Movie making can be a demanding task that requires large funding for excellence. With the Nigerian movie industry taking the world by storm and being the world’s 2nd largest movie-making industry, there exist the challenge of funding for the overall growth of the industry.
Funding a movie is the first step towards getting the dream or idea placed for the movie into reality. Movie financing has just recently become a huge business across the world today, with movie studios paying millions of dollars to employ movie financing experts. This article offers insight into the ten top ways you could fund a movie in Nigeria.
What's in this guide?
Top ten movie financing techniques
1. Film studio
This is by far the simplest way to finance a movie in Nigeria today. A film studio is an organization set up with the sole purpose of filmmaking. Most film studios fund movies of other creative moviemakers, especially notable ones.
Some examples of film studios in Nigeria are Inkblot, Ebonylife, Iroko TV productions, Royal Arts Academy and others. To have a film studio finance your movie would also mean allocating certain rights of the proceeds to the film studio.
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2. Pre-sales
Pre-sales is yet another very popular way movies can be financed in Nigeria. The pre-sale occurs when the rights to the movie have been sold to a movie distributor before the movie is created.
This invariably means the movie distributor buys all the rights to the movie and gets the proceeds from it; the money derived from the distribution house can then be used to create the movie.
Popular example of movie distribution companies that undertake the pre-sales movie financing technique in Nigeria is Netflix, FilmOne, Silverbird distribution and others.
3. Gap financing
Gap financing is similar to pre-sales financing, but in the case of gap financing a loan is taken out by the movie makers based on the unsold rights of the movie, which is often limited to the distribution rights.
Take, for instance, the movie X is to be created and the makers take $100 million on the distribution rights of the movie. The movie can then be made and the distribution rights sold to make the loan and the interest.
This style of financing is a high-risk financing method because compared to the pre-sale financing, the gap financing is yet to have the movie rights sold.
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4. Slate financing
Slate financing occurs when investment houses invest in a variety of movies in a film studio house with the hopes that one movie would sell and offer the investor a return on his earnings.
The slate financing offers leverage for investment houses to get into the risky entertainment business while offering protection for their money in the end. The spread of the money across varying movies mitigates the overall risks to be faced by investment houses in the long run.
5. Negative pickup deals
This system is similar to the pre-sales but with a bit of difference. Negative pickup deals are another popular film financing technique adopted by Nigerian movie producers.
In this film financing style, the movie makers get on a contract with the studio to purchase the entire rights to the movie after the movie has been created to specification.
Under this style, the studio doesn’t give out the money to the investor but rather lets the investor source for the investment, makes the movie and sells it off to the studio.
A prior contract between the movie maker and the studio is made so that the studio is bound to purchase the movie. With this agreement at hand, movie makers can seek out loans for the making of the movie through gap financing with the promise to pay.
6. Product placement
This occurs as a brand influencer arrangement. Movie lovers are some of the young and old people seeking excitement. Most times some movies tend to appeal to a target market of some famous brands, and these brands would be more than ready to invest in these movies for their products to be used all through them.
For instance, Apple invests in almost every romantic movie appealing to a young audience. Luxury items like Laurel and Lamborghini invest in movies that appeal to the rich and famous people.
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7. Grants
Grants occur in the form of a direct donation from the government or non-government organizations. The biggest giver of grants for movie financing is the government through the bank of industry.
In 2013, the federal government infused $2 million for movie financing into the economy. Also, the Lagos state government funded ‘The CEO’ movie through grants in 2009.
The government offers grants to attract movie tourism to the country through movies.
8. Actors buyout
Most times the actors in the movie can intend to buy out the rights to the movie from the movie makers or might what to be a partner in the production. This mostly occurs when the actor has been known for that role or is now attached to the character being played.
Nonetheless, for this to occur, most actors would first be cast in the movie before buying out the rights. This, therefore, leaves the movie makers with the job of sourcing other funding options for the movie.
9. Crowdfunding
Similar to grants, in this case, funding is raised through the general public using crowdfunding apps. Movie makers create crowdfunding accounts with platforms or simply use social media for the raising of funds for movies.
Before crowdfunding is successful, such movie financing groups but be persons known to the movie world. The cast and crew must also be experts in the industry, which would further influence the decisions of the general public.
10. Personal funds
Using personal funds is perhaps the most adopted means of movie financing in Nigeria today, almost 70% of movies in Nollywood are financed through the pool of personal funds of the movie makers.
Conclusion
The Nigerian movie industry has taken the global stage and is expected to grow even greater in the coming years. Financing has become an issue for movie production and is a strong complementation to having a standard movie in the long run. This article provides the top ten ways to finance a movie in Nigeria.
