How do Indie ProdCo's Make Money?

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  • How do Indie ProdCo's Make Money?

    If you look at the amount of Indies there are out there and the amount if films they're making, how do these guys justisfy the cost of development.

    Movie budgets are always in the millions, but these films are not all making it mainstream.

    So, where's the money coming from, and where is the profit?

  • #2
    Re: How do Indie ProdCo's Make Money?

    I wanna guess that some of it comes from when they sell their films to studios @ festivals, like they did with HUSTLE & FLOW.
    "The two hardest words to write are FADE IN. The two most gratifying are FADE OUT."

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    • #3
      Re: How do Indie ProdCo's Make Money?

      Originally posted by sstaubin
      So, where's the money coming from?
      If you're talking about money for development, I'd guess their overhead is low. Many of them are working out of their homes, trolling for lo or no-money options.

      An email account, a cell phone, and PO box, and viola you're a prodco.
      ==========

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      • #4
        Re: How do Indie ProdCo's Make Money?

        Sure, there are many basement prodcos producing flicks a step up from home movies, but there are also many companies making a packaged product.

        If that product doesn't get picked up by a distributor and get shown on TV, the theater or direct to DVD, is it just a made movie with no revenue?

        Considering the cost of development, I don't see the up-side.
        Last edited by sstaubin; 06-22-2006, 09:50 PM.

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        • #5
          Re: How do Indie ProdCo's Make Money?

          Originally posted by sstaubin
          Considering the cost of development, I don't see the up-side.
          My point is that development costs very little. Production costs are covered by investors. If the movie doesn't get picked up, they lose their investment.

          For the bigger indies, many have deals with studios to cover their nut and option money in exchange for right of first refusal.
          ==========

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          • #6
            Re: How do Indie ProdCo's Make Money?

            Yes, what is this fixation on development? Development can mean anything, or nothing.

            In many cases it doesn't cost a producer a dime or a dollar to option material. Or if a naked script is acquired it can go straight to production. The costs mostly lie in actually making the film. And plenty get made w/ no return on investment. But distribution, DVD, international sales all fuel the business, and are what make it lucrative for many.

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            • #7
              Re: How do Indie ProdCo's Make Money?

              distribution

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              • #8
                Re: How do Indie ProdCo's Make Money?

                Originally posted by Charli
                distribution
                Yes. Essentially they hope to make their money on distribution deals.

                EG The Shooting Gallery made Sling Blade with BB Thornton on a budget of $890,000. Miramax acquired it for distribution for $10 million.

                That was a bit unusual as there was a bidding war and Miramax were intent on flexing their muscles.

                The indie prodco would also have a cut of the back end. But with Miramax there rarely ever seemed to be a back end for some reason.
                http://wasitsomethingiwrote.blogspot.com/

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                • #9
                  Re: How do Indie ProdCo's Make Money?

                  Originally posted by boski
                  what kind of profit does an indie prodco look to make or expect to make from a low-budget feature?
                  Anything from nothing to 'Blair Witch.'

                  I think most indies don't want to stay indies, and that their business model involves not so much a high return on investment as establishing themselves as a brand, and working up the ladder; eventually getting a studio deal.
                  ==========

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                  • #10
                    Re: How do Indie ProdCo's Make Money?

                    Originally posted by boski
                    This is a great question. I've wondered about this myself.

                    I know that there are several avenues/revenue streams for making money off a finished film: theatrical release, DVD, TV broadcast rights, cable sales etc.

                    But what I've wondered about recently (because a Canadian indie has our script optioned) is what kind of profit does an indie prodco look to make or expect to make from a low-budget feature? What are good and/or reasonable profit margins for indie prodco's on their projects?

                    Assuming limited theatrical release, DVD & broadcast sales etc., what kind of profit do indies make on films that cost a few million (2-4, say) to produce?

                    A half-million profit? A million or more? What's the skinny on this kind of deal?

                    Say, this Canadian indie makes our movie for about $3 million. How much are they lookin'/hopin' to make on the deal to make them happy and satisfy the needs of their business model?

                    Anybody out there have experience with this sort of thing or have some insight into this question?
                    Hope they make a lot of money, that's all you can really do. The prospectus given to potential investors will have financial forecasts showing how much the film can potentially make but these numbers are usually just as much fiction as the script sent along with the prospectus.

                    It is virtually impossible to predict how much money an indie film will bring in, especially before the picture is locked. If a producer tells you how much he is looking to make on a particular project it is simply wishful thinking.

                    Best case scenario is a bidding war over your film ensues and your 3 million dollar project sells for 10 million. This could be an out right sale, or a sale with a percentage on the back end. Not as great but still great is the distributor picks up your negative costs on the project, in this case 3 million, and promises you a percentage on the back end. That amount could be recoupable, or not, it all depends on your particular deal. Then there is the standard distribution deal. No up front money but the distributor agrees to sink X amount of dollars into publicity and advertising and hope for the best.

                    An independent producer should just be thankful if he doesn't lose money on a project.

                    Production companies are a lot like writers in the respect they also are looking for their "big break". They might produce 3 films that flop, never get distributed etc, but that fourth one hits and they are on the map as a successful production company. All of the sudden the major studios are interested in your next project and if you're lucky you may even get a first look deal with a studio, as Hasil mentioned.

                    Eddie

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                    • #11
                      Re: How do Indie ProdCo's Make Money?

                      From doing my own research and producing my own and a few other projects currently in development, writing business plans, meeting with investors, PPM's, etc.....essentially and without major Canadian and/or another country's tax bene's, your film has to make 2.5 times the budget to break even. But, BUT, once you get over the 3-5 million price, then that goes up because you're paying big time for stars, marketing etc.

                      There seems to be a sweet spot between 1-3 mil where a film can reasonably hope that within 3-5 years you can break even by dvd and foreign sales as long as you get a good fest showing and some US theatrical. However, many an awesome film and filmmaker have sat on the sidelines with a good US cable/dvd deal in their hands at Sundance or wherever which could have gotten their investors paid back, but they balked because they would have to give up US theatrical window. So, there's that.

                      The Truly Indie program http://www.trulyindie.com is a great remedy to this so that you can build your US theatrical into your budget (you'll end up paying for it later on crappy deals anyway), get a good showing and a good cut of sales, some PR on the back of a good Fest showing, pick your cities, and then go after foreign and US dvd.

                      There are obviously tons of other issues here and yes, there is no development money unless you start your own company with some investors giving you some seed money. They get first position repayment on your first slate of films...one of my producers is doing that for his own projects.

                      Hope this helps.
                      Cesahr
                      www.Baggagethefilm.com
                      "I could be wrong, and I probably am."

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                      • #12
                        Re: How do Indie ProdCo's Make Money?

                        Most indie films get no distribution of any kind and make no money.

                        I had coffee with a producer friend who was just sent a list of almost *30* projects looking for financing. All of them have some cast attached (and not bad cast - people like Minnie Driver and Mark Wahlberg) and some have directors attached (Robert Altman is attached to one and Penny Marshall to another)... but these projects can't find funding right now. Some have partial funding, but not enough to make the movie. You would think wih cast and name directors, someone would put up the money... but my producer friend said he would *not* be going to any of his financial sources for these projects because none of them will ever make a cent - all are art house indie dramas. The gamble is that these films will go to Sundnce and get in a bidding war and end up with more money than they cost to produce. Problem is - the cast & directors make them too expensive to make their money back without that bidding war lunacy (which isn't happening as much as it used to).

                        By the way - I IMDBed the writers on all of these projects and not a single one has a previous credit. I'll let you decide if that's bad or good.

                        Anyway, my friend would like to go back to these companies and request they only send him genre packages from now on. A horror movie or rom-com or thriller with Minnie Driver? He can find money for that. I'm trying to get him to propose they just substitute my scripts...

                        Miramax used to make all kinds of nice big art house flicks... but Dimension is where they made the money to make those art house flicks.

                        So, maybe the answer is *diversification*.

                        - Bill
                        Free Script Tips:
                        http://www.scriptsecrets.net

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