Sales can be made on a project at any point during the production process, from early development through to completion and delivery, and any time after that.
It is easiest for a distributor to buy a film or TV show once it has been completed and they can see the finished product. That way, they know exactly what they are getting, and there is much less risk involved.
However, if a project is regarded as a ‘hot property’ and many companies are interested in acquiring it, a distributor might try to get ahead of its competitors by buying it long before it is completed or even goes into production.
Any sale that is made before the finished film or TV show is ready to be viewed – and particularly one that is made before filming has even begun – is generally referred to as a ‘pre-sale’.
How Is A Pre-Sale Made?
A pre-sale is made based on the strengths and recognizable elements of the overall package.
A distributor will ‘pre-buy’ the rights to a project based on factors such as its:
Cast
Budget
Genre
Plot
Script
Source material (if it is based on a well-known story or book)
Other marketable elements
The more of these elements you have in place - and the stronger they are! - the more chance you have of making pre-sales.
However, without at least one or two of these elements, the sales agent doesn’t have much to sell. Pre-sales are almost never made on the strength of just a script alone.
The Risks
A pre-sale (or a ‘pre-buy’, depending which side of the deal you are on) represents a great amount of risk for a distributor.
Even though they might like the director, script, and cast, there is no guarantee that the final product will turn out as it is being described to them.
And we all know that, unfortunately, a great script or even a great package does not always become a great film or TV show if it is executed poorly.
The distributor will need to feel extremely confident that the production team can deliver the product that they are pitching, with the high levels of performances and production value that they have promised.
Director And Producers
Because the success of a pre-buy is so execution-dependent, the distributor will be evaluating the director and the producers particularly carefully.
They will study their track records, as well as the team around them. They will need to feel confident that the production team has good taste, understands what the market and its audiences are looking for, and can deliver a product that is high-quality, on time, and on budget.
This is why it can be difficult for first- or second-time directors to make pre-sales on their projects. Distributors are often afraid that they won’t be able to deliver on their promise, however talented they may seem.
The director is responsible for everything that ends up on the screen, so if they don't have a strong track record of delivering high-quality content that has made a profit or received acclaim in the past, it can be difficult to convince distributors to part with their money for a pre-sale.
Many will see this as too great a risk and will simply wait to see the finished product.
Playing Up Your Strengths
However, a great story, cast, or package can help offset certain team members’ inexperience.
If the director is a particularly exciting talent, or has an impressive directing reel or series of short films or commercials behind them, this can help significantly, particularly if they are surrounded by a strong and experienced team.
Your sales agent should be able to explain why this director is a safe and talented pair of hands for this project, even if they don’t have a long track record.
So, making pre-sales for a project helmed by an inexperienced director can be difficult, but it is definitely NOT impossible, and has been done many times before.
Lower Prices
Due to the risks associated with pre-sales, the MG price (or “acquisition fee”) will generally be lower than it would be for a regular sale once the finished product has been screened.
This is simple economics: where there is increased risk, the buyer is able to acquire the product for a lower amount.
Many distributors do not like to make pre-buys. Given the risks involved, they want to see a finished product to know exactly what they are buying, even if that makes it more competitive for them.
So, for a sales agent trying to make pre-sales, there will be fewer buyers in the market, and it can be more difficult to convince a distributor to take a chance on their project.
One way that they can convince them to take this chance and offset some of the risk is by offering it to them at a lower price, much closer to the ‘Take’ price than the ‘Ask’ price in that territory.
The Benefits to the Distributor
For a distributor that truly believes in the project and the people behind it, a pre-buy can be a great opportunity to:
Acquire the rights to a project for their territory ahead of their competitors, who may want to see the finished product before they commit
Acquire the rights to a project for a lower price than if they were to wait until the film or TV show is finished
If a distributor is willing to take the time to research the producers and director, and is willing to take on some of the risks associated with pre-buying, they can get a great deal here!
The Benefits to the Filmmakers
For filmmakers, pre-sales can be crucial to the financing and packaging of a project.
They provide legally-binding contracts that you can take to an investor or financier to cash-flow - a classic example of debt financing that can raise a big chunk of your production budget.
Pre-sales can also be used to trigger additional gap financing. A financier will look at these pre-sale contracts and feel confident that there is enough market interest in the project to lend you additional funding secured against the sales it will make once it is completed.
Pre-sales can also be extremely helpful when attracting equity financing. Investors love seeing that distributors across the world have already committed to the project. This confirms that it is commercially viable and will have distribution, as well as showing that the sales estimates accurately reflect the project’s value.
The Pre-Sale Market
So, given the risks involved, the market for pre-sales can be quite tough, especially for less-experienced filmmakers. Not every project is going to be able to make significant pre-sales, particularly ones without some very commercial and marketable elements already attached.
But… the market is ever-changing, and nothing is impossible!
As you keep adding elements to your project, reach out to sales agents and discuss the possibility of generating pre-sales. Sometimes, it just takes one element, one name, one actor to change your finance plan.
You never know what that one element might be that sparks their interest... and which could just get your next project greenlit!
Ricky Margolis has over 15 years' experience in the entertainment industry and has been involved in the finance, development, production, marketing, and/or distribution of over 30 titles.
To learn more about how to create the perfect business plan to get your next project financed and produced, check out his book HOW THE HELL... Do I Get My Film Financed: Book Two: SALES & DISTRIBUTION. Still want to know more about film & TV financing and production? You can find our series of books by clicking here.
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