Industry Report: Market Trends
In Film Buying and Selling: Too Much Insider Information, Not Enough Data
by COLIN BROWN
- In his latest post for his Filmonomics blog, Slated Editorial Director Colin Brown makes the argument that the film industry needs to make more of its data available so that filmmakers -- and their distributors and sales agents -- can make more informed decisions on what kind of return other films have seen.
In his latest post for his Filmonomics blog, Slated Editorial Director Colin Brown makes the argument that the film industry needs to make more of its data available so that filmmakers -- and their distributors and sales agents -- can make more informed decisions on what kind of return other films have seen. He also shows off data that proves there's no clear correlation between budget and return on investment when it comes to film. So what do you think could be gained by having a little more big data into the film industry?
Secrecy is such a hot-button issue right now that sales of Orwell’s Nineteen Eighty-Four have seen a dramatic spike on Amazon. One might expect the same for video streams of Coppola’s The Conversation or sales of any new Big Brother-themed scripts currently doing the pitching rounds – except that we have no reliable way of knowing. It is evidently easier to track all our individual phone calls and detailed purchasing habits than it is to carry out even the most low-level of film industry surveillance.
Data transparency has never come easily to movie professionals. Instead of sharing information for the collective good, the tendency is to massage, manipulate and even muddy those figures for individual gain. This goes beyond Hollywood’s accounting niceties and its long history of under- or over-reporting a film’s numbers to suit a particular message. Filmmaking talents themselves are not above inflating the money they actually receive from films in order to preserve their salary ‘quotes’. And independent producers routinely withhold budget information – even though actual film costs bear little linear relation to true market value (see chart).
No matter how many times the whistle is blown on these backroom practices, stealth remains the film industry’s default mode. And yet lack of transparency is hurting everyone. Orly Ravid, founder of non-profit distribution service The Film Collaborative, noted as much in a Tribeca blog posted last year that detailed the many harmful side-effects of guarding information. Her astute conclusion:
“This mystery and obfuscation leads to incomplete or inaccurate business plans, an uninformed investor pool, and an excess of supply that creates a glut. In the end, no one benefits.”
One of the biggest data deficiencies surrounds the whole business of foreign sales. With few exceptions, such as the yearly figures put out by French trade paper Ecran Total that enumerate what French distributors pay for imported films, there are no hard numbers for what films sell for in overseas markets. In the absence of such data, foreign estimates for different territorial sales are often expressed as budget percentages. Sales agents might tell you, for example, that a film with this cast and these production values might recover 10% of its budget from France, another 12% from Germany and so on. Such figures are dressed up as low, base and high estimates and yet they remain fundamentally crude as evaluation tools. They assume that films will be sold in all those territories and that their commercial prospects are somehow determined by how much it cost to make.
The truth is that the global ticket-buying, video-ordering public is for the most part clueless about film budgets – and would pay the same for all movies regardless. Basing a film’s appeal on its production costs is like pricing a painting based on the how much paint, canvas and brushes were expended in its creation. There is simply no correlation. As the late Gary Winick liked to say of the micro-budget films that he shepherded though his InDigEnt filmmaking collective: 'It's not what it cost that matters, but what it's worth.” Sure enough, the best InDigEnt films - TADPOLE, PERSONAL VELOCITY and PIECES OF APRIL - sold for many multiples of their production cost after their Sundance festival premieres. In doing so, Winick was able to reward all cast and crew-members who agreed to work for scale on the promised share of any profits. Such back-end participation deals only work if there is full disclosure on all costs and revenues.
Too bad then that even in today’s era of crowdsourcing and collaborative consumption that so many producers still feel reluctant to pursue a similarly open-book policy. Their fear is that too much information upfront will only jeopardize a lucrative financing or distribution deal down the road. But in preparing for that future payday, they run the greater risk of never getting their projects launched at all. Transparency is essential to financial decision-making. If no one knows the truth about budgets, and hence the real break-even points, how can you draw up a business plan based around recoupment?
So long as investors are kept in the dark there will be trust issues that stand in the way of a healthy, functioning relationship. This is as true of the film industry as it is of Governments. The more they operate out in the open, the cleaner they will appear and the more comfortable we will all be in those decisions that do require far greater discretion. As the former Supreme Court Justice Louis Brandeis so memorably noted, way back in 1914: “Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.”
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