How Film Investors Turn A Profit

How do you make money for your film investors? In this video, I take you through a typical deal structure, waterfall and real-life case study of how film investors turn a profit.
Here is a link to the spreadsheet used in the video: bit.ly/4bnVwfF
It’s vital to understand how revenue flows from the box office to your investors’ pockets. It will allow you to structure your equity in a way that gives your film investors the best shot at turning a profit. It will also make you start thinking of your film as an asset that builds wealth, not only an artistic pursuit.
Now, let’s dive in…
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• How Film Investors Tur...

[@anthonymelanconsr3808]

Hi Alexi, thanks for the very interesting and viable information on financing and ROI. You are a great resource to writers and filmmakers. Peace

[@AlexiOuzas]

Thanks mate!

[@aashaaronstudios9328]

Brilliant info & generously shared!

[@silas1414]

A follow up speculative video on changes that could've made to increase chances of a net positive would be interesting. Also, the math works out differently when you zoom out and look at it within the larger sequence of films for those filmmakers. Like Angel investing the hits can pay for the misses. Break even in that context isn't too bad, and there is other non-monetary value from having a feature made and successfully released that has positive effects.

[@Hotinri]

WE NEED MORE OF THIS THANK YOU

[@transversalfilms]

Thank you very much for this clear, accurate and instructive explanation.

[@AlexiOuzas]

Anytime! Is there anything you would like me to expand on?

[@canitv8604]

Amazing info

[@jodief8371]

Yes run some other films numbers if you can find them.

[@AlexiOuzas]

Will do!

[@MyzteryLandFilms]

Love this video! Do you have a recoupment contract template available for download?

[@AlexiOuzas]

No, sorry!

[@silas1414]

Hi Alexi, fantastic Video. What sort of percentage share of the net profits (assuming 50/50 split with private investors) should a Producer expect of the remaining 50%, (say the Writer/Director had come to them with completed IP and the Producer was purely finance and production support), 10-20% seems to be the figure from my research. The remainder being split between the Director/Writer/Key Contributors backends, Co-Producer perhaps....does that sound about right in your experience? In terms of industry standards? Thanks!

[@AlexiOuzas]

The Producer will always keep the lion's share. Writers and Directors might get 5-10% of the Producer side and same with Actors, though agents prefer bonuses rather than net profit participation.

[@silas1414]

@@AlexiOuzas Hi Alexi, I recall you recommended approaching and setting up yourself and the Director as equals on a project, reflected with a 50/50 split of duties (finance/creative) and also a 50/50 split in ownership and profits, so neither is getting a greater share than the other. However, above you stated the Producer would keep the lion’s share. What am I missing? After key contributors' shares, wouldn’t it be a 50/50 split between the Producer and the Director of the remaining share, if using your suggested approach of Producer and Director being seen as equals on the project? I very much appreciate your insight as always.

[@AlexiOuzas]

@@silas1414 that's how I do it and in that case the Director is also a Producer. So I should have said Producer/s because there can be more than one.

[@Cylon1]

Great video, is the spreadsheet available to download?

[@AlexiOuzas]

Yep, added it to the description. Here it is as well: bit.ly/4bnVwfF

[@Hillsuchfilm]

Sorry, if I'm asking too much than I should. I'll drop the question here nonetheless. Another follow up question I have is that there's a difference between how much the film gross and how much the film is sold for? Correct me if I was wrong. For example, the film Farewell gross about 25m (17m local and 7m worldwide). But it was sold to A24 for 7m. So does that mean the profit should be calculated off the 7m? The investor will not see more money until the deal period is over, and being re-distributed in 10/15 years? Like even if the film made 200m in the box office, the filmmaker/ investors will not be financially gaining any extra so to speak?

[@AlexiOuzas]

If the film sold to A24 for a $7m advance. That advance goes towards gross receipts for the film. Then A24 will put up money to market the film, so when the $25m is made, it will recoup its $7m advance, then marketing and distribution costs, then it will split the rest with the producer. For the local release, it will split most rights 50/50. The international sales, its likely taking a 15-25% commission.

[@Hillsuchfilm]

@@AlexiOuzas Oh, righty. Got you. Thank you, Alexi!

[@jodief8371]

I think the SAFC main objective is to raise tourist profits not get returns on films.

[@AlexiOuzas]

Absolutely, a commercial ROI isn't the only (or even primary) objective for a funding agency

[@joshuamilesshelton]

What about the $100K bonus advance for crossing $1.3M at the box office? Does that get paid out down the waterfall? - Thanks for another great video Alexi!

[@AlexiOuzas]

Yes that would be paid by the distributor to the production company and make it's way down the waterfall

[@Met9171]

Yoh I don't know these terms used here"waterfall"-sounds like this about to all float down here

[@Hillsuchfilm]

Thank you, Alexi. Very insightful information. Great example with the Last Cab to Darwin. Could I make this example and see if I've gotten it remotely correct? I'm trying to figure out how much exactly an investor could get back for a 40K investment. Development investment: 40K Budget & secured : 5m Sales/ Gross : 25m (hypothetically) 120% Recoupment : 48K (guarantee) Net Profit: 25m (Sales) - 5m (Budget) ÷ 50% (Waterfall: no.1 - 6 items) = 10m 50/50 share: 10m ÷ 50% = 5m 40K Proportional share net profit: 0.8% x 5m = 40K So the investor put in 40K. He will basically get (120%) 8K + (50% profit share) 40K, if the film is gross or sold for 25m.

[@AlexiOuzas]

How did you calculate the 50% (Waterfall items no. 1-6)?

[@Hillsuchfilm]

@@AlexiOuzas The waterfall items: 1. Disbursement agent. 2. Sales agent. 3. Lenders. 4.Private investors recoupment. 5. Cast equity 6. Third-party equity. The 50% is a presumption that (1-6) will take up to 50% of the gross. I wonder what is the realistic cut from/for the waterfall payments in your opinion? Using the example of 5m picture gross 25m- How much will the 40K investor get?

[@AlexiOuzas]

​@@Hillsuchfilm for this example, let's say the $25m is the gross receipts from sales, not box office. The sales agent will take 15-25%, let's say it's 20% for this example, so $5m, leaving $20m. The investors will recoup the $5m budget @ 120%, being $6m and leaving us with $14m. You can skip 5&6 because we're assuming the investors have fully funded it. So then 50% goes to investors, being $7m. And if this investor put up $40k out of a $5m pool, that's 0.008. So they will receive $56k of the net profit plus their 120%, which is $48k, total is $104,000.

[@Hillsuchfilm]

@@AlexiOuzas This simplified version makes perfect sense. Thank you. So from this $104,000. That 40K investor will still be entitled to any profit if the film did well in the box office or foreign sales etc at 0.008 rate.

[@AlexiOuzas]

@@Hillsuchfilm yes, it's 0.8% of the net profit. You simply take the investment made by the investor and divide it by the total investment to get their share

[@dominicstclairstudios6324]

Whats the best way to market your film so imvestors can see a return

[@aashaaronstudios9328]

Wouldnt showing all that info based upon LC2D scare any investor away from coming anywhere near the film industry? 800K Invested - 8Mill BOFFICE neg 8K at end of theatre run? Now I guess if you are using that run as a Marketing tool the 0 return might boost TV/Streaming sales then hopfully things make it worth it but this looks like a disaster for the investors no matter how good a film may be? My real question is how did they hope to recoop investment on a "sad/drama" film about an elderly aussie" cab driver dying of cancer who travels across the desert to kill himself? I wouldnt imagine there would be a huge audience for that these days? And $4 Mill - sure i liked the film as a nice sunday arvo watch on streaming but I would have only gone to the cinema to watch it as research and not for its appeal - especially when something like Evil Dead Rise had a budget of approx 5mill (prob 20 mill advertising by studio later) but it returned I think 150-200Mill USD - my thought is lower your budget and make a more international targeted film

[@AlexiOuzas]

Box office fuels home ent/vod/anciliaries