08 April, 2013

Why NOT Kickstarter



With the success of the VERONICA MARS Kickstarter effort, fans everywhere are wondering why this isn’t being done more by more studios.

The answer may be this: because it is the wrong way to crowd fund studio projects.

Let me detail a few realities for anyone out there looking for a CHUCK (or fill in blank here) movie.

  1. Kickstarter and Amazon (which handles transactions) each take 5% off the top. That’s 10% of total donations gone in handling fees. So, if you need $10 million to make your movie and you raise $10 million, you only have 9 of those millions. Problem.
  2. Pledge rewards cost money. In the case of VERONICA MARS, that included renting out movie theaters and sending packages to thousands of donators. In the case of our fictional $10 million project (which I suspect the CHUCK movie would cost), that could be a considerable loss. Now you’re down to anywhere from $8 to $5 million of the original funds raised.
  3. Kickstarter eliminates a vast number of payment options due to Amazon’s tyrannical fear of PayPal. Your crowd funding project is missing out on millions of potential donators who could make your effort an enormous success.
  4. Projects are only funded if the goal is reached in the allotted time. If you miss the deadline by $1, then it isn’t funded and you start all over. That happens. It's insanity! There should be an option to make donations perpetual until the project is funded.
  5. Studios are less likely to do a public crowd fund for any project that will cost many millions to produce for fear that it will fail (and/or negative media coverage). The VERONIC MARS creators brought to Warner Brothers what they believed was a reasonable budget (WB agreed to cover marketing costs). Other projects could cost much more to deliver as a worthwhile movie (SERENITY II anyone?) and those efforts would need a more specific type of crowd funding model designed specifically for studio productions.
  6. Currently projects of this type are being looked at long after production ends. That means added overhead to kick things off again, including building sets and the like.

POSSIBLE SOLUTION
Studios, either individually or as a collective, could develop their own crowd funding model that is designed from the ground up to fit their unique needs. They have to eliminate the middle-men so that the handling fee losses at Kickstarter/Amazon are absorbed at the source. They also need to be able to accept a greater number of payment options from more areas around the world.

Once implemented, this type of studio run crowd funding model could be used for any number of projects.

Consider a world where a studio doesn’t pick up a TV pilot but posts it online and asks if anyone would be interested in seeing it go to series. Or at the point where a show is about to be cancelled due to low ratings, the studio offers fans a chance to crowd fund a movie or a final episode that wraps things up in a satisfying way before production is shut down.

POSSIBLE SOLUTION TAKE 2
A crowd funding site specific to TV and movie productions could be created by some enterprising individual familiar with the industry and with the drive, experience, and resources to pull off something like it. Someone like NerdMachine/NerdHQ creator Zachary Levi. The launch of such a site could also be used to kick-start a CHUCK movie crowd funding effort.

SIDE WORD TO FUTURE CROWD FUNDED VENTURES
Please, for the love of everything holy, unholy, and otherwise imagined, stop creating ridiculous and expensive rewards that end up being so cost-prohibitive that the funded project either never gets underway or is delayed indefinitely.  Or if the crowd fund initiator believes they are necessary for the venture to succeed, then at least make the required donation amount realistic. If you have to send out DVDs, t-shirts, vouchers, or rent out theaters around the country, then it is going to take money and a lot of time and personnel. Account for these things in your planning. Hire a project manager!

SocialTimes has a couple of articles about the trouble with Kickstarter projects either not being funded, or not delivering on time

16 comments:

  1. Loved the "watch the pilot, fund it if you like it" idea. It would be an opportunity for shows to start with fans, which means regular viewers, already. Oh, and as a project manager, thanks for the last bit of advice there. :)

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  2. totally agree with you on all points, why are you so smart?

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  3. "4. Projects are only funded if the goal is reached in the allotted time. If you miss the deadline by $1, then it isn’t funded and you start all over."

    I've always found that very odd, although I guess giving people a strict timeline forces them to commit when they might otherwise procrastinate it.

    "2. Pledge rewards cost money..."

    This is the craziest part of it to me. The amount of man-hours and money that will be required to deal with all the rewards for that VM movie stresses the hell out of me just thinking about it. It seems like it would take up half the freakin $2M they had as their goal to begin with.

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  4. I do think you raise some valid points and certainly $10 Million would be no where near enought to do serenity 2. The fiirst ones budget was more like $40 Million but I do think that a Chuck movie would be less. Zacs idea seems to concentrate on a web only production not a theatrical release. A large portion of the budget would be taken up with wages and with a budget that is so low I would assume that the primary actors are doing it for no pay or certtainly minimal pay but then you have the crew and i would assume that they have to get union minimum.
    I did not know that kickstarter effectively took %10 but it does not surprise me but it also would not surprise me if there are going to be more projects like these that in cases of over a certain amount eg $2mill that that percentage drops. However that is surely something that would be incorporated into a budget ie if you need $2mill you set a target of $2.25 mill.
    You aslo mention the cost of giving the rewards, but if you look down the rewards the things that need to be posted seem to be DVDs, Tshirts and Posters. Niow I am not saying that this will be cheap but I woud also think that it is not particularly expensive either. The other things are Digital downloads, PDF files, Answerphone messages and video messages that would not need to be physically posted. Other things include naming a character how much will that cost? being an extra again how much will that cost the production, tickets to premieres and parties this has to cost something as they are having 3 surely it would be cheeper to fly 3 lost of two people to LA than have three seperate events. (these events would probably fall under WBs distribution, and promotion budget however) You mention Hiring local cinemas for a private screeening but as that is for pledges of $500 and is for 51 people I hink that would still be profitable figuring about $200-300 dollars to hire the cinema at a non peek time eg mornings or on a cheep night. (in Uke we have cheep nights or even 2 for 1 nights)
    The one thing that i woould say against making a cinema film is that most of the backers will get a digital version of the film, and script, how many will also pay again to see it at the cinema along with all the related costs food, parking or transport costs.

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    1. The rewards all cost a ton of time and money to create, package, and ship. Some crowd funded projects have actually gone completely broke just trying to deliver the rewards.

      And as for renting out the theaters, they were doing it in several locations, not just one. How much do you think it costs to rent out a theater? It's in the thousands at least. It's just unnecessary cost and headaches.

      As for Zac's web only plan, I don't like that one. I have no interest in an episode of CHUCK that looks worse than season 5. We got our finale. I don't need a crappier version of another that bad. I want a CHUCK movie with a budget. I want a CHUCK movie that delivers something the show never could, or hadn't been able to deliver since season 2.

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    2. DVD's cost money to manufacture, package and ship plus when you sign them someone has to spend their time doing it. Even if people do it for free it takes a long time. I have seen rewards that look to cost about as much as the donation. There are other articles on the net talking about kickstarts that were funded and went bankrupt trying to deliver rewards. It is a problem for sure.

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  5. Thanks for writing this. I didn't know about the 10% handling fee.

    I have a vague sense of discomfort about a major corporation doing a crowdfunding project to begin with.

    When I have expressed this to others, they don't share this discomfort. They think of crowdfunding as paying for something ahead of time. But, when I see that average donations at the VM kickstarter is up in the $60-70 range, that's more than paying for a DVD.

    If the VM project actually makes a profit for WB, they keep any profits. The person donating what is similar to the price of a share of stock (Time Warner currently about $58 a share) basically gets a T-shirt or whatever.

    As I said, other fans don't seem to share this discomfort. Maybe it's the investor in me that would rather get a share of the profits--if there are any--if I'm going to donate more than the price of a DVD.

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    1. But VM is so far a testbed not a trend. They had a few thousand people very hungry for a movie. So they were willing to pay.

      I don't think any of them cared about the rewards. I believe they cared about the movie. Just like I think CHUCK fans would just want to donate to see a movie. The rewards are unnecessary. The reward is the movie.

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    2. I agree that VM is a test.

      I also agree that most fans just care about seeing the movie. When I talk about the concept of someone else possibly making profits from their "investment", they don't care. They just want the movie to be made.

      I've seen fans at "for profit" conventions pay exorbitant amounts for tickets just because they can sit in the front rows and get an autograph. The shows don't even have to be big hits. The passion of the fans is all that matters.

      I think at the higher donation levels, people did care about things like getting a phone message recorded by Kristin Bell.

      I remember Zac Levi auctioning off following someone on Twitter and he got thousands of dollars. Zac and Yvonne could get thousands in donations just by offering people to follow them on Twitter. There are people out there desperate for such things.

      Yes, people really want the movie, but something like that does make a difference to some people in how much they are willing to offer.

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    3. Those are cost effective ideas. Following someone costs nothing. And until someone doesn't provide rewards, we have no idea whether fans would give just to get the movie.

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  6. Because of the problems of #3 and #4 isn't there a way for fans to maybe donate towards a movie that isn't kickstarter?

    Maybe Zach Levi should look at one if there is.

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  7. I could see the first one as a possible solution, although I'm not sure how fans would feel about paying a studio to make a final episode or epilogue after they just cancelled the series. Or how they would feel about donating money toward a pilot that, if it doesn't meet the goal, might not wind up getting made into a series. Also, with the pilot idea, I think it's tough to judge a show solely off of one episode enough to justify donating a significant amount. There have been many great pilots where you might instantly know that you want to watch more, but there have also been other shows that have needed several episodes to develop and get things together. The Pop Culture Happy Hour podcast over on NPR discussed this issue also and they brought up some interesting points regarding the obligations show runners might feel towards fans story-wise with this type of crowd funded model. Definitely interesting to think about crowd funding someones creative vision and how that might change their perspective one what they're making, although that could probably be a separate post all on its own.

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    1. You wouldn't need to make 13 or 22 episodes of said pilot. It would depend on how much was funded. Stuff like that happens all the time for user created web content.

      As for your last, I actually wrote a kind of follow-up to this titled "The CHUCK Movie I Don't Want".

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    2. "The CHUCK Movie I Don't Want"

      I look forward to reading that. I've read comments from several fans who only want a Chuck movie if it meets their particular demands. One delusional fan even thinks the PTB should let fans write it.

      I wonder how much of the fervor in Chuck fandom for this movie involves a very specific vision for what they want to see and how pissed they'll get if they don't get it.

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  8. Interesting statistic from the numbers at the Kickstarter page. About 10% of the $5.3 million was collected from just 371 backers. Those are the people who donated $1000 or more for rewards like tickets to the premiere and afterparty, getting a job as an extra, and so forth. So, 0.4% of the people donating make up 10.3% of the money. (Based on my calculations)

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    1. It is paying to feel important. And people with means eat it up. That's why I believe you don't need to ship anything to anyone. Give them a credit in the movie. Let them into a Hollywood premiere party etc.

      These are actually more like traditional fundraising efforts in the biz but now going to the public for smaller individual investments as opposed to a smaller group for larger ones.

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