Mary Aloe – Studio Development Production Deals
Mary Aloe recognizes that an in-house studio production will usually start as a development deal. As a filmmaker, you will first have to pitch the concept to a studio creative executive and then submit a synopsis of the project to the creative department. If the studio decides to finance the development, production, and the distribution of your project, then the studio will ultimately own most of the rights associated with your film.
Mary Aloe sheds light that when a studio gets involved in your project, you can expect a tough road ahead of you. The first phase will be a “Development Deal Memo,” which is a short form written contract between you and the studio. Mary Aloe finds that The Development Deal Memo will simply outline the agreement, salary, time schedules, screen credit, and percentage points. Most studios will give points of the net profit to unknown talent. Mary Aloe has found that by doing so, this gives you a false sense of security while ensuring the studio to make as much money as possible. Typically, net profit deals do not pay-off. Mary Aloe points out that studios tend to juggle financing for different projects and use creative financing so most films do not “make money” (at least, on paper). For example, a studio will put the advertising budget of your film and that of another film in your budget creating an inflated advertising cost for your film. This means that the studio not only recoups their 30 percent distribution fee, but also recoups the extra money spent on the advertising that was not associated with your film. Therefore, the film’s break-even point will be in flux enabling the studio to continue to generate money from your film. At the same time, their bookkeeping reveals a deficit to eliminate virtually any chance of the studio having to pay net profit participants their due, explains Mary Aloe.
The studio will make Development Deal Memo’s contingent on a “Step Deal.” A Step Deal is when the people working on the development of your project are paid incrementally as the project develops. In addition, the development work is reviewed and evaluated at each stage. This may sound great on the surface, but the real deal is that the studio has the right to stop development of your project at any given point.
However, a Step Deal offers you a few key advantages. Mary Aloe explains that you will be able to use the studio’s money, as well as the studio’s development companies. Because you are using these resources along with their professional script developer, you can ultimately make a bigger picture.
On the other hand, Step Deals offer many disadvantages. First, having Paramount actually pick up an unknown filmmaker’s project is very slim. Second, there is the “Hollywood System,” which is a relationship driven business. Third, there is theft! Mary Aloe knows that it is not uncommon for the studio steal your concept and have their development team work your idea in a new way. Therefore, you have to be careful with whom you share your ideas and to remember that scripts and treatments are copyrightable, but ideas are not copyrightable. Fourth, there is also the potential to lose your material to the studio if your project is delayed by the studio. Fifth, with Step Deals you can be fired at any stage, namely if you are not meeting the studio’s schedule or if your work is not up to their standards. Mary Aloe states that once you are fired, you lose the rights to your project unless you negotiated properly before-hand. You must also protect yourself and your ideas against slipping into “Studio Limbo” (i.e. having the studio purchase a perpetual option on your project). Finally, you may run into a situation of not having your film adequately developed. Mary Aloe recognizes that most studios tend to overbook the number of release pictures in a given year. If a studio picks up your film to meet their quota, then you can expect very quick development, production, and post-production time.
If you are seriously considering studio financing Mary Aloe highly recommends that you hire an experienced entertainment lawyer. A seasoned studio executive will have more leverage than you and having a good lawyer on your side will only improve your situation.