Actors, Celebrities, Licensing, Rights

Lennon Reloaded

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The “One Laptop per Child” Foundation released a television commercial on Christmas Day of John Lennon – almost 30 years after his assassination – pitching viewers to buy laptops for poor children.

The Foundation produced the spot using digital technology; creating an ersatz version of Lennon saying “I tried to do it through my music, but now you can do it in a very different way. You can give a child a laptop and more than imagine, you can change the world.”

Variations on the technology have been around for years. Michael Crichton predicted the advent of the technology in “Looker” in 1981. In 1995, I cited Crichton’s work when I wrote about the use of digital technology to reanimate deceased celebrities in new works – and the possible legal complications – here.

Although the ethical and business dilemmas of using digital automatons instead of real actors are still in flux, the legal issues remain the same. The commercial exploitation of dead celebrities requires the consent of the celebrity’s estate. In this case, Yoko Ono, Lennon’s widow approved the spot.

When I wrote my article in 1995, the infinite possibility of the internet was largely unknown to the public. Our understanding of its potential now combined with advances in digital reanimation technology will only bring these issues to the forefront.

You can find out more about One Laptop Per Child’s donation program here.

AFM, Debt, Distribution, Equity, Film, Financing, Hedge Funds, Independent Film, Markets, Notable

The Film Industry Is In A Pickle

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Pickle Magazine, a film industry publication based in India about all things Bollywood and now, Hollywood, recently asked producer and sales agent, Ron Lavery to interview me and ten others for its American Film Market edition. After reading all eleven interviews, it’s clear that none of us agree on what the long term and short term effects will be on the film business given the latest seismic shocks (and those to come) to the overall global economy. Here’s my take:

Lavery: How do you think the current economic situation will effect AFM business this year?

Me: The entertainment business, like most businesses runs on credit. Although there appears to be a credit thaw . . . if the financial environment gets worse or even if it continues to improve at its current pace, the credit freeze will definitely affect AFM business this year. With limited access to the credit markets, buyers will be less inclined to close deals and will have limited buying power in the short term. Over the longer term though – and I’ve already witnessed it first hand – private equity will step in to do more traditional debt financing (albeit at a premium) if the banks are unable to do so.

Lavery: Do you foresee any mergers between distribution companies?

Me: Yes. Although mergers are already a part of the overall trend towards the consolidation of the business, the current economic climate will only accelerate this process.

Lavery : Are there any news ways of financing films on the horizon?

Me: Over the last decade and longer, people have been and continue to try to build a better film financing business model as the economics of the film business shift. This process will likely [continue to] shift at a tectonic pace especially if credit remains tight, the costs of production continue to rise and equity sources dry up. With the Internet as a potentially new distribution platform with untested sources of revenue based on either a subscription model (which won’t work) and advertising (which might work if the revenues become more meaningful), Internet exploitation windows may become a more significant revenue source for producers and distributors.

This is especially true now that that the technology exists to “geo-filter” the exploitation of films on the Internet on a territory by territory basis.

Electronic sell-through of video units of films may increase the value of minimum guarantees since the Internet will allow producers to have greater access to mass markets for their films during the video exploitation window. In some cases, producers may be able to directly distribute their films without an actual distributor just as artists have in the music business, thereby saving on costs by eliminating the middleman.

What is even more interesting is that short films are rising in commercial appeal.

Long relegated to film festivals, new distribution opportunities have developed on the Internet and on mobile phone and Ipod technologies for shorts. As a consequence, producing shorts are good for business since they have lower budgets and can now attract marquee talent who view internet exploitation as a cutting edge business opportunity that provides potentially great exposure with minimal effort.

Lavery: Will the economic crisis effect government subsidies and tax credits?

Me: With the drop in income here in the United States (and a corresponding drop in tax revenues), each locality is looking for new ways to attract revenues, jobs and new industry to each of the States but [they are also] forced to contend with a corresponding drop in tax revenues by virtue of providing the tax subsidy itself.

Meanwhile India, the Middle East, Eastern Europe and China will continue to be appealing places to produce films which might not provide tax credits per se but . . . increase the potential bang for the buck.

Lavery: Any thoughts on the enormous impact Indian film companies seem to be having on American film companies?

Me: While the current economic climate is adversely affecting the global economy, India is viewed by many in the entertainment business as a potential source of new financing as opposed to talent. The good news for Indian film companies is that if India is the source of financing, then there might be increased leverage to utilize Indian talent in American films.

The other factor is the increased reliance on foreign sales of American films which right now hovers around 60-65% of the budget of the typical mainstream American film. This in turn requires . . . increased reliance on foreign talent in an effort to increase the appeal to foreign audiences.

Lavery: Any thoughts on Indian financing opportunities like the recent Spielberg-DreamWorks deal?

Me: The Spielberg-Reliance deal is viewed by many as the high water mark of Indian investment in film. The good news is that other film funds do not and will not require market capitalization to this extent. I expect the formation of several Indian and Asian based funds with more modest capitalization ranging from US$35 million to US$80million in the near term provided economic conditions do not seriously deteriorate.

Start-ups, Venture Capital

The Economy From A VC’s Perspective

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View SlideShare presentation or Upload your own.

Venture Capitalist, Sequoia Capital put together a simplified slide presentation on start-ups and the economic downturn.

Less is more and this presentation simplifies a lot of the complexity of the current economic mess we’re all in. Be sure to check out slide #21 for the take away.

Many thanks to Fred Wilson’s blog A VC for alerting me to this.

Actors, Celebrities, Distribution, Film, Financing

Box Office

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The Coen Brother’s Burn After Reading starring George Clooney and Brad Pitt is an awful movie that, despite being awful has been critically acclaimed (for the most part; my opinion notwithstanding). The budget for the picture was $37 million and as of this writing, has already grossed over $57 million during its theatrical release. The picture stands to make substantially more when (and if) it goes into wider theatrical release internationally and through ancillary exploitation on video and pay/free TV.

This disconnect of a mediocre film doing well at the box office got me thinking of my UK client Fred Hogge’s post on his blog cinelogic about how box office success builds audience interest regardless of the merits of a particular motion picture. With respect to the interest in the latest Batman sequel, Fred said:

The Dark Knight, just won big. Sure, it helps that they opened on over 4000 screens, but people are excited to see it. The reports coming back from those that have are overwhelmingly positive. So more people will go. And this is regardless of all the side-bar hype, largely focused on the late Heath Ledger, his death having, sadly, been turned into a marketing tool.

I responded that:

The general public follows weekend B.O. performance like a Wall Street stock index for one simple reason. People like horse races and the weekend box office is just that. This isn’t about quality pictures; it’s about “who’s winning now.” B.O. stats used to be restricted to Variety and other trade publications. Now they’re found in virtually every major news source around the world (at least those in countries that distribute motion pictures from the West).

To be sure, more people will buy tickets to a movie based on a horse race mentality because they “heard” the movie was good (just based on the initial B.O.). The fact that the horse race might be a fiction or, to be more charitable, of limited use as a barometer of [sic] quality picture is largely irrelevant to most of them.

There really is no accounting for taste. Which is why bad movies with “bankable” stars are easier to finance and distribute than high quality, material-driven pictures with little or no recognized talent attached. Indeed, that why Beverly Hills Chihuahua was – as Variety put it – “top dog at the box office” this weekend.

Then again, it might be really, really good despite the bad reviews. I’ll have to see it and get back to ya on that.