business Starting a commercial video production company

To follow up on my recent posts with others, I have been wanting to get into the movie business for over a decade, and I've been all talk and no lights, camera, action. Anyway, I was told a few years ago that commercials would be a good way to break into the business, and Jerry Bruckheimer did that, and companies like Filmation also broke into the business that way.

I was struggling at that time from the Great Recession, and it has taken this long to get over it. But my business is now doing nicely, so I have time to look at my dream again. I may also be looking to buy a second business in a few years, and my research into the video commercial business shows that it can provide stable earnings.

I will give some thoughts on business and invite discussion.

1) First and foremost, a business, like any human endeavour, must begin and end with people. Get the right cast and crew in place, and get the right type of customers. If you, the entrepreneur, have issues, like lack of experience or, even worse, anger management and drug abuse, then you are the wrong type and must become the right type of person. I have dealt with such people in my practice, so I have learned a great deal about not only business but life in general.

2) Your business plan must go through a stress test, as in put the idea through various tough situations, to ensure it can survive. If it cannot deal with problems, then it would be a lousy plan. Related to this are the cash flow issues - always, always make sure you have the funding, because a business will drain you initially.

3) Someone just starting out in his career should work for a few years at various companies - first in a large one, then a small one, to get the breath of experience. Then perhaps get some courses in business before going out. A senior professional like me, however, should not do that, because I already have a business. Someone like me should take over a company that is established and add value to it - if not that, then get experienced cast and crew who know what they're doing and can give the proper advice. Again, the quality of the people make the difference, so make sure they not only know what they're doing but are also reliable as people.

4) The larger the business or group of businesses, the more likely the senior management will not be able to do the actual work, because they have so many things to deal with. Lucille Ball apparently had that issue, as Desilu got bigger with Mannix and other TV shows - she had difficulty being the executive producer and being the star of "The Lucy Show". That would also be an issue for me, because I got into this to indulge in my creative urges, not just to run a business. But I'll cross that bridge if I ever get to it.

I look forward to your comments.
 
To start the ball rolling, perhaps you could describe a few aspects of what you would consider a "win". In your mind, does a win consist of purely financial success, or do you have a certain vision of a creative achievement you wish to pursue? Is the film to make money, or is the money to make film? You've given me a vague idea of that answer in the past, but more clarity could be helpful in shaping the discussion.

In example, you discussed Buck Rogers at one point. Would you say that creating a serial sci fi show is the apex goal? How long is your timeline for the overall game? If you made a single show that broke even, and reached 10 million people, would you be happy? Do you have original ideas you want to get out into the world, and is that a priority? How would you balance financial gain with creative achievement, as in, "3/10 creative, 7/10 financial"

I ask these specific questions because the nature of your overall goals, and your priorities, is very significant in calculating an approach vector.
 
First of all, I won't be doing anything for about five years, because I already have a thriving practice.

With that in mind, if I was to go into a second business, the company must have a minimum annual revenue of $1 million, preferably $1.5 million, and I must have a skill set that so I can grow the revenue (and profit) to $2 million and more. If it was just a normal video commercial production company, then I would like the normal rate of return plus a bit. IOW, if the normal return for that industry was 10%, I would like 12%.

But I want to go into film not just to build a business but to indulge in my creative impulses. I am open to just a normal company, but my real goal would be to be a science fiction writer-EP. And, as my username suggests, I want to be a mogul. Since I have a lucrative career, I don't want to make a career change to another industry, and this is going to be all or nothing - either I become a mogul or I crash. If I can't make it as a science-fiction mogul, that would be fine, because I have done almost everything else I want in life. I can be happy just printing out copies of my writing.

Clear as mud?
 
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sfoster

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It takes a lot of practice and experience to get good at this stuff and you haven't even started the clock yet on experience.
A typical person just wants to make a living, they would be happy with 200-300k a year making commercials and you're talking about starting off 5x that in year one .. or is there some sort of long term plan to build up to this million dollar business?

How would you hit the ground running so fast.
In a lot of ways I relate to you bc I have been here a long time too at IT and I have barely done anything, just a small handful of films.

But I am getting better with each one, and i think maybe in 7 or 8 years more i could be good enough to attempt a feature.
Maybe if I really really focus i could get there in 4. but it takes a lot of practice and experience.
 
SFoster,

That is the million-dollar question. At this stage of my life, it's not cost-effective to start from the beginning, unless I want a career change, which I don't. I already have a good career, and, if I give that up to go into film, I would be giving up everything that I have worked for. The trick, then, is to find a means to advance myself without sacrificing my current business.

How it often works, for a senior professional, is that he partners with a producer or director who already has an established business, or he buys it from someone who is retiring, and he puts a experienced producer or director in charge, while he manages the overall situation. There are no hard-and-fast rules, but that's the general way to go.
 

sfoster

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SFoster,

That is the million-dollar question. At this stage of my life, it's not cost-effective to start from the beginning, unless I want a career change, which I don't. I already have a good career, and, if I give that up to go into film, I would be giving up everything that I have worked for. The trick, then, is to find a means to advance myself without sacrificing my current business.

How it often works, for a senior professional, is that he partners with a producer or director who already has an established business, or he buys it from someone who is retiring, and he puts a experienced producer or director in charge, while he manages the overall situation. There are no hard-and-fast rules, but that's the general way to go.
So you want to be a suit with no experience injecting creative ideas into a film?
That sounds exactly like how disasters like Wild Wild West are born.

You could just, ya know.. start as a hobby?
 
A good example would be Disney buying Lucasfilm and Marvel - both companies have proven concepts, and Disney would not want to start off from scratch. By the same token, Disney would not want to deal with any company with revenues of less than $10 million, because they are just too small.

As for starting as a hobby, there are serious business and tax obstacles to that approach. Yes, I know that many successful people go to Hollywood and fail, but that's the problem of outsiders being stuck between the proverbial rock and hard place.
 

sfoster

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A good example would be Disney buying Lucasfilm and Marvel - both companies have proven concepts, and Disney would not want to start off from scratch. By the same token, Disney would not want to deal with any company with revenues of less than $10 million, because they are just too small.

As for starting as a hobby, there are serious business and tax obstacles to that approach. Yes, I know that many successful people go to Hollywood and fail, but that's the problem of outsiders being stuck between the proverbial rock and hard place.
Disney made snow white.. the first animated feature film ever.. they have been in the movie business for a very long time.
Here is an example... squaresoft super successful game company with huge fanbase made a movie final fantasy...

they were not a movie company, they were a game company. and they thought they could inject their creative ideas into a movie with no experience.
bankrupted the entire company. they are now squareenix cause they had to sell themselves to enix.
 
Absolutely. No one knows anything, and you must expect to lose everything, which means I may never fulfill my dream. And I've decided also to know that, if I don't become a mogul, at least I have had one successful career.
 
BTW, that example proves my point - they have to buy a studio with an established talent pool to make their movie, and, yes, those in one area should often not venture into another area without help from experienced professionals.
 
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First of all, I won't be doing anything for about five years, because I already have a thriving practice.

With that in mind, if I was to go into a second business, the company must have a minimum annual revenue of $1 million, preferably $1.5 million, and I must have a skill set that so I can grow the revenue (and profit) to $2 million and more. If it was just a normal video commercial production company, then I would like the normal rate of return plus a bit. IOW, if the normal return for that industry was 10%, I would like 12%.

But I want to go into film not just to build a business but to indulge in my creative impulses. I am open to just a normal company, but my real goal would be to be a science fiction writer-EP. And, as my username suggests, I want to be a mogul. Since I have a lucrative career, I don't want to make a career change to another industry, and this is going to be all or nothing - either I become a mogul or I crash. If I can't make it as a science-fiction mogul, that would be fine, because I have done almost everything else I want in life. I can be happy just printing out copies of my writing.

Clear as mud?
Do you have $25 mil to invest? 'cause you're going to need it. But even if you do, you stand zero chance unless you hire a connected entertainment professional.
The smart way to go is to become a hands-on Executive Producer and learn the trade from the top down. Half a million gets you up and running and in the middle of things. After that, it's in your hands.
Either way, the future is now. When you're serious, let me know.
 
Do you have $25 mil to invest? 'cause you're going to need it. But even if you do, you stand zero chance unless you hire a connected entertainment professional.
The smart way to go is to become a hands-on Executive Producer and learn the trade from the top down. Half a million gets you up and running and in the middle of things. After that, it's in your hands.
Either way, the future is now. When you're serious, let me know.

And you would be the professional to talk to, when I have the money to spend?
 
Sorry it's taken me a while to respond, I've been busy over the holidays with family stuff.

I also wanted to take a minute to think about your situation and goals, so I could try to provide some answers that actually made sense. Sci fi production is especially complex, since it has all of the issues you'll face with normal production, plus the added issues of very advanced post workflow.

Something basic to keep in mind with any film project is that success is always relative to overhead. It may sound too simple to mention, but you would be shocked by the number of times even experienced producers have had otherwise successful endeavors shut down over budgeting issues.

In the simplest terms, a 4 star movie that costs 100 million and earns 90 is a failure, and a 1 star movie that costs 30 million and makes back 50 is a success. This problem is a much higher risk for sci fi producers, because if you're not handling your vfx budget and setup exceptionally well, cost overruns are extremely common, for a variety of legitimate reasons. Keep in mind that that 100 million dollar film was probably supposed to cost 60 million, and would have made it, but then a guy with no understanding of viz ordered huge vfx scenes at crunch rates.

The main cause of this is the common practice of simply throwing money at Viz departments after the entire show is locked in, rather than developing in parallel. I won't explain it all now, but expense in Viz is extremely unintuitive, and hiring an expensive mercenary viz team and then telling them to just "get X done" has been the one single decision that bankrupted numerous productions. I can show you a drastically better way to handle this aspect, if the conversation gets that far. This is a situation where an oz of prevention is worth a pound of cure.

Right now technology, and the market, are changing dramatically. I don't think anyone would advise you to wait 5 years to start. Saturation is not a major issue for sci fi right now, but it is for almost everything else, and it's just a matter of a few years time.

We may have similar long term goals that have overlap that would offer synergistic advantages, so I'd be interested in chatting with you, as there may be some opportunity for mutual benefit. I noticed upon returning that you've written several more threads, so let me go and read all of those before continuing.
 
I had to think about it for a while, and I think I see a way that we could help each other. How well do you understand the concepts of vertical integration, synergy, and similar? I know these are basic business concepts, but I have to ask, because I've sometimes encountered confusion.

In the simplest possible terms, I need a small angel investor to help grow my operation, and in time you will need a VFX infrastructure. You can hire mercs at the time of need, but with planning and infrastructure, built up in advance, you could achieve the same scenes in your future productions for cents on the dollar. I know where I'm going to be 3 years from now, and what my costs will be like, and you would be shocked by the price difference between long term planning and in house viz versus buying commercial dev time. It would likely be the difference between a win and loose situation. I worked on a film where the director moved the entire operation to a state with tax incentives, and shaved off 20% or so of the total cost. For indie filmmakers, that kind of thing can easily be the difference between success and failure.

I've read through your example scenes, and conversations, and I believe that on the infrastructure end, there is a lot of overlap between what my organization is doing, and what you'll need done when you go into production.

Do yourself a favor, and call up a VFX house, describe a scene to them, or better yet a few, and get their pricing. Then talk to me about the same scenes and hear my pitch. Every scene is bespoke, but there are common elements of development that are static, and you can be drastically more efficient if you take on those challenges with a well organized, longer term mindset.

I believe I can offer you an option that will help accomplish two of your goals simultaneously. A mogul is basically a film investor, running a diversified portfolio of projects, which is the smart way to go with film investment. I could offer a percentage ownership in an up and coming production company, an inexpensive first piece for your portfolio. For your own films, you will need affordable and well equipped VFX studio, which is central to any sci fi project. I could provide that as well, given some time and development resources. This is the vertical integration aspect I was mentioning.

If you'd like to discuss it, you can message me.
 
Thinking aloud... So, you are changing your career path. You put a stop to what you have done so far when you get hand full of money and to jump to a new career, leaving behind all your expertise you earned so far? That doesn't make any sense to me. You may think of generating side income with what you already have. Even if its a peanut, it may save a day down the line. Dealing with multiple businesses is added advantage in many ways.

Not worried about the failure? That's great, and stupid too. Especially when you want to invest $1.5M. Instead, you may think of starting with $0.25M, to dirty your hands. You gain so much of experience in dealing with situations and people. Also that gives an edge over others, when you are dealing with taking over or talking to pros.
 
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