No-Budget Filmmaking: Rise of The Backyard Indie

Like it or lump it, there are a lot of backyard indies being made each year. Thanks to inexpensive production technology, no-budget filmmaking is not only possible, but has become the norm for many first time feature filmmakers, web series producers, YouTube artists and short filmmakers.

These days any filmmaker with passion and a story can make a movie. And unlike years past, backyard indie filmmakers are not prohibited by cash or creativity.

Yet despite the no-budget filmmaking movement, many of my high profile “professional” friends in Los Angeles, have made a conscious effort to ignore the rise of backyard indies. Why?

Because no-budget filmmaking isn’t real! (At least, that’s what some of the old school pros would tell you.) When it comes to no-budget filmmaking, some common questions asked by these Hollywood hot-shots are:

  1. Who signed the SAG agreements?
  2. Who contacted the Unions?
  3. Who notified the MPAA?
  4. Where is your theatrical distribution deal?
  5. Who do you think you are?

Good questions. Why don’t you go back in time and ask Roger Corman!

But the thing is, if you create a good movie – Your audience doesn’t care if the movie was an official union indie or a backyard indie made for pocket change.

no budget filmmaking

Photo © Jacek Krol / Dollar Photo Club

No Budget Filmmaking: Rise of The Backyard Indie

The demise of traditional DVD distribution coupled with the growing market domination of iTunes, Amazon and Netflix had leveled the playing field. The big difference between a $10,000 backyard indie and a $2,000,000 dollar indie isn’t the budget – The difference revolves around the film that gets the most eyeballs (and sales).

Think about it. Hitting breakeven on a 2M feature is going to require a lot of sales.

As a rough example, to recoup 2M dollars, the filmmaker will need to to sell (roughly) 200,000 video on demand downloads at $10 a pop. These first sales will cover the 40% cost allocated to VOD providers (the real winners here), after which, the filmmaker will still need to sell an additional 200,000 downloads to repay the investors.

400,000 VOD downloads x $10 = $4,000,000 minus $2,000,000 in VOD fees = the initial $2,000,000

Meanwhile, through no-budget filmmaking, a backyard indie only has to sell 2000 VOD downloads to recover the initial 10K costs.

While nobody wants to make movies for pocket change, many filmmakers still believe we can somehow continually produce unprofitable (movie) products and expect the money and the subsequent jobs to keep rolling in.

And unlike years past, filmmakers can no longer approach investors with the cliche pitch: “Filmmaking is a risky investment – if we are lucky, we might win Sundance and get a deal.”

Now, with transparent distribution options available to all filmmakers, that line of give-me-money reasoning is reckless, no longer applicable, and in my opinion, unethical. And for these reasons, no-budget filmmaking makes a lot of sense.

Aside from the initial challenge of sales and marketing, the ripple effect reveals an even greater conundrum:

How will you raise enough money to pay your cast and crew AND still pay back your investors?

I mean, what’s the new sweet spot?

How can we once again make independent filmmaking profitable?

“I CAN’T AFFORD TO PAY MY CAST AND CREW. WHAT DO I DO?”

Here is the modern moviemaking model on how to save the movie industry.

(And you thought this was going to be your typical no-budget filmmaking article.)

To survive in this ever changing world of indie filmmaking, we have to change our strategy.

Instead of focusing on making that one big awesome indie, we now need to focus on building a genre specific movie library and spend all of our downtime building a ginormously targeted email list.

Step 1: Find your top-ten closest filmmaking collaborators. Form a company.

Step 2: Write a business plan, but instead of putting all of your focus on making one movie, concentrate on making 3-5 feature films.

Step 3: Make sure that you include a sales and marketing plan for each movie. To do this, take your proposed budget for all movies and work backwards. Start asking yourself, “How many units do we need to sell to recoup our investment?”

Step 4: In this model, instead of paying freelance day rates, you’ll have to hire long term employees and provide each with a salary and back end points (sort of like stock options) on each title.

Step 5: When the title wins, you all win. Over the years, your titles will add up. And the real compensation will come back in the form of residual movie income.

While this is not a fully refined model, it’s a start.

In my opinion, creating a sustainable business model is better than ignoring no-budget filmmaking and pretending backyard indies are not real movies.

We are experiencing a time of change.

This is the indie movie distribution equivalent of the automobile replacing the horse drawn wagon.

You can choose to ignore this movement, and you can probably succeed for a few more years. But there will come a day when all entertainment will be on-demand and cheap to produce and cheap to consume.

The question is, will you ignore the no-budget filmmaking movement and continue to play your distribution lottery ticket in hopes of winning the dream deal, or will you  join the movement and help us filmmakers figure out a way to make indie movies profitable?

If you liked this article, you’d probably benefit from these professional filmmaking tools.

Film Finance: 5 Tips to Find Out if Your “Rich Guy” is Real

5 Tips to Find Out if Your “Rich Guy” is Real
By filmmaker, author and film finance expert Tom Malloy

Film finance is all about trying to land an HNI (High Net Worth Individual) for your film.  And one of the main obstacles film makers face is qualifying if an investor is “Real.”

In other words, REAL means that he or she CAN actually fund your film.

Real investors are not guys who know other guys.  Real investors are the guys that can actually put in the money.

film finance expert Tom Malloy

Film Finance expert Tom Malloy

Film Finance: 5 Tips to Find Out if Your “Rich Guy” is Real

So if you are looking for film finance, I present to you 5 tips for you to know in your quest to find who’s real and who’s not!

1. Google your prospective investor.  It sounds simple, and it is.  Do your research on the guy.  It’s easy to find out information if you just take the time and search for it.

2. Take into account what he’s wearing and what he’s driving.  Sometimes relying solely on image is a mistake.  In the world of film finance, sometimes the guy with the 3 piece suit is the phony and the guy in shorts and a t-shirt is the eccentric millionaire.  But where does he live?  What does he drive?  Many HNIs enjoy the comforts their money brings.  This method is not foolproof, but it does work 90% of the time.  I had a meeting with a prospective investor and he was missing some teeth.  His teeth were Real, but he wasn’t.

3. Does he pick up the check?  I say it over and over again.  If you are eating dinner/lunch with a potential investor and he/she doesn’t pick up the check, I can 99% guarantee that you will never get a penny out of them.  If they care so little about you that they cannot invest $50 for a meal, you ain’t getting their money.

4. If he starts talking about “money coming in”, he’s not real.  Had this happen many times.  Someone talks about some bank deals or commissions that will be upcoming.  Walk away.  Don’t get your hopes up… it never closes.

5. Is it too easy?  This is an interesting one.  If your film finance efforts seem to be going too easy, a red flag should pop up.  Closing money is not easy.  And if the guy doesn’t really look at your business plan or do his homework, chances are he doesn’t have the money to fund your project and he’s just pretending.

Here’s the key to film finance… You must ALWAYS be in research mode!

I start almost every film finance meeting asking a prospective investor questions about himself or herself.  I’ve also came to that meeting having Googled them and I usually know some info already. Pay attention… don’t be too anxious.  Analyze all the information you’re given and your ratio of closing will increase dramatically!

If you’d like more film finance information so you can find out how I raised over 25 million to make my movies – Check out the film finance guide.

– –
Tom Malloy is an Actor, Writer and Producer, specializing in independent film finance. He is the author of BANKROLL: A New Approach to Financing Feature Films, which is the best reviewed book on film financing, and is considered a “gold standard” in indie films circles. To date, Tom has raised over $15 million in private equity from independent financiers.

How To Overcome Your Indie Filmmaking Challenges

Over the past year, we have seen a lot of developments in the indie filmmaking space. New technology coupled with non-discriminatory distribution has enabled many would-be filmmakers to finally get a feature made and distributed.

While most of us in the indie filmmaking community welcome these changes – The downside to these innovations is the market is now saturated with backyard indies.

The other day I asked members of the Filmmaking Stuff Facebook community to describe their biggest indie filmmaking challenges. Minutes later, it became clear that the most glaring obstacles revolved around:

  1. Film Finance
  2. Movie distribution.

This seems right. Like you, there was once a time when I had no idea on how to finance, make, market, sell and distribute a movie. I remember spending countless hours reading everything I could get my hands on. Most of those filmmaking resources let me down. None of them helped me overcome my particular indie filmmaking challenges.

So I decided to address both points below and offer solid solutions you can utilize to get your movie made, seen and selling.

indie filmmaking

Indie Filmmaking Challenge – Film Finance

You know you need money to make a movie. Your indie filmmaking challenge here is obviously finding the money.

Read any of the books out there and the solution almost always involves some ridiculous scenarios where you either hire a seasoned producer to raise the money (wouldn’t that be nice) or find someone with disposable income, like a doctor or dentist. I’m sure you heard this useless crap too. I am tired of it.

So here is your non-magical solution to film finance. Notice I DID NOT say easy. What I’m about to share is not easy. I am sorry. If you don’t like a challenge, choose another profession or simply buy another indie filmmaking book that promises fame and fortune. But for those of you wiling to do the work, here are the steps for raising money:

  1. Write or acquire a great script.
  2. Break your script into a schedule and budget.
  3. Create a business plan that outlines how you will make, market and sell the movie.
  4. Have a lawyer draft a Private Placement Memorandum.
  5. Approach prospective investors and ask for the money.

While the entire indie film finance process can be broken down into five basic steps, it may take you months or even a year or more to get your movie fully financed. At this stage, your indie filmmaking challenge is to decide if you want to keep going, or perhaps save your blockbuster for another time and focus on making a smaller movie now. I personally think it’s better to make a feature than wait. But only you can decide what’s right for you.

Regardless of the scope and scale of your project, most prospective investors will want to know how they will benefit from your movie. Tom Malloy talks about this quite a bit in our film finance guide – But the basic thing to remember is that each prospective investor is looking for a different payoff. Some want a financial return. But some simply want to get involved in the movies.

It is important that you do more listening than talking. Figure out what the investor wants and then provide that.

In all scenarios, investors will likely ask what your plans are for marketing, sales and distribution. And that leads me to address the next point in your biggest indie filmmaking challenge – Distribution.

Indie Filmmaking Challenge – Distribution

There was a time when film distribution required someone picking up your move in exchange for a tremendous outlay of cash. Those days are over. Thousands of filmmakers flood the market with cheaply produced backyard indies. DVD distribution has been replaced by VOD distribution. And traditional distributors (with minor exception) no longer offer minimum guarantees.

filmmaking_challenge_solved

The cast of Special Dead.

Sounds pretty wacky, right? Wrong.

Many traditional distributors still pretend it’s 1995 and avenues to the marketplace are limited. But this is not true. Getting onto iTunes or Amazon or any number of VOD outlets is simply a matter of choosing one of the popular encoding houses and shelling out a few thousand bucks.

I cover a lot of this in my indie guide to digital distribution. But the bottom line is, you no longer need a traditional distributor to grant you access to these marketplaces. (Especially if the deal is not good!)

Here are your steps to distribute your movie:

  1. Create a marketing plan and launch strategy. (Note: This should be part of your initial business plan.)
  2. Get your movie onto popular VOD platforms like Amazon, iTunes and Pivotshare (and others).
  3. Come up with an advertising strategy that pays for itself and provides a profit.

Once again, I oversimplified this. Your indie filmmaking challenge with distribution is creating a strategy that makes sense for your movie. You need to move enough units of your movie to show a profit. Otherwise, you will be operating at a loss. And nobody wants to lose money… Because that’s not a real business.

If you’re like most indie filmmakers, you want me to prove that this works. You want Video On Demand Sales Projections to show your prospective investors. The truth is, most investors will see your projections as fluff. The reason is simple – Just because The Polish Brothers were able to have one of the highest grossing movies on iTunes does not mean that your movie will have similar success.

There. I said it.

More important than any VOD sales projections is figuring out how you will leverage VOD sales, to sell more movies. In short, there are some old fashioned direct mail formulas that will serve as an awesome starting point for actual scenarios. You can utilize these in your business plans. And savvy investors will understand.

You need to plan both your financing and distribution strategy as if you are your own mini studio. Because you are. If you plan to make, market and sell movies – you now have the technological firepower to take your filmmaking dreams to the big screen. And the best part? You don’t need to ask me or any other film professional for permission.

But you have to take action and make things happen.

What is your biggest indie filmmaking challenge? Feel free to tweet this and comment below.

 

 

How To Finance Movies With VOD Sales Projections

Do you know the most popular question filmmakers ask me?

I’ll give you a hint. It has to do with video on demand.

Ready. . .

Without too much variation, the most popular question is: “Can you provide some VOD sales projections?”

I understand the motive behind this question.

Believe me, I do.

You’re a filmmaker. You either made an awesome movie and you’re trying to use VOD sales projections to convince your partners that VOD is the way to go. Or you are in the process of making a movie and you need to convince your investors that VOD is awesome. In both scenarios, you’re trying to find proof that movies make money in VOD.

I get that. . . But. . .

Let’s make one thing clear. Asking for VOD sales projections is asking the wrong question!

If you dig around, examples of VOD Sales successes are out there. Check out what The Polish Brothers did. And if that’s not enough, Google the case study around Indie Game the movie.

But the truth is, one filmmaker’s past success does not guarantee that your movie will be successful.

Read that statement over and over again. And if you need a little more clarity, take a look at what the cat is saying here:

VOD Sales Projections

Realizing that VOD sales projections are BS is essential for your success. And I am going to explain how you can use your new found understanding for good, very soon…

But before I go there, let’s talk about why people invest in independent film.

Why Investors Invest In Indie Film

Independent movie investors invest because (aside from having an appetite for risk and an interest in the film business) most of these people want a return on their money. If you are doing things by the book, you probably created a marketing strategy as part of your business plan. This plan provides prospective investors an overview of how investment dollars will be budgeted, spent and hopefully recouped.

In the past, trying to convince investors movies were a good investment involved projecting returns based on speculative data. To guess how much money a movie may make, filmmakers would compare their project to other successful movies.

Creating indie movie comparables is complete BS.

The reason for this is simple.

Just because you make a low budget horror movie does not guarantee your movie will have the same success as Paranormal Activity.

In fact, Paranormal Activity is an outlier. It is not a fair comparison. And using breakout hits as examples, while ignoring the thousands of unsuccessful horror movies made each year, is short-sited at best and I dare say a little unethical.

Video On Demand Sales Projections

Given the birth of VOD distribution, as a filmmaker you now have the ability to access and enter into a non-discriminatory marketplace as soon as your movie is ready. And because many of these marketplaces exist online, much of your sales will come from internet traffic.

This is actually awesome news.

It means that you can boost your sales by using a very common marketing concept called…

[Seriously… Are you ready? You are about to receive the secret sauce of modern, indie movie marketing.]

More important than VOD Sales Projections is:

Conversion Rates

What is a conversion rate?

Conversion Rate Defined, According to Wikipedia:

Your conversion rate is the proportion of visits to a website who take action to go beyond a casual content view or website visit, as a result of subtle or direct requests from marketers, advertisers, and content creators.

Conversion_Rate

In other words, if you send one-hundred people to your movie website and two people buy your movie, your conversion rate is two percent. This is profound. This is life changing for indie filmmakers!

Question: Why should filmmakers be enthusiastic about the internet marketing, nerd concept of conversion rates?

Answer: If you know your conversion rates, you can model and potentially project more accurate movie sales projections from day one.

But before you start noodling around to find your conversion rates, it helps to answer the following questions:

Modern MovieMaking Model

  1. Who Is Your Target Audience?
  2. How Large Is Your Target Audience?
  3. How Will You Reach Your Audience?
  4. What Is Your Marketing Strategy?
  5. How Many VOD Sales To Break Even?

While I won’t get into the actual mechanics of marketing and selling your movie here (My Action Guide How To Sell Your Movie provides you with an actual step-by-step plan for getting your movie seen and sold), I will simply note that a marketing plan must now be included with your business plan.

The Secret VOD Sales Projection Formula

When you create (or refine) your marketing plan, you must now include some marketing math.

Truth be told, math is a weak subject for me and I dare say, most of the filmmakers I know. But luckily there are many spreadsheet templates that allow you to test several conversion rate scenarios. You can use these scenarios as a guideline to ballpark the potential ROI for your movie.

Here is a basic website conversion rate calculator you can utilize: http://bit.ly/17TSCrt

Before you get overly excited (like I am) calculating your movie website conversion rate is only one metric to determine your movie’s potential for profitability. You still need to figure out how to price your movie. And at the same time, you will need to determine how much targeted internet traffic will cost you.

Generating Internet traffic is the result of executing four strategies. You can either get free traffic online, free traffic offline, paid traffic offline or paid traffic online.

For the sake of this example, I am going to incorporate pay per visit advertising. With pay per visit advertising, you simply pay for someone to visit your movie website.

One example of Pay Per Visit traffic is StumbleUpon. It’s a social bookmarking site that also allows you to pay for semi-targeted traffic. This works well if you have a movie with a dose of controversy and a strong hook.

And again, if you’d like more info on specific traffic generating strategies, check out my indie guide to distribution.

Ok. Here is our first example…

Let’s assume only 1% of the targeted folks who actually visit your website, buy. Then how many visits will you need to sell 100 units?

100 units = Our goal for this ad campaign.
$.05 = Amount you may pay advertiser per visit.
X = Number of Visitors Needed to buy 100 units if only 1% buy.

(X).01 = 100 units
EQUATES TO: X= 10,000
THEN 10,000($.05) = $500 paid for targeted traffic.

So in other words, if you were lucky enough to get a 1% return, you just paid $500 dollars in pay per visit advertising to sell 100 units of your movie. But let’s go one step further. Let’s assume you’re like me – and you hate order fulfillment and shipping. So you decide to let a company like Amazon’s Create Space or iTunes (or some other popular marketplace) handle your order.

Video On Demand For Rent (Electronic Sell Through)
100 units ($3) = $300 – 50% paid to marketplace = $150
minus $500 paid for advertising = -$350 NEGATIVE

In this VOD rental scenario, the Pay Per Visit Ad numbers don’t work, unless you like losing money.

Video On Demand For Download (Electronic Sell Through)
100 units ($10) = $1000 – 50% paid to marketplace = $500
minus $500 paid for advertising = BREAK EVEN

In this VOD download to own scenario, the numbers work a little bit better. Assuming you’re lucky enough to get 1% of your money returned, at least the advertising pays for itself. But unless you can increase your conversion rates, pay per visit advertising is going to be very difficult method for returning money to your investors.

Physical DVD Sales
100 units ($20) = $2000 – 50% paid to marketplace = $1000
minus $500 paid for advertising = $500 in profit.

Ah ha! If you’re fortunate enough to get 1% return on your pay per visit advertising, you can see how physical DVD’s (or units) sold at $20 dollars may offer a slight profit margin. In other words, in this scenario, for every $.50 cents you spend, you get $1 dollar back.

So let’s tackle the bigger problem. Let’s try to get a return on our 1Million dollar movie, selling physical DVD sales and using pay per visit advertising alone:

Movie Budget = 1 Million dollars
Physical DVD Sales using Pay Per Visit Advertising

$1,000,000 divided by $20 per unit = 50,000 Units

Since we will give 50% to the marketplace for all sales, we will need to project for double our budget.

100,000 units = Our goal for this ad campaign.
$.05 = Amount you may pay advertiser per visit.
X = Number of Visitors Needed to buy 100,000 units if only 1% buy.

(X).01 = 100,000 units
EQUATES TO: X= 10,000,000 (Yes, TEN MILLION people.)
THEN 10,000,000($.05) = $500,000 paid for targeted traffic.

100,000 units ($20) = $2,000,000 – 50% paid to marketplace = $1,000,000
minus $500,000 paid for advertising = $500,000 in profit.

So to break even, you would need to sell 100,000 units and make $2,000,000.

Some Sales Conclusions

Based on this scenario, as a filmmaker you will (obviously) need to expand your promotion beyond pay-per-visit advertising!

But importantly and most AWESOMELY, you can treat your movie business like any other small business. With VOD Sales projections, you can find the marketing formula that works for your movie and crunch your numbers until you find a scenario that brings you profits.

Create a plan that included your marketing costs in your budget.

While there are no guarantees in any business, having a plan for marketing, sales and distribution sure beats the old days when your only plan for ROI involved crossing your fingers in the hopes someone will offer you a profitable, traditional deal.

While these may not be the VOD Sales Projections you were looking for, hopefully you now realize the power of knowing your conversion rates.

Treating your movie business like any small business simply means you don’t have to ask permission. You can make your movie NOW! And your prospective investors might take notice…

Also, can you do me a favor? If you liked this filmmaking article, could you kindly retweet or share this article with your friends?

What Is Your Movie Competition

One of the Filmmaking Stuff readers sent the following question:

Jason – I’m trying to put together a business plan for my prospective investors. I need to figure out who my competition is, and I am having difficulty. Do you have any ideas what my movie competition is?

- A Confused Filmmaker

Hi Confused,

Good question. Since the kernel of all industry is an idea, followed by a business plan, you’re not alone. When venturing into any industry, one of the challenges is working to pinpoint your competition and figuring out ways that your business will compete.

What Is Your Movie Competition?

In the world of indie filmmaking, your competition comes down to two main categories.

  1. A virtual video store-shelf full of millions of other movies.
  2. Ignorance in the marketplace… Nobody knows you exist.

On both accounts, you are responsible for helping your movie rise above the noise. The question is, what makes your movie so remarkable that your audience should carve out two hours to watch it? If you can’t find a way to hook someone with your story, your movie runs the risk of floating forever in quiet obscurity.

For all these reasons, it is vitally important that your business plan also includes a marketing plan. I would also go on to say that your marketing plan should allocate at least fifty-percent of your budget towards the marketing, sales and distribution of your movie.

If you would like to create a marketing plan for your movie, check out my how to sell your movie program.