Steven Rumbelow suggests that a more traditional manufacturing model can be applied in films business to cut deals beneficial for investors, producers, and distributors.
By Steven Rumbelow
Film has been through some pretty dramatic changes since the 2008 crash. Every significant aspect of the industry has been impacted including distribution, production, technology and financing.
The new business of film has become clogged by several factors; fear of financial failure, a new Calvinistic investment environment, a tidal wave of DIY films generated by inexperienced hopefuls and the majors abandoning the mid budget films.
Mid budget films were an important part of the industry that provided the largest number of well-paid jobs for keys and actors alike. This has now inspired a major migration to TV and SVOD (subscription video on demand) content producers.
The survivors of feature film production fall into two polarized working groups; the major blockbuster providers concentrating on pulse movies and the low budget professionals who are producing for the new digital markets with budgets for genre films that range from $500K to $4M.
The definitions of low budget have been significantly lowered by unions and producers. The majors loosening their grip on the theatres allowed the theatre chains to ramp up the lower budget production companies as potential distributors.
Some of these changes are arguably healthy and long overdue. However, the new investors who have come in from the non-entertainment world have been looking at some of the industry’s business practices with wide-eyed amazement. “Well what exactly makes the distribution minimum guarantee a guarantee? These agreements are too vague to be enforceable.”
So here we are in a situation where the industry is ready for some major growth with great new emerging markets, new forms of distribution and new developments in technology but no financial players who are willing to get involved in anything but the blockbuster end of the business. This led me to consider what is really needed to solve the financing problem for smaller productions like my films.
Distributors are often financially behind the eight ball and scrambling to keep up with their selling cycle costs. They are painted into a corner and forced to rob Peter to pay Paul with the intention of paying Paul later after the next batch of sales payments come in. Meanwhile, producer Paul is getting upset because he has not been paid. So, it occurred to me that what we needed was not an investment bond as much as a distribution bond.
I sat down with some friends and discussed it at length with general agreements all around that we needed to enter into a more traditional real-world business model that would secure the purchase being made by the distributor, much like a standard manufacturing deal.
Amazingly, two days later I was approached by a film financier who had exactly the same notion and had firsthand experience of financing billions of dollars’ worth of film. He had been planning a reworking of a successful film financing system that had been proven in the eighties and early nineties.
This distribution deal was pretty much exactly what we at Renegade had determined to be a much needed dose of financial reality to the industry. We were determined to “beta test” the new system. It is an elegant system and offers a tremendous opportunity to the right distributors.
The system manages to provide investors with the kind of security that manufacturing enjoys. The producer gets funded and the distributor is able to massively increase its buying power without having to rob Peter. Our first film out of the gate using this system is proving the process to be a win-win for everyone. We have two more on the rollout and other two ready to go after that.
This system is not attractive to the majors or mini-majors that have their own financing sources, neither does it work for the small distributors who are struggling to make sales but it does work for solvent, mid-sized distributors and content exhibitors. For that significant niche, this is a real game changer.
Steven Rumbelow (pictured above) has directed almost 200 productions in all media including feature films, television episodics, major stage productions, music videos, docs, commercials, dance, opera and TV specials.
His productions have won numerous awards in film, theatre and commercials. His reputation has been built on leading-edge, high-quality, independent production. As a writer, he has over 150 produced works. These include about 90 produced works for large and small screen, 40 stage adaptations and about 20 original stage plays. He is CEO of Renegade Motion Pictures which he started in partnership with colleague Frank Capra Jr. in 1993. Steven is also Executive Producer of the Griffin Group.
Steven has written this article exclusively for the RMN Stars site.