Prepared for Avichag | Delivered November 15, 2019
Independent films financing
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To understand how independent films are financed, what motivates independet film investors, and if crowdsourcing is a successful option. In addition, to understand the size of the independent film space.
Financing Independent Films
most common ways
that independent filmmakers receive funding are through equity investments, pre-sale agreements, bridge/gap loans, and crowdfunding. Most independent filmmakers use a combination of funding options.
Tax credits and deferred payments
can help off-set the amount of money a filmmaker needs to raise for film production.
Equity investment financing
involves having investors constribute money for the film production in exchange for a share of ownership in the film.
involve executing contracts with distributors before the film is produced. These agreements can be used as collateral for a loan or the distributor may pay cash up front.
are smaller loans that make up the difference between financing raised through other methods and the cost of production.
is becoming an increasingly popular method for raising funds for independent films. However, crowdfunding campaigns rely heavily on friend and family unless a filmmaker has a cult following.
Some states or countries will offer
to filmmakers if they film a significant portion of the film in the state/country, hire local film crews, and use local vendors. These tax credits can help off-set the amount needed through loans or other investments.
for producers and other talent can also help off-set the amount needed to produce the film.
Profitability of Independent Films
of independent films is hard to measure do to deregulation, varying revenue streams, and inaccurate reporting. However, Stephen Follows has studied the independent film market in the United States and has made some conclusions about the industry.
There were roughly
35,000 independent films
made in the United States between 1999-2018. Of those, about
did not have a theatrical release and very unlikely to have been profitable.
of the indendent films were released theatrically. Of these,
recorded a loss in profits and about
recorded a profit.
For a better perspective, of the 35,000 independent films released between 1999-2018, only about
3.4% showed a profit
have a greater chance of making a profit, followed by live action
Film genres least likely to turn a profit are
, followed by history films.
Due to the
of the independent film space and lack of financial reporting standards, there is not a true "market size" for independent films.
were submitted to the Sundance Film Festival, representing nearly
in financial investment.
There were 235 films that were selected by Sundance. Of these, 33 made over
at the U.S. box office.