- Privately owned - a company whose shares may not be offered to the public for sale and which operates under legal requirements less strict than those for a public company.
- Independently owned - a business that is free from outside control. It usually means a privately owned establishment, as opposed to a public limited company, the latter of which is owned by investment shares traded in the stock market. In many cases, independent businesses are sole proprietorship companies.
- Ownership - the act, state, or right of possessing something.
- Funding - money provided, especially by an organization or government, for a particular purpose.
- License Fee - An amount of money paid by an individual or business to a government agency for the privilege of performing a certain service or engaging in a certain line of business OR a sum paid to use a copyrighted item, such as a photograph or logo, that is owned by someone else i.e. BBC.
- Subscription - an arrangement to receive something, typically a publication, regularly by paying in advance i.e. SKY.
- PPV - a television service in which viewers are required to pay a fee in order to watch a specific program i.e. UFC, WWE.
- Sponsorship - financial support received from a sponsor i.e. Product placement.
- Advertising - the activity or profession of producing advertisements for commercial products or services.
- Public Service - is a service which is provided by government to people living within its jurisdiction, either directly (through the public sector) or by financing provision of services i.e. BBC.
- Independent Companies - a business that is free from outside control. It usually means a privately owned establishment, as opposed to a public limited company, the latter of which is owned by investment shares traded in the stock market. In many cases, independent businesses are sole proprietorship companies i.e. Love Productions.
- Internet TV - is generally-available content distributed over the Internet. Unlike IPTV (Internet Protocol television), which is distributed over proprietary networks, Internet TV is available wherever a broadband connection exists. The two terms are often confused.
- Broadcaster - a person or organization, as a network or station, that broadcasts radio or television programs i.e. BBC, Channel 4.
- Private Company - a company whose shares may not be offered to the public for sale and which operates under legal requirements less strict than those for a public company i.e. ITV.
In the film industry private investors often put forward their own money to pay for a production. An example is George Harrison, who put money into the famous Monty Python skits and The Beatles. Independent production companies can also invest in productions and put forward money. Other company owners may also put forward money to pay for productions they may believe will work. Investors like this will often ask fora percentage of the returns as part of their investment i.e. ROI ('Return On Investment').
Capital Investment
Money invested in a TV/film production with an expectation of income, and recovered through earnings generated by the output of the product. It is generally understood to be used for overall expenses rather than for day-to-day operations (working capital) or other expenses. An example would be ITV's I'm a Celebrity. It is expected that earnings be made for several years over the product, should it be successful. People who invest this way may have an agreement with a company by which they recover their funds by a certain time (often after the products release). This could also include beneficial interest, shares in the production and ownership over creative rights.
Financial Aid
A way of funding that is given in the form of grants, loans and scholarships. This would pay for the expenses and costs of a product while being paid i.e. National Lottery funding films, as well as the BFI (British Film Institute). It would also be used to pay for an individuals expenses and costs incurred whilst they are working on a film.
Development Funds
This is when money is raised after a project has been pitched. This money can be given in the form of a loan or grant (not paid back). Film pitches, GoFundMe, Kickstarter and Indiegogo are examples of this.
How much money does the average film cost?
There is no such thing as an average film cost of a film. They vary greatly dependent on a variety of factors, such as:
- the production requirements (do they require hundreds of casts, elaborate sets, technical props, special FX and stunts).
- rights - do they have the rights to the screenplay? This would cost money.
- the previous success of the production company - do they have a reputation? Do they have independent finance to contribute or do they have a financial backer?
- the amount of crew required.
- the length of production.
- the distribution and exhibition costs.
'The Blair Witch Project' (1999) cost a tiny $60,000 to make (Haxan Films). This was in part due to the production decisions made:
- filmed in one location (the woods - minimal location required).
- they used unknown actors (low costs).
- used primitive filming equipment (hand-held cams, natural lighting).
- minimized crew costs - actors filmed much of the film itself as it was documentary styled.
- the trailed used minimal footage or effects.
Comparing The Inbetweeners Movie (£3.5 million), X-Men: The Last Stand (£210 million) and Kidulthood's budgets (£600,000), one would have to evaluate why it would cost so much. That would be because of the differentiating costs for film crew, cast, the special effects needed and the backing of production companies that are necessary.
X-Men of course would be the highest costing as it had to pay for big name actors such as Hugh Jackman and Patrick Stewart, as well as afford all the necessary special effects for and action-based superhero movie. Production companies included Marvel Entertainment, which executed the two previous X-Men movies, already profiting off-of those movies and building up a reputation.
The Inbetweeners Movie falls in the middle as it no doubt made profits off its already successful TV series (further encouraging a sequel). This helped it already have popularity among viewers and enticed its audience to go and see it. It's actors of course or not as big as those featured in X-Men but are payed moderately and costs for crew and location (abroad) would be necessary.
Kidulthood also benefitted from a niche audience and was backed by Revolver Entertainment, who have worked in collusion with the BBC in the past. Very local being based in London and uses relatively low-key actors and actresses. Location being very close to home make for easier production of movie and eases the budget.
Film Financing
The producer (e.g. the studio or production company) must secure funding before the production of the film, before filming starts. The problems with this is that it is hard to predict how much (if any) money a film will make. There are various legal and procedural problems in securing rights to a film property. Some of these issues may include:
- Copyright - the exclusive and assignable legal right, given to the originator for a fixed number of years, to print, publish, perform, film, or record literary, artistic, or musical material.
- Plagiarism - the practice of taking someone else's work or ideas and passing them off as one's own.
- Contracts - written or spoken agreements, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law.
- Clauses - a particular and separate article, stipulation, or proviso in a treaty, bill, or contract.
Grants are provided by Government Schemes designed to encourage creativity and new talent. A film production can benefit a country in a number of ways:
- employment opportunities
- development of culture
- advertising a location to an international audience, encouraging travel and tourism
Tax Schemes
There are benefits to a country in having a major film release shot on their shores. The UK introduced the Producer's Tax Credit in 2007 to help entice film producers to the UK. It offers a direct cash subsidy to producers choosing to shoot in the UK. This has helped to bring in large scale productions to the UK. These film tax credits can only be applied when the correct procedural processes have been completed.
Tax Shelters
In the UK, they allow those who invest in UK films to pay less tax, provided the film be shot in Britain and employs a far proportion of British actors and crew. As a result of this, many American films choose to shoot at British studios such as Pinewood and Shepparton. This also helped to attract large scale US productions to the UK. The UK Tax Shelter for Film Investment in 2007.
Pre-Sales
Involves the producers selling the right to distribute the film before it is made - this is the most common method of film financing. In order to secure their investment, distributors will expect certain elements that are likely to guarantee success. These may include 'marquee' names or some kind of change to a film to make it more commercially tenable. If a 'star' leaves the film for any reason, this would often result in the funding for a film being pulled, as with Terry Gilliam's The Man Who Killed Don Quixote' (2002). It is still stuck in development hell to this day, with actors constantly pulling out of production and funding requirements never being met.
Pre-sales are usually done by territory i.e. Europe, Australia etc. They can also be made of DVD or TV distribution rights. This is especially likely to be the case if the movie studio distributing the film is part of the same conglomerate as a TV station.
The following movies attracted investments and helped secure the funding for production:
- Titanic - $200,000,000
- Spiderman 2 - $200,000,000
- Waterworld - $175,000,000
- The Wild, Wild West - $175,000,000
- Van Helsing - $170,000,000
- Terminator 3 - $170,000,000
- Troy - $150,000,000
Highest-Grossing Films of All Time
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