Film Budget and Recoupment Schedule Relationship

When considering Film Budget and Recoupment it is important to remember is the published Box Office are not directly related to the film’s profit. Box Office takings for any given film, are the retail returns to the distributors. The distributor pay for the cinema time and all the advertising and publicity so has first call on any returns. The Filmmaker and Investors might be lucky to see 15-20% of these figures.

Remember a filmmaker sells their product to the Sales Agents. The Sales Agents touts their various wares around film festivals and forums. effectively acting as a wholesaler to the end distributors. So the value of the film is the wholesale value paid by the Sales Agent based on what they can sell it for in the distribution channel.

So it is critical, when committing returns to investors that they are based on sales figure from Sales Agents, not the over hyped eye watering returns from box office receipts.

The relationship between Film Budget and Recoupment is much narrower than many think, Hence it is wise to do you best to secure sales projection from a Sales Agent from which you deduct your profit margin which leaves you with the budget the film must be made for in order to deliver a profit. If you think the budget is too low, don’t make the film, or at least don’t expect it to make a profit.

 


 

Film Budget and Recoupment Schedule Relationship

Film Budget and Recoupment Schedule Relationship – Who gets paid out and in what order

 

Basically there are no revenues without sales and distribution and are often proportional to the money spent on film promotion. The “There is no product, only marketing” rule and these folks take their profit and expenses back very early. They take 75%-80&% of revenues. We’re not here to argue the rights or wrongs of this, it’s just a fact of film making life.

Our model below is after they have taken their 80% of revenues, shows a typical example of a film budget investment (on the left) and recoupment chart (on the right). Every film is different, according to the negotiation of the individual financing and recoupment structure.

Film Budget and Recoupment Schedule Relationship

Many things have changed of potential changed since this study, and there are many more to come, e.g. Netflix & Amazon becoming significant content producers, which is already happening.

  • growth of internet downloads and video-on-demand, (Prime, Netflix, Itunes, Apple TV)
  • reduction of production costs due to the digitisation of the whole film-making process
  • digitisation of cinema screens, reducing physical distribution costs
  • producers being able to market and distribute their films directly to the consumer
  • long term growth of the niche market via the Long Tail Theory

 

 

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