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.

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?

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.