Making Movies Without Losing Money

Practical Lessons in Film Finance

Daniel Harlow

• Publisher: Taylor & Francis
• Year: 2020
• Print ISBN: 9781032173719
• eBook ISBN: 9781000051308
• Edition: 1
• Topic: Media & Performing Arts
• Subtopic: Film & Video

This book is about the practical realities of the film market today and how to make a film while minimizing financial risk. Film is a risky investment and securing that investment is a huge challenge. The best way to get investors is to do everything possible to make the film without losing money.

Featuring interviews with film industry veterans - sales agents, producers, distributors, directors, film investors, film authors and accountants - Daniel Harlow explores some of the biggest obstacles to making a commercially successful film and offers best practice advice on making a good film, that will also be a commercial success. The book explores key topics such as smart financing, casting to add value, understanding the film supply chain, the importance of genre, picking the right producer, negotiating pre-sales and much more. By learning how to break even, this book provides invaluable insight into the film industry that will help filmmakers build a real, continuing career.

A vital resource for filmmakers serious about sustaining a career in the 21st century film industry.

Part 1

One small problem

1A surprising discovery

Independent filmmakers have a problem: they lose money. And I don’t mean marginally or some small percentage of their film’s investment. Often the investment is completely lost. All of it. This would appear to be an ever-so-small problem to most laypeople.

My education is not in film. I’m coming at this from an outside point of view. I ran a successful IT consulting firm for 20 years, sold it, retired and played golf for a year – long enough to know that a year is more than enough golf for a lifetime. Ready to come out of retirement, I wanted to try my hand at being a movie producer. I started a film fund and began interviewing filmmakers to make a film. Things started to go south quickly once I asked the filmmakers: “So how do we monetize the film once it’s done? How does the film make back the money?” Once I asked that question, I got a mix of annoyance, silence or just general gurgling. I quickly realized that I needed to figure this out since no one else seemed to know.

From one point of view, you might say my background is pretty good for filmmaking. I built my company with no outside funding from one employee to 300. From zero offices to six. Similar to indie filmmakers, I regularly competed with teams that had substantially more people and money than I did. Not a little more money but a factor of 100 or 1,000 times more capital. And not a few more employees than my firm but they would be staffed at a level ten times larger than mine. And yet I won business and captured market share repeatedly, beating large competition in almost every competitive situation. I captured the attention of customers and got them to buy with creativity. I knew my customers, my audience, better. I used my limited resources to create an experience that stood out from the crowd even while others were better funded and better staffed. In short, we made magic happen with pennies and with very few people – people that were young, inexperienced, but motivated. I thought I could make the same magic happen in the entertainment industry, so off I went.

I wanted to make movies, yes, but I didn’t want to throw money away. There are lots of charities to give money to. If I was going to knowingly toss money away, I can think of many worthy causes. And even if it wasn’t my money, I didn’t want to lose other people’s money either.

Plus, I didn’t want to just make one movie. I wanted to build a career in film which is hard, I would imagine, to do by making films that don’t recoup their investment. A sustainable career in really any field is based on breaking even or making a profit.

Knowing how hard it might be to make a good movie without losing the investor’s money, I went about learning all there was to know about movies and money. After all, I didn’t want a movie all finished and done and then find out I did it the wrong way or I should have done something at the very beginning of the process that I didn’t learn until it was too late! I spent two years learning everything there was to know about movies and money.

What does the industry say about indies and money?

What do you learn about making a financially successful film when you spend $1K+ to attend SXSW in Austin, filling your days with one-on-one mentor sessions, round table discussions and inspirational keynotes? In Chapter 2, I cover one of the most repeated lessons on “Looking for answers at festivals.”

What do you learn about making film without losing money when you attend UCLA’s Certificate program for Independent Film Producing – staffed by the best and the brightest from the professional ranks of working film industry personnel? It is covered later in this Part.

Or when you spend countless hours online watching filmmaker speeches by Mark Duplass, Ava DuVernay and others – or read Ed Burns, Robert Rodriguez’ advice on making indie film on a budget?

We will discuss all of the above in the upcoming pages. I did all of this and then I set out on my own, with the guidance of the UCLA film studies faculty to interview 100+ working industry professionals to learn how to reliably make a financially successful film on a budget of less than $1M (the lower the better). My research steers clear from the “no-budget” films with less than $50K budgets because we are trying to find films that cost some money, which is the only way to figure out if they recouped an investment.

What made my research unique is that I did not sit down with only the creative contributors and filmmakers like writers, directors and production specialists. I focused on film business people. Sales agents, distribution experts, film accountants, film financiers, film lawyers, producers, and what I accumulated was – it seems to me – the largest research project to date about what makes an indie film financially successful.

I learned that the goal – to make money (or at least to not lose money) on a small budget film – was, well, very hard, to put it mildly. Pessimism is a mild word for the feeling I was confronted with. Making a financially profitable film for under a million dollars is a task with a failure rate that most estimated as well over 90%.

The problem with much of this pessimism is that it takes for granted a questionable assumption: that a filmmaker is only interested in making “their film, their way.” The assumption implies that filmmakers are stubborn and uncompromising when it comes to their “artistic vision,” and just not interested in making money. But after talking to a lot of them? My conclusion is: “Not so much.”

Sure, some are this way. As much as the filmmaking “creatives” (as they are called) seem out of touch with the business people, the reverse is often equally true. Filmmakers want to make a film – hopefully a good film. But let’s be honest: a bad film that people watch is, by far, preferable to not making any film at all. In fact, there are a lot of benefits (that are not lost on filmmakers) to making a commercially successful film even if it’s not in Oscar contention the year it comes out. So the pessimism is warranted IF you’re making a “personal film” with an “uncompromising artistic vision” and you have no plan for how you’re going to sell it once it’s done. If you are making a film that’s good, and you make it with a plan, then your odds of making the investment back are going to skyrocket. If your plan starts even before you have a script, then your odds go up further. Commercially viable films are as hard to make as critically acclaimed films. They involve all aspects of the filmmaking process from casting, producing, writing, budgeting and picking the right genre. They are meticulously planned in partnership with people that have experience. They don’t come together on a Red-Bull-fueled weekend of inspiration.

How the book is organized: common themes and unconventional advice

The book presents the obstacles first for good reason. Throughout my research, the same types of obstacles came up again and again. They fall into different categories but they repeatedly came up. The obstacles – and the keys to getting around them – should be well understood by an aspiring filmmaker. As you might expect, I discovered the obstacles first. When the Wright Brothers created their flying machine, they hit the ground many times before it flew. The solutions come after becoming very familiar with the problems. Thus, I lay out the varying issues and challenges of the film industry as I encountered them. Then I present some ideas for solutions.

I offer a detailed discussion on the business of film. What happens to a film after it is finished? This discussion is important when you think about monetizing the film and recouping the budget in order to break even or make a profit. Understanding the logistics of the film business is as important to making a successful film career as knowing the rules of football if you want to play football and win games. A director or writer who wants their picture to be a financial success without knowing the business side of film is like an actor who can’t be bothered to promote their own films. Acting in the film isn’t the only job. Promoting the film is key. For a filmmaker, it isn’t just making a good film. Knowing the bottom line matters to the people that funded the project.

Then I go over to the best practices suggested to me again and again when you want to make a film that makes its budget back. The practices run the gamut from development, production, financing, etc., almost every aspect of the filmmaking process is addressed.

I know that you might be tempted to skip straight to the solutions. However I urge you to bear with me and wallow in the challenges and problems before jumping straight there.

Primarily, this recommendation is because knowing the problem well is always more important than memorizing a pre-packaged solution. Understanding the challenges is like looking at a map of the territory. Look at a map of California and you can instinctively understand the difficulties in getting from San Francisco to Napa Valley, considering the bays, the ocean and the river. I can give you a detailed description of multiple different routes from San Francisco to Napa Valley but if you know the territory, you might be able to find your own way. You may even decide to use a hot air balloon so all that water in between might not concern you as much anymore. If you understand the issues thoroughly, you can improvise your own solutions, come up with your own formulas that fit your goals and might be significantly more creative and successful than the ones I present here.

What this book is not

This is not a book about how to make your movie, your way. The desire to make a “personal movie” with total freedom was expressed so often from the creative side of the filmmaking industry that it became somewhat of a common refrain: “I want to make my movie, my way” the phrase would go. If you want to make your movie your way then you should (and I’m being serious) use your money.

This is not a book about how to make a giant, great big, massive HIT. If this book were about making a hit, it would be far easier to write and research. Box office returns are the only financials that are public and thus easily accessible. Researching what makes a hit would simply be a process of pulling out the box office financials of the top 100 indies, finding commonalities and publishing the results. This book isn’t about how a small number of big winners managed to get lucky and strike it rich. It is about how the every-day, blue-collar producers place their bets strategically to tilt the odds in their favor and minimize the chances they will walk away from a project as a loser, financially

Lastly, this is not a book about how to make the actual movie. There are many books like this already. Guerilla filmmaking, low budget filmmaking, indie producing, etc., are all topics that are well covered by books that are already out there. Authors like Suzanne Lyons have covered them well. For the most part, those books stop upon completion of the film.

I had initially thought this book would pick up where those books left off. It would discuss what to do once the film was done. But in fact, the process of building a commercially successful film starts much earlier. But I’m getting ahead of myself.

I had better take the advice of the king in Alice in Wonderland and simply begin at the beginning.

2The journey begins

During my efforts to make a film, it became apparent that a lot of filmmakers don’t understand the financial end of the industry. In particular, many don’t know how a film drives revenues and recoups the initial investment. There are a myriad of reasons for this (that I’ll get into later). I sat down and began a quest to find people who did know and who would share the information. It wasn’t as easy as I had thought it would be. When I did speak with people knowledgeable on the subject, they weren’t optimistic about the chances of small films being profitable.

To imagine what it’s like to search for a reliable and profitable business model in film, I think it best to imagine yourself in the opening sequence of Francis Ford Coppola’s Apocalypse Now. Helicopters flying over, explosions, destruction and fire. Roughly a third of my conversations with film industry veterans were of this nature: “This industry is a burning building and you’d be crazy to run inside.”

It’s hard to imagine an industry as ubiquitous, international and glamourous as film being “in trouble” but the changes in the industry have caused many businesses to fold. Only the smartest will survive. Education and positioning are key.

Turmoil was a word that kept popping up. As in: “The film industry is in turmoil.” Huge sources of revenue have dried up from DVD sales and theatrical ticket sales. These revenues have not been replaced (at least not yet) from the digital analogy of DVD sales, pay-per-view TVOD (Transactional Video-On-Demand) sales from such platforms as Amazon or iTunes.

On the flip side, the cost of making a film has dropped, and as a result the market is flooded with product. There are many new channels that are creating a lot of original content (which creates fantastic opportunity for filmmakers) but these buyers are hesitant to buy independent films from new filmmakers. They are making their own films or buying from reliable sources where they get consistently the types of films they expect. It all adds up to them being less inclined than ever to buy your film. The downward trend in demand and the upward trend in supply of new indies throws more turmoil into the industry.

If the story prologue is helicopters and explosions, then this would be the opening credits:

This is a true story. The events and the conversations depicted in this book are real. The names have been changed to protect the innocent (or the guilty, depending on how you look at it). I have conducted 100+ interviews from film professionals – film sales executives, distributors, producers, film financiers or accountants, and development professionals. The conversations were candid and nearly everyone requested their comments be “off-the-record.”

In Apocalypse Now, this would be the scene where Martin Sheen blinks and sees he’s still only in Saigon. But instead, he’d look outside and see he’s in Austin, Texas and it’s 2018. “What am I doing here?” Martin would ask. The answer: trying to find a way to make a film and not lose money.

Act one – looking for the answer at film festivals

It was around $1K to buy my film conference ticket at SXSW (cheaper if you pay well in advance, which I didn’t). What did I learn? One lesson I learned was the same from Blake Synder’s Save the Cat: what’s really important is the film’s title and logline.

Title: To make an indie

Logline: One filmmaker, against the odds, forges ahead while an industry toils. A thriller with an ending that no one can (ever) predict.

Fade in – SXSW 2018 – a roundtable discussion

Frank and I sit at the round table discussion. He’s an Austin filmmaker with a big burly beard, slicked-back ponytail and a burning gaze. Frank punctuates his sentences with a verbal exclamation point that tells you that if he says he’s going to do something, you can...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Introduction
• Part 1 One small problem
• Part 2 The obstacles
• Part 3 How films make money
• Part 4 Making profitable films
• Conclusion
• Appendix: Case studies, interviews and producer profiles
• Index