Earlier this year we launched the Producer’s Investment Pool, which is a crowd investment created to share our own financial risk. The investment has a fairly good position in our recoupment schedule.
ABC of film investing goes like this..
Making a film is no different than running your own business. To get it done, you need to know what you are doing (if you don’t, then pretend you do), you need to believe in what you are doing (if you don`t, then pretend you do) and most importantly you have to never give up (if you do, its probably the right decision).
Our "Star Wreck: In the Pirkinning" was the first feature film ever made for the internet and went on to attract over 10 million viewers – a huge number back then. the next day these guys contacted me and pitched an idea about the Nazis from the Dark Side of the Moon.
BACK TO THE FUTURE!
This means that your global release strategy must shape up nicely. Exiting times ahead of us.
"Minimum investment" is 5,000 € and we wish to collect up to 1 million € by the end of 2016. Why 5,000? We want to keep crowd investing as accessible as possible, but due to the way this works the higher the number of investors the higher the overhead in reporting and distribution of profits through the collection agency. This puts a limit on what the minimum sensible investment is.
"Premium" means a fixed interest and is 22,5 %. Each 5.000 € investment potentially brings you back 6.125 € from three different revenue streams A, B in a 1st row and C in a 2nd row.
"Back-end profit share". Every 5,000 € investment brings the investor a profit-share of 0.029 %. Please note that to reach this level the film has to perform big time in the box office. Also do note that once the Producer`s Investment Pool, including the premium, is recouped, there will be close to 2 million euro in other investments & deferments to cover before we are profitable.
"Reporting and Payments" are handled by an independent collection agent. When you sign the Producer`s Investment Pool agreement you will be added as a beneficiary in the Collection Agreement and you will receive reports every 6 months.
Let's explain how these 3 revenues stream works and give tools to analyze the risk.
We are pre-selling the up-coming film itself in various formats.
From the crowdfunding gross revenue platform, transaction, bank and other fees will be deducted and from the remaining crowdfunding net revenue 50 % goes to cover fulfillment costs, such as VAT, manufacturing, packaging and shipment. The remaining 50% will be distributed to Producer’s Investment Pool and other investors according to their share of the overall investment.
This is an example what we are building up here as part of the crowdfunding as well as promotion. With the original Iron Sky we did Iron Sky on Tour in Finland, where we pre-sold about 10,000 tickets for 25 € each. With that pre-payment fans were delivered fan-screenings in 25 cities followed by a Q&A with the director and the producer of the film, an Iron Sky on Tour t-shirt and a poster of the film with autographs. A perfect financing and promotion tool in the same package.
This time we want to do that globally. But as we can`t be physically in many places the same time, we are currently modifying the concept a bit.
The idea is to set up fan premiere screening events, which are to take place in selected cities a few days or max a few weeks before the actual release of the film in the territory. We started to build up this system last November as its 1st wave of development and have already sold tickets to over 40 cities worldwide. 2nd wave is planned for the coming autumn 2016 once we release our first teaser trailer. 3rd wave is once we release the launch trailer couple of months prior to the release and have confirmed the exact dates for these fan premiere screenings.
There can be 3 different Fan Premieres;
RED CARPET PREMIERE 50 / 100 USD. In Helsinki and Berlin. For these main events we have already sold over 600 tickets, and its only a start. Will have the maximum amount of cast & crew present and a huge party event.
GALA FAN PREMIERE 25 €. In about 15 cities (+/-) on 3-4 continents. Will present the Director & Producer and also cast members. The final decision which cities are part of this tour will be done Q1 / 2017 once the release plan will be more concrete. The more FAN PREMIERE tickets are sold to a city, the more likely it will be part of this tour.
FAN PREMIERE 25 €. In as many cities as possible. These events are organized without cast & crew in present, but will be one of the first opportunities to see the film. The attendees will get also some extra content/perks such as Directors video greeting before the screening.
All these premiere events will be organized together with local distributors, where the local press and celebrities will be invited to maximize the promotional power.
How film sales normally work?
This is the most standard way, but there are others as well.
a) Producer makes an agreement with a world sales agent, who takes a fee on the sales made, and is also allowed for a gapped sales costs.
b) Producers, sales agent and other investors make a collection agreement with a third party, who is collecting the revenues and distributing to parties who are part of that agreement.
c) Distributor from a territory, which could be one country, several countries or even whole world pays production a minimum guarantee (MG), which is an advance payment for future royalties.
d) Distributor spend additional money to release the film in its territory in different medias, such as cinema, video, digital and TV. For each of those medias a royalty share for Producer is negotiated.
e) Distributor gets revenues from cinema, digital platforms, physical stores, TV, Netflix etc. The first revenues are covering the release costs (which are usually capped), then the earlier paid advance will be covered from the Producers share.
f) From that point on, more revenues will reach producer.
In practical sense; You can think it as 2 different revenue waves. First the advance, which come already before the film is released. And then second, possible overages if the film performs good enough.