Building sustainable film businesses: the challenges for industry

Success factors for building 

sustainable film businesses

Section 3.0

The two sustainability definitions describe what 

success might look like for independent film 

businesses, but for many companies the question 

remains of how to achieve it. 

SPI has identified a number of common factors 

which have contributed to building individual 

successful film companies around the world. This is 

based on our experience in advising film production 

businesses, and supported by new research we have 

undertaken for this report, including interviews with 

owner/managers of successful film businesses in a 

number of different countries.

These factors are: 

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  The ability to share in downstream revenues 

generated by successful content

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  Diversified revenue streams across a number of 

activities, each providing different  

risk/return parameters

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  On-going relationships with successful talent

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  Strong, entrepreneurial leadership

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  Strong relationships with international 

business partners and networks, especially  

major, corporate players

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  Working within a public policy environment 

system that is supportive, reliable, predictable 

and consistent

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  Having more than a fair share of luck!

These are explored in greater detail in the  

following pages.

3.1

Sharing in downstream revenues 

generated by successful content

The single most important factor in determining a 

company’s potential for sustainability and growth 

is its ability to take a meaningful share of revenues 

generated by any successful content that it makes. 

This has a better chance of occurring  when the 

production company has greater leverage in 

negotiating financing for a project than has typically 

been the case for  independent film. 

Such leverage is likely to be based on a variety of 

business factors, such as having equity to invest  

in the project, or successfully securing the 

separation of particular rights within distribution  

or broadcaster deals. 

The producer’s negotiating position can also be 

affected by the public policy system within which 

it operates. Where the regulatory environment 

actively mandates greater IP ownership, or where 

public funding is designed to reward producers 

for box office success, or where terms of trade 

enable producers to take a superior recoupment 

position ahead of public funders and broadcasters, 

production companies can benefit from 

downstream revenue generation.

Crucially, many production incentive schemes – 

especially rebate style fiscal incentives – do not 

enable producers to take a greater share of revenues 

generated. Instead, rebate incentives reduce the 

costs of production, thereby reducing the risks for 

financiers. These schemes could, however, reward 

the producers of a successful project, and contribute 

to their sustainability, if they mandate that the 

incentive amount be treated as producer equity. 

Building sustainable film businesses:

the challenges for industry and government

10

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3.2

Achieving diversified revenue streams 

Of all the activities involved along the film value 

chain, development and production is the most 

high-risk. Successful production companies are able 

to mitigate this risk by engaging in a diversified 

range of activities with lower risk profiles, thereby 

ensuring a more stable revenue stream. 

Diversification might be horizontal (producing other 

forms of media such as television, commercials or 

new media) or vertical (engaging in film sales and 

distribution or providing post-production and other 

facilities and services). Ideally a company will have a 

portfolio of activities with a variety of different risk/

reward profiles. 

If companies are to meet the generic definition of 

sustainability – i.e. to be ‘investment ready’ – it is 

important that they can demonstrate some revenue 

streams which are ‘predictable’. If film development 

and production is the only business producers 

are in, it will be a huge challenge to convince an 

investor that the business is sustainable. 

3.3

On-going relationships with  

successful talent 

Production companies which have demonstrated 

on-going success have often benefited from long-

term relationships with successful creative talent, in 

particular with directors and writers. This appears to 

be a key factor in enabling a film business to build 

on prior achievements and strengthen its ability to 

get projects off the ground in future. 

The creative dynamic between, for example, a 

producer and director, can often become the 

core of a film business. This might be an exclusive 

relationship, a first-look agreement, or some 

other form of partnership. The obvious benefit to 

the production company is where the talent has 

become established and can therefore be expected 

to attract audiences. This factor is of particular 

importance to companies which have achieved 

sustainability in the ‘maintained stability’ definition.

In some cases successful production companies 

have been in partnership with key creative talent 

from the beginning of their career, and in a sense 

have benefited from being part of the process of a 

director or writer making a name for his or herself, 

strengthening the relationship even further. 

Additionally, working with familiar creatives on an 

on-going basis can help to establish a brand for a 

production company, giving stakeholders (public, 

private and even consumer) a sense of the kind of 

films it produces. 

Section 3.0  

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  Success factors for building sustainable 

                               film businesses

Building sustainable film businesses:

the challenges for industry and government

11

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