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Financing a Film With International Pre-Sales

Original publish date: April 11, 2024

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Securing the funds needed to bring your project to life is often as intricate an art as crafting the film itself. There are countless ways to fill a production’s coffers, and some have a more successful track record than others. Among the most useful options is securing foreign pre-sales for a film.

Foreign pre-sales are a strategic avenue that helps filmmakers finance their projects before production even begins. This process involves selling distribution rights to foreign territories before filming begins. By leveraging the marketability of a script and any attached talent, filmmakers can secure agreements that provide crucial funding and serve as a testament to the film’s commercial viability. 

A map of the south of France with a push pin in the city Cannes, where a major pre-sales market gathers every year.

How do you finance a film using international pre-sales? 

Financing a film through international pre-sales involves selling distribution rights to foreign territories before production begins, referred to as pre-sales. Foreign distributors may offer upfront payment based on the script’s strength and attached elements such as director and talent. While pre-sales typically yield a modest deposit and a promissory note for the remaining amount upon film completion, these notes can be used as collateral for production financing loans.

By securing funds in advance, pre-sales mitigate financial risk for filmmakers by providing a portion of the needed financing upfront, reducing reliance on other sources such as investors or lenders. For more details, refer to Media Services’ Definitive Guide to Financing Your Film

What is the film pre-sale process? 

The film pre-sale process involves several key steps and mechanisms. Initially, filmmakers pitch their project to potential buyers, such as distributors and sales agents, providing a comprehensive package including a synopsis, treatment, and visual materials. Negotiations ensue, focusing on elements like script, cast, genre, and marketability, culminating in legal agreements outlining distribution rights, financial terms, and delivery requirements.

Buyers may offer financial commitments, known as minimum guarantees, securing distribution rights for specific territories. These commitments provide immediate financing for production and enhance the film’s appeal to additional investors or production companies.

The pre-sale process can take different forms, including territory-by-territory deals tailored to specific markets or package deals for broader distribution. Advance payments are made by distributors to secure rights, with payment structures varying based on negotiated terms.

Finally, delivery requirements and release commitments ensure filmmakers provide necessary materials and distributors fulfill obligations regarding the film’s release and marketing. 

What makes a film pre-sale package successful?  

A successful film pre-sale package hinges on several key factors that collectively contribute to its appeal and marketability. First and foremost, the quality and originality of the script are paramount, with distributors seeking fresh perspectives and compelling storytelling that resonates with target audiences.

Additionally, the attachment of recognizable talent, both in front of and behind the camera, enhances the film’s marketability, bringing star power and industry expertise to the project. Genre suitability plays a crucial role, with certain genres enjoying broader commercial appeal, while sales estimates and market trends provide valuable insights into audience demand and revenue potential.

Finally, high-quality marketing materials, including pitch materials and promotional assets, are essential for effectively showcasing the film and generating interest among distributors, ultimately contributing to the package’s success in securing pre-sales agreements. 

What are some best practices and negotiating strategies when dealing with film pre-sales? 

When dealing with film pre-sales, employing effective negotiating strategies and best practices is essential for securing favorable deals and maximizing revenue potential. Start by conducting thorough market research to identify potential buyers and understand the distribution landscape. Cultivate relationships with sales agents and distributors who specialize in your film’s genre or target audience, leveraging industry events and networking opportunities. Craft tailored pitches that highlight your film’s unique appeal and address buyers’ interests and needs, utilizing compelling visuals and data to support your presentation. Be flexible in deal structures to optimize revenue while mitigating risks, exploring various financing options and distribution strategies. Ensure clarity on contractual terms and rights by hiring an experienced entertainment lawyer to review and negotiate agreements, protecting your interests and fostering mutually beneficial outcomes through constructive dialogue with buyers. 

How do you maximize the value of pre-sales and mitigate risks? 

To maximize the value of film pre-sales and mitigate risks, filmmakers should adopt several strategic approaches. Firstly, diversifying funding sources by balancing pre-sales with other financing options such as investors, grants, and production loans minimizes reliance on a single revenue stream, ensuring financial stability throughout production.

Incorporating pre-sales fees directly into the film’s budget helps cover production costs and prevents budget overruns. Leveraging pre-sales commitments as proof of market demand attracts top-tier talent and additional financing, strengthening the film’s financial position. Managing distribution risks involves avoiding overcommitting rights and negotiating flexible distribution agreements to maximize revenue potential.

Seeking guidance from experienced entertainment lawyers and sales agents ensures legal compliance, protects filmmakers’ rights, and maximizes revenue opportunities through informed decision-making and strategic negotiation. 

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