Monday, September 16, 2019

How AI Could Reshape Filmmaking

For several decades, placing long-shot bets and hoping for the best was pretty much all there was when it came to making TV shows and movies. Then along came data and analytics.

In this episode of Now & Next (the podcast I host), we hear from Jack Zhang, who believes he’s found a better way to tackle the problem of matching supply with demand. He’s a recent Waterloo grad who started a company called Greenlight Essentials to combine his love of math with his love of movies. Zhang calls his system ‘audience demand analysis’.  It uses an AI-based system to develop probability models that determine the demand for a movie, before it’s made. Think a ‘Moneyball for movies’.

So far, the tests Jack Zhang has run look promising. He created a trailer for a movie that didn’t exist using the database he created that itemizes over 40,000 attributes found in movies. With little expectation of anything happening, he posted the trailer to Facebook. It ended up getting close to 3 million views and tens of thousands of comments. That movie is now in the process of being ‘packaged’ (the industry term for bringing together writers, producers, directors and on-camera talent) by executives in Los Angeles.

Show Highlights:

  • When Jack first realized data could help transform the film industry (05:09)
  • How Jack got Hollywood’s attention (09:40)
  • How Jack's company ended up being involved in film production after demonstrating its success online (11:49)
  • The challenges and uncertainties inherent to a new world of human-AI collaboration (14:15)

Click here to download a transcript of the episode.

Saturday, September 14, 2019

Where Do The Documentary Dollars Come From?

When it comes to financing documentaries, many think the options are either running up a tab on credit cards, shaking down family members for cash or calling in one favour after the next. And all the while, colleagues and acquaintances are probably starting to seriously think about blocking your calls and texts.

But it doesn’t necessarily have to be that way. Though all the above possibilities form part of the picture, particularly for documentarians just starting out, there are other financial avenues available for exploration. Each one comes with its own basket of risks and potential rewards, of course, and this was the focus of a fireside chat at the recent Hot Docs Industry Conference in Toronto.

The documentary gold rush

After years of being limited to the film festival circuit and one or two broadcast windows, the advent of subscription-based video on demand services has brought a whole new audience and new sources of dollars to the world of documentaries. Over the past two years, seven documentaries were sold for over a million dollars and even well beyond that amount – numbers that were previously unheard of in the sector. And yet, when feature documentaries such as Won’t You Be My Neighbor and RBG are grossing $22 million and $14 million respectively, it’s not hard to understand the rush of interest in the genre.

The big ticket story at Sundance this year was the $10 million sale of worldwide rights to Knock Down the House, the story of the unprecedented influx of women in the U.S. Congress, most notably the firebrand Alexandria Ocasio-Cortez.



Other doc deals in the 7-figure range that were struck this year include NatGeo’s $3 million acquisition of Sea of Shadows, Netflix’s close to $3 million for American Factory and Hulu’s $2 million acquisition of The Untitled Amazing Johnathan Documentary.

In addition to Canada’s federal and provincial funding sources and tax incentives for documentaries, there’s a whole other world of financing to consider. However, as with anything riddled with risk and uncertainty, there are different trade-offs to consider, as well as new knowledge required for navigating new systems.

The main types of documentary financing, outside of self-funding and governmental funding bodies, include:
  • Private equity
  • Venture capital (VC)
  • Co-producers’ equity
  • Loans
  • Broadcast equity
  • Crowdfunding

Private equity

This is a type of investment that, as its name suggests, is private and thus not listed on a public exchange. It’s considered a high-risk investment that, in some sectors, can also yield a high reward. In the world of film financing, it’s usually placed in a portfolio as a tax credit to offset the returns from other investments.

Venture capital

This investment category is also high-risk. It is usually associated with startups and comes with the expectation of potential for longer-term growth and a high return on investment. It is rather uncommon as a source of financing for films. However, a science-themed film, for example, could cross over from the usual, more targeted science audience to a mass audience, and therefore yield a substantial return.

Co-producers’ equity

These investors are producers themselves, and as people from within the industry tend to have a deeper understanding of its particularities and may therefore have additional demands. “Not recommended for control freaks,” said Yi. Also, the granting of producer credits to Americans or other foreign producers can be tricky when working within the Canadian funding guidelines.

Loans

These include startup loans, gap financing loans and finishing loans, among others. All are dependent on how they can be secured and the stage of the production process. For example, producers may be able to use unsold rights as collateral. As this is a contract between a producer and a financial institution, there is a legal obligation to repay and any collateral used is put at risk.

Broadcast equity

This is used when a larger broadcaster offers a higher fee than usual (i.e. an over-licence fee) for the film and acquires the rights for global distribution instead of just one or two markets. The broadcaster is then able to take the project to Netflix or any other streaming service. EyeSteelFilm’s Moore says: “For Canadians, generally all rights are not available, as opposed to European broadcasters, who are able to partner with someone like CNN.”

Crowdfunding

Here, there are many pros and cons to consider. As James J. Yi says: “It’s its own full seminar.” Some filmmakers use platforms such as Kickstarter and Indiegogo for the early stages of fundraising and awareness building, while others turn to funding websites to finish their project. Yi pointed out that many filmmakers have underestimated the time and cost to fulfill the obligations of the campaign, leading to a redirection of scarce resources.

Business deals & legal obligations

At the 2019 Hot Docs conference, the challenges and benefits of these options were considered from both a Canadian and US perspective. The former was provided by filmmaking veteran Bob Moore, of Montreal’s EyeSteelFilm, and the latter by Sundance award-winning documentary producer/director James J. Yi.

Yi was quick to point out the main differences between Canadian and US funding models. More specifically, when dealing with private investors, there are binding contractual requirements. “It’s a business deal with legal obligations,” he reminded the session’s attendees. EyeSteelFilm’s Moore made it even plainer: “Your house can be on the line… so all of a sudden, your legal line is big.”

Assuming most filmmakers, like them, are lucky enough to have houses, Yi and Moore offered a high-level breakdown of each category of financing, along with the risks, rewards and potholes that may initially not be visible when going down the documentary road.

In addition to providing a crash course on the many financing options available to documentary filmmakers, Yi and Moore also had some tips for producers, noting that some options apply more to US financing models than Canadian ones.

Among their top tips:
  • Start a separate company for each film
  • Be sure to contract based on net profit share, not the company, and not the intellectual property/IP
  • Your investors are just that: investors
  • As a courtesy, filmmakers may allow showing a cut of their film to investors. However, it’s important to specify, not just verbally but in the actual contract, that the film’s producers and director retain final cut rights
  • Manage expectations. Clearly specify what investors can expect in return for their $50,000 or $100,000 investment. A partnership? A tax benefit? An on-screen credit?
  • Note that public financing for documentaries in Canada dictates how contracts must be structured, as opposed to the US, where it’s possible to designate Pool A and Pool B investors, with different terms, incentives and payback schedules

With all the new outlets available for the distribution of non-fiction films, many believe we are witnessing the decade of the documentary. Also, while a $22 million gross for the Mister Rogers feature is an outlier, there’s now potential for such films to reach audiences outside of limited theatrical runs or a brief broadcast window. And along with the broader landscape for distribution come new sources of enthusiasm and funding. James J. Yi is optimistic about the prospects for filmmakers but reminded the audience at the Hot Docs conference that documentary funding is a particularly difficult process. “If possible, he said, look for an investor with a more philanthropic mindset.”

For more information on industry standards for documentary financing and crediting, see this recently released report from the DPA (Documentary Producers Alliance).

Note: This post originally appeared at Trends