Draft:First Law of Film Finance
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| Submission declined on 23 August 2024 by Shadow311 (talk). This submission is not adequately supported by reliable sources. Reliable sources are required so that information can be verified. If you need help with referencing, please see Referencing for beginners and Citing sources. Declined by Shadow311 3 months ago. | |
| Submission declined on 15 August 2024 by Utopes (talk). This submission is not adequately supported by reliable sources. Reliable sources are required so that information can be verified. If you need help with referencing, please see Referencing for beginners and Citing sources. Declined by Utopes 4 months ago. | |
Comment: About half the draft is unsourced, Also I suggest removing the Linkedin source. Shadow311 (talk) 21:46, 23 August 2024 (UTC)
- Comment: Needs more than the one reference, and needs inline citations. Utopes (talk / cont) 16:52, 15 August 2024 (UTC)
The First Law of Film Finance says that the Market Value of a film must be bigger than the Financing Plan, and the Financing Plan must be bigger than the Budget. It first appeared in the book, "Independent Film Finance: A Research-Based Guide to Funding Your Movie" in 2023.[1] Films that follow this law are more likely to earn a return for their investors than films that ignore it. As a result, practitioners and professors encourage producers to follow the First Law of Film Finance.
The three key components of the law are as follows:
Market Value
[edit]The expected revenue over the life of the movie's economic life.[2] Revenue could come from distribution in movie theaters, on streaming video services, on television channels, or other venues. Revenue could also come from guaranteed payments from distribution agreements. The revenue is not necessarily discounted with time value of money techniques.
Financing Plan
[edit]The film producer's plan to raise money to pay for the movie, from development all the way through to delivery to the distributor. The financing plan may include investments from equity or debt financiers, tax incentives, product placements, crowdfunding, and grants.[3]
Budget
[edit]The expected cost to produce the film all the way through to delivery. The budget is typically crafted by a line producer in concert with a shooting schedule, both based upon the script.[4]
The financing plan must be bigger than the budget because there needs to be a cushion for deposits and a budget contingency, especially if working with a completion bonder. The market value must be bigger than the financing plan because many other parties receive some of the distribution revenues, including cast and crew (through residuals), lenders (through interest on loans), sales agents, and collections account managers.