Film budgeting refers to the process by which a line producer, unit production manager, or production accountant prepares a budget for a film production. Once I got my brain around this, the rest was easy. Again, the tentacles of the budget/sales corollary at work. If the director is a wild perfectionist, demanding absolutely perfect special effects and endless retakes, the budget will increase dramatically. )… Insiders are always using this lingo, so you need to know it. The average production budget of a major studio film in 2007 was $106 million [source: MPAA]. When I first heard this, it really threw me. Since … 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. 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. Exceptions have of course been made, one of the most notable examples being Titanic (1997). 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 distributor is entitled to retain 20% of gross revenues, or $200,000, as a distribution fee. Step 3. (Witness anything done by James Cameron and Martin Scorsese.) No kidding. Film budgeting usually occurs in two different phases. Sooner or later, the budget will be handed to the lender with a request to fund the budget. I.e. Note: … info@multiplemedia.ca. Distribution Costs Typically, the distribution costs of a film are not included in the budget breakdown. Short films have a life in the festival circuit and are a great way to create a “calling card.” Use a short film … 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. 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. Also, the below-the-line costs are used as a rough indication of the value of production going âon the screen,â as opposed to payments for rights, talent, etc. Theatrical, DVD, VOD. The Los Angeles Times presented an extensive special report, dissecting the budget of the 2005 film Sahara. The distributor sells your film to retailers, but YOU have to sell it to the fans. 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. Many film budgets come in a bit lower, ranging from $100 – $150 million. You have to do the research and hard work, even when you have a deal with a great distribution company. Perhaps the most tangible aspect of a filmâs budget is that the amount that distributors will pay for a film is almost always calculated as a percentage of the budget (the âbudget/sales corollaryâ), regardless of the script, the cast or anything else. (Photographer: Dimas Ardian/Bloomberg), EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit â And Pushing For Change, Michigan Economic Development Corporation With Forbes Insights. 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. The completion guarantor will then make everyone sign in blood that they can live with the budget. Opinions expressed by Forbes Contributors are their own. Film budgeting refers to the process by which a line producer, unit production manager, or production accountant prepares a budget for a film production. 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 budgetâusually 10%. Go figure. Deferments and participations paid to talent are not included in the budget. Formats Required for Theatrical Distribution. We are accepting for consideration indie films in post production or in the film festival circuit. Good luck. [citation needed]. 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. As with producer fees, this is just a disguised way of making a profit on the film. To illustrate this, I have calculated how much larger a film’s box office gross was as a multiple of the marketing spend. 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. © 2020 Forbes Media LLC. When all else fails, one irresistible tendency is to greatly exaggerate the true budget in order to jack up prices. The budget of the film did not go to $26 millionâit went to over $40 million. Finally, all the guilds have fee structures that are higher for high-budget films. 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. Market Share for Each Distributor 1995-2020 I graduated from UCLA (Phi Beta Kappa. 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. The below-the-line costs are basically all costs of production and post-production. Film Distribution & Marketing; Self-Distribution on a Micro-Budget: Releasing Your Film Worldwide Without Spending a Dime by Josh Folan. 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. [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. If the distributor and the studio have a profit-sharing relationship, on the other … For example, the completion guarantor may request a reduction or deferment of fees to the producer or an increase to the contingency. The good news was that because of the budget/sales corollary, the pre-sales increased by more than enough to cover the increased budget. 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 … There are no guarantees, but you should always give it your best shot. 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. 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 filmâs budget plays a dominant role throughout the filmâs life cycleâwith implications going far beyond the mere cost of the film. 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. 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. The budget does include self-charged âproducer feesâ paid to the producer. 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. Director James Cameron ran over budget and offered his fee back to the studio. United States December 2020 Genuine movie/Tv serial/advertisement TVC shoot/Event/Print shoot/Script writer/Reference shoot and pilot … if a film spent £1 million on marketing and went on to gross £3 … LOW-BUDGET FILM DISTRIBUTION: A PRIMER FOR INDEPENDENT FILMMAKERS. Securing traditional film distribution for your film is doable. Movie budgeting contains the key information that you must have for your production. 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 … The “traditional” distribution model (i.e a film’s rights being sold via a single sales agent at a film market to distributors purchasing … The Bigger the deal the less control you have. For example, if talent is paid $20 million up front, that amount will be 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. Unless the person preparing the initial budget has a firm grip on the directorâs psychological predilections, the budget will be no more than a wild guess. INDEPENDENT FILM DISTRIBUTION: A PRIMER FOR LOW-BUDGET FILMMAKERS. Note: Figures for 2020 are at an annualized rate. 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."). The budget excludes film promotion and marketing, which is the responsibility of the film distributor. The preliminary film budget is created to raise financing and it isn’t generally detailed or extended. 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). The budget almost always includes an artificial mark-up referred to as âoverhead,â usually approximately 10%-15% of the budget. In the US film production system, producers are typically not allowed to exceed the initial budget. 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. It often only provides the top … 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. Dah. For low budget film with distribution. [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. 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 a partner in the corporate entertainment department of Greenberg Glusker, practicing entertainment, corporate, and tax law. THE FILMMAKER’S ULTIMATE GUIDE TO VIDEO & FILM DISTRIBUTION Short film distribution. However, if you are an independent filmmaker you don’t want to get caught out … 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. 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. These film … There are also several interesting inclusions and exclusions, discussed below. 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 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. The budget of (nearly) every movie ever made. It is critical that … Presented by Tim Morell of Morell Media. Another way to view what is happening is that the producer is saying to whomever is financing the film, âPlease 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. [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. CASTING ROLES! Prepare Your Independent Film for Distribution. The net result is that any proposed increase to a filmâs budget has a ripple effect that can more than double the proposed increase. Types Of Films They Distribute. Another impact of the budget is that many related costs rise and fall with the amount of the budget. The conventional wisdom is that there just isn’t much short film distribution out there. The bigger the company, the bigger … Film financing can be acquired from a private investor, sponsor, product placement, film studio, entertainment company, and out-of-pocket funds. Director of photography Edi Santoso, right, during, the production of the film âSinâ in Jakarta, Indonesia, in February. It is not ideal, but few things are in the micro-to-low budget filmmaking process and the film … 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. The amount of the budget can vary widely depending on the neurosis of the director. But there are also some memo… Advertisement Marketing makes up a huge chunk of modern movie budgets -- $35.9 million on … All Rights Reserved. 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 Donât Teach You in Law School. Once the upfront costs are paid and the film is released, … The documents had become public domain after a lawsuit involving the film. For example, talent will charge far more on a big-budget film than they will for their identical services on a low-budget film. 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. Presented by Tim Morell of Morell Media. There are several miscellaneous items that arguably should not be included as part of the budget, but are. Small. Thus, the budget includes, for example, costs of acquiring the script, payments to talent, and production costs. 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. As one stark example I worked on, a $20-million star was added to a $6-million film. Of course. Which distribution model is best for low budget films? The first question asked by all distributors is: âWhat is the budget?â The higher the budget, the more the film sells for, so there is a perverse tendency to inflate the cost of films. 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. Method Of Distribution. 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. Movie Budgets. Contact Email. Every budget includes a contingency for potential excess costs, always expressed as a percentage of the budgetâusually 10%. Almost without exception, the completion guarantor demands an increase in the budget to give the completion guarantor more breathing room. 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). 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. As you create a distribution strategy for your horror film, remember that the key to success is good marketing. Box 138 Toronto, ON M5K 1H1. Thus, as a filmâs budget increases, so do the prices distributors will pay for the film. Above the Line, Below the Line, and Other. Producers often increase the budget for a picture by tagging on additional inflated âproducer feesâ or âoverhead chargesâ for themselves, which are nothing more than a mark-up to the true cost of the film. I am a partner in the corporate entertainment department of Greenberg Glusker, practicing entertainment, corporate, and tax law. In the leasing model, the distributor agrees to pay a fixed amount for the rights to distribute the film. 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. Smaller Budget and Different Films. Pay for the film distributor included in the US film production system, producers are Typically not to... It really threw me, during, the budget but you have a deal with a great distribution.. Are at an annualized rate fees to the lender with a great distribution company up prices be from. Even when you have … note: … film distribution & marketing Self-Distribution! 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