3 Things Every New Film Investor NEEDS to know

I write a lot about the film business with filmmakers as a target audience.  However, in my non-educational content job, I have to interface with film investors on a fairly regular basis.  This blog is adapted from one such situation where a first-time film investor had a lot of impulses that might actually hurt their film.  The response got rather lengthy, so I asked my client if he minded if I adapt it into a blog.  The client didn’t mind at all, so now I can share the insights with him with significantly more people.

With that in mind, here are 3 things that every new film investor should know. 

1. Films are not evergreen.

Once a film is more than a year past its initial release, it loses a significant portion of its perceived market value.   Buyers just won’t touch it.  You released the film this year, so you have a bit of time, but that time is not infinite.  This means that negotiations around a minimum amount of money over time is not always productive, as it will likely be out of the highest actual period no matter what happens.  Often, even if you get the rights back, the film will have been so heavily shopped no one will take a look at it anyway.

This is a mistake that a lot of filmmakers make.  Unfortunately, you do not have all the time in the world to shop for your film.  Eventually, you’ll want to make sure you get it out there, even if it’s at something of a loss.  If you want longer, it’s unlikely that your prospects will get better.  

Of course, I want to be clear that you shouldn’t take any old deal as soon as it’s offered.  It’s just important to remember that barring some incredibly specific extenuating circumstances,  your film won’t be worth as much next year as it is now.  Your Also, if the distributor or sales agent is in clear breach, you should still try to get your rights back. 

2. Generally, films take a few markets to make a cash upfront sale, and the pay chain is absurd.  

It often takes a few in-person touchpoints before the sale is finalized.  While I’m going to be pushing for a quick sale, sometimes it takes a while for the money to come through.   

Further, you should remember that a lot of time it will take a while for those payments to trickle through to the producer.  I’ve outlined the issue in detail in the blog below, but to give you an idea, an MG-oriented sale will likely have something like 10% due on signing, 40% due within 30-90 days from notice of delivery, and the remaining 50% due prior to release or within 30 days of release.  Also, most SVOD sales in the US pay out a set amount of time after the beginning of the license period.  

Related:The problems with the indie film distribution payment system.

3.  No one likes dealing with inexperienced people with huge egos.

If you’re an accredited investor, you’ve probably dealt with this issue on the other end.  You likely have money due to your own entrepreneurial endeavors, a high-paying position that likely required you to employ other people, an expansive portfolio of investments that may have required you to interface directly with other entrepreneurs, or some combination of the above.  

While the primary goal of any film production should be to get all of your money back, the industry is incredibly specialized.  Nobody likes being told how to run their business by someone without much experience in the driver’s seat of this highly specialized industry.

It’s important to remember that once you get to dealing with more powerful members of the industry, trying to throw your weight around to get a better deal isn’t likely to break in your favor.  Unfortunately, most good sales agents or distributors will just decline to take out your film, and the less-than-good ones who remain will find legal ways to avoid paying out as long as possible if they pay out at all.   

This industry may be in a period of upheaval, but currently, sales agents and distributors still hold a lot of power.   So if you want to make a profitable film, or a widely distributed one, you’re going to have to take some time to understand the common industry practices.

It’s incredibly difficult to negotiate with someone when you’re at a massive informational disadvantage, and more than likely you will be at an informational disadvantage purely by the nature of the specialization of the film sales and distribution industry. 

If you want to lessen your informational disadvantage, you should sign up for my mailing list to get monthly blog digests segmented by topic, you’ll also get a free film business resource pack that includes an ebook, whitepaper on the macroeconomics of the film industry, an investment deck template, and a whole lot more!  Click the button below to grab it.  

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