Thursday, September 2, 2010

Making a Business Plan Part IV

OK, so we're going over and over the ways we might stay afloat as a movie studio. I say "afloat" rather than "make scads of money" because well, it's unlikely we'll make scads of money and to base your business plan on making a movie as successful as Paranormal Activity was, and because we're unfortunately not in a business which lends itself to profit margins in the double-digits (a problem I've talked about before.)

That doesn't mean nobody can make money. One thing that is interesting about The Asylum is that their business plan is clearly always in flux. Back in the day they were all about making $80,000 horror films for the direct-to-DVD market (actually, before that they were an art-house distributor if you can believe that.) Now I expect their biggest cash influx comes from SyFy.
A better business plan.
SyFy is interesting. Traditionally their deal with producers of "Sci-Fi Original Movies" was that Sci-Fi (before they became "SyFy") would put up 750K against a 2 million dollar budget (the New York Times even had an article about that.) That meant that the producer would have to find pre-sales around the world of 1.25 million dollars, then get a bank to lend the cash against the promises of the distributors to pay for the picture.
Obviously today that deal is untenable. There's no way you're finding over a million dollars overseas for a B horror/sci-fi picture. The Asylum is producing for SyFy, but I can't imagine they're spending much over half-a-million dollars on a picture and I'm sure that they're "in the black" on whatever amount of money SyFy gives them for producing a picture (and that foreign sales are just "gravy"). I could be wrong, but I doubt it.
The thing is that although for us, a half-million-dollar budget would set us in the veritable lap of luxury, there are a variety of other major expenses which can come into play when someone else is paying for a movie up-front.
One is that they really like actors they've seen before. Buyers, distributors, heck -- even the public, aren't too smart. They assume that a known actor is a good actor and an unknown one isn't. I'll let you close your eyes and think of all the big-name "actors" you know who couldn't act their way outside a paper bag.
The issue with name actors is that they tend to want to make money way outside of what they're "worth" as far as added sales or distribution go. You can easily burn up more than half your budget paying for name talent.
So let's pretend we had a $500,000 budget to produce a picture. We break out the cigars. But then the reality hits us -- first-wise, we have to deal with the fact that the script has to be approved by multiple levels of higher-ups from the buyers. Right now, we don't have anyone looking over our shoulders when we greenlight a screenplay (you could argue "maybe you should have someone looking over your shoulder" but that's another story.)
Backup microphone - Oktava MK-012.
Then we're going to blow $250K on name talent. Will we like working with these people? Will they annoy us? Will they insist on a trailer which will end up costing us an extra thousand dollars a day?
More than that even -- will we become paranoid about having backups for everything? Spare cameras? Babysitters (I mean "assistant directors") for the actors?
Will the buyers insist that we go out-of-house for visual effects? For sound? For... whatever?
How much will all these caveats (or "covenants" or whatever you want to call them) cost?
Mind you, it's unlikely we'll be in worse shape overall than the $8,000 movie we make now. But it could very well be less fun.

So what is the action plan today? It's to harass my overseas distributor about finding out exactly what his buyers want. I don't want to hear "creatures and disasters". I want to hear "massive shark attacks the Empire State Building."


DAVID FREY said...

any word from the american distributor about the 25 second commercial? Their feedback would help me gauge the shape of the 55 sec version.

Cunningham said...

"It's to harass my overseas distributor about finding out exactly what his buyers want."

I think that's the problem - you need to go to at least a dozen distributors to see what is selling for them. You seem to be tied to one, and that may not be working for you.

Andrew Bellware said...

David Frey: Have you noticed it's not Labor Day yet? Nobody will return phone calls or anything 'till after Labor Day! ;-)

Cunningham: That's going to be the focus of episode 6 in "Making a Business Plan" ;-).