoenix. This video agency is the sharpened, savvy result of all my street smart education. I'm confident in the processes, I have a treasured collection of freelancers who I trust not only to excel at their work, but that add something to it, and I understand Business.

With all this in my past, as I analysed a writer-producer agreement, I realised it was only now that I could fully make sense of this document and the context surrounding it. Only now could I bend my experience to the purpose I set out of uni with: to be part of those who change the film and TV industry into a more profitable, global industry.

The horror feature and the lifestyle TV show are the first steps, and I wanted to use this blog to keep track of how its going. I also want to share what I learn, because one of the great frustrations has been the secretive, little black book approach of the old guard. The lean young entrepreneurs I've met know this is a bullshit approach, so stay tuned and learn with me how to make movies and shows that make money for the people who are a part of them.

Dec 1, 2013

Stop Listening to Politician Promises

In light of the last five years, I think it's time we simply stop listening to politicians' promises. The old joke, "How do you know a politician's lying? Their lips are moving," has been trite for a while, but after the countless lies on both sides of Parliament maybe it's time to view politics in a different way.
If you judged your politicians based on the promises and policies they made when going to an election, more than likely you would be disappointed with the results once those politicians got into office. I suggest a very simple way to alleviate the frustration and disappointment. Simply ignore all promises and policy. Look instead to past performance. Evaluate an entire party and disregard the words and actions of the leader and the individuals. Simply look at the way a party is perceived and make your assumptions about how they will handle any issue based on how they handled similar issues in the past.
If you hoped there would be no carbon pricing and you believed the promise Julia Gillard made about the issue, you would have been disappointed by the resulting carbon policies of the Labor government. Instead, if you had a ignored any such promises, and instead viewed the party as a group, you would have seen that on the whole they are pro policies that instigate carbon pricing. You would not have been disappointed by the resulting moves of the Labor Party to price carbon.
Similarly, if you listened to Tony Abbott promising that the Gonski reforms would remain as they were before taking office, then of course you would be disappointed by the resulting turn around they have made in the last three months. Instead, if you had ignored any of their promises and looked at the past of the party, you would see that they often have a preference for dividing funding and controlling it in a manner exactly like what Christopher Pyne is doing now.
So next election why don't we all try something new? Why don't we all just ignore what the parties say and look at how they have performed. Regardless of what side of the aisle you are on, you are sure to avoid the disappointment and frustration that has come from listening to politicians' promises. Instead, when a politician does something you don't like, you'll say, "Of course they did that! They were always going to do that! I never expected them to do anything else but that!"
Together we can fight the draining frustration and disappointment of politics. Together we can stop that tired old joke from being relevant.

Nov 4, 2013

New Website Coming: Wordpress Theme Recommendations?

So this site's been quiet because The X Gene has been blowing up in a good way. has lost its special free server, so I'm taking advantage of that to rebrand and change the site. This blog will change its design, too! That'll be fun as balls. Any Wordpress templates you recommend, especially if it can showcase video well.