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Building an indie business, and the center of venture capital. I am Alex Edmonds. People call me supremerumham on the internet. And this is the building an business podcast. Okay. So today, it's gonna be a little different. It's not going to be about revenue per se, or it's not going to be about revenue at all. Um, I'm going to be discussing film production budgets. So, how money is spent, not how money is made. Um, okay, so there. 1234 arm ways, a production budget is broken up into. So I'm going to go over those four parts, and what's in those four parts, and then we're going to be discussing budget reducers crowdfunding. My opinion. Of course, and I'm going to finish it off after that. Okay, so let's get into it. Um, the first stage is development. And this is where I'm a, a production company will pay for the intellectual property, and the intellectual property is like story rights. So, let's say someone wants to buy the film rights to what's the deal with podcasting, somehow. So, the production company has to pay me money for the right to turn my book into a movie. So that's where development comes in. And then script writing. So, sometimes that the story that they bought isn't like a very good script, or it's not, it's not done, they might buy half a script. It might need to be rewritten. So, the production company will hire a script writer to finish off the script or turned it into a script. Okay. And the last thing in development that I'm going to talk about is financing. So, at this stage, the production company will need money for the rest of the budget. So they will approach investors to invest in the movie. And it might even be a hedge fund. I was reading that a hedge fund will come in, what or make a deal with a production company and buy like the the rights to 25 or 30 movies at once, and just fun those movies, especially because now they're the budgets are like $250 million, and some movies are making a billion dollars so you know that's that's a good amount of money to be making. Okay, so then there's pre production. And so this is before the movie has started filming yet and development is like, developing the movie. So pre production is the next step. And this is like getting the cast and the crew. So you're paying the cast their their money, right, which might be $10 million per person for getting someone like Leonardo DiCaprio at A. and then the crew of the people to, you know, assist the director to use the mics. Fix the lighting handle the camera on people like that. I'm going to be talking about the cast and the crew, a little more. And in another section. So, alright. Um, the next stage is production. So, where does this money go to this is the actual shooting of the movie. So this is the camera. The sets the costumes for actors, anything else. Right. Okay. And then there's post production. What's post production post production is the editing of the movie. Right. So like adding special effects, adding music. reshooting things. Adding. I don't know, editing, right, like, clearing up the picture. So yeah. All right. So then, there's marketing and distribution, and I found this really interesting. So, this is creating the trailer for the movie, so that way people can, you know, get interested in the movie and go see it. What else is this. This is a yeah this is going out. Selling selling movie going on interviews, things like that. Um, and then for distribution. This is what I found interesting, um, you know, every theater needs to have a copy of the movie. Right. So play it and have people pay for it. So, this is distribution, this is like them creating copies for the theater. Right. Um, and then exit exhibition is what they call it. This is paying people to review the movie. So, you go to a mall or something, and you solicit people to watch the movie and review it. And you have to pay them for that. right. So, that's in the marketing budget. Okay. Um. Now, indie films who don't have high budgets are using crowdfunding to fund the movie, so they might use Kickstarter and do a huge Kickstarter campaign. They might use Patreon. And they give people rewards for funding movie on, they might be gonna give people t shirts or put their names in the credits. The people find that their name goes in the credit credits, their names go in the credits. Um, and so, in some cases, in many cases, they have to create a trailer or a short portion of the movie to show people. Because people probably aren't going to fund a movie that there's just a script or a bunch of people with an idea. People are visual so they have to see and be interested in the movie and invested in it. By, you know, being shown something being shown something physical. Right. Film budget reducers. I found this really interesting. So locations. It's very expensive to shoot in like New York and San Francisco there's some movie that I was reading about where they had to shut down the Bay Area bridge which is. Oh, Jesus. I know that because I live here. And, Yeah, they had to pay for that, and that was very costly for them. But there's one place in like Canada, not like in Canada. Um, there's one place in Canada. That's like set up to look like New York. So if you drive by there, you'll see like New York cop cars. And it's cheaper to shoot there, because you don't have to shut down the city, and probably Canada gives you a tax credit for shooting there. Another budget reducer is no night shots. The reason why no night shots is because in the night. You have to like set up the lighting and have extra lighting. But if you shoot during the day. Um, you're getting free lighting from the sun. what do you know, and so you don't. The film. The production company doesn't have to pay more money for the lights, because they have the free lighting from the sun. Another budget reducer is product placement. Um, sometimes the company that's promoting their, their products might pay for their placement in the movie, but they might just give the equipment for free. And the reason why they do this is because the, the production company has to use that equipment anyways, so by getting the free equipment, it's, it's a place where they're saving money. Right. Um, the, the payment for using their product is an added bonus, one movie that's like famous for product placement is James Bond. Let's see. His Rolex his car, his drink. Those are three things that I can remember off the top of my head, that are product placement in the movie that that the James Bond product production company gets paid for to advertiser for him to wear. And like one third of the budget. This is off the top of my head I didn't research this. I just remember from researching in the past. One third of the budget is covered arm from product placement. Okay, so my opinion. In terms of crowdfunding. Um, the problem with crowdfunding is that you may run into trouble getting small donations for hundreds of people. And this is because like to, to shoot a movie, it's expensive it might cost you like $100,000. Right. Let's just say, and to get enough people to finance that $100,000 can be difficult, especially if you're doing it through $20 donations. So that's one problem with crowdfunding. And, um, Oh, did I talk about the fight and talk about the. Alright so, The one thing I missed was that, um, companies. Well, production companies will save some money. By, um, instead of paying the actors like $10. million. They'll give them a percentage of the movie, and that way. They're sharing the profits of the movie, there might be like, I don't know, 1% of the movie. And that could lead to more than $10 million, especially if you're making a billion dollar movie and that way, they're saving $10 million up front, and it's money that they would generate, and it's only if the movie would generate the money right if the money. If the movie loses money, they don't have to spend the $10 million. Um, and this is that leads me to what I was just about to talk about, um, let's say you have a big name. And the reason why you want to have big names and movies, so that they draw crowd to the movie. And that might hurt profitability. If that big name loses their. They're not their credibility but their star power, which just say, and they don't draw the crowd that the production company, thought that they would. So that's one mistake. Um, also. The. When a company. When a film series has a bunch of movies let's say five to 10 movies. The more money has to be spent on that movie series like each movie as to the budget has to be bigger so like the first movie as a smaller budget than the fifth movie, right, because each movie that the actors and the director and the people involved in the movie, they're gonna command. More not command but like they're gonna ask for more money so that increases the amount the budget. The, the amount of the budget, right. That means that the amount of money that needs to be made for each movie has to be more, right. So, you can't make 100 million dollars on the fifth movie like you did on the first movie because your budget is now bigger. Right. So that might be difficult for some series because eventually, maybe even at the fifth movie. Um, people might get tired of seeing those actors on the screen and that that same film series, so that's a problem with some, some movies or some movie series. Yeah. Okay. And then I just talked about percentages, those long series where you have five movies 10 movies. That's where you're gonna see percentages come in to reduce that budget and and increase the profitability for the movie production company. because when you're having five movies. And you need to reach a bigger budget. Or no, you need to reach a bigger profitability number. That's where they want to reduce the budget. Right. Okay. All right. But for the first time on this podcast let's talk about the coronavirus. Um, I think that's gonna lead to more increased costs for production companies, because now you need to pay for PP like mass sanitizing. You might need to start quarantining your actors just in case. Cast and Crew. You need to pay for testing. Right before they enter that bubble that you've created or eventually you may be a vaccine. Right. And the crono without even doing anything, it's delayed on production costs and that increase. No, it hasn't, it's delayed production which increased costs of the movie. And so it without even doing anything except shutting down production. You've increased costs already. Right. Um, I think what they should do is have a digital first strategy in the future in terms of promotion and distribution of the movie. So, um, there has been promotions that are done on platforms like fortnight. And Roblox not Roblox but Minecraft. I think Cao, UC Berkeley. They had their graduation on Minecraft, so you could do like a promotional event on Minecraft, that would be something cool. Travis Scott, with kid karate, they have like a concert on fortnight. So that could be cool. Um, Roblox. I don't know it's something might my niece and nephew play. I don't know if you could do like an online promotion. Um, you can stream on Twitch YouTube, Twitter, And that way, your promotional event can be done anywhere at any time, reducing risks to people catching COVID. Right. I'm. Finally, I think they need to start going away from movie theaters and create like VR movies that people can watch at home, and that would create a new experience. Right. Um. In conclusion, a bigger budget does not mean a better movie, they are movies that had a small budget, and they weren't financed by a hedge fund. And the movie was great and it, it still made a lot of money off the top of my head Pulp Fiction is one. I think that budget was like $9 million, but it made 150 something 40 something. So yeah, that's a great return on DOD bigger budget might even hurt sales because people might get tired of seeing the ads, about the movie. And because they're tired of the ads. They don't want to see the movie, or they feel like the ads gave away the plot of the movie and so they don't see the film, for that reason. Okay. Um. Thank you for listening. Have a nice day. Bye. Okay. are basically tapped out on platforms, I tried and tried to stick with Discord. That's about it. Oh really. Okay, I don't, I don't use discord though I don't even have an account, so that'll be a learning experience, I guess, to have a discourse community.