Tag Archives: finance

What is a presale?

If you want to thrive in the independent film world, this is a term you need to become familiar with. It’s an agreement made between a distributor (usually foreign and specific to only one country) and the production company before the film is completed and often times even before production of a film has even commenced. This is a strategy that producers  use to get their film financed. You may here that a producer financed a film via foreign presales alone. This means that a distributor will pay for the distribution rights in their country before they even see the finish product. In return, they will get to pay a significantly reduced cost for these rights as opposed to if they waited to buy the rights to the film in the open market upon completion. They are banking on the film doing well in the box office based on the script, director, producer and actors that are attached to the film. Some presale agreements involve the distributor and producer agreeing – prior to production – on a fixed amount to be paid upon delivery of the film. This is called an advance or a minimum guarantee.

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The Pitch

A pitch is basically a verbal presentation you give to someone regarding your project. Reasons for pitching could be as simple as sparking interest, or getting someone to finance your project. It’s basically a sales presentation. Pitching is arguably the most important skill to possess as a producer. Pitching is a huge part of how projects get bought and greenlit in this industry, and the better you are at pitching, the better chance you have of getting projects in motion. The duration of a pitch can last from 30 seconds to 20 minutes depending on what your project is, what environment you are pitching in , and who you are pitching to. Sometimes you’ll only have 30 seconds capture the attention of an agent on the phone. Other times, you might have 10 minutes to sell your script to an executive in a board room. No matter what way you look at it, pitching is an essential art that all producers must learn how to master.  There is no “right” way of pitching – everybody has their own pitching styles. However, there is a “wrong” way of pitching.

Read “The Do’s and Don’ts of pitching.”

What is an Independent Film?

When we here this term, we normally think arthouse, film festival, and cheap. This can be true for most independent films, however, not all independent films will share these characteristics. To put it simply, an independent film is a film that is financed outside of the traditional studio system. In other words, the money to finance the film came from a place/person other than a studio. In most cases, independent filmmakers have to find distributors on their own. This could be a major studio, but often times independent filmmakers have to find other means to distribute their films.

What is an “Ultimates Model”?

An ultimates model is a financial model used to determine the value of a film. This is usually established by the distributor of the film and is based on all revenue streams generated by the film including domestic theatrical box, DVD, network TV, pay TV, cable TV, and other ancillary markets within a 10 year period. The domestic theatrical box office is the main driver behind the ultimates valuation. Ultimates serve three main purposes. One is to determine the anticipated value of a film in order to attain financing from a lender. This ultimates value will allow the lender to derive an appropriate amount to lend to the filmmaker. Another purpose is determining the price for post-release sales. This could be to foreign TV, pay TV or any other ancillary markets. When determining the price to sell a film to another distributor after the film has been released, the price will be based off the ultimates value of the film. This is usually derived from domestic theatrical box office revenue. The third purpose is collateral for lending. In other words, if you were borrowing money from a lender, the lender could lend against your library and the value of your library the ultimates model is applied to each of the films in that particular library.