American Film Market 2012

The Do It Yourself low-budget movie that makes a six-figure profit out of the box represents the new financing paradigm that has Hollywood talent buzzing.

Forget about the disappointment from endless rejections at pitch meetings around town. Star talent simply bankrolls a film personally, keeping the budget within the high six figures, a price tag that’s feasible with today’s digital technology. Then, presto, collect more than that from domestic video-on-demand/DVD ($400,000), a domestic basic cable deal ($200,000) and international VOD ($200,000).

“It’s becoming feasible to get 100,000 downloads domestically, another 100,000 internationally and a domestic basic cable deal, all of which should get you your money back” on an under $1 million-budgeted production, says entertainment financial consultant Doug Lowell. “Anything in addition to that becomes gravy.”

Star talent-financed projects are nothing new, but they are becoming more prevalent as digital production tools lower creation costs and online video platforms mushroom. Also, talent can inexpensively market to consumers via online to create a buzz as a catalyst for traditional distribution deals.

“People want to work,” says Jay Cohen, head of film finance and distribution at the Gersh Agency. “But it can be an expensive canvas. When you create something that’s a digital piece of content, the hope is it will go wider.”

An early example of a digital video acting as a springboard to a traditional series is dry, black-comedy TV series “Web Therapy,” which stars Lisa Kudrow. Car company Lexus approached the actress from “Friends” in 2008 for an online series of short videos for its L Studio website, the license fee for which covered “Therapy’s” budget in the hundreds of thousands of dollars for four seasons. Eventually, Showtime licensed episodes of the comedy about a therapist who conducts patient sessions via online video.

“It’s not a TV show that any network or studio would buy if you pitched it,” says Kudrow, who convinced Meryl Streep, Jane Lynch, Alan Cumming and other well-known talent to make guest appearances. “It really started off as you are doing something in your backyard and so ‘who wants to come over to play?’ There was nothing at stake and we only needed someone for a half a day. We weren’t asking for a lot time.”

Kudrow and two others retain ownership of “Web Therapy” but she believes funders and distributors today would angle hard for backend rights.

Another instance of talent self-financing is “Red Hook Summer,” which Spike Lee says he financed for under $1 million. The urban drama, which underwhelmed in a narrow theatrical release, nonetheless earlier lined up domestic distribution deals with Image Entertainment for key domestic rights.

The grindhouse indie film “The Victim” illustrates how audiences from online propel a project. “The Victim” was launched with funding from actors Ryan Honey and Michael Biehn, says producer Jennifer Blanc-Biehn, who also co-stars with her husband. “Over half the budget was covered through deferments” by talent, post production and marketing services, says Blanc-Biehn.

After the film was made in 2010 with a budget in the hundreds of thousands of dollars, it was promoted online, whipping up interest from genre movie fan sites and Facebook pages of talent, which helped land a North American distribution deal with Anchor Bay earlier this year and foreign sales from WTF in Paris. Those sales started financial recoupment.

Using your own money “is something you shouldn’t do, but this project was a labor of love,” says Blanc-Biehn. “If you can get other people to finance a film, why take the risk yourself? In this case, it actually turned out OK.”

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