Are They Predictions?
I find that some folks prefer to look at Projections as some kind of prediction of performance.
Let me start off by saying clearly that Projections of Potential Income ARE NOT PREDICTIONS of any performance. Predicting is what humans have sought for millennia, and have never found, except by happenstance. Even the near-term example of Nate Silver, of numerous political polls, too many to count, show us that predicting is a near-impossible business.
What are FilmProfit Projections of Potential Income?
Our models are meant to be shaped reasonably to the real world. What does that mean? Shaped, means that when there is a domestic profile for a certain kind of film, then the potential for a foreign profile of a certain shape, as seen through study and analysis, is a reasonable assumption.
But, those shapes are different for different types of films: dramas and comedies, thrillers and science fiction. They are also different according to the release pattern taken by the film. Those with slow roll-outs theatrically fare differently than do medium-wide releases, and than do wide releases. On top of the release pattern lays the type of film, as we discussed before, but with even more nuance. A marketing campaign can aid a film in gaining its shape, or performing above its weight, and can also miss or even sink the film into the morass.
Now, I have only cited three key factors here, and one can see the complexity of maintaining a prediction. In this age of “big data,” many want to put their faith in data alone. But where does institutional memory fit into big data? Where does casting fit into it? Is Brad Pitt always a 1 (or a 10, depending on the scale)? Has that assumption proved out? Is Johnny Depp always a 1?
No, modeling a film in release is much more complex than that. Particularly when you are modeling against “consumer activity.” Because consumer sentiment, attraction and activity are always much more complex than that. Is a tweet from Kim Kardashian certain to make a film a winner? It could also make it a loser, for certain types of films and certain portions of the consuming public.
So, What Can Projections Of Potential Income Do Best?
They can identify restrictions in the pipeline, and they can raise flags regarding risk factors that must be addressed, from casting, to budget size, to target markets, to deal structures which reduce risk and increase upside potential.
They can help shape a business plan so that it hopefully has multiple paths along its arc.
- If one market fails, is all then lost?
- How can another market be attacked?.
- They can also show a film that is hemmed-in by deals, or planned deals that could restrict its potential.
- Upfront deals help reduce risk, but they almost always reduce upside potential as well.
These things can be explored in Projections models that are shaped like the real world, and follow what I call the “wave-form” of a deal.
It Kind Of Goes Like This:
- Film’s upfront deal structure in
- Film’s comparable data in (per-screen average, weeks of run are elements in this)
- Film’s audience knowledge in
- Shape of world in (domestic box office to foreign box office is one element in this)
- Deal structures anticipated in
- Including Investor/Partners’ share structures
- Rebates and Incentives
- Model these elements and adjust for outside factors and for reasonable conservatism
Out come projections models that are closer to a business plan than a prediction, and a much better tool than reading entrails, and maybe even more interesting than political polls. Ahh, probably not that last one.
Onward and Upward!