The Economics of Film Financing: An Introduction

Chapter
Part of the Media Business and Innovation book series (MEDIA)

Abstract

This chapter tries to analyse the main issues in film financing. It explains the structure of film project financing and the issues stemming from the uniqueness of each project, the ephemeral nature of the product and the unequal distribution of expenses on the timeline. It explores the role of risk in studio decisions and in financing arrangements, explaining why it is that sequels are the “holy grail” of movie studios and why they are not co-financed. It then discusses state subsidies to movies. It analyses the difference between expense-based subsidies as offered in the USA and quality-based subsidies model used in many other countries and argues that the latter may be inferior due to agency issues. It concludes with a brief discussion of future developments.

Keywords

Agency problem Co-financing Expense-based subsidies Film finance Film project financing Lemons problem Project Quality-based subsidies Risk reduction Sequels Stars State subsidies to movies 

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Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Sy Syms School of BusinessYeshiva UniversityNew YorkUSA

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