OPINION: Crowd Funding Expendables 3

There’s a lot of talk on launching a third installment of the Expendables franchise. That’s all well and good, but Hollywood learned a long time ago that as more sequels are made, the box office returns generally go down. A third installment will more than likely have a $100 million budget, and to ensure money is available, the producers and executives may want to look to crowd funding to get the production off the ground.

It’s not uncommon for indie filmmakers to go to sites like Kickstarter and Indiegogo to fund their projects, and many have been successful in getting their movie off the ground.

This past year I became an Associate Producer for the movie TimeScapes, by Tom Lowe. After discovering the great time-lapse work being done by the director, I knew I wanted to see more of his work, and wanted to see his project hit the big screen. Instead of contacting him, negotiating donations, cutting checks, and so on, I simply made a (large) donation to the cause. The project was completed, I got to see the fruits of Mr. Lowe’s labor pay off, and everyone was happy.

There’s no argument that TimeScapes was a true independent project, but can one scale up the idea for a major motion picture like Expendables 3?

THE MATHS

One of the best places to answer the question is to look to the previous two films and do some math.

The Expendables, released in 2010, cost an estimated $80 million, and brought in $103 million in the U.S. ($171 million internationally). Thirty-seven percent of the $274 million made world wide came from U.S. audiences.

The Expendables 2, released in 2012, cost an estimated $100 million, and brought in $70 million domestically ($102 million internationally). With a world wide take of $172 million, The Expendables 2 is still a money maker, and shows that there is still money to be made from fans.

It’s interesting to note, at the time of this writing, the world wide box office take for the sequel is half of the original, while the percentage of funds from U.S. audiences increased to 40%.

The National Association of Theater Owners (NATO) notes that the national average price for movie theater tickets is $7.93. That means that roughly 13,054,499 went to see the first film, and 8,827,238 saw the second – a drop of 32%. If that trend were constant the number of domestic viewers that would see a third installment of the franchise then drops to 6,179,066. But let’s be more realistic, and cut the audience in half and say 4.4 million people will see the movie.

There’s talk that Sylvester Stallone and the other producers are approaching everyone from Clint Eastwood to Linda Hamilton to be in the next film, which means the budget isn’t going to drop. With a $100 million budget, seeking funding from the crowd (and presuming 4.4 million would jump on the fundraising campaign), would mean each person would need to donate an average of $22.00 to meet the target goal.

THE RISKS

Anytime a movie studio gives the green light to a movie, it is taking a big risk. The movie may not even make back its budget, and be a colossal flop. Remember Dylan Dog? On paper it had the makings of being a hit, but ended up only making $4.4 million world wide. If there was only some way of gauging audience interest and willingness to see the work ahead of time before committing the money…

Kickstarter is tight lipped when it comes to the number of failed campaigns that cross its site, but good researchers like Jeanne Pi, Seth Godin, and Professor Ethan Mollick have made some interesting insights about failed Kickstarter projects. The most interesting bit of data that has come out of their observations indicate that as the size of the project and the funding needed increases, so does the chance of success. Most Kickstarter projects rarely exceed $100,000, but those that do only have a 7% chance of success. For a studio looking for $100 million, it seems the odds are stacked against them from the start.

However, Seth Godin pointed out that “Kickstarter campaigns fail when the tribe of people who believe in the idea is too small.” That’s a great observation, and for a studio that is trying to launch a new movie, the sell through/promotion of the project would need to be huge. It’s also interesting to note that as publicity for the campaign increases, so does the chance for success. For The Expendables 3 audiences are already familiar with the concept and brand, and though publicity would still need to occur, it may not need to be pushed as hard.

The nice thing about Kickstarter is that if the project doesn’t meet its goal, no money is exchanged. Sure there may be egg on the face of the studio or the producers if their project fails, but the blunder is on paper and in publicity circles, and not a $100 million mistake that could cost stock prices to stumble, or cause people to lose jobs. Plus, the studio now has a better understanding of what audiences want to see.

In a sense, crowd funding on a microscale is already occurring in the movie industry. Movie goers are already purchasing tickets early – sometimes months in advance – so they can see the flick on opening weekend. Why not extend that early ticket purchase by a year and give those “ticket” holders a variety of rewards while they wait?

THE REWARDS

The key to successfully crowd funding Expendable 3 would be in the rewards system. As indicated above, the average amount needed per viewer is roughly $22, which is far more than the cost of a normal ticket. Beyond getting a free ticket to the movie, what other rewards could the studios look to to entice fans to contribute to the cause?

It’s become common practice to include a digital version of the movie with the release of the feature on DVD, so at the very least, giving contributors a free digital download code would make sense. As the contribution amount increases so to would the promotional schwag offered. The producers could even offer a Meet the Cast event, and attend the premiere for those donating hundreds of thousands of dollars in addition to an associate producer credit. Considering contributors to Kickstarter campaigns come mostly from the West Coast (Los Angeles, San Francisco, Seattle and Portland), the studio could create a stretch goal to keep the production in California instead of sending it overseas. The sky is the limit, but as Mr. Godin points out, it needs to have some value for the contributor.

THE PAYOFF

If successful, a crowd funded Expendibles 3 movie could have a huge payoff for the studios. The publicity alone could very easily increase movie goer attendance by those that didn’t contribute to the campaign, thus increasing the bottom line. For theater owners, increased traffic in the theater means more concessions being sold, which gives them more funding to enhance their facility. For fans, they get to see Stallone and crew blow stuff up.

I’m not sure an untested movie would be successful if it sought funding from the general public, and I’m certainly not suggesting that the entire movie industry go to crowd funding to generate new content, as there are some gems you simply have to take a risk on (Buckaroo Banzai, Big Trouble in Little China, Memento).

However, in the case of The Expendables, audiences already know what to expect, have background knowledge of current and future actors and their characters, and a fan base has been established. In a day when dollars are being divvied between a variety of different projects, the studios could continue a franchises with a smaller out of pocket expense, create future funding for untested films, and continue to feed a fan base that wants to see more. Never leave money on the table, but don’t flush it down the toilet. For The Expendables 3, seeking crowd funding may be the best way to get the project off the drawing board and in front of the camera.