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BUDGET. How do I estimate my investment?. Why is budgeting important? . Must approximate to get the green light Overcharges may impact producer’s cut High production costs might limit funds for promotion. Pre-production Costs. Legal Rights Acquisition Music Clearance Feature Film Clips
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BUDGET How do I estimate my investment?
Why is budgeting important? • Must approximate to get the green light • Overcharges may impact producer’s cut • High production costs might limit funds for promotion
Pre-production Costs • Legal • Rights Acquisition • Music Clearance • Feature Film Clips • The Script • Cast • Locations
Above the Line Costs Above the Line Costs are preproduction • Story Rights • Options and Rights to material • How much do I pay the author of the idea/material • Depends on success, prestige of author, demand • Script • Will the author adapt? • Writers fees • Treatment • First and Final Drafts • Polishing and Production Bonuses
Above the Line Costs • Producer’s fees • Executive producer • Producer • Assistants/Associates • Director’s fees • Director and AD • Cast • Lead Actors • Supporting Cast • Day Players • Location Casting Costs
Above the Line Costs • Travel and Living Expenses • Cast and Producers • Air • Hotels • Taxi/Limo/Autos • Excess Baggage • Phone – set allowances • Gratuities – set allowances • Per Diem - $100 per day • Yields Total Above the Line Costs
Below the Line Expenses • Production Staff – producer, ADs, Production Coordinator, Script Supervisor and Accountants • Extra Talent - $100 per day for extras • Wardrobe – size of cast and wardrobe changes • Make-up and Hair – lead players expensive • Special Effects – ILM • Transportation • Location Expenses – overseas increases costs • Sound and Camera • Film and Lab • Crew Travel and Living – size of production impacts overall expense • Animals
Budget Overruns • Producers generally argue for a 10% contingency over the going-in budget • Without penalty • Once exceed – the penalty is the overrun + 100% penalty • Some producers meet overruns out of pocket i.e., Braveheart • May have a secondary investor
Revenue Distribution • Early Percentages • Early First Run – 90% to distributor • 90% of box-office minus an allowance for theatre operating costs (nut) • Major theatres can claim $20K for nut
Floors • Floor Percentage • Required to offset costs of a bomb • Distributor mandates that it will take no less than 35%-70% of the b.o. • Helps avoid a bomb with a high “nut” killing cost recovery
Box Office vs. Film Rental • Is box office the best measure of performance? NO! • Revenue divided between exhibitor and distributor (90/10 to 50/50) • Film rental what goes to distributor • Covers production, promotion, prints and participations • Tail-End • No b.o. reported • Fixed fee
Promotions Expenses • Media decisions locked in two – three months prior to release date • Low-end campaign for national media expense • $5-6 M • Big Pictures - media • $10-20M
Promotions • Publicity • 6 weeks out • Chart availability of cast for interviews • Press Kit • 8-15 stills in blk/wht that capture the spirit of the movie • Distribute 6-8 weeks in advance • Press releases • Interviews with cast • Press Kits • $750K - $3M
Opening Weekend • Perform exit interviews to ballpark WOM • Estimate strength of film • Bigger than anticipated opening • Support with more $ in ads, prolong interview cycle • Lesser Opening • Spend no more than intended
Conserving Marketing Costs • Major network audience diminishing • Paying more for less • Go off-network • Fox Broadcasting Network reaches movie goers better • Plan without regard to competition!
International Distribution – Timing and Promotion • Certain genres translate better • Consider media mix • Play off US media coverage and minimize expenses • Release 3-6 months post US debut • Japan #2 grossing county
International Distribution • Movies are the second largest export of the US • Advertising and Publicity generate that popularity • New Media • Internet • Low cost • Global reach