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by Colin Brown
July 1, 2013 1:24 PM
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Why Are People Frustrated with Film Financing? Maybe They Aren't Going After the Right Investors

The following article, from Colin Brown, Editorial Director of the film financing and dealmaking website Slated.com, explains why all of the people predicting the end of the film industry may just be protective of Hollywood (and film financing) as it has been for several decades.  To read more from Colin, check out his Filmonomics blog on Slated.com.

Think you’ve got problems getting your films financed and seen by audiences? Well, you are in shockingly good company. In recent weeks, everyone from Steven Spielberg and George Lucas to Steven SoderberghJohn TravoltaMike FiggisDavid Lynch and Lynda Obst have all bemoaned the near-impossibility of getting their own pet projects onto the big screen. Taken together, their published comments are a scathing indictment of a film establishment that is only obsessed with pre-assembled projects that pander to the planet’s widest common denominators. Such is the obsession that original scripts and pitches are no longer being bought by Hollywood studios on spec. Even by the standards of an industry prone to pessimism, this amounts to one gloomy requiem for the grown-up cinema we once knew. But is it fair to just keep blaming "the money people" for this creative malaise and industrial self implosion?

Talk to individual film financiers - as opposed to the brokers, managers, analysts and other intermediaries who collectively dictate Hollywood’s risk-mitigating strategies – and the surprise is how open so many are to backing even the most idiosyncratic visions. They are fully prepared to take creative risks and would happily entertain the prospect of working with many of the same talents now feeling marginalized - so long as they enjoyed equal access to projects at a stage when it makes most sense to invest. In this regard, the film industry may well be its own worst enemy.

The hottest projects, those that involve bankable talents in surprising storylines, tend to be ones that involve so many contingent interests they are simply not conducive to open access. Just like laws and sausages, to paraphrase Bismarck, the less you know what goes into their making, the better. They have so many complicating shades of grey that they require a level of negotiating finesse best left to the hands of a discreet few.

A case in point might be a small-budget labor of love where big reputations are at stake: the star doesn’t want word to get out that he is juggling several projects at once or is attached to one that might never get made; the producer is wary of undermining her carefully-honed brand by associating publicly herself with a different genre; the director can’t be seen hawking a project for fear of appearing too desperate. As trivial or exaggerated as these concerns might appear to the uninitiated, it is easy to appreciate how they might get in the way of investor access. Far safer to keep projects behind closed doors, where nuances can be ironed out among a trusted coterie of interested parties, than to invite outside financiers in and jeopardize industry standings.

All this backroom maneuvering might help protect the industry’s delicate caste system, but the knock-on effects of this self-preservation society are now being felt. There are too many projects that never make it past those early gates simply because they were never exposed to a wider circle of potential investors. As for those projects that make it through and onto the open marketplace, they are already of diminishing interest to outside investors. The most desirable ones will have been snapped up already or have gathered so much industry heat that the cost of entry for investors is prohibitively high, making a return nearly impossible. Anything that is left on the table is niche, or heavily shopped. This is no way to grow a new class of film financier, one that would help provide a viable alternative to the studio system becoming so anathema to bold new ideas.


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10 Comments

  • Film Strategy | July 9, 2013 11:38 PMReply

    This is the gist of the article: "The hottest projects, those that involve bankable talents in surprising storylines, tend to be ones that involve so many contingent interests they are simply not conducive to open access."
    But I think the bigger problem for filmmakers like Steven Spielberg and George Lucas to Steven Soderbergh, John Travolta, Mike Figgis, David Lynch and Lynda Obst is distribution. I think that's where alot of these filmmakers find frustration in. Any of these filmmakers could finance a movie on their own or with a select group of fellow millionaires but that's just one part of the equation. The other part is distribution (along with the marketing it entails). It's not as easy to get a film into theaters as it might seem. The majority of exhibitors are there to sell popcorn and soda, art is just a byproduct, so they won't be quick to take on a movie financed solely by a Lynch or Soderbergh just because. They need the assurances that comes with a distributor telling them it's ok, this movie's got legs. A major movie, even by these filmmakers, without major backing makes the exhibitors think it's no good (they need to change their mindset too). But these filmmakers might not want to compromise on or share the potential wealth that could come from their story, so they can't finalize deals with the financiers, backers and studios and they can't get their work on the big screen.
    Maybe filmmakers will start to give up the big screen for the silver screen and the computer screen to get their vision out there. Spielberg already admitted that at one point he considered HBO to release Lincoln. They should. Purists who prefer cinema though they may be, it's better that they share their art however they can.

  • Film Strategy | July 9, 2013 11:41 PM

    I meant the "TV screen and the computer screen" not the "silver screen and the computer screen."

  • Tycoon | July 5, 2013 3:04 PMReply

    The structure is in need of change. If you provide a risk-neutral structure then you should be able to raise capital. The fact of the matter is....their is nothing 'about' a film that should make anyone invest other than how much of the negative cost can be recouped before the release. It's not a creative issue, it's math. Negative Cost = Equity+ Presales+ Advances. If their is a shortfall more equity or gap financing is used. Even though most films have 20% built in for what I call fluff that the producers keep, they don't use it for the benefit of investors. When I perfected the Film Insurance Guarantee years ago, it was never intended for Insurance companies to take film risk. Neither should investors. I did not complete the insurance policy and due to lack of integrity left that project that it was going to be used for. To be clear the first insurers AXA, AIG were duped by the brokers and their own staff. But I was astounded how quickly other insurers established their own film groups or depended on "movie experts" who were friends to determine what movie would be a commercial success or not.

  • Moonpatrol | July 3, 2013 6:45 PMReply

    Movies like "Meet the Fockers" and "This is the End" are nothing less than con jobs where they lure you in and then screw you. They betray your trust and now you have to be real careful to go see movies. The reviews are not always that accurate either. I think reviewers see too many movies which makes them in a way unqualified to be objective.

  • LZ | July 2, 2013 7:57 PMReply

    Notice that the people complaining are over 50 (some over 60). Hollywood is a youth business. I'm sure that when Spielberg, et al, were breaking out, the same end-of-the-movie-business gloom-and-doom was said about them, by the 50- and 60-somethings who suddenly could not get their calls returned anymore.

  • John McGrath | July 1, 2013 11:17 PMReply

    Are there any worker owned coops of scriptwriters. Once incorporated they can seek financing in many ways. They would also have to be cost conscious, but with control over what costs get cut.

  • terra | July 1, 2013 10:15 PMReply

    Incredibly negative article. Like it was a rant instead of leading toward a solution. This article needs a few more paragraphs of how to get us out of this.

  • BM | September 13, 2013 4:23 PM

    Totally agree.

  • ajit | July 1, 2013 9:29 PMReply

    whats going to happen to those screenwriters who writes original screenplay , spec
    scripts. i think people should stop watching formula films which are only made for
    making money. its like investors are making movies not filmmakers. its all business.
    hollywoods future should be in publics hand not investors.

  • ajit | July 1, 2013 9:13 PMReply

    vot goin to happen to those writero writes oiginal scripts.?i think people should stop watching formula fis thwill try to fnd new, origiinal, innovative ideas for films. its now in the public hand