Category Archives: Funding

Smart contracts come to film financing

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I’ve written about the blockchain and smart contracts before. Now we have a breakthrough: the first film using both!

The film is called The Pitts Circus and promises to be a “feature length-horror-comedy movie incorporating the skills, comic talent and uniqueness of a real Australia circus family”.

Investors who buy some of the 666 shares with cash or Ethereum are guaranteed to share in 50% of the profits until 2036. Single shares are $150 USD or 10 Ether.

Caveat emptor:

‘As always with indie movies, there is only a small chance for a huge success — but in case it does take off, it is a journey to the moon.”

Use a wallet you know you’ll control until then because the smart contract will distribute the proceeds, if any, to that account.

My take: I know this sounds a bit weird, but it represents a radically different way to raise financing and settle contracts by using crypto-currency and smart contracts, both made possible by the blockchain. This illustrates the power of the blockchain — it does away with the friction of intermediaries, in this case bankers, advisers, lawyers and accountants. (For kicks, work out how much the 2007 million dollar coin is worth today!)

Zapruder Films seeks Canadian female feature writer for dev deal

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Because they don’t feel the Canadian feature film industry is doing enough to bridge the gender gap, Matthew Miller and Matt Johnson of Toronto’s Zapruder Films have launched a program to help support the development of one emerging female screenwriter.

They will be giving all of their $12,000 Telefilm development funds to one woman to develop a treatment into a first draft narrative feature script.

The rules:

“The contest opens September 8, 2016 and closes September 18, 2016.
The winner will be announced on Friday, September 30.
Applicants must not have written a produced feature length screenplay.
Scripts must be the original work of a female writer and must be written originally in English. Adaptations and translated scripts are not eligible.
The writer must be a Canadian citizen or permanent resident.
The writer must agree to option the material to Zapruder Films for a 24 month period.
The writer must not be a member of any screenwriting unions or guilds.”

Your single PDF application must be at least seven pages:

“One page synopsis of the film
A short treatment of the film (5-10 pages)
A short brief addressing what your film means to you (300 word maximum)”

I asked Matthew and Matt what sort of response their program has received:

“The response has been really encouraging. There have already been several submissions and dozens of inquiries as to the specifics of the rules and regulations. For the most part, it is very hard for young writers without an agent to get their foot in the door. Most companies don’t accept unsolicited works so we think that alone has provided a breath of fresh air. And it is trying to help address the issue of gender disparity in our industry and that has helped to spawn a healthy and spirited debate on social media. We couldn’t be happier with where things are at this early in the program.”

My take: I applaud Zapruder Films for this program. It’s smart on two counts: firstly, they’re addressing the gender imbalance in the Canadian feature film industry. Hey, it’s 2016 already. Secondly, these guys want to encourage new, as-yet-unheard voices, with new, interesting stories to tell. As we all know, story is king, or in this case, queen.

CRTC rewrites the rules for indie funds!

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In a surprise move that comes into effect this Thursday, the Canadian Radio-television and Telecommunications Commission is rewriting the rules when it comes to indie producers accessing Certified Independent Production Funds.

Among the changes, the CRTC is:

  • Eliminating the requirement that producers obtain a broadcast licence or development agreement to receive CIPF funding.
  • Allowing and encouraging CIPFs to allocate funding for script and concept development.
  • Allowing and encouraging CIPFs to allocate funding for promotion and discoverability.
  • Allowing CIPFs to fund productions achieving at least six Canadian certification points (down from eight), and include the pilot projects recognized by the Commission.
  • Including co-ventures in productions eligible to receive CIPF funding.

Responding to the new policy framework, Andra Sheffer, CEO of the Independent Production Fund, states:

“The Independent Production Fund has long been an advocate for the support of Canadian content for platforms other than television and because of its endowment, has been able to fund scripted series designed for the web. Therefore, the IPF is encouraged by the CRTC decision to allow other certified Funds which receive their funding from BDUs, to potentially finance projects with no broadcast licence. This will provide the flexibility that our system needs to keep up with evolving production and business opportunities and the demands of modern audiences. Web content allows for innovation and experimentation in story-telling – we have seen it in the web series we have funded over the past 6 years. With few gatekeepers and risk-adverse broadcasters, it encourages new talents to explore and create new forms of story-telling and content that do not typically work on the traditional television platform.”

There are over a dozen Certified Independent Production Funds in Canada.

My take: I think this is a clear signal that the CRTC and Heritage Canada (see ‘by ministerial portfolio’) want to diversify media production and divorce it from television. We shall have to wait and see how the CIPFs respond and how they change their programs.

 

BitTorrent launches the Discovery Fund

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BitTorrent Inc. wants to promote emerging content producers on the net this year — to the tune of $2,500 to $100K per project.

The Discovery Fund aims to “incubate the world’s next wave of awesome, straight-up brave storytellers and outside voices.”

“Over the next year, BitTorrent aims to partner with 25 creators by providing cash grants and promotional support to build impactful releases and discover new fans. We are looking for artists, musicians, filmmakers, designers and other creators working on uncompromised projects representing a diverse, original perspective seeking global distribution.”

There is no deadline or application fee.

My take: Kudos to BitTorrent for launching this initiative. To their credit, they surveyed artists and learned that “getting their work discovered is the biggest challenge they face.” Amen!

How to finance your independent movie

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Ben Yennie‘s post on Medium, The 9 Ways to Finance an Independent Film, is one of the clearest summaries of film funding I’ve seen.

He breaks your funding sources into nine categories:

  1. Skin in the Game
  2. Soft Money/Deferments
  3. Crowdfunding
  4. Tax Incentives
  5. Private Equity
  6. Gap Debt
  7. Product Placement/Sponsorship
  8. Pre-Sales
  9. Grants

“A lot of Filmmakers are only concerned with finding investors for their projects. While films require money to be made well, there are better ways to find that money than convincing a rich person to part with a few hundred thousand dollars. Even if you are able to get an angel investor (or a few) on board, it’s often not in your best interest to raise your budget solely from private equity, as the more you raise the less likely it is you’ll ever see money from the back end of your project.”

Ben also provides a graphic in which he displays a typical breakdown for three projects: first narrative feature, documentary feature, and second or third narrative feature.

It’s somewhat difficult to read, but here’s my best guess:

A. Narrative Feature

  • 1 – 10%
  • 2 – 10%
  • 3 – 20%
  • 4 – 20%
  • 5 – 20%
  • 6 – 20%

B. Documentary Feature

  • 1 – 10%
  • 3 – 20%
  • 4 – 20%
  • 7 – 10%
  • 8 – 20%
  • 9 – 20%

C. Second or Third Narrative Feature

  • 3 – 10%
  • 4 – 20%
  • 5 – 20%
  • 6 – 20%
  • 7 – 10%
  • 8 – 20%

Ben also has an excellent post called The 12 Slides you Need in your IndieFilm Investment Deck which you can use as an outline for your next pitch video.

My take: I love the visual which I think of as depicting your full budget as a pie of six flavours! Some are tastier than others and some come with strings attached. But the unsaid truth is that it’s difficult to bake this pie in only one flavour.

Europe moves to protect VoD

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As reported on Screen Daily, the European Commission is proposing that one of out five titles on Video on Demand platforms be European.

“The updated Audiovisual Directive will enforce VoD platforms such as Netflix to ensure at least a 20% share of European content in their catalogues. The new proposals will also give the possibility for the EU member states to impose financial contributions upon on-demand services to the production and rights acquisition of European works.”

The new rules are outlined in the Audiovisual Media Services Directive (AVMSD), under clause three: Promotion of European Works.

My take: it’s about time. Quotas work to establish a domestic industry. Just see how successful CanCom has been for Canadian music and television. With this measure, the Europeans are ending the free ride for VoD services. Too bad we don’t have the guts to enact this and movie screen quotas in Canada.

 

Avi Delivers!

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Within the next week, Avi Federgreen and IndieCan will unspool five new Canadian feature films in theatres in Toronto, Vancouver, Saskatoon, Regina, Halifax and Moncton.

The films are:

They are some of the results of Federgreen’s IndieCan10K project. Along with executive producers in each province, Avi mentored emerging filmmakers as they created their first features — as long as they kept the budgets under $10,000.

As quoted on First Weekend Club, Federgreen says:

“I believe initiatives like INDIECAN10K are imperative to the success and survival of the Canadian film industry, which is facing increasingly difficult parameters for young filmmakers. We need to encourage emerging filmmakers in Canada to get out there and make their first feature, and we need to show them they can make a great film for a very low budget. The filmmakers that participated in the INDIECAN10K initiative are all amazing, passionate and creative people who deserved a chance to make their first feature and I think they all deserve all the success in the world not only for their INDIECAN10K films but their next films moving forward. I am super proud of all of them!”

My take: Telefilm take note! I love your microbudget initiative, but I firmly believe $100K is too much for first-time feature filmmakers. Ingrid Veninger ($1K) and Avi Federgreen ($10K) prove it. My modest suggestion: reserve the $100K money for second-time feature filmmakers. I guarantee the results will warrant it — let emerging filmmakers scrape up just enough cash to make their first features and, more importantly, make all their mistakes making their first features. Their second features (if they survive to do it again) are where you want to invest.

Writers & Filmmakers Green-lights Short Film Competition

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I blogged about Jonathan Krimer’s Writers & Filmmakers a year ago and now it looks like the short film competition is about to be launched.

The funding model is a crowd-sourced meritocracy: online writers select a worthy filmmaker and similarly online filmmakers select the most engaging scripts. Entry fees pay the winners for the script and to make the film.

My take: if you haven’t entered and paid yet, do it now! I will publish numbers next week — all I can say today is that there are twice as many writers as filmmakers signed up. And your odds are much, much better than originally planned.

Real world budget numbers of an indie feature

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As teams around Canada put the finishing touches on their first feature pitches for round one of Telefilm’s micro-budget program, I thought it would be instructive to look into some real world budget numbers for an indie feature.

Stephen Follows did just that for the UK independent feature Papadopoulos & Sons. See his long post.

The budget for the 24-day shoot in London was £825,000, fully financed by the film’s first-time producer/director Marcus Markou. That’s approximately $1,350,000 in 2013 dollars. (In other words, skimpy but still about ten times a micro-budget.)

Here’s the breakdown:

£ 0,775 Story, Rights & Continuity
£91,046 Cast
£19,014 Supporting Artists
£90,332 Production Staff
£93,245 Art Department
£32,070 Wardrobe
£16,782 Make-up/Hair
£53,371 Electrical
£58,580 Camera
£16,882 Sound
£77,918 Travel/Transportation
£28,670 Hotel/Living
£70,111 Location
£27,343 Overtime/2nd Camera
£ 0,482 Digital Stock & Transfers
£25,507 Music
£83,929 Post-Production
£ 9,307 Insurance
£ 2,556 Legal & Clearances
£ 7,705 General Expenses
£ 2,900 Publicity
£ 0,750 PACT & Training Levy
£15,947 Fringes

Once the film was made, Marcus moved on to distribution. (A lot of indie films follow this formula, with no pre-sales up front. This puts them in a weaker position than if they had some guaranteed revenue.)

A producer’s representative negotiated deals for Greece, Germany and airlines.

The film played four festivals: the Dinard British Film Festival, the Thessaloniki Film Festival, the Palm Springs Film Festival and the Seattle International Film Festival, and also screened at the European Parliament.

“By this point, the film had a German, Greek and airline deal but was still lacking a UK distributor. Marcus is not someone who gives up easily, and so he turned to self-distribution. Via Miracle Communications, Marcus struck a deal with Cineworld cinemas which placed the film in 13 screens for a week. Marcus identified Greek communities throughout the UK by looking for Greek Orthodox churches. If there was a church, he’d target the local community, using a variety of off- and on-line media.”

The cost of that was £35,525, which earned him £45,601 — a profit of only £10,000.

His TV deal with the BBC earned him five times as much: £50,000.

“The biggest cheque Marcus received was from the UK taxman, in the form of his rebate for the UK film tax credit. If your film is certified as officially British then the tax credit will give you 20% cash back on the money you spent in the UK on certain costs. The eligible costs are confined to activities within pre-production, production and post-production; meaning that all the money Marcus spent on distribution, exhibition and marketing are not included in the calculation. In the case of Papadopoulos & Sons, the UK film tax credit came to £156,000, or 19.1% of their overall production budget.”

The German TV deal netted Marcus £36,072.

VOD sales earned almost £35,000, the lion’s share of that from Netflix.

“The Netflix deal is for the UK and America and the gross is around £15,000 per year for a two year deal. The sales agent takes 15% and the aggregator takes a further 15%, leaving Marcus with 70% of the gross.”

In total the film earned £399,055 in two years — less than half of its cost:

£158,000 UK tax credit
£88,259 TV
£45,601 UK theatrical
£34,942 VOD
£32,667 Airline
£15,594 Germany theatrical
£12,753 Greece
£ 9,374 DVD
£ 1,131 US screening
£ 0,459 UK screening
£ 0,275 Speaking fees

However, Marcus has a long-term vision and says of the venture:

“Think of this as a long-term investment. The capital is sunk up front. After a couple of years I am 40% recouped. The hope is that after 10 years I will be fully recouped. But because of the strength of Netflix and BBC it’s clear this film will have a long shelf life. In year 11, that means every penny that comes in will be PROFIT! Think about it. If in year 11, I am making £25k per year that is £25k per annum with NO COST. This is why catalogues of old films are so valuable. Because if you have 20 films like this, making £25k per annum with no costs… well, you can do the maths. You must not underestimate the long-term value of a movie once its sunk capital has been recouped. In the West End a musical will have to run for two years before it’s profitable. Most never get to the two year mark. With a movie, if you have a universal story that has a long shelf life, you can be collecting payments for 20 or 30 years. So I would always argue that this is a long haul investment. If I took the same £1m and put it in a bank, you may find that after 20 years Papadopoulos has out performed on a return many times over. This is the recoupment stage but it is also still selling – e.g. the US DVD and possible impact of Netflix rolling out across multiple territories. You say: existing deals MAY continue to pay out. They WILL continue to pay out because I get paid quarterly and for DVD, VOD, Netflix etc. Not in advance. So many deals are not completed yet (e.g. Netflix) so it’s not a MAY it is a WILL.”

Stephen concludes with this advice for indie filmmakers:

  1. Self distribution is not easy.
  2. Who you know, helps.
  3. The cost of deliverables adds up.
  4. Soft money is vital for survival.
  5. The publicly available data can be wrong or incomplete.
  6. Research your marketplace.

My take: There are many take-aways here. Tax credits may be the biggest source of revenue for your film. TV revenue may double theatrical. VOD revenue may soon eclipse theatrical. Be creative in identifying your audience — I love that Marcus used Greek Orthodox churches to pinpoint his target audience.

Bread for Canadian Content

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Stream Daily recently posted Funding for Content Creation: Canada.

It lists four funding models:

  1. Direct public funding, such as cultural programs
  2. Indirect public funding, such as tax benefits
  3. Industry funding, such as taxation and redistribution
  4. Private funding, such as sponsorship, crowd-funding and personal loans

The best insight is provided by Andra Sheffer, CEO of the Independent Production Fund and the Cogeco Fund:

“Producers typically would have considered their primary target to be the end broadcaster — in effect, they were business-to-business companies. Now, with the reduction of linear broadcaster participation (which, traditionally, handled the marketing efforts), more emphasis needs to be placed on connecting with the end-audience. This means, producers need to do a better job at identifying who exactly will be consuming their content, and how best to engage with them in that pursuit. That can mean anything from more social media interaction, the ability for fans to influence storylines, or a better understanding of which platforms the intended audience is actually watching.”

My take: well said! To use a sandwich analogy, the old model was open-faced — a slice of pre-production with a generous amount of production on top. Your commissioner paid you before and while you made them this sandwich. The new model is that plus another super-slice of marketing and monefication on top. Note that it takes twice as long to make this sandwich — and you might not have any buyers lined up yet.