Film Financing

Government Grants

        A government grant is when the government give money to a organization or company which allows them to finance their firm. It can range from story or project development to production funding or even foreign sales funding. The government provide funds in the hope that the production of a film in a particular area will boost the local economy not only by bringing the production crews but also by raising the profile of the region, which will help a specific are attract more tourists. When the government give out grants they do it in a hope that it will boost certain areas therefore they do not want the grant back otherwise there would be no point in give the grant.

Tax Schemes

        The individuals pay the producer a fee in order to obtain the tax deductions; this means that films that are being invested in by wealthy individuals whose money would otherwise be healthily taxed. In 2007 the United Kingdom government introduced the Producer's Tax Credit which results in a direct cash subsidy from the treasury to the film producer.

Debt Finance

        The primary way in which films are financed is through pre-sales. Pre-sales are when the film company sells the script and cast in advance so they have the funds to make the film. Pre-sales works by film companies purchasing big named actors which almost guarantee a consumer that they will get their money back with interest; this is why big named actors are important, as consumers will be more likely to take the risk. As a result, the borrower stands to make significantly more profit if a successful film is debt-financed.

Equity Finance

        Equity financing requires the filmmaker to sell interests in either the film or Film Company in exchange for the funding. If a filmmaker sells 50% of the corporate interest to an investor, for example, then the investor will lose his entire investment if the film is a complete failure, so investors want the films that they invest in to be a success so that make a ‘huge’ profit. Equity Finance in film is less of a risk than a Dept Finance because Dept Financing relies on everything being a success and investors can put 100% into it however Equity Finance you only get back the money you put in for instance if 10 % is put in 10 % is given back in profit.


Product Placement

        Product Placement is a form of advertising used in television and film. Product Placement is when an actor or actress will use a product of some sort and the film production company will be paid by a product to make their label visible to their viewers gaining them custom, examples of this would be the use of Aston Martin Cars in James Bond films or Nissan Cars in 2 Fast 2 Furious. Sportswear and drinks labels seem to use product placement a lot as viewers are able to see their product in use. Product placement within film is an investment for brands trying to reach a niche audience. There are strong reasons for investors to expect that film product placement will increase consumer awareness of a particular brand.

Wayne's World Product Placement Below :