Revenue on Film and TV: The Mystery of Advances

I jumped into the start of my research on revenue and expenses as part of putting together a finance plan with our management accountant. After getting together some ideas of how theatrical box office is split up, I needed to go deeper, further backwards in the process. Box office is at the very end of the process, and we're all making a fairly high gamble that the movie will make any money at all, let alone enough to cover distro, P&A and exhibitor cuts enough to leave a decent chunk for us.

Here is the rough pathway I could put together for us. You'll see the question mark that signifies what I've hit up against.

The big question is whether an indy can get an advance.

There's a thing called an advance. When you're signing up with a distribution company, they might offer an advance, being a payment of funds up front. It's like in the publishing industry, where an author might get an advance they can use to fund their life while they write. If you're established as a filmmaker, producer or production company, you might get an advance. Every year the figures for advances shrink.

How much is that figure, then? What sort of advances are out there, even in the big leagues, as something we can bounce off of? This is the most difficult piece of information I've tried to find. I did manage to find a table of average advances to video paid in 1997, split up on a scale from A+ movies down to B-. Here's the link:

The Feature Film Distribution Deal

Take inflation into account and $50k becomes $75k. The industry isn't that good any more, though, so let's discount inflation and keep it at $50k. Let's also assume we suck, so take the lowest figure and split it in half. Even with these figures, from a $250k production budget, it suddenly seems possible to make not only make budget on presale advances, but to go into profit, too.

I doubted it, though. I needed more information, more recent data. Rummaging around some more, I found Mark David Ryan. Mark is a screen academic at Queensland University of Technology, who specialises in the study of Australian horror. Too perfect. I went through his two theses:

• A dark new world : anatomy of Australian horror films
• Whither culture? Australian horror films and the limitations of cultural policy

...and decided I needed to give him a call. He was really generous with his time, and we both seemed to agree a lot. It felt damn good speaking with someone who not only understood the business side of things, but could illuminate more of that world for me. Mark made me aware of Michael Robertson, a producer on Black Water, The Reef and Road Kill - all low budget Aussie horrors. According to Mark, Mr Robertson had been operating under this model I'd pinpointed: presales enough to get the film made. Keep budgets low, get money early so you aren't stuck waiting for the sales two, three years later. Mark also told me about another production company who had sold off their film's rights to subsequents (sequels, spin-offs and remakes) while overseas, in order to earn more money early. Turns out there are companies in the US that buy up these sorts of rights from foreign films as product for their own US versions.

From all of this emerged the skeleton of a finance strategy: take the money and run. I spoke with the above the line team about all I'd learned and put the outline to them.

Fuck long term return. Let's try and generate as much funding from the international and private markets as early as possible, and in doing so, sell off the rights and aspects that traditionally might generate long term profits. If the film is successful, we won't see much of it, but we'll have enough early enough to get paid for our efforts on The Lonely Hills and move on to our next one. Meanwhile, everyone else - distro, exhibitors, investors - makes money off of our efforts, hopefully generating returned interest in the next project.

I still had no idea what to expect in way of advances. Time to speak to Australian sales agents. I have connections with lifestyle TV, but not features, so I simply grabbed the Screen Australia list of international sales agents and worked my way down, marking those that might take our genre, and those in Australia. This was at the end of 2013, just before Xmas, so I only had the chance to contact one. He happened to also be the head of Screen Producers Association of Australia. I have to wait until the new year, but the short response I got helped: You won't get an advance at all without a name attached to the film, be it writer, director, or most preferably, talent.

So that's the latest challenge, and one we were prepared for: get a solid, internationally recognisable name on the picture.