Recent bankruptcy news includes a headline about industry icon MGM filing a prepackaged bankruptcy, which, relative to the movie industry, may carry as much as impact as the General Motors and Chrysler filings had in Detroit.
However, operating with excessive debt is not a new concept in the film industry. In fact, it's how most filmmakers get started. One has only to ask the nearest independent movie director how he's funding his latest effort and your likely to hear the words "Visa," "Mastercard" and "American Express."
Today, access to the credit market is slowly changing the small film market. Just a couple of years ago, aspiring directors and producers would have little fear about maxing out their credit cards because of the prospect of a major studio discovering their unpolished cinematic gem and putting it on screens across the country.
Hollywood is rife with stories of how the one-time small-time filmmaker thrived on friends' couches and ramen noodles while making their "dream project." With banks squashing credit limits and destroying all but one copy of the vault key, the creative collective in California is afraid that the recession is also hampering the future of film, not just the unemployment rate.
And, for those who took the credit card route to financing their films before the recession tsunami swept ashore, bankruptcy has become their best route back to dry land.
On the eve of the Sundance Film Festival, the crossroads of all things independent and Hollywood, little known movie makers are working harder than ever to see their dreams realized turned into record weekend box office gross. Thankfully, those behind the now red carpet event have found a way to deal with the recession's toll on the individual director by creating a new category called "Next" that is only for those films made on little to no budget. This year, six pictures were selected.
In 2003, two documentary filmmakers made it to Sundance with a piece about children and spelling bees. They used to the limit 14 different credit cards to pay for the travel and production that went into the movie. One of the filmmakers said in a CNN.com article, "Over the course of several months, we hit the road, using our credit cards to fund the project ... Then we'd come home between shooting the film, pay down some of the debt and resume shooting." Their film, once picked up by a major studio, made $6 million.
In this credit drought, some indie producers are turning to a new loan concept powered primarily by the Internet called "crowdfunding." One site in particular, www.indiegogo.com, allows filmmakers to propose their idea to whomever comes on to the site. They can include clips, story ideas and other production updates. Donations can be of just about any amount. Currently, the site boasts 2,300 projects and more than $200,000 in funds raised.
Crowdfunding has become a big hit with movie folks because it establishes a fan base early on that could eventually contribute marketability and in the end, butts in seats.
Still, the lack of credit has saved a lot of independent filmmakers from going too far into the hole. David Spaltro, a low-budget filmmaker, amassed $150,000 in debt on a total of 40 different credit cards.
"My credit score looks like a batting average. And that's being conservative," he said. The film was finished in 2008 and since then, he has been able to pay off a substantial amount of what he owes.
Wow, talk about a horror show.