Chinese Coproductions - Learning from the Experts

China has an annual box office of around US $1.5 billion and a growth rate that makes the rest of the world jealous.  But if we want access to Chinese cinemas for our productions we hit a problem - China has tight internal regulations that limits non-Chinese films to a limited number of slots.

Thankfully there is loophole, however - Australia's co-production treaty with China offers a method to get around the import quotas on foreign films.

So it was worth hearing from some Aussie producers talking at the latest SPAA conference about their experience working in China.

Are Business skills really needed to run a company?

It was a fairly straight forward annual report for a public company:

"Financial position
The net assets of the Company have increased from $8,008 as at 30 June 2009 to $191,448 as at 30 June 2010, which is an improvement on prior year due to the improved operating performance of the Company.
The Directors believe the Company is in a stable financial position."

Getting your indie film onto iTunes

Plenty of distributors talk about putting your independent film onto iTunes.  They wax lyrical about how good they are at it, give estimated timelines .. talk about what deliverables you need .... but if you ask for a single example where they've successfully done it before then you just hear silence.

The reason why is fairly simple - Apple simply doesn't want to work with small distributors .. they want to work with large aggregators who provide a known quality of product.  To be blunt - they can't be bothered working with independent films.     But there are solutions.

Product Placement - Case Study (Heinz Ez Squeeze)

In some ways product placement for our indie films is trivial.  For example, set designer Margaret McDonald was telling me recently how she gets Woolwooths to supply free groceries for set dressing.

However, real product integration is something that provides the producer with real value - either with money upfront or marketing support later on.  As much as we'd like to save $50 on set dressing - for a $10 million film it's not exactly value for the producer.  So I thought I'd look at some examples of successful product integrations to see how others do it.

Example 1 - Heinz 'EZ Squeeze' bottle.

Marketing Brief:  Heinz Ketchup had a new 'EZ Squeeze' bottle.

They'd worked for years to get people to recognise their old bottle - now they were taking a totally different product to the market.  Not only that - but the bottle was used quite differently too .. so would the public accept this new shape?


So Heinz worked with a US company called 'International Promotion' to include the new bottle into product integration on TV and film so that the consumer 'would consider the EZ Squeeze bottle as an everyday household product'.

Case Study: Estimating Film ROI - Crash (2004)

We often use box office receipts as a metric when we consider how much ROI investors in a film can expect.  Clearly the entire box office receipts don't magically appear in the production company's bank account - but how much does?

There are some lousy distribution deals ... but imagine that you have a non-studio film that distributors really want.  Let's even imagine that the film is successful - it covers the distributor's P&A spend and returns money. What could you reasonably expect your income from the film to be?

There are a few estimates out there - I've always used the 'one third of box office' guideline - so if a film makes $30 million in box office we can expect about $10 million to eventually filter back to the production company.  Clearly this guess has limitations - it won't work for a film that was a hit on DVD but a flop in the theatres.  But it is a start to estimating how much money will be coming in to pay back the production budget - hopefully leaving something over for the investors

But how accurate is this estimate?

How to get Benderspink to read your screenplay (Offer Closed)

Note - this offer is now closed.  It successfully raised over $8,600 for the Heart Foundation.  

Benderspink represents screenwriters as well as producing their own films.  They were behind the Oscar nominated 'History of Violence' as well as a pile of other successful films - 'The Ring' & 'The Butterfly Effect' are probably my favourites. (They were also behind 'Cats & Dogs' if you prefer family films)

Do you want them to read your screenplay?  Well, thanks to Daniel Vang & friend-of-the-blog Joe Nienalt, you have a chance to skip a gatekeeper or two.

If you wonder why Joe Neinalt's name sounds familiar - he's the writer who picked up a six-figure deal to write a movie to be filmed in Russian - despite not speaking a word of the language. (I had a chat with him here when the deal was announced.)

Here are the details from Joe:

The Catwoman/Clerks Paradox

Catwoman is famous as a financial disaster.  It was a film with a reported budget of $100 million(*) - but only generated $82 million in theatrical ticket sales.

Clerks is famous as a huge financial success.  Shot on a budget of only $27k(*), it still managed to bring in about $3.9 million in ticket sales.

Which would you rather have invested in?  There's an obvious answer.
Here's the real paradox - if you were a distributor (or an exhibitor) ... which film would you prefer to be showing?

A shortcut to pre-selling distribution rights

'Going Back' was a movie about a group of Marines returning to Vietnam to relive their war experiences.

The film's budget was estimated to be about $4 to $4.5 million and the producer had deal with Hilltop Entertainment who was finding international presales for the film.  Harel Goldstein at Hilltop was banking on a deal with a German conglomerate that would supply at least $3 to $3.5 million for the film.

And then disaster struck .. the deal with the Germans fell through.  And this happened only days before the meeting with the bank to cashflow the finance.

The good news was the Goldstein managed to come up with ten distribution contracts for five international territories.  In only days!
It was pretty impressive - he even managed to sell the French TV rights for $550k.

It was an amazing feat of salesmanship.  He even managed a distribution agreement for another film 'Ignition' about the space race as well.

It was all going well until the time of the 2001 Cannes Film Festival when someone noticed that there was something a little odd about the distribution agreements.

More than a little odd.  The distribution agreements had been, to use the polite legal term, 'visibly altered' .. and in fact it looked like someone had physically cut and pasted signatures onto the documents.

How on earth did they expect to get away with it?

The end result was that Harel Goldstein entered into a plea agreement ... but forgot to mention the minor point that the plan to defraud was actually his idea.  So ended up being sentenced to four years jail.

Maybe there isn't really a short cut to getting those distribution agreements after all.

Private Film Investing - More bad examples

There seems to be a rash of prosecutions in the USA over indie film investments.

Example 1:  "There for Hope" 

Here's a blurb about the film.  http://comedymovies2011.alotoffilms.com/usa/there-for-hope.html

Pretty impressive cast list for an indie film :

Martin Sheen, Diane Ladd, Britney Spears, Nick Nolte, Brian Krause, John Carroll Lynch, Gedde Watanabe, Mark Rolston, Voyo Goric

Absurdly impressive.  And it doesn't even make sense.  It almost looks as if someone had picked some random famous names and claimed that they were involved in the film!

Independent Film Finance Success Study - The King's Speech

If we want investors for our independent films then there is only question to consider: "What benefit will the investors get by putting money into this film?"

I've read plenty of indie film offer documents and prospectuses recently, and it's clear that they are doing their best to talk up the possibility of box office return.

But, sadly, we know that the reality for independent films is harsh.  Really harsh.  Even if the film gets international distribution and great box office returns we know most of that money won't filter back to the investors.

It is sobering to read the prospectus of a respected independent film fund only to find that 'You can be an extra!' and 'You get movie memorabilia!' are still being touted as serious benefits.  And this is a film fund which, by definition, is only open to high net worth individuals

So I thought I'd look at some reasonably recent film funding decisions to see what I can learn.  Why did investors put money into these independent films?

I'll start with a recent success story: "The King's Speech"

Finding Private Investors for Film Projects - The problems

A recent discovery of an embarrassing example of how NOT to do this triggered an obvious question - how do successful film projects find private investors?

There are plenty of horror stories.  While our legal system here in Australia seems to ignore even the most blatant illegal funding schemes there have been occasions when law enforcement has shown an interest - as Robert MacLeod of Starlight films found out when he was sentenced to seven years jail for raising finance for his film projects without a proper prospectus.  (The fact he spent that money on himself might not have helped things)

Even the guy who tried to raise money for the film 'Jack the Director' by cold-calling people and inviting them to an investment seminar might have even gotten away with it if he hadn't made the mistake of cold calling the former director of consumer protection at ASIC !

So I thought I'd do a bit of digging to find out more.

Feature Film Accounting

All art is defined by its limitations.  Origami is an artform where you are limited to using only folding paper.  A sonnet is limited to fourteen lines.

And a feature film's major limitation?

Budget.

So to understand this better, I figured I'd better talk to an expert.

Testing Myths: Is Hollywood obsessed with remakes?

I was recently listening to a writer complain that the US Film industry is only interested in is remaking earlier films.


It is a common complaint - but how true is it?

SPAA's proposed Producer/Distributor fund

The Producer/Distributor fund is a proposal by SPAA to get around 17 Australian films financed (with an average budget of $15 million each) financed over 3 years - without private investment.

Selling a Short Film in Foreign Markets

We all know that Short Films are a very  hard sell. So when I heard that David Gould had sold the Italian Pay TV rights to his short film 'Awaken', I had to find out more.

The deal was truly an international affair - it was brokered by Premium Films in Paris who was contacted by a buyer from Italy who had seen his film at the 'Short Film Corner' at Cannes. The Pay TV deal also covered Monte Carlo, Malta, Switzerland ... and even part of Slovenia!

This gives the first clue - I suspect that the first key to selling the international rights to a film involves not sitting around at home. So this led to the first question - how his exposure in Cannes helped him:

Getting funds to finance a short film

Crowdfunding has been successful for raising finances for some short film projects.

In one recent success story, Megan Huitema recently raised completion funding for her short film 'Toot Toot' using an Australian crowdsourcing website here.

So I thought I could find out what she did right - so hopefully the rest of us can learn a little.

Are you a screenwriter outside of Hollywood ?

I've often been told how it's almost impossible for screenwriters outside of Hollywood to get the major agencies interested. So I thought I'd chat with Joe Nienalt - a guy who not only signed up with UTA - he's also picked up a six-figure deal to write a movie to be filmed in Russian. And no - he doesn't speak a word of the language!

And despite what the naysayers would claim - he achieved all this from Tacoma .. which might as well be Dubbo as far as Hollywood is concerned. So how did he achieve all of this? I figured I should talk to him to find out.

The myth of Greenlighting screenplays

I was chatting recently with the screenwriter for one of the great horror films - 'Thirteen Ghosts'

His screenplay was analysed in a curious paper which attempted to determine which screenplays were worth greenlighting - and I wanted to hear his feedback on the paper.


Here's his response:

The basic premise -- that studios greenlight scripts -- is wrong.

They don't.

I have never, in my experience, ever heard of any movie being greenlit based upon the screenplay.