Here’s a quick transcript from the seminar arranged today by Finnanimation. Sorry about any spelling mistakes etc. If you have any questions just post them in the comments!
Attending the financing seminar by Finnanimation. Going to tweet using the hashtag #anifinance.
Film Fund ceo Krohn gives a welcome. Says that in the finnish animation scene does not suffer from big egos =)
Finnanimation’s promoter @LiisaVee gives a welcome. Facts on FA: 50 member companies from freelancers to studios. Running 6 yrs.
Liisa: FA’s mission is to Share info, Promote internationally, Influence educational policies and Develop funding models.
Anima Vitae’s ceo Petteri Pasanen continues with “the size of the animation market & the possibilities for animation”.
Petteri: Be careful how you look at the numbers when assessing the market. Especially in the field of animation.
Petteri: 2008 world market US158 billion, 2012 estimate US249 billion. Most segments grow at 10-15% annually.
Petteri: North America is the biggest market, Asia passed Europe in 2007. 80% of market is art/entertainment, 20% industrial.
Petteri: TV & movies request growing at 20%, 3D grows fastest of the techniques.
Petteri: Animation travels well, in France 45% of the AV-exports is animation, even though only 4% of film sector.
Petteri: Animation is a born global business. There’s also no language barriers, no star actor cult.
Petteri: Short term anim. is more expensive than live-action, but has a larger & longer audience potential. Niche is big as well.
Petteri: What if finnish animation could get to 0,1% of the world market? There’s room for much improvement.
Petteri: In 2008 numbers it would be US92 million in tv- animation, or US158 million of total business. Something to think about…
Juliane Schulze from Peacefulfish presents on Animated films as Investment Target.
Juliane: PFF has 3 client groups: Production sector, Policymakers & Digital distribution platforms. Founded in 2000.
Juliane: Film prod value chain presented for investors present. Covering dev/prod/distrib.
Juliane: Price of rights rises along the value chain: Dev: low, Prod phase: high, Distrib: very high.
Juliane: Film exploitation chain same as live action. Theatre -> 4-12 mo later dvd/vod -> 6-18mo paytv -> 6-24 mo freetv.
Juliane: Free tv reruns go on for live action 3-5yrs, for anim 7-12 yrs so there’s more time to exploit ancillaries!
Juliane: Covering film financing in Europe in general (mediaPlus, nat/regional funds, tax incentives, presales, banks, etc).
Juliane: 2 kinds of tax incentives: Tax shelters (BEL, UK, FRA, ITA) and Tax credits (cash rebate) (CZ, FRA GER; HUN, NOR etc).
Juliane: Why tax credits? Studies show that 1 tax rebate euro translates to 2-2,5 euros invested on location.
Juliane: Most banks have stopped providing cash flow loans for film projects because it wasn’t a good business for them.
Juliane: 3rd party guarantees help access bank loans and minimize risks. 3 guarantees (Fra/Spa/Ger) introduced.
Juliane: Specialisd funds for animation: Film funds for gap financing, tax driven funds in Fra/Bel, business driven mainly in UK.
Juliane: UK business driven funds: Ingenious, Goldcrest, Matador among others.
Juliane: New funds: COFANIM film fund (French), available through established FR comp’s Futurikon, Millimages, Moonscoop & Xilam.
Juliane: International Animation Fund (IAF): MIPTV 2010 launch, for Singaporean coproducers, Fremantle takes int’ll sales.
Juliane: P&A (print & advertisement) funds: Global Cinema Distribution, Incentive Filmed Entertainment, European subsidy funds.
Juliane: P&A fund criteria: Covers release prints (physical neg) & advertisement costs, typically funded 2 mo preceding theatre.
Juliane: P&A takes 10% return on principal, 2% of all profits from domestic revenue, priority over all payments, 3 mo payback.
Juliane: Film as investment: small investment, identified market, undercapitalised, growing sector, soft money shares risk.
Juliane: Disadvantages: prototype business (no templates), project based, high risk, intangible assets, unstable regulation.
Juliane: Business angel invests early, regionally and in companies only. 20k-1mioEur, typical 200k-500kEur -> wants to involved.
Juliane: VC 2nd-3rd stage investments w/ proven business model, invest in comp only, active int’ll, larger deals (>5mEur).
Juliane: VC has no real focus on content, waiting for european media market to mature.
Juliane: What should investors consider? Prefer a slate over single films, look at int’ll potential, who else is on board?
Juliane: Investor has several entry points: Slate of 1 prod comp, combined slates with many prod comps, corporate investment etc.
Juliane: Investors should look at 1) Track record -> can they deliver? 2) management team -> will the producer deliver?
Juliane: Investor should look at busin.plan: HOW will the producer deliver? Including creative package, distrib, target, ROI etc.
Juliane: For corp financing investors should check balance sheets 2-3 yrs, assets and realistic ROI.
Juliane: PFF found that what helps is a working relationship btw investor and producer. They encourage transparency & openness.
Juliane: PFF has created an investment forum, which will come to Helsinki this year, check www.media-deals.org.
Tanu-Matti Tuominen from Mediatonic – the game and media brand investment fund.
TMT: Talks about the difficulty most companies face: If you sell your IPR for the prod budget you end up with zilch.
TMT: If you sell your IPR beforehand you’re in the project biz, if you keep it you’re in the produt biz.
TMT: As companies you should focus on building your catalogue.
TMT: When making films it’s not about projects. Your goal isn’t using up the budget, it’s shipping the finished film!
TMT: Many traditional investors/funding bodies still have big difficulties in assessing a company’s skills & assets.
TMT: Example from FIN gaming sector: Was worth 90mEur last year, should have been 350mEur if it had been fully exploited.
Lisa Hanen from MTV3 Media talks about licensing & merchandising.
LH: A very crucial part of Licensing&Merchandising is the marketing of the products.
LH: Licensing is giving your L&M rights to a third party. You can chop up your IPR into parts just as small as you like.
LH: A successful L&M plan enhances your brand’s/animation’s reputation & sales. L&M also opens doors to sponsoring.
LH: Most producers dont have the cash to do L&M themselves. She urges producers to consider a good experienced licensing partner.
LH: Most usual ways for L&M exploitations in Finland: DVD’s, books, toys, games, music, services&events.
LH: Content is always king. Good content makes the precious brand. An unknown or boring brand doesn’t make for good L&M
LH: L&M should be planned from the get-go. What char’s/themes etc can be part of your L&M? Be careful of your contracts re: L&M!
LH: Broadcasters & distributors always want some L&M, so don’t sell out everything to your friend’s companies…
LH: L&M takes time, so don’t sweat it. A new project isn’t easy to license.
LH: If you’re not swimming in cash, you might need a licensing partner. Also a good animator isn’t always a L&M guru.
LH: Always make written contracts, detailing who gets what, which territories, what products etc.
LH: Before writing contracts shop around which L&M player offers you what. Don’t take the first offer! What’s their investment?
LH: Don’t license what you don’t own! Be careful with the small print and that you don’t sell anything you already licensed.
LH: Protect your IPR. Do what you can to make sure you own and protect your project. (I think it’s not so straight forward).
LH: Don’t be afraid of L&M. If you need a lawyer, hire one, but don’t be so afraid of the jargon you end up not doing L&M!
Petri Kemppinen from the Finnish Film Fund wraps up the seminar with his view of the finnish animation sector.
PK: Finnish film fund gives 13% of it’s budget to script writing and development, which is exceptionally high in Europe.
PK sees finnish animation companies as industrious and is thankful of the co-operation he sees.
PK: Small advertisement for the Cross Media Content For Kids by the Nordisk film & tv fund. 6 projects will be awarded 40kEur.
That’s all for the seminar, hope there was something of use for you. If you have any questions, tweet me!
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