FilmProfit

The Business of Successful Films

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Announcing A New Product, Statistical Confidence Modeling in Film Projections

Bootstrapping Our Way to Confidence and Probability

Over our 25 years of financial modeling for films and slates and funds, we have developed sophisticated methods for modeling a film or films in distribution. Because of our hard-won proprietary data and years of deep diving into markets arcana, leveraging our baleen whale tendencies toward information, we have modeled hundreds of films, from the quietly beautiful “Sweet Land,” to the challenging comedy of “Sleeping Dogs Lie” and the blockbuster-sized upcoming “The Meg.” All of these films were modeled using all of our skills, but we are continually seeking to enhance the quality of our work, and now we have again.

We here at FilmProfit have devoted significant time and effort into formulating a statistically meaningful approach to estimating Confidence and Probability (two different things in statistics) in our modeling for a single film (Illustrated below at different potential budget targets) and for slates of films. We have performed these analyses and refined the output tools to where we can now confidently share them with our clients.

Above is an illustration of a projections model we have developed for illustrating Confidence Levels when studying the potential performance of your film across a range of markets.

Our models take bootstrapped datasets and estimate these confidence levels based on target fee and costs structures. This can be done for a single film, for a slate of films, or for a fund strategy. We can divine market performances for a range of budgets determined by the data, so as to target maximum potential ROI and effective budget, or targeted to a single budget, based on bootstrapping thousands of iterations from our dataset.

The bootstrap method is a re-sampling technique used to estimate statistics on a population by sampling a data set with replacement.
It can be used to estimate summary statistics such as the mean or standard deviation.

https://machinelearningmastery.com/a-gentle-introduction-to-the-bootstrap-method/

In our continual striving to provide clients with quality information and effective guidance, we have begun driving our Monte Carlo Bootstrap Analyses to higher standards of predictability.

In this pursuit we have developed algorithms which take key data through thousands of bootstrapped iterations that can be used to derive two levels of analysis.

Confidence Intervals.

In performing a Confidence Study, we are trying to ascertain within a high degree of confidence, the possibilities that a film will perform within a certain range of market parameters, for example, box office, foreign box office, various aftermarkets, and so on.

A study will typically consist of collecting a pool of Comparable Pictures Data, and then subjecting the market characteristics of that pool to a bootstrapping (Monte Carlo) that randomly generates thousands of iterations of each studied parameter. The resultant data will give us clear indications on each parameter as to the outside edges of Confidence, and at each Confidence Interval, what the different market parameters would be: for example, at 99% Confidence Interval, we might see that the highest box office could be $100 million, and the lowest box office could be $25 million in one study. In another, those same parameters at 99% Confidence could be $10 million and $2.5 million. The Confidence Intervals, say at 90% would give us a narrower range of possibilities, but could be sufficient for purposes of the target study. What it would also tell us is what performances have a very low Confidence of happening, those outside the 99% Confidence Fence as illustrated just below. These are not outside the realm of possibility, but they are very improbable. We calculate that improbability and give you a number for it.

Discrete Event Probability

If I was using typical statistician speak, you would begin to hate me and hate what I am saying, and with reason, because much of statistical talk becomes gibberish among those who are not statisticians. It does not reduce the value of their work, but it makes it not understandable to people who also need to understand it. A Discrete Event Probability is a higher level of Confidence that an event will transpire (domestic box office +plus foreign box office + domestic and foreign aftermarkets + cost to achieve those, both in production and marketing, could be called a discrete event in this parlance for us). Probability is typically a lower percentage, because it has an even higher potential for happening than confidence. It pulls the fences in, and in the illustration above, we have achieved a 99% Confidence Level, and with the same data achieved a 90% Probability (for a Discrete Event).

Discrete event simulation (DES) is a method of simulating the behaviour and performance of a real-life process, facility or system.

https://www.ncbi.nlm.nih.gov/books/NBK293948/

If you think the business plan for your film or slate could benefit from this kind of robust analysis, then check out our Statistical Confidence Models page at www.filmprofit.com/confidence and probability_studies.

Or fill out our Project Intake Form

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Comparable Pictures: How to Choose ‘Em and Use ‘Em

I get a lot of clients who find it difficult to choose comparable films right off the bat. I wrote this article to help them, and help others, even if they do not become clients. Bona Fortuna to all!

How I Go About Choosing Comparable Pictures

In a given year I might prepare projections and financials packages in which I have to help producers choose hundreds, even thousands of titles for comparison to their prospective film. Every producer comes to this a little differently, but I thought it might help some of you if I talked about my own point of view when approaching this task. Whether I am involved in your process or not, I hope this helps in the way you approach it. First, the comparable films chosen should be seen as “models” for your film. They can be creative models, but they are also business models, and we are seeking insight from the information those models bring to us. In my case, mostly business insight for strategies and value. So, what are some key questions I think you should be asking and answering to discern comparable titles.

1. I like to start with films of Similar Themes.

Many producers think they need to use films with similar stories. This is often, in my book, a real stumbling block. A film uses its plot elements to explore themes, rather than themic elements to explore the plot. So, focus on the theme. If your film is a kidnap, then choosing only kidnapping films, for example, could actually miss the mark of your film, and make your choices far narrower than they really might be, than if the positioning of your film was as a drama of how an individual can get caught up in events that snowball unintentionally into great tragedy.

2. Of course we want to start in the Budget Range of your film.

There is a little bit more I will have to say about this later. But the lower the budget of your film, in some ways, the narrower the range of budgets we might have to work in. So, a $5 million film, we might look at titles from $3 or $4 million, to $10 million. If your film is $100 million, then we can reasonably look at films in the $70 to $200 million range, for example. Of course, with lower budget films, there could be reasons why we might broaden the range of budgets, some of them might include a sharper comparison in target market, for example. Sometimes, we may be dealing with a film that has few thematic, story, target market, and so on films that are in the same budget range of our film. In that case, we may need to choose higher budget films, or some at our target budget, and one or more at a completely different budget level.

3. If possible, we would like to work with films Released More Recently.

Various elements of the release and markets in these changing times may be much more indicative of how your film might perform as we go forward, than a film released ten years ago.

a). Still, however, your film might be so unique that similar films come along relatively seldom, so that we have to take them from the time periods in which they have appeared. That might lead us to choose films from fifteen or even twenty years ago, if they also fit in other ways.

b). As well, if we understand the range of the domestic box office, at least that can give us a starting point for understanding the possibilities of our prospective film’s value.

4. Understanding Your Film’s Target Market.

This is an important element in helping us determine good comparable films. Just today I was working on a middle ages Action Adventure with a relatively low budget, but when studying the target audience of two higher budget Action Adventures, and analysis of Action Adventure audiences from an exhibitor overseas, it was remarkable the similarities in audience breakdown. Understanding your film’s target market is crucial in many other ways that will serve you through the whole process, including the range of target distributors and the distribution method.

5. Style of Release or Distribution Method.

The viable selection of distributors, the possible number of screens in release, the size of the target market, all are encompassed in the understanding of the style of release of your film, and its comparables. At certain budget levels, a Producer Controlled Release is viable, even if it is not your preferred method and you go a different way. At others, unless you can mount a studio-style release, you must find and work with a studio partner to achieve the market dispersion your film and budget needs, and your target market(s) can support.

6. What is the Look and Feel of Your film?

The style of your film can tell us a lot about where it belongs in the continuum. That continuum encompasses Budget and Target Market. A comedy that is quirky, or a film that will be cut with a fast pace will likely have a younger-skewing audience, and may be less suitable for an older audience, unless there are thematic elements that are more suitable for older audiences. I suppose, then, what you see from my answer to this question, is that these things are all inter-related.

7. What is the Target Cast or the Negotiated Casting of your film?

Of course, given that you can achieve and afford your target cast, what does this say about target market, and, commensurately, what does that say about the style of release. Now, sometimes, a producer will think it might be easier for me than for them to make choices of comparable films. In many cases, it can be much harder for me. And, then you might understand why I charge for this service, and why it is better for you to start with your own choices, and then I might be able to help you refine that list.

Let me tell you some of the reasons why:

1. You probably know your film better than I do.
2. You likely know what about your film inspired you, better than I do.
3. You know your own influences and desires for your film better than I do.

The influences for your film, whether you are the writer, the producer or the director, or some combination of the three of them, are likely the most insightful place to start. So, I always like to start by asking you to help me see the film the way you see it. No matter how smart I might be, my goal and job is to help you achieve your film, and comparable films that I deliver are a suit of clothes you will wear, not one I will wear. The following is a set of questions we ask our clients to think about in choosing comparable titles. This comes from our Project Intake Form for packages where we are doing Comparables and Projections, Business Plans and the like: Comparables – in look and feel, market, budget, cast, distribution strategy, story, or a combination thereof. These should be films you think are the best matches for comparables, but be assured we look them over fully, and make sure we don’t think others might be better (Our criteria for choosing comps are:

1. Does it share target audience
2. Is it story style comparable, not story comparable (many get hung on this)
3. Is it distribution comparable (studio, methods, etc.)
4. Is it budget comparable
5. Does it evidence broad or deep interest in the subject matter
6. Did it come about the same way (outsider production, or insider production)
7. Is it casting level comparable
8. Certain other items may include production methods, etc.
9. Does your team feel comfortable with it, can they represent it)
Onward and Upward! Jeff

Comparable Pictures Available ListDownload

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Comparable Pictures: How to Choose ‘Em and Use ‘Em

I have helped producers choose and use literally thousands of titles for comparison to the films they seek to finance and make. When I am preparing projections and financials packages, whether for a single film or a slate of films, the first crucial task for me is to understand the film(s), to be able to see them both as the producer does and how the world might perceive them, so that we can look at comparable titles from several points of view, including the eyes of finance partners, distribution partners, and so on…

[Read more…] about Comparable Pictures: How to Choose ‘Em and Use ‘Em

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How Do You Kick-Start Your Business Plan?

What The Heck Is The Thru-Line?

And Why Is Every Film A Marketing Challenge and An Opportunity?

***I am updating this article, particularly after a discussion with a client that tweaked my thinking on using the word “problem.” Every time I used it, I found myself explaining it, and he was right. Thanks to Anre Garrett!

Many new and even highly experienced filmmakers arrive at our door trying to think about all parts of a business plan at once, worried about the research (worried about what to research), worried about how to describe the process, planning to deliver a detailed schedule of their production activities, trying to make their own stab at projecting the value of their film, and worrying about all kinds of deal questions, their festival strategy, selling DVDs on the Internet, selling downloads to phones in China, you name it, a stew of boiling ideas and decisions. I sometimes call this state of affairs “all trains arriving on all tracks simultaneously.”

But how do we stop and schedule the trains? One of the biggest contributors to overwhelm in decision-making and clear action is simply trying to make too many decisions simultaneously.

A Good Way To Overcome This – Remember Why You Are Here

Every film has a driving force in its idea. The industry likes to call it the concept. They love to reduce things to a few pithy words that seem to mash two or three ideas together and make a film rank high on a “cool” meter. The fact of the matter is, some films take contemplation, some films encourage involvement. There are many kinds of films that are viable for many kinds of film fans. Some are even for people who are almost never fans of films, or are very wary of films. Some elements of the Christian audience fit this profile.

Remember Why You Are Here, Above All – The Thru-Line

When a film is conceived, there is an audience for it within the story’s conception. Some think it’s dirty to contemplate your consumer, but even if the perfect consumer of your story is someone just like you, maybe even is you, that’s an audience too (no matter how unique and unreachable and above it all you think you are). I once had a Thanksgiving dinner where one of the older guests, an ex-hippie mom who had raised two very nice geek sons who were into all the latest gadgets and technology, even working in technology, and she said she was unreachable, as she didn’t have a TV, and wasn’t susceptible or identifiable to marketing. Well, if she reads Mother Jones, or even her local co-op newspaper, somebody is trying to reach her with messages. I think she hated me for saying all that. She was just the right kind of person to get a What The #$*! Do We Know?! message from the granola, co-op, whole foods type marketers that worked on that film. She probably did get more than one message.

Paula Silver once told me she was hired to help galvanize the audience for My Big Fat Greek Wedding, and her first job was to go a Greek dancing convention in Seattle. As she gave out every shirt she had printed up, she told the dancers that they needed to support this film, or “it would be another 20 years until you get a film about Greeks.” That was the start of the avalanche for the film. Constituency. Films like this are built on constituencies.

I call the line from the conception of the story to the ultimate consumption, the Thru-Line (trademark, service mark, copyright, intellectual property). The Thru-Line is what will always return you to why you are even here anyhow. When you are pitching your film and its reasons for being to an investor, your Thru-Line is what you are asking them to partner with you on. When you are lining up actors and production personnel, you are asking them to get aboard and help you attain the vision that delivers your Thru-Line. When you are presenting your film to a festival, or to a distributor, you are asking them to get aboard and help you bring your film to the audience, achieve the fullest expression of the Thru-Line.

Why Does The Thru-Line Exist, Then?

The Thru-Line is your direct connection to your audience, why you’re even making the film. It can be sublime, sharing a meditation on the most metaphysical of concepts in a documentary or a filmed tone-poem, or it can be a ridiculously funny and bloody zombie romp, or it can be a quiet look into the emotional needs of a woman uprooted from her homeland and dropped into an alien farm town halfway around the world. And I’ve enjoyed working on all of the above.

Every Film Is A Sizing Problem Challenge – Then It’s A Marketing Problem Challenge and Opportunity
What do I mean by that? I don’t mean that marketing is at the heart of your endeavor, but I do mean that communicating the existence of your film to your natural audience is as important as making the dang film in the first place. So, thinking long and hard about who your audience is, how to describe them, why they even want to see your film, or they need to, is a crucial first step.

Unfortunately, this business (making a film) usually costs some kind of money. And often the story requires enough money that a couple of friends just can’t do it out of their wallets, even if their wallets are middle-class, or above middle-class.

So, unless you can do the whole thing on your own allowance, you will need financial partners. Knowing who your audience is, and being able to clearly articulate who they are, and why they want to see your film is part of bringing those financial partners on board. Knowing who your audience is can also help you size that audience in some reasonable fashion.

Celibate Goths may be a pretty small group, but you can look for them and their friends and try to find out how many there are, and how they communicate, and get a feeling for whether they can help support your ten million dollar movie or not. If not, then you need to either determine how to crossover, or how to trim your budget by five or ten bucks. This is “Sizing.” Now, when you do this a lot, sizing becomes easier, and you can get a feel for it, but there are no absolute “facts” out there, and you just might uncover the surprising and wonderful fact that Celibate Goths are all on one Twitter channel, and that there are forty five million of them, and they all use VOD extensively every day because of something they got in a tweet, so your job is easy, and a $10 million negative cost is easy to deal with. But the key thing in this paragraph is that “there are no facts.” Everybody in this risky business of filmmaking and delivery wants to feel secure, so they grab at “facts” and spout them repeatedly, to gain and retain comfort, and to provide it to others.

Here’s a fact:

In a 2009 New Yorker article on the new Julia Roberts and Clive Owen international spy dalliance romp in the hay, the author says that “Today, the film industry considers adult-oriented drama a small target, and one that is getting smaller. Middle-aged Americans don’t go to the movies; young adults and teenagers do, and they prefer action to talk…”
There are actually several facts stated in this small excerpt, a. what the movie industry considers a viable target audience (probably based on the “4 quadrant” theory – men, women, above age 25, below age 25) b. who goes to movies (and who doesn’t) c. and what they love in a film (and don’t love).

Let me show you a countervailing couple of facts:

The audience opening weekend for Gran Torino was 45%+ 50 years old and older. The audience for The Unborn the same weekend was more than 40% under 18.
Gran Torino achieved $143 million US gross, and The Unborn achieved $42 million US gross.
Gran Torino had 52% highly satisfied female attendees opening weekend and The Unborn had 56% very unsatisfied female attendees opening weekend.
1, 2 and 3 are much closer to facts than the facts (a, b, c) in the quote above.

The secret is, (whisper) the audience is aging, and, frankly, the MPAA is trying to hide that, or, at least I think they are. Up until 2005, they reported age and attendance figures by slices like this:

  • 12-15
  • 16-20
  • 21-24
  • 25-29
  • 30-39
  • 40-49
  • 50-59
  • 60+

Starting in 2006, they began reporting it like this:

  • 12-24
  • 25-29
  • 30-39
  • 40-49
  • 50-59
  • 60+

Now, read below, and you might wonder, like I do, if they are trying to plaster over a crack in reality.

–In 1990, the percent of moviegoers above the age of 30 was 37%.
–In 2000, the percent of moviegoers above the age of 30 was 42%.
–In 2006, the percent of moviegoers above the age of 30 was 51%.

The audience is aging, and has been since at least the mid 90’s. I have been covering it that long, sad to say, or happy to say. But these are facts.

–In 1990, the percent of moviegoers above the age of 40 was 17%.
–In 2000, the percent of moviegoers above the age of 40 was 24%.
–In 2006, the percent of moviegoers above the age of 40 was 33%.

When a segment of the audience nearly doubles its hold on a marketplace (those above age 40), this is significant. But even these facts are also “facts.” When you start to analyze frequent moviegoers, you get a different, but not radically different slant on the situation. As would be anticipated, you lose a few points when looking at frequent moviegoers in the upper age groups. They have a lot more discretion, a lot more money, a lot more decision freedom, and a lot more they like to do.

And don’t even get me talking about online presence and other facts areas like that. What many people think are facts are actually just crap to talk about.

The point is, facts are closer to facts, and what is often taken as “received wisdom” like the statement from the New Yorker article is nothing but water-cooler talk, in light of real facts.

That’s why what you hear in the halls of AFM might be far from a fact, and just one piece of anecdotal information handed around ten times before it got to you, all massaged into a soft little tidbit.

Facts are actually better.

Every Film Is A Marketing Challenge and Opportunity

I see every film as a marketing problem (Read: problem as task) challenge and opportunity, but that is really broken down into:

  • An audience identification task
  • An audience sizing task
  • An audience hangout identification task
  • An audience message preference identification task
  • An audience position in the flow of information
  • A scoping out of the cost of messaging the audience task
  • Identification as to whether all this will support the ostensible negative cost, or investment.
  • Go/No Go – or redesign…
  • Unless these things are at least reasonably and satisfactorily answered in some way, it is hard, I believe, to begin to think really clearly about what the model for your film’s life could be.

Oh and by the way, the Julia Roberts film opened with a 60% female audience, and almost 50% aged 50 and above. Both males and females were generally dissatisfied, and older audience members the most dissatisfied.

Onward and Upward

Jeffrey Hardy

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What is a Film Business Plan?

This is a foray into the key elements of a business plan, in which the philosophy, and the nitty gritty of proper business planning will be discussed. Feel free to respond. Comments that can be helpful to others may end up in future issues. My intention is to walk through the parts of a business plan and discuss them as we go.

WHAT A BUSINESS PLAN IS NOT.

The first thing I want to say is what a business plan is not. At least in my mind, it is not just a document which has the magic power to make the pitch and get you money without you showing up or exposing yourself, or putting sweat and your best thoughts into the process.

WHAT A BUSINESS PLAN IS

I like to call your business plan your plan for business. So, what it is, is a collection and recording of the assets (scripts, people, equipment, contacts, contracts, proprietary knowledge or technology) of a proposed and/or existing company, as well as a set of educated predictions for the marketplace and how the company will make money with their product.

Are there certain conventions in a business plan, items which one generally needs to get the story across? Yes. And we will get to what those regularities are as we go along, but for now, we will work our way through the preliminaries, the keys to how you should think about your business plan.

Many filmmakers are so focused on their creative goals that they forget that they also must have a business vision which they can articulate as well as they do their creative vision. It’ll be cool, trust me, just isn’t enough. Particularly now.

WHAT IS A BUSINESS MISSION?

First we need to ask and answer a couple of questions, and from those answers we are closer to the business mission for you.

What do you want for yourself?

  • A new car?
  • New shoes for the baby?
  • The chance to make a second, third and fourth film
  • A house?
  • Access to a broad audience
  • Total creative freedom?
  • To work with friends in a collaborative environment?
  • All the money in the world?
  • Your own production facility?
  • To be an honestly successful blend of the creative and business person all in one..?

HONESTY

Honest answers to this question is the first step in creating a business plan. If a plan does not fit you, and you are the chief executive of the company, how can you pursue it to its logical conclusion? Any viable investor will want you to be motivated and fulfilled. It should be in fulfilling you that you fulfill an investor’s goals too.

As well, I would say, that if you cannot answer this question honestly, and in a way that takes into account the rest of the world, you may gain the whole world, but lose yourself along the way, and have no way to actually enjoy it. Maybe an outmoded concept to some, but I believe it is truly so.

WHAT DO INVESTORS WANT?

What do you think your potential investors want?

  • Some want money for things like you want.
  • Some want money for things you don’t care about.
  • Some have money and want to have fun at something new they couldn’t do for themselves with all the money in the world.
  • Some want to change the world a little with the money they have.
  • None want to do anything stupid.
  • Your business plan is built internally, upon facts about the outside world.

–Your business plan incorporates your vision (mission) for yourself.

–Your business plan encourages the visions (missions) of the right potential investors.

–Your business plan should be a road map to effect both sets of goals.

So, the first thing to do for a business plan is define your vision, your mission, your goals.

WHAT IS A MISSION STATEMENT LIKE?

This is not an actual mission statement, but it incorporates the concepts that bring a mission statement to life:

To make the best damn film I and my team members can make. To make people laugh at the characters in the film, and thereby learn to laugh at themselves a little (hopefully). To have fun with a good team of people around me who know how to make high quality films on a reasonable budget that is not oversized for the market. Have that film sell enough tickets that it makes our investors (who we also think of as team members) money, that it makes my other team members money, and that it makes me money This is an actual mission statement:

Vision Pictures, Inc. a Florida corporation, has fully developed, and intends to finance, produce, and distribute a romantic motion picture tentatively entitled Vision, and thereby to manage the rights to Vision so that it is seen by mass market audiences on a global basis, and subsequently returns profits to the film’s investors and to all of its profit participants. This is an actual artistic mission statement:

The artistic mission of the film Vision is to produce an original and audience-pleasing entertainment which can inspire viewers from all backgrounds by showing them that there is more to be gained from life by giving to others than there is in merely taking from them.

You can have both a business mission and an artistic mission. A good business mission statement need not be complex, but it will signal that you intend to keep promises to achieve the financial goals of the enterprise as well as your artistic goals.

I have worked on films that also have a proselytizing mission. There is room within the world of business planning to incorporate any vision and mission that there is. If, however, your mission is all about yourself and your needs and hopes and fears and dreams, then be prepared for people you talk with about it to tune you out and tune your business plan out.

A BUSINESS PLAN IS THEN TWO THINGS:

It is a document which describes your vision and how you are going to reach that vision, and it is a document which describes how you are going to enable the visions of others through effectively reaching your own.

Over time, in subsequent newsletters we will break down the elements of the business plan, and discuss how each is arrived at, how it works, and the decisions inherent within it. Here is an outline of the sections we will cover.

BUSINESS PLAN OUTLINE

The outline below lists the contents of an average business plan which we find are important to investors and partner companies. Each film company and project bring a different set of talents, strengths and weaknesses to the table, and thus each plan has to have an individual set of emphases. A more detailed outline of a business plan is available on our web site, under Business Planning.

  • Mission Statement For Your Movie
  • Executive Summary
  • Motion Picture Market Statistics Overview
  • Domestic Markets
  • The Birth Of An Independent Film
  • THE PRODUCT
    • Synopsis Of Your Movie
    • The Process Of An Independent Film: From
    • Conception Through Post-production
    • Gaining Distribution For Your Movie
    • Festival Strategy (if any)
  • MOTION PICTURE MARKETS
    • Domestic Primary Markets
    • Foreign Markets
  • THE AUDIENCE
    • Movie Audience Demographics
    • Analysis Of Target And Any Crossover Or Secondary Audiences
  • EXHIBITS
    • Biographies and Resumes
    • Historical Studies of Comparable Films
    • Projections

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