Today, I started writing a business plan for a new film project, and it occurs to me that first-time filmmakers could use some pointers on the dos and don'ts of crafting a business plan.
The biggest mistake I see in business plans for low-budget projects is the inclusion of wildly inappropriate "comps", the list of films used to show income potential. The most frequently abused titles are The Blair Witch Project, My Big Fat Greek Wedding and Pi. My response to reading such fantastical claims is to mumble quietly to myself, "Witches and Weddings and Pi, Oh My!"
Incidentally, the box office success of The Blair Witch Project is not a story of brilliant low-budget filmmaking. Rather, it is a story about the power of internet-based marketing. This success has been difficult to replicate despite attempts by the studios to do so. See Plane, Snakes on.
Why is it a bad idea to include these titles? By presenting such films as examples, you imply that your project could match this rate of return for your investors. IMDB lists 18,695 movies filmed in the United States in the 20 years since Steven Soderbergh's Sex, Lies, and Videotape sparked the current renaissance in independent film production. To place in the top ten by ROI requires that you outperform 99.95% of all films made in this period. In statistical jargon, that is called a three-sigma event.
TOP TEN FILMS BY RETURN-ON-INVESTMENT
Title ... ROI*
The Blair Witch Project ... 50181%
Super Size Me ... 35320%
Napoleon Dynamite ... 13784%
Open Water ... 9303%
Saw ... 6535%
My Big Fat Greek Wedding ... 5432%
Pi ... 5186%
Fahrenheit 9/11 ... 2473%
Saw II ... 2420%
Lost in Translation ... 2177%
*ROI is my own calculation based on data provided by Baseline Research, Variety and The-Numbers.com
If you tell investors that your project is in this category, one of two things will happen, neither one good. One, the investor will reject your proposal -- and is right to do so -- for relying on the unreasonable assumption that your film will perform in the top .05%, or two, the investor will develop impossibly high expectations about the money that he can earn on your film and will be disappointed when these expectations are not met. Can you say lawsuit?
So, when writing your business plan, resist the temptation to include these spectacular, and atypical, examples of film's return potential. Remember, The Blair Witch doesn't exist, slim down before the Wedding and keep your arguments rational.
4 comments:
So, I really like My Big Fat Greek Wedding (go figure).... but even I'll admit that Open Water was awful. :)
It is awful. Unless, of course, you invested money in it. Having a financial stake alters your perspective somewhat. :-)
Loren: These are both fascinating, well written articles. I very much hope your business plan gets the attention and financing it deserves. Best, Kim
Thanks, Kim! My next article will be on how budget size affects ROI. Look for it some time next week.
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