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
http://www.creativeskillset.org/film/knowledge/article_5103_1.asp

How Much Does a Movie Need To Make to be Profitable
http://io9.com/5747305/how-much-money-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.


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