5

The Markets

The Spin

You may view the 7.4 billion people in the world as potential moviegoers, but very few filmmakers expected to sell tickets to all of them—that is, until Jurassic Park pushed the box office frontier further than ever before in 1993. It earned more than $750 million worldwide. You didn’t need to speak English or know anything about biology to enjoy this film. It had something for everyone who was old enough to watch it. Then, in 1998, Titanic racked up $1.7 billion worldwide. Star Wars: The Force Awakens released in 2015 earned over $2 billion in box office dollars alone. The purpose of this chapter is not to tell you what stories to write or how but to understand the implied mix of your audience, its size and how to appeal to a wider audience.

On the independent side, the three films of The Lord of the Rings trilogy, released between 2001 and 2003, earned more than $3 billion worldwide and raised the profile of lower-budget indies (including all revenue sources, budget, and P&A) by gaining a significant part of the market. Then through 2011, the seven Saw films earned more than $1.4 billion in total revenue. The 2010 film The Twilight Saga: Eclipse, however, earned $1 billion in worldwide revenues itself; and, on the low-budget end, 2014’s $3.3 million Whiplashearned $42 million worldwide. (Note: As this edition goes to press, we only have worldwide numbers through 2014.)

What does this mean to you, the independent? While studios were emphasizing tentpole films, independents had a large portion of the ballpark all to themselves. The indie home runs being hit in this century opened the game to many more players. In more recent years, studios have recognized the value in lower-budget films, but their main focus still is the blockbuster.

On the financing side, everything has gone through a turbulent transformation. With the change in the economic climate since 2008–2009, many hedge and real estate funds failed. While the hedge funds were more interested in large, integrated production companies, real estate investors have been partnering with individual filmmakers. In the ensuing seven years, many of the investors have moved out of big funds to investing in individual films or small companies. This has allowed them more transparency and causes even more scrutiny about every word that is written in your plan.

In this chapter, you need to not only explain the popularity of various genres, subgenres, and themes, but present facts to support your analyses. Whether your film’s budget is $400,000 or $80 million or has newbie actors or stars, you need to research the market for your film and explain it for your investors.

The market comprises all those people who are going to buy tickets. In this chapter, we will be looking at the potential popularity of the themes and styles your films represent. To some extent, we also will look at marketing, but do not confuse these two concepts. Marketing involves selling your idea not only to the investor but also to the distributor and audience. Here, we will focus on selling to the investor through the business plan, but we will also touch on current forms of self-marketing; the distributor is dealt with in Chapter 6. To make terms somewhat more confusing, this book also refers to “the markets,” such as the American Film Market and Cannes, the two largest international marketplaces where production and distribution deals are closed.

In the previous section of your business plan, the Industry section, you defined the industry as a whole and independent film as a segment of it. Now, in the Market section, you will build on that definition by further dividing your industry segment. Your segment may not be as global in size as “everyone,” but it has its own value. You also will use the projects that were described in the earlier Film section and use their components to pinpoint the market. This analysis gives you a base for later estimating those very important gross revenues.

Market Segment

Your market segment, or niche, consists of the type of person out of the total movie-going population who is likely to rush out to see your film the first weekend, as well as secondary target groups that will be interested. You need to identify, for yourself and those reading your proposal, the characteristics and size of this segment. By devising a snapshot of your film’s likely audience, you will be able to determine the film’s ability, first, to survive and, second, to succeed. Who are the end users of your film—that is, the ticket buyers—and how many of them are there likely to be? Before you worry about marketing strategies and distribution channels, create a picture of the potential size of your market’s population. How can you do this? Very carefully. But do not worry. It is easier than you think; it just takes work. You do not need to have inside information or to live in Los Angeles to do this. Research is your tool.

Having divided the industry into studio and independent, you now need to divide your segment into smaller pieces. In looking at this piece of the market, ask yourself these questions:

• What are the real genres?
• How large a population segment is likely to see my film?
• What size budget is reasonable vis-à-vis the size of this segment?

Defining Your Segment

Filmmakers would like to appeal to everyone, and some independent films reach a mainstream goal. For the most part, though, an independent film will attract moviegoers from a few identifiable segments of the audience. To understand how to focus your investor’s expectations (and your own), you will have to do a little research. You do not have to be an expert, but investigation will help make you and your investor wiser and wealthier.

The profile of your target market in terms of audience might include the following:

• Main film genres—comedy, action, thriller, horror, drama, romance, faith-based
• Subgenres―female protagonist, history, black comedy, family-friendly
• Underlying themes—inspirational, young adult, magical realism
• Special formats—documentary, animation, large format
• Affinity groups—ethnic, urban, religious, sports, age, and sex
• Similar budget parameters

To Pigeonhole or Not to Pigeonhole

Your identification of the target audience for your film begins when you select the genre of the film. The term genre can be very confusing. Some people appear to use the term to refer to cheap and formulaic, as in “it is a genre film.” One client of mine was upset that I was cheapening her films by using the term genre. For the business plans I write, it is used to refer to films that can be grouped together by plot, setting, and/or theme. Genre doesn’t refer to how well you made the film or the amount of the budget. You could probably use the word category, but it doesn’t have the same movie feel.

As a genre, horror films, for example, are generally movies that scare you for some reason and have lots of blood and gore. In IMDB, there are approximately 3,174 theatrical horror films from January 2013–January 2016, ranging from the no-budget The Gallows to the higher-budgeted Warm Bodies. These films have different premises (sci-fi creatures, blood and gore, childhood nightmares) and appeal to different audience segments. The former will appeal to teenage moviegoers as an initial audience, while the over-35 group is more likely to be drawn to the latter. In the end, though, both of them are still horror films.

Genres can be big or small. Drama is considered the most pervasive genre and is combined with others in many films. The next most popular genre by number of films produced is usually comedy. Both of these genres include films that often carry descriptive adjectives, such as family, romantic, or dark, to further narrow the category. Then we have thriller and action/adventure, which are unique genres. Very few films are just one genre or theme. A filmmaker wants to use everything that fits the film, which often goes beyond those main genres. For example, 2015’s Brooklyn is a drama/romance. What isn’t included as a main genre is “female protagonist.” This genre is growing as the audience, both men and women, have become used to women heading films that aren’t classified as “chick flicks.”

There are also filmmakers who are linked with specific genres and who have become their own genre. Saying a movie will be a Quentin Tarantino, Judd Apatow, Kirby Dick, or Tyler Perry film creates a frame of reference for the particular experience moviegoers will have. When they deviate from the familiar types of films, their movies often do not do well at the box office.

You can even have a producer genre. Jason Blum produces mostly horror films, like Insidious: Chapter 3 or The Visit. When a producer or production company is identified with a particular type of experience, the audience tends to pick the film based on that track record rather than anything else. If you feel that your style is akin to a particular director’s niche, you may draw from that audience.

Why bother identifying the genre for your film? Many writers and directors believe that categorizing their films is not only meaningless but also, in some cases, demeaning. There are always filmmakers who say, “My picture is different and can’t be compared to any other films.” Nonetheless, all films can be compared, and you do have competition. By giving your investors these frames of reference, they understand the groups of moviegoers to whom the film might appeal and explain the genesis of your projections. One of the challenges you face with your business plan is being understood. You must be certain that you convey your meaning correctly to investors. It is important, therefore, that you define your terms so that everyone is on the same page.

Art Versus Specialty

As far back as the first edition of this book, production and distribution companies have preferred the term specialty for their films rather than art-house and with good reason. Art may bring to mind a very narrow image of a type of film. Many would assume the film to be an inaccessible film only for the intellectually intense. Specialty, on the other hand, is a broader term without these negative connotations. Until you define it, there may be no frame of reference for the investor. Creating a definitive description that everyone agrees with would be impossible. In writing your business plan, you have to find whatever phrases and film references best convey your meaning.

We usually define the specialty market by sensitivity of story, unique style, experimental and/or budget size. Our first weekend audience is likely to be small, and the film will grow through word-of-mouth in social media. Ex Machina, Carol, and Dope are examples. These pictures may have nothing in common in story or overall theme, but they provide an expectation for the reader.

An important aspect of specialty films is their distribution (and, consequently, revenue) potential. In recent years, the scope of specialty films has widened tremendously. Typically, a specialty film may open on 1 to 15 screens and expand to more screens as revenues become available. On the other hand, if the distributor has enough money and faith, a small independent film can play on many screens. Grandma (2015) opened on four screens domestically and played on 1,061 at its widest distribution. The Big Short opened on eight screens and was on 2,529 screens at its widest point of distribution.

Genres Big and Small

We tend to think of the “main” genres; however, there are strong subgenres/themes. Comedy, for example, has been with us forever. It has subgenres, however, such as black, slapstick, screwball, cringe, and―one of my favorites―mockumentary. These multiply over time depending on the current culture. There also are combinations of all the other genres: romantic comedy, horror comedy, action comedy, etc. A favorite of my business plans to write has been a supernatural, young adult, faith-based comedy. Any of these subgenres or combinations may go through different periods of audience favoritism. Even if your genre has not been doing well in the marketplace, however, all it takes is one film of any size to suddenly bring it back.

Take horror, for example. This genre seemed to fall out of popularity in both film and books in the late 1980s. In film, it languished in the no-budget, direct-to-video, and direct-to-foreign world. Until Scream in 1996, the general wisdom also was that horror films were not worth putting any money into; therefore, it was hard to get the investment community interested in the genre. With that movie, I Know What You Did Last Summer, and The Blair Witch Project (my personal favorite!), the investors flocked back and have never left.

But timing is everything. Now production money is available everywhere not only for the traditional scary films (Insidious 1 through 3 and Saw 1 through 7) but also for variations on the theme, such as The Lazarus Effect (horror/sci-fi) and The Devil Inside (mockumentary). Suppose you wanted to make a horror film before any of the above films were released. How would you convince someone that your film would be successful? There are several techniques you could use.

1. Emphasize other elements: Devil is a horror/mystery/thriller in which five people trapped in an elevator are killed, one by one. An alcoholic detective and rescuers work to free them. Do bad things happen for a reason?
2. Redefine the genre: Twilight is a teenage Romeo and Juliet vampire story. Moving to a small town to live with her father, Bella meets the mysterious and beautiful Edward. The two fall unconditionally in love with each other. Even learning that he is a vampire does not deter her love. How will they resolve this unnatural relationship?
3. Override the horror genre altogether: Shaun of the Dead has the zombies playing comic foils to Shaun, even while eating and killing people.
4. Use the cycle theory: The five (so far) Paranormal Activity films are mockumentary/horror stories with found footage.

More about Cycles

Given the cyclical popularity of some genres or combinations, the technique used above is not a spurious one. A successful film often inspires a number of similar films that try to capitalize on the popularity of the original. Film noir is a term coined by French movie critics to describe American crime dramas in the 1940s. After a brief reappearance of the genre in 1962 with the original Cape Fear, the genre’s real resurgence began in the 1990s with Martin Scorsese’s Cape Fear remake in 1991 followed by, among others, The Usual Suspects in 1994. It encouraged a proliferation of updated film noirs (the darkly lit look of the 1940s films contributed to the term), such as Fargo, Lost Highway, Devil in a Blue Dress, The Underneath, Exotica, L.A. Confidential, No Country for Old Men, The Town, The Dark Knight, Brooklyn’s Finest, and Winter’s Bone. Recent examples are Bridge of Spies, Sicario, John Wick, and Inherent Vice (also a comedy). These films broadened the boundaries of the noir genre beyond the detective thriller to represent a way of looking at the world through a dark mirror reflecting the shadowy underside of life. As each year passes, they continue to update the style, content and themes, as well as media. (Note for all purists:, IMDB uses the term neo-noir to refer to noir films made after 1950.)

Considering the length of time from development to release, the market may be glutted with a particular type of film for two or three years. When this happens, the audience may reach a saturation point and simply stop going to see films of that genre for a while. Then someone comes along with a well-crafted film that makes money, and the cycle begins again.

Special Niche/Affiliated Groups

The high-cost structures of the studios inhibit their ability to exploit smaller, underdeveloped markets. Independent filmmakers have the ability to tell unusual stories that appeal to a small group of moviegoers depending on the size of the budgets. Films with budgets under $5 million receive a bigger contribution to profit from each revenue segment than films with the large P&A of studio films. (Distributors often refer to the “sweet spot,” or budget limit―which can be as low as $2 million―for making a good profit on these films.) When the first edition of this book was published, it appeared to be big news that African-American filmmakers could draw a wide audience. It became clear that there was a “black bloc” audience when the studios almost immediately released films―both studio and independent―aimed at that market on 2,000-plus screens.

Throughout the rest of the 1990s, gay and lesbian films also came to the fore, capped by the Oscar wins of 2005’s Brokeback Mountain produced Focus Features (then independent), Good Machine, and River Road Entertainment. Not only did the $12.5 million film gross $334 million and win three Oscars (Best Director, Best Original Score, and Best Adapted Screenplay), but the $104 million that came from North American ancillary sources demonstrated for many the value of looking beyond the box office to the audience that would rent (not download and stream) a movie. In 2005, however, to make a gay cowboy movie was taking a big chance. By 2010, The Kids Are All Right was discussed more as a film about family relations than one about a family headed by a lesbian couple. The main story of The Imitation Game was a biopic about the man who created a machine that succeeded in breaking Germany’s seemingly unbreakable Enigma machine in World War II. An equally important theme, however, was the tragedy of a gay man in danger of being imprisoned in England for being gay. Made for $15 million, it grossed $95.3 million at the North American box office and $291.2 million worldwide. There is no way to know how much of which genre/theme appealed to the audience. If you had been writing a business plan for the film, each would have had an equal discussion in your business plan. We can say, however, that the acceptance of gay/lesbian/transgender themes in film continues to grow.

Until 2000, the Disney Company seemed to have a lock on family films, which usually referred to animated movies with a “G” rating. It was almost impossible for independents to break into that category. Now Hollywood seems to have discovered that not R-rated films but family-friendly films with stories of bright school kids and scrappy ballplayers, in addition to princesses and talking animals, are its next best thing. The industry makes its biggest profits from G- and PG-rated movies, according to many analysts’ reports, and continues to fill the nation’s screens with films that cover a broad audience from preteens to grandparents.

Young people go to movies in droves, and, if they like what they see, they go more than once. Older moviegoers go to the same films for the stories that remind them of their experiences. The independent film My Dog Skip was part of the family film renaissance in 2000. This was followed by Dimension’s Spy Kids, a breakout hit with a U.S. box office of $113 million that inspired a franchise. Other examples of PG-rated films are Are We Done Yet?, The World of Arriety, Soul Surfer, The Second Best Exotic Marigold Hotel, McFarland, USA, and When the Game Stands Tall. At CinemaCon 2016, John Fithian said, “A strong youth audience for cinema signals future industry growth as we develop another generation of movie-goers.”

Inspirational covers a wide range of films from faith-based to new age. They appeal to a wide range of people from those who are religious or those generally curious and may include elements of good versus evil, redemption, and the eternal questions of who we are and why we are here. The genre also includes quantum thinking, as with 2015’s Ex Machina. Looking at the keywords can help you, since faith-based films would give you a good idea of the type of groups that would be intrigued. In addition to a main genre, you may want to look at numbers of groups of people who would be interested in the subjects of the two films, such as yoga and workout, environmental and new technology. Or your characters may show people overcoming great odds that will inspire filmgoers.

In the first ten years of this century, films such as The Passion of the Christ, The Pianist, the Tyler Perry films, What the Bleep Do We Know? and even March of the Penguins alerted production companies and distributors that there is a major market for inspirational films. When Facing the Giants (2006) made for $100,000 earned $21.2 million, distributors took notice. A few of the significant films that have followed are Facing the Giants, End of the Spear, Fireproof, Courageous, Soul Surfer, God’s Not Dead 1 and 2, Heaven Is for Real, and Risen. With an estimated 150 million-plus Christians going to church every week, faith-based movies also have found additional opportunities there. In the last few years, many churches throughout the country have installed movie screens to host family movie nights. The churches publicize their special movie nights and charge admission to the audiences. The money usually is split with the filmmakers through distribution agreements that are similar to those made with traditional outlets. Another marketing outlet not open to other genres is the annual International Retail Christian Show, which provides an environment for buyers to preview and order titles. Whereas previously a company might have hoped that the audience would see life-affirming elements in their films, they now readily advertise that a film seeks to inspire viewers to lead a life of higher values.

My admonition to my faith-inspired filmmaker clients is to make a film that has a subtle message and doesn’t sermonize. Producer Samuel Goldwyn has often been quoted as saying, “If you want to send a message, call Western Union” (ask your grandmother). Or, as Paul Haggis, director of Crash, said, “Film is an emotional medium, not an intellectual medium, so you have to move people. You can’t just lecture them.” You can make a film that will play only to a church audience and be successful. Or you can be subtler and perhaps attract a larger audience to hear your message.

Movies made from “young adult” books, often referred to as YA movies, are the “hot” new genre. While made for an adolescent and young adult audience (ages 12 to 24 in MPAA numbers), they have demonstrated strength far beyond that age group. Harry Potter generally is credited with being the first modern book series to bring teen viewers to theatres in the 1990s, followed by Lionsgate/Summit with the Twilight and Hunger Games franchises. The latter have grossed an estimated $8 billion between them. What makes these young adult stories even more alluring for filmmakers is that their audience is not limited to teenagers. While Harry Potter was expected to attract hordes of young men, the revelations for filmmakers were that females turned out in high numbers, as did the parents who had read the books along with their kids. The Lionsgate franchises also had a wide mainstream appeal. Making these films has not been limited to franchises, however. A few of the one-off independent movies based on YA books are The Perks of Being a Wallflower, Warm Bodies, The Giver, and I Am Number Four. Any film made for the combined teenage/young adult group has the chance for attracting a significant audience, but films based on books come with a built-in social media appeal. The trick is to make the film appealing without getting too far from the novel.

Another large group that has continued to grow is the Latino/Hispanic audience. I never knew which term to use as they seem interchangeable, but a Latino investor for one of my clients has suggested that I use the word Hispanic to describe the entire market. Films that appeal to this audience also have been considered a “new market” for the past 15 years. At 2015’s CinemaCon, Univision’s Pete Filiaci noted that Hispanics represented 18 percent of the U.S. population and 53 percent of population growth. Citing Nielsen statistics, he added that Hispanic customers go to 8.4 movies per year, compared with 7.3 movies for the average moviegoer; and 50 percent of Hispanic customers attend on a film’s opening weekend, compared to 34 percent for the average customer. Other reports note despite buying about 22 percent of all movie tickets, however, Hispanics are a relatively untapped group in terms of film marketing. These moviegoers are concentrated in the trend-setting major markets that make or break Hollywood releases.

The success of Latin American imports has brought more attention and investment to U.S. filmmakers who want to make films with Hispanic/Latino themes, but, at this point, it is still hard for these films to go beyond very limited distribution. Films from U.S. filmmakers, such as Frida, Real Women Have Curves, and Tortilla Soup plus few more recent films from South American such Un Gallo con Muchos Huevos and Wild Tales, have helped awaken to what has been termed the “sleeping giant” of the Hispanic market.

In more recent years, however, both imports and the U.S.-made films of Hispanic-themed films have failed to attract the broad, multiethnic, Spanish-speaking population in the United States. To be successful, they need to crossover to a significant percent of the rest of the film audience. One problem to overcome may be that the median age of the U.S. Hispanic population in 2014 was 29 years, younger than most other racial or ethnic groups with a majority born in this country. With an estimated 10 million between the ages of 10 and 19, they tend to be drawn to the usual films that other U.S. teens see rather than necessarily identifying with films related to their ethnic heritage. At CinemaCon 2016, NATO CEO John Fithian said, “In the U.S., Hispanics have the highest rate of cinema visits.” At Cinemacon 2015, for example, Walmart’s Javier Delgado Granados stressed that Hispanics want to be thought of as mainstream customers. Presumably that is why Walmart canceled plans to open Hispanic-targeted stores in the Southwest, as “that’s how the Hispanic customer wants to be treated.” Still, they have the attention of the power brokers—investors and distributors.

Who Is Going to See This Film?

Demographics are an important subsection. Do you know the age and sex of the person most likely to see your film? Market research properly belongs in the hands of the person doing the actual marketing (probably the distributor), but you can estimate the appeal of your potential market based on its age groups. For example, for years we accepted the term family as referring to G-and PG-rated films. Now we have started referring to many films as family-friendly, which allows PG-13 to be included.

Teen films are targeted toward an affluent and sizable group. They run the gamut from The Duff, Dope, Deadpool, and Kick-Ass 1–2 as well as to slacker/stoner films, such as Superbad, and the Harold and Kumar films. Teenage movies are traditionally released at the beginning of the summer, when schools are out and teens have a lot of time to go to the theater. While they often have gone to the same movie more than once with various groups of friends, it is likely that their additional viewings may be via the assortment of ancillary sources available.

Studios always have been eager to make films for the teen and young adult market—usually defined as people between the ages of 12 and 24―which made up 23 percent of moviegoers in 2015, according to the MPAA’s 2015 Theatrical Market Statistics. Within that group, however, 12 to 17-year-olds represented 11 percent of moviegoers and 16 percent of tickets sold in 2015, compared to only 8 percent of the population. At the same time, the 18 to 24-year-old group also “oversampled” for 14 percent of tickets sold relative to their 10 percent of the population. The crossover age group, those who might go for either teen or adult stories or both, of the audiences (ages 25–39) made up 36 percent. The older audience with filmgoers 40 and over remained crucial with 40 percent of moviegoers. In 2015, NATO, which collects the audience data for the MPAA, either counted everyone under 12 or just assumed that the other 13 percent were ages 2 to 11 so the total would add to 100 percent. The percentages for the wide age range from toddlers (Disney fans) to pre-teens (leaning toward teen films), however, can’t be used. The total admissions for different groups of moviegoers changes from year to year; therefore, you will want to check the MPAA’s website for current information. Be sure when talking about moviegoer percentages that you are looking at the second line in the graph, not the first one, which is the percentage in the population.

Since the moviegoers dubbed “tweens” (ages 8–12) have emerged as a force at the box office during the past several years, I use market research data to explain their importance.

For example, a survey by Marketing Sherpa, indicates that the buying power of this group is $200 billion. Market research by upsidebusiness.com also shows that tweens like movies, video games, collectibles, books, and dolls. They also like to spend time talking to their friends on mobile phones and communicating through social media sites, such as Facebook, Twitter, YouTube.com, Nick.com and Web K inz.com. Coming-of-age films such as The Spectacular Now, Boyhood, The Way Way Back, Vampire Academy, and all those movies made from dystopian novels such as The Hunger Games and The Divergent Series owe much to this group.

Be careful to use as wide a market as you have. For example, I have had students say that a film is for women ages 35 to 45. If women are the first group that is going to be attracted, then use the broader categories of 25 and under or 25 and older. Don’t leave out the grandmas. The MPAA stats in 2015 showed that 77 percent of moviegoers were over the age of 17, and women still were 51 percent of all moviegoers. For a female protagonist movie like Brooklyn it is your primary group that will make up the first weekend audience.

The old four-quadrant system that the studios like to use is no longer viable. The system says that a film will attract exclusively young boys, young girls, older men, or older women. It is clear now that the sexes and age groups do not necessarily restrict themselves to one kind of film. Young girls like thrillers, while young boys will go to see teen movies no matter what the mix of sexes in the film. At the same time, the age groups for most films have a much broader range than the old system understood. Often we have assumptions about the movie audience that are holdovers from a time when the current available data did not exist.

Production Cost

When writing a business plan, you need to find as many ways to support your argument as possible. A valid comparison for films concerns the amount of the production (negative) cost. In some cases, the cost is additional confirmation for your assertions; in other instances, it may be your only argument. There are as many configurations of a film’s budget as there are producers. No two situations are ever alike. So, we will review the most common cases and let you extrapolate from there.

Case 1: Similar Films, Similar Budgets

Your films should be able to make equivalent or better revenues as films that share a genre or theme with yours and cost within a reasonable range compared to the total of what you’re budgeting for your film. When preparing your proposal, the first step is to read every interview with the filmmakers that you can find. You will usually be able to find information on how they made their pictures work—creating a production budget, finding a distributor, and getting by on a low budget. The market is more open for a small film to be successful than it has ever been. The potential for having a breakout film increases with the release of each successful film.

Case 2: Similar Films, Higher Budgets

If your film has a story or theme similar to that of others but will be made with a significantly higher budget, you can point out that better attachments are likely to help bring in more revenue. If you have a well-known director who will draw some attention, be sure to mention that it is another Arthur Artiste picture. For a film with a budget of up to $1 or $2 million, both the director and the stars can be unknown; the film will rely totally on its story and quality. For a larger film, story and quality will still matter, but name value will mean even more.

Case 3: Different Films, Moderate Budgets

There may be a ceiling on the ability of niche films to grab the market. One strategy in this case is to start with moderate budgets that have mainstream potential. For this example, you may start with a $5-million movie and move up to a much broader market. Always keep your genre in mind in addition to all the factors mentioned in Case 2.

There are many variations to putting together your comparative films and your explanations of the markets for your film. The point is that you should build on what exists. No matter what your niche market—and it may be a specialized one that has not really been explored yet—the same principles apply. Take the experience of similar films and use it to your advantage.

Even with these three cases, a discussion of the success of similarly budgeted films is in order. For example, I created a business plan for the producers of a $7-million gay/lesbian romantic comedy several years ago. Since there were no gay/lesbian films made within the $3- to $14-million budget range to use for comparison at that time, I created tables of other romantic and comedy films.

Detailed tables showing the actual results of other films with similar budgets belong in the Financing section of your plan. Here, however, you can use the summary information to build a story. Gather comparative market information to prove the size and extent of the audience for your film.

What if you do not know the budgets of the films you are going to make? Your case will be much weaker, but you can still develop a rationale. Showing the results of films with various budgets will help. The other elements of your company, as described in Chapter 3, “The Film,” can bring more credence to your proposal. If you have well-known directors or actors committed to your projects, you can use their previous films to describe a segment of the market.

What if you have someone else’s budget for a $2-million film? Don’t use it. Your film will have characteristics that don’t match that budget and needs a knowledgeable person, such as your friendly production manager, line producer, or unit production manager (UPM), to create its budget. Make sure you are right before going to investors. At the end of the day, you have to work within this budget.

Incentives

State incentives were proliferating when the last edition was published in 2013. With a general election happening at the same time this edition is published, it is hard to tell what will happen with incentives. If you are going to film in a state that has one, remember that with a few exceptions you cannot subtract from your budget the amount that you “hope” to get from the state. While states will approve a film for their incentives, in most cases, the money is not guaranteed. At the end of filming, you will be sending in a Certified Public Accountant (CPA) report on expenses that will be gone over by their CPA. That person will then certify what amount of money you will get. To make the film, however, you need to raise the entire amount of your budget. Any amount that is paid back by the state later will make both you and your investors very happy. (More on Incentives in Chapter 9.)

Marketing Strategy

Marketing strategy is usually defined as the techniques used to make the end user aware of a product. In film, you have more than one potential end user, more than one person who might queue up to the box office to buy a ticket. There is also an intermediate end user: the money person. The ticket buyer will not read your business plan. Instead, your marketing is aimed at those who might provide the financing to make those ticket purchases possible. First, we’ll look at your own strategies for getting the film made. Then, we’ll look at some of the marketing tactics that distributors and producers may use for the film.

Experts often talk about the four Ps of marketing: product, price, place, and promotion. We have already touched on the first three in this section. In the Markets section of your business plan, you don’t want to forget promotion. However, do not confuse what you will do and what the distributor will do.

Market Research

As cognizant as investors or distributors might be about the emergence of a particular genre or market, they may not know the true scope. One step in promoting your projects is to do your own research and obtain as much information―especially data―as possible to bolster your contentions. Whether you are raising money for one film or a group of them, gathering data on the feasibility of your project is important. Part of that information is contained in your description of the market segment. However, you need to go a step further and get real facts and figures. You don’t need to be close to Hollywood or New York with the proliferation of resources on the Internet. Chances are that whether you are in Cincinnati, Ohio or Branson, Missouri there are events that bring the “Hollywoodites” to you.

Reading—A Lost Art

The most difficult idea to get across to many filmmakers is that they need to become voracious readers. Many creative folks are too busy doing their own thing to take time out to read. Even seasoned professionals say, “But I don’t have time.” This is a big mistake. There is a lot of information available to you if you will take the time and trouble to find it.

With the advent of the Internet, much of the information is free. The major domestic entertainment trades that are good sources of information―deadline.com, hollywoodreporter.com, Indiewire.com, variety.com, and thewrap.com―are free. You can get useful information for your business without subscribing. In addition, Variety and The Hollywood Reporter currently have weekend or monthly print editions still in print. I also go to the U.K. publication, screendaily.com, every day to keep track of European and Asian news. While full articles require a subscription, you still can get valuable information from the parts of articles that are free.

The trades have the news articles that tell you who is doing what with whom and how much it is going to cost. If you follow these sources carefully, you can pull out some data on the production costs of films and descriptions of how the producers found their financing nestled among the reviews, press releases, and gossip are facts that can help your business plan. Several of them plus other trades that may not be online do have daily print copies at the major markets and film festivals like AFM, Cannes, Sundance, and Tribeca.

Another benefit of reading the trades is that you learn who the movers and shakers are. When you are at any networking type of event, it is helpful to recognize a person’s name. If you watch network/cable interview shows, you also will be surprised how many people you recognize when you are at a festival.

Besides the industry publications, you can find a lot of information in regular monthly magazines that have no direct connection to the film industry. Interviews with producers or directors of independent films and articles with business statistics are often published recently in such non-entertainment publications as Forbes and Vanity Fair. Local daily newspapers also carry interviews in their entertainment and business sections. The proliferation of sites on the Internet has made this information far more accessible. Following these and the above publications on Twitter and Facebook I find useful for saving time. (For discussions about sources of data and how to use it go to Chapter 10, “The Financials” and Chapter 11 “Sample Business Plan for a Fictional Company.”)

Libraries

Times definitely have changed. The entire marketing research section was originally titled “Libraries and Computer Sources.” Even I do most of my research on the Internet. Like reading, however, another lost art appears to be the ability to do research in a library. If you are a student, you have free access to information that can’t be found—or at least can’t be found for free—on the Internet. In addition to the film school libraries, your local library may subscribe to data services that will help.

Networking

My first Sundance Film Festival was also my first entertainment industry event. Until then, I had worked in “real business,” creating business plans and corporate strategies. Although I had mixed and mingled at meetings before, I had never tried to “work a town.” I knew no one and had a general feeling of nausea as I got off the plane. On the shuttle to Park City, Utah, everyone was silent. Finally, I asked a gentleman sitting behind me if it was his first trip. He and his friend turned out to be film commissioners. That night I went with them to the opening night gathering and met more people. The next day, I chatted with those people and learned a lot about how they had financed their films and other salient information. Had I not spoken to the first two people, I might never have met the rest. The concept of networking this way can be very scary, but you can do it.

Why do you want to network? Your best sources of information may come from attending seminars, college classes, luncheons, industry meetings, festivals, and markets. Besides listening to whatever public speaking occurs, you should go up and introduce yourself to the speakers and mix with the other people in the room. Let others know who you are and what you do. You don’t have to be in Los Angeles or New York. Many states and cities have filmmaker and digital groups, their own festivals, and other networking events. Take advantage of whatever is in your area. Always check with your local film commissioner to learn about events in your area.

There is no better source of information for you than other independent filmmakers. Whenever you have a chance to meet filmmakers, politely “grill’ them for advice. People like to talk about their experiences, themselves, and, especially, their successes. (If this were not the case, I would not be able to get well-known filmmakers to talk to my classes and seminars.) You will learn more from someone who has done what you are interested in doing than from all the books in the world.

Promoting Yourself and Your Projects

We make our own opportunities, as every overnight success will tell you. By doing all that market research, you have prepared yourself for two things:

1. Quantifying your market segment
2. Approaching others with your project

At the beginning of this chapter, we talked about the market segment and how it is time to focus on marketing yourself and your project. As noted before, your goal is to find the money or links to the money. There are entire books that focus on this subject, so I am providing you with just the basic information.

Arm Yourself with Ammunition

As a good promoter, there are certain materials you can prepare before seeking out contacts. Business cards, sales sheets, press kits, and director’s reels are among the promotional materials you might use. Some filmmakers have even made a short version of their film, often on their websites, for promotion. For first-time filmmakers with no other footage to show, making a short video of yourself talking about the virtues of your film may be the way to go.

Whether your aim is to sell a single film or to obtain financing for your company’s group of films, the first step is to evoke interest. Making contacts is your objective, wherever you are. Earlier we talked about networking as a means of gathering information. Another purpose is to unearth those money sources, wherever they are.

People with like interests tend to congregate in the same places; therefore, entertainment-related gatherings are your most likely place for success.

Film Markets and Festivals

Knowing how to attend and network at film markets is critical. You do not want to be carrying around business plans, handing them to everyone who says, “I can get you a deal.” That is why you bother with the materials described earlier. Those are the items you hand to people initially. Common sense will stand you in good stead in attending markets. There is no trick to meeting and greeting. Just get out there and shake hands.

When you attend a market, always remember that a distributor’s main goal in being there is to sell product. When you want to introduce yourself, here are guidelines for you to follow:

• Be prepared: Bring your short-term promotional materials and bone up on who is who before you go. Let your fingers do some walking through the trades.
• Be aware: Distribution companies usually focus on certain types of films. Look at their posters and at the items listed in their market catalogs. Try to match your films to their inventory. After all, the distributor is your shortest route to those foreign buyers and presales.
• Be inquisitive: Ask questions of everyone you meet—in an office, in the lobby, on the street. Try to discover the person’s qualifications before spilling your guts about your plans and projects, however.
• Be considerate: In introducing yourself to distributors, pick slack times. Very early in the day and at the end of the day are best. Whenever you reach a distributor’s display room, notice if buyers are there. If they are, go back later.
• Be succinct: Keep the discussion short and sweet. Your objective is to get a meeting at a later time. You want your “prey” to feel relaxed and be attentive. Try for a meeting at the distributor’s office.
• Be dubious: Lots of people are milling around screenings, hotel lobbies, and expo halls pretending to be something they are not. It may be a big rush for someone to tell you that they were the “real” investor behind The Visitor (when they had nothing to do with it) and are interested in financing your film for $2 million (when they have no money). Listen carefully, take cards, and try to verify the facts afterward. Do not give your scripts or proposals to anyone unless you can validate their credentials.

There is more detail about pitching in Chapter 13, “Other People’s Money.”

Advice on Submitting to Film Festivals

Christopher Holland is the author of Film Festival Secrets: A Handbook for Independent Filmmakers. He has shared this list of “10 Simple Secrets for Saving Money on Film Festival Submissions.” For more information, go to www.filmlfestivalsecrets.com.

1. Don’t treat festivals as an afterthought when creating your film’s budget.
2. Make sure your film is done. Really done. (Test screenings will help.)
3. Think it through. (Set some goals, and do the research!)
4. Submit early. (You could submit to twice as many fests this way.)
5. Look for bargains. (I’ll tell you how.)
6. Network at festivals to find visiting programmers looking for films like yours.
7. When you ask for discounts from a film festival, offer something they want in return. (Like a film that speaks directly to their audience, or the promise of cast/crew in attendance.)
8. Turn yesterday’s festival success into today’s festival invitations.
9. Put your marketing house in order. (A great website tells festivals you’ll be a good marketing partner.)
10. Decide ahead of time when you’re going to stop paying to submit.

Advice on Attending Film Markets

Joe Majestic formed Majestic World Entertainment in 2007 as a film, multimedia development, and distribution company. Previous to that, in 2003, he co-founded the Ilya Salkind Company, where he served as vice president of production. He was a contributing architect of the company’s initial slate of film and television properties. In 2008, he partnered in Monterrey Pictures Entertainment. He left that company in 2009 to focus on film development and sales as President of Majestic. In 2011, he also founded film and television production company Hurricane Film Partners, LLC. Having worked with Joe as a consultant since 2003, I asked him to lend his advice on both attending and being an exhibitor at the American Film Market. In addition, check the market’s website at http://americanfilmmarket.com/attendee/ for its section “How to Work the AFM.”

Social Media and Self-Marketing

An important component for any film, especially the opening weekend of the film, is word-of-mouth. Without incurring additional costs, it is possible for a filmmaker to implement a marketing strategy that is complementary to that of the distributor. Or, in the absence of having a distributor, create word-of-mouth. You can get a “buzz” by contacting grassroots organizations with a process referred to as viral marketing. Many special-interest groups have email lists and will be happy to send out information on a film that attracts them. It is a strategy that encourages individuals to pass on an email or video marketing message to others, creating the potential for exponential growth in the message’s exposure. The people on their lists then send the email on to other individuals and organizations, and the marketing message is spread exponentially. Don’t forget to include your hometown newspapers in this activity. An important component for any film, especially the opening weekend of the film, is word-of-mouth.

For some inspirational films, it may also be appropriate to schedule free showings in a church, synagogue, or other spiritual gathering place. By having such screenings, which often are free to the participants, you create word-of-mouth before a film opens on local screens. For other films, you can promote the film on websites devoted to the genre. For example, there are quite a few sites devoted to horror films. When you think about the “affiliate groups,” make them aware that your films will open. For example, in a business plan that had a story about a writer, I added: “Particularly relevant to [name deleted] are the hundreds of writer’s groups that meet live and/or online. In the age of the Internet, they all have email lists.”

No matter how big an Internet site is or how fast it has grown, it could fall out of favor by the time this edition is published. Originally, Friendster (2002) and My Space (2004) seemed unbeatable; since then we have Facebook, LinkedIn, Twitter, and Instagram with Snapchat snapping at the heels of the others. None are immune to change.

Self-marketing is an area in which it is good to think outside the box. Explore what is best for your film. Remember, however, that anything you describe in your business plan is a type of promise to the investor. Do not say that you will do something for which you have to spend money that you don’t have. Never, ever use the word guarantee.

The entire discussion of Social Media and Self-marketing that I currently use in business plans can be found in Chapter 11, “Sample Business Plan for a Fictional Company.” Much of it is boilerplate; however, I recommend updating the data and adding information that fits your film.