Film Finance : How it Works

Film Finance makes the films we love.

Movie Investors have long since been looking to recoup their funds any way possible.

We see films today as a pleasant distraction: a way to easily escape the reality of our troubles in a crisp 65° theater where, if we’re lucky, we can prop our feet upon the chair in front of us, sip on a cold cola, and maniacally munch popcorn while multi-millionaires pretend to be someone they’re not for two hours. Frankly, it’s fantastic. But, like many businesses, films need some source of investment to be made into small independents or the billion dollar blockbuster summer films we know and (arguably) love. This is where the brilliance and complexity of film financing comes into play.

Film Finance : From then to Now

Modern film can be first attributed to two men: Leland Stanford, a businessman and former governor of California, and Eadweard Muybridge, a professional photographer, circa 1872. Stanford wanted to know whether or not all four horse’s legs came off the ground when galloping. Stanford contracted Muybridge with the task of finding out the truth. Thus, the first form of film financing began. Muybridge set up a crude assembly line of 12 cameras and, as the horse passed, each camera took a different picture. Since the idea of film wouldn’t be properly introduced for another decade, Muybridge strung the photographs together on a loop, creating the first film. Nowadays, it would seem more in line with a .gif, but due to the two men’s efforts, the first documented film was created, and financed.

Presently, the general idea behind film financing is a tad more complex than it was 150 years ago. The general concept behind film financing occurs during the initial development stage of film creation. Filmmakers bring myriad items to the table whether a verbal pitch, a several page synopsis, a full script, a demo reel to potential financiers to showcase their production abilities. Financiers then decide, based on predictions on how well they believe the film and/or franchise will perform, then invest appropriately. Generally speaking, the prediction of revenue for film is based on the initial theatrical release, DVD/Blu-ray sales, syndication on cable, in-flight movies, and ticket sales abroad. This investment process tends to have about a 10-year span, making it potentially difficult to predict just how much money to invest in a single product.

Film production is, in the truest sense, a business. It facilitates film investors, barters on equitable terms with investment companies, releases a product, and tries to make sure it can create a positive product that will sell. If film production and movie studios are businesses, then that would make film financers and movie investors more akin to that of the banking industry. Investors must have some sort of faith in a project if they are going to invest money into a film. Most involved in film finance and equity have some sort of positive and consistent cash flow, or the banking industry itself, behind them.

Film financing has been quite lucrative for those with a sharp mind and a large wallet. Although they are not as well-known as the studios who make the films themselves, film financers and equity investors have done quite a lot to help out, not only struggling independent filmmakers, but large-scale movie production companies. Alcon Entertainment is run by FedEx founder Fred Smith. Alcon has helped finance the aggressively heart-wrenching movie My Dog Skip, as well as the equally emotionally destructive movie The Blind Side. Endgame Entertainment’s focus is mainly on documentaries like Hotel Rwanda, and psychological thrillers like Looper. Even still, Participant Media (possibly the company who has the most films under their belt with over 75 to their name) has helped fund such movies as Netflix’s own Beasts of no Nation, An Inconvenient Truth, The Help, and Good Night, and Good Luck.

Even if we don’t see its work directly, film equity and financing plays an important part in one of our favorite past times to date.  Our past screenplay contest winners have gained invaluable insight and direct relationships with film investors year after year and express their thoughts of how the contest has helped them of the feedback page.

Click to check out the unique opportunities with our Screenplay Contest and Short Film Script Contest.