The Cost of Planning: Financing of Film

While it seems obvious to most that huge amounts of money is invested into the production and distribution of films, many do not think about the amount of time and money it takes to plan movies, and a large majority of them will never make it to production.

Before a script is written, contracts involving ownership rights and royalties will have to be created for movies based on another piece of work. This means that fees are paid before anyone even knows if a quality piece of work will be created. Also, this is just one step during the planning of a film where entertainment lawyers will be hired. The screenwriters themselves do not typically make a large sum of money and are uncertain if their products will ever sell, but a few are able to create contracts with studios to create scripts for specific movie ideas. In addition to hiring writers, a producer or director may be paid in advance for a specific film in a development deal.

Agents and managers receive their fees during the planning phase; both represent their clients and secure their involvement in a film but there are some key differences. Agents may help plan product placement in a film, because they represent writers who can involve products early on, they have an interest in future versions of the product, and they generally receive 10 percent of their client’s payment. Managers are able to develop and produce media and they receive 15 percent of their client’s payment.

Once a producer is hired, and a movie is green-lighted, the organization for the production begins. A producer will have to find locations for filming, rent studio space, hire a crew, and secure equipment to be used to production. Personally, I thought this was the most surprising cost, because I never thought about the expense of equipment and the fact that studios themselves may not take on this financial liability - due to the high cost of cameras and other equipment, most films will rent these products. There is a huge amount of money spent through every step of creating a movie, from planning and overhead to production and distribution, most of which is not obvious to the audience.

Where does all the money go?

Planning: Is the first phase of costs for individual projects. It begins with securing the script either through the studio, author (of a book) or even a game prototype. This part of the process is extremely risky in terms of money because there is no guarantee at this point that the script will become a movie/television show/ video game. Edward Jay Epstein said, “One out of every ten scripts that studios buy is ever developed into a film” (Havens & Lotz).

While the procedures alters with each film the process and areas of cost remain about the same.

1. Negotiating film rights and properties to work: making sure individuals creative talent is preserved and correctly acknowledge/rewarded

2. Important People

a. Writers: Either hired by the studio or the directors or producers. It takes multiple steps to reach the final product (which even then can be changed during production).

b. Agents/Agencies/Managers: Often hired by writers and other important “players” to represent them and be in charge of marketing their different products and help negotiate terms that are favorable for the individual.

c. Entertainment Lawyers: help to organize and navigate through the different terms and contracts. They are especially useful for motion picture productions.

d. Producers: There are many different types of produces and spread across a wide range of roles. Typically they guide a film through development (obtaining a scripts, selecting talents, securing financing), pre-production, production, and post-production.

3. Production companies: Form pacts and agreements for development and output – ultimately deciding which network or studios will have the rights to which film. Not all pacts involve financing upfront but some do (ex: a first-look deal).

4. Key Talents (actors/actresses): a large part of the budget, especially depending on their previous work and fame, goes to the actors and actresses.

5. Funding sources: This plays a huge role in whether the film moves to production. There are so many aspects in this step that can fall and ruin the films chance at being produced. This is when they seek out loans, investments, advertisements, product placement deals, etc

6. Co-Production: the “creative partners” – this relationship helps with the funding in return receiving rights to the final film/show

7. Pre-Production Costs: this includes the filming materials and other equipments (which is usually rented)

8. Location: this has moved from primarily set designs in California to the new phenomenon of having sets “on location”. These various locations love the business and press that their spot gets so they become very accommodating for production companies and studios.

9. Post Production: Special effects (which keep needing to top the last movie), editing, scoring, music, and the cost just seem to continue even after all the filming is over.

The costs that surprised me the most were the ones towards the beginning, which involved all the legal aspects and the partnerships/pacts with different companies. All of these hidden costs happen before the actors and actresses are even casted, before the film is even produced and then on top of everything the companies need to invest more in advertising and marketing. By the time the film is finalized these companies are in so much debt and yet still don’t know if the audience will like the final product or not. The whole process was extremely interesting to see lay out in this article. As viewers we only see the final product and have no idea what time, money, and manpower need to go into making the 2-hour film we pay (or at least should pay – a whole other cost issue) to see.