Reality Check! Your $2 million budgeted film with first or second time Director and Producer isn’t going to make a profit!
Well let me back up a second actually….
These past few weeks I’ve been in Australia where I gave a 2 day workshop and spent a day consulting one-on-one with Producers and I’ll tell you this – non-U.S filmmakers can actually make $2 million films without having to worry. That is because most of their film financing is public money (via government agencies) and their primary objective is not profitability. Lucky them!
However as U.S producers should we be concerned about profitability? Yes, we should! There are two reasons for this:
#1 – at the low budget level don’t you want to at least recoup or make a profit for your investors so they’ll open up their wallets for your next film? There’s no faster way to lose investors than to lose their money.
#2 – even at the Studio level, if your films generate profits when you’re first starting out, you’ll keep working. If not, you won’t. Simple as that.
Here’s the reality of today’s marketplace:
• Acquisition prices in worldwide territories aren’t as robust as they were several years ago, so you shouldn’t be using sales estimates from anywhere but the most recent film festivals and markets.
• Box office numbers don’t matter! Just because you see a particular film made millions at the box office, doesn’t mean the filmmakers recouped any of that money. In fact, most of that revenue went to the exhibitors and distributor and until you develop a serious track record for yourself, don’t plan on a slice of any box office earnings.
• New revenue models are emerging and revenue is shifting. Ah, the good news! Yes thankfully new revenue streams (like VOD) are emerging to replace old revenue streams (like DVD) – just not as quickly as everyone would like. So hold your horses with this – the revenue will catch up eventually, but as of now it still doesn’t justify making a film for more than a couple hundred grand.
So this is what I mean about establishing realistic goals for your project. And now I want to turn this over to you – have you given yourself a reality check in terms of your projects in the marketplace? If so, what have you discovered? And how are you envisioning profitability for your films?
Looking forward to your comments below!
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