Behind the Scenes w/ David Brown -Demystifying Film Markets: A Guide to Financing Your Movie
Demystifying Film Markets: A Guide to Financing Your Movie
Ever wonder how movies get made? It's not just about a great script and talented actors. Financing plays a huge role, and film markets are at the heart of it. Let's break down these markets and how they can help you finance your film.
Understanding Film Markets
What exactly are film markets? Think of them as industry events where filmmakers, distributors, sales agents, and financiers come together. Major examples include the American Film Market (AFM), the European Film Market (EFM)(held during the Berlin Film Festival), and the Cannes Film Market.
These markets aren't the same as film festivals like Toronto, Sundance, Tribeca, or South by Southwest. Those festivals showcase films to audiences, but film markets are where the deals happen. While deals can be made at festivals, the primary focus is different.
Film markets are all about connecting the right people and securing funding. A key part of this is pre-selling your film's rights to different territories.
The Power of Territories
What do we mean by "territories?" In the film world, a territory is a region where you can sell the rights to show your movie. There are many territories. You can find a list of 44 territories (excluding the US and Canada) within the video Behind the Scenes w/ David Brown - Film Markets & Film Finance. Pause at the linked time to screenshot the list.
[Include a high resolution image of the territories here]
Selling distribution rights to each of these territories allows you to raise money to finance your film. This is often done through pre-sales, which are agreements made before the film is even finished. These deals are based on the script, the director attached, and the cast.
Should You Hire a Sales Agency?
Think of a sales agency as a realtor for your film. Their job is to connect you with potential buyers (distributors) in different territories. They take a commission, so they only get paid if they successfully sell your film.
Do you need a sales agency? If you don't have the experience or the connections to navigate the film market on your own, the answer is probably yes. Producers often wear many hats, but a good sales agency can focus specifically on distribution and sales.
How do you find a good sales agency? David Brown's company, Film Agency (filmagency.com), can help. Other options include Voltage and Highland. You can also find a broader list of agencies through ID Pro.
It's always a good idea to contact a few different agencies to see who's the best fit for your film and your budget.
Understanding Sales Estimates
Before going to market, sales agencies will give you sales estimates. These estimates show how much money your film could potentially earn in each territory. These estimates are based on:
The film's genre
The film's budget
The director
The cast
The agency will give you an "ask" (the ideal amount you hope to get) and a "take" (the lowest amount you're willing to accept).
Be careful of agencies that give you unrealistic estimates just to get your business. A good agency will carefully consider the market and the real value of your cast. What are the actors working on right now? What projects are coming out soon? Where will their careers be in 6-12 months when your film is released?
How the Sales Process Works
What happens once you have a sales agency? The first step is usually to try and get a global deal with a streaming service like HBO Max, Netflix, Amazon, Hulu (Disney+), or Paramount+. A global deal is simpler. You'll only have one contract, one buyer, and one payment.
If the streamers pass, the agency will create a market poster and character artwork to promote your film. They'll also share the synopsis, genre, and script with potential buyers.
Next, they'll try to secure a North American distribution deal (for the US and Canada). The goal here is to get a "backstop" agreement. This allows you to sell the film to another buyer later on (for example, after a great festival screening) if someone offers a better deal. You would just need to pay a "kill fee" to the original distributor.
The agency will also negotiate with international buyers. It helps to have a North American distributor in place, as this adds prestige to the project. They'll also negotiate "holdbacks", which means international territories can't release the film before the US release.
Navigating the Film Markets
The big film markets are AFM, EFM, and Cannes. Sales agencies often rent booths at these markets, which can cost anywhere from $10,000 to $200,000. Before the market, the agency will create posters and other marketing materials. They'll also email potential buyers to set up meetings.
Meetings at film markets can be quick. Sometimes they are only 15-30 minutes long. During these meetings, the agency will pitch your film to potential distributors. The goal is to negotiate pre-sales for different territories, focusing on key regions like Germany, Russia, the UK, Australia, New Zealand, Latin America, and the Middle East.
Understanding DMO Contracts and the IFA
Most international pre-sales use a standard contract called a DMO (Distribution Minimum Obligation) contract. This contract is provided by the International Film and Television Alliance (IFA). You can find more information on the IFA's website: ifa.org.
The DMO contract will include details like the purchase price, the upfront payment, the revenue share, the length of the agreement, and any special terms.
Closing Deals and Getting Paid
Your sales agency can usually close deals during the market without having to get your approval every time, as long as the deal falls within the "ask" and "take" range you've already agreed on.
The agency can sign the contract on behalf of your film's LLC, or your LLC can sign directly with the buyer.
Pre-sale payments usually work on a 20/80 schedule. You'll get 20% upfront when the contract is signed. The remaining 80% is paid when you deliver the finished film. This is known as "Notice of Delivery" (NOD). Once you've delivered the film, the buyer will wire the remaining funds.
Financing Your Film with Pre-Sales and an Article on Other Funding Methods
Once you have your sales estimates and pre-sale contracts, you can create a finance plan. This plan will include:
The Minimum Guarantee (MG) from your North American distributor
The total amount of your international pre-sales
A pre-approval letter for your film's tax credit
You can then take this plan to a film lender. Some potential lenders include:
Film Money (filmmoney.com)
Bonded Media Capital
SSS Film Capital
Cast and Crew Media Finance
Entertainment Partners Media Finance
Some lenders will require a completion bond, which is like an insurance policy that guarantees the film will be finished. Films with budgets under $5 million usually don't have completion bonds because of the cost.
Don't forget about tax credits and cash rebates! These can be a big boost to your financing. However, the timing of these payments can vary depending on the state where you're filming.
Lenders will also want to assess the financial stability of your North American distributor. If it's a well-known company, that's great. If it's a smaller company, the lender might ask to see their financial records to make sure they can actually pay you.
The lender will then disburse funds to you based on a cash flow schedule, giving you the money you need for pre-production, production, and post-production.
Final Thoughts
Navigating the world of film markets and financing can seem daunting, but it's a crucial part of getting your movie made. By understanding the process, knowing the key players, and securing pre-sales, you can increase your chances of bringing your creative vision to life. Remember to do your research, build relationships, and seek professional guidance when needed.