Investors and Film Financing
Erica Harrell
Producer
One thing that always seems to mystify people about the film industry is the amount of money that it takes to make a movie. This weekend Spider-Man 3 opened, a film that cost waaaay more than $200 million dollars. Although this is a staggering amount of money, its easy to see where it came from: Spider-Man is made by Sony Pictures, which puts out a bunch of movies every year. The money made from those movies funds the next batch of movies, and so on and so forth. It’s a normal business model.
However, outside of the studio system (otherwise known as “independent” filmmaking), it is up to the filmmakers to pay for the cost of making the film. Budgets for films are always discussed in the independent world, and are marveled at how it contrasts from studio pictures; Spider-Man 3 = $250 million, but Napoleon Dynamite = only $500,000.
So in the independent world, the entire cost of the film has to be covered by the filmmakers: the cost of the production, the cost of editing, the cost of exhibiting. This is usually found in the form of individual investors.
Investing in a film is the same as investing in any other business: there is a chance for financial gain and a chance for financial loss. Of course, for a film to earn money, people need to be paying to see it. The high cost of exhibiting the film can be paid for by selling it to a motion picture distributor. The distributor would buy the certain rights to show the film commercially and the films investors would see a return on their investment.
The highest profile market for the purchase of films (also known as acquisitions) are the big film festival markets like the Sundance Film Festival or Toronto International Film Festival. Every year, representatives from various distributors, such as offshoots of major studios (like Fox Searchlight or Focus Features) attend these festivals, looking for movies that can be purchased for some kind of commercial release.
This is not the only scenario in which a film can make money, but it is the best-case scenario. There are possibilities of selling to a foreign distributor for exhibition outside of the United States, as well the direct-to-video market, where the film is available in stores, as well as video rental outlets. Now an independent filmmaker can even distribute the film digitally using interfaces such as the iTunes Music Store or hosting the film on a private website such as this.





