It appears the impending recession is already starting to dry up funding for film projects. We hear wind of this dilemma thanks to an article over at the fabled caves of Yahoo. Below is an except from the piece.
As the U.S. economy faces a swirl of negative forces, the film-financing world is set to endure its own perfect storm. And like the economy, things could get a lot worse before they get better. Most evidently, skittish equity investors who once thought nothing of dropping a few million into a project are becoming a lot tighter with their money, while the overall number of equity investors is starting to drop. Almost as dramatic is the change in debt financing, the means by which much of a film’s budget is covered. Money is either too expensive — interest rates have soared from the neighborhood of 10% to 20% for many films — or impossible to get in the first place.
But with the debt market prohibitive, equity investors tight-fisted and foreign sales languishing, film-finance pipelines are starting to close up.
Still, some who note the crowded release schedule of the past few years say a film-financing shakeout may be a welcome development. “I think as we go into a tougher economy, some films won’t get made and probably shouldn’t get made,” Elwes said. As a recession comes, consumers will have less money to spend at the movies — and soon, perhaps, fewer movies to spend money on.
It’s a shame that some projects are going to have a tough time getting off the ground because of a finance drought. I can only imagine how frustrating it would be to have all systems go and then you just sit on the lot because you can’t afford the gas that makes the machine run. With luck, some insanely wealthy film enthusiast will step up to the plate and start writing checks out of love for the medium. Billy Gates – I’m looking at you.
A lack of funds may not be the worst of dilemmas however. I agree with Mr. Elwes that some films shouldn’t be made and perhaps a dry up of funding will thin out the amount of crap that has been flung at us over the past few years. The number of films released in a year has also been climbing higher and higher; I would welcome less releases on a weekly basis as this gives us the opportunity to focus on all the films that are released.
Sadly, some of the worst films make the most money and we may see the axe fall on a ton of cool lower budget motion pictures and indy films that tell stories from off the beaten path. My desire to see all the “run of the mill” dreck get axed may be a pipe dream, and in the long run it may be the visionaries with different perspectives that get hit the hardest.
International friends, what are your thoughts? Do you think the funding issues facing the movie industry will be a hidden blessing or a curse?
