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The Economics of Film Festivals


These days it seems like film festivals are a dime a dozen. From the glitzy red carpet of the Cannes festival to the casual vibe at Sundance, film festivals are a chance to premiere new films, generate buzz and get distribution deals. Some big-name directors got their start with independent films at festivals. How do these filmmakers make money and how do the festivals themselves turn a profit? Let’s a take a deeper dive.

Consider working with a financial advisor as you explore the possibility of investing in film or movie ventures.

What Makes a Film Festival

The tradition of holding film festivals to showcase works of cinematic art has its origins in the 1930s. It was Italian fascist dictator Benito Mussolini who called for the first-ever film festival, held in Venice in 1932. Mussolini wanted to compete with Hollywood’s cultural power and to raise Italy’s profile as a film powerhouse.

The film festival in the French Riviera city of Cannes, originally slated to take place in 1939, was to be a counterweight to the Venice festival. The film festival at Cannes was designed to celebrate free expression and the films of non-fascist nations. It had to wait until after the end of WWII, though.

It was in the post-war period that film festivals really got going, with a reboot of the Venice festival, the launch of the Locarno festival and the first official Cannes festival. In the 1950s, the media coverage of famous attendees, particularly at Cannes, established the film festival as a cultural touchstone.

These days, there are film festivals of all sizes. Some are famous for premiering films, while others mostly play films that have already premiered at other festivals. For critics, filmmakers and actors, the film festival circuit is now a year-round affair.

Film festivals hire programmers to select the films that will screen at the festival. In some cases, filmmakers can submit films directly to a festival, but often festival programming depends on the informal networking between directors and programmers.

Every year’s Oscar winner premieres at a film festival. If you keep an eye on the news coming out of festivals you’ll get a good idea of which films are destined to be on every critic’s shortlist.

How Filmmakers Make Money

The Economics of Film Festivals

The short answer to the question of how filmmakers make money from film festivals is that they often don’t. In fact, in some cases they lose money because they have to pay to submit their films. Not every filmmaker receives a screening fee if his or her film is selected.

Instead, the value of participating in a film festival lies in the opportunity to get distribution deals. Distributors and studio executives attend festivals looking for talent. They’re either looking for films to pick up and distribute or for directors to hire for future projects. Because film festivals provide both networking opportunities and publicity, they don’t always have to pay filmmakers for the right to screen films.

At festivals, directors pitch producers on their films, producers sell those films to distributors and distributors sell the lucky films to cinema chains. In addition to getting a distribution deal on their festival film or a deal on a new film, filmmakers stand to make money from a festival if they win a prize.

If your film is accepted to a festival, you have a chance of winning prize money. For example, the Cannes Prize Un Certain Regard is designed for young filmmakers and comes with a 30,000-euro award. The winner in the Un Certain Regard category also gets a grant to assist with film distribution.

Still, film festivals represent a lot of money invested into the films that are submitted and screened. Investing in films isn’t the same as investing in an index fund. There’s a lot more risk involved and a lot more expertise needed.

Certain festivals have better distribution stats than others. If your film is selected to screen at Sundance you can feel pretty good about your chances of getting a distribution deal. The same doesn’t hold for smaller, more under-the-radar festivals.

Showing a film at a festival is essentially a “loss leader,” a sale for less than something (in this case a film) is worth, designed to drum up interest and stimulate future sales. Needless to say, this strategy doesn’t always pay off.

And even if your film gets a distribution deal it may never be released. Sometimes studios will buy films at festivals and then sit on them, keeping them in the vault for release at a later date – or never.

If you don’t get a distribution deal from one festival you can always take your film to more festivals and try your luck with a new crowd. The screening fee you get from a regional festival will be greater if your film premiered at Sundance or SXSW.

How Film Festivals Make Money

Festivals have several ways of making money. For one thing, they sell tickets. For another, they solicit corporate sponsorship. Sponsoring a film festival provides major brand enhancement. The bigger the festival, the more competition there is for sponsorship rights.

Cannes festival partners have been Chopard, Nestle and HP. On its sponsorship page, the festival touts its social media presence and attendees. That’s a lot of brand visibility.

At Cannes, brands can also sponsor gifts given to celebrities in gifting suites. A company can have its name on the wall of the gifting suite and have celebrities pose with branded gifts. Also, festivals tend to generate plenty of buzz in the traditional media and on social media.

The Future of Festivals

There’s talk of film festivals as an alternative distribution circuit for films. So, instead of a film going to a festival to find a distributor, in this new model the festivals are the distributors. That’s partly due to the fact that there are so many festivals, and partly a response to the demands of the market.

For independent films that are never going to be a big box office smash, a round on the film festival circuit may never lead to a distribution deal in cinema chains. Instead, a film could make money from a combination of generating press at festivals and making money from alternative distribution at museums, cultural centers, smaller festivals and other events.

Filmmakers whose films have generated buzz from festivals can make money from speaker fees as well. Another reason that film festivals seem to be here to stay is that they make money for the towns and cities that host the festivals. If you live in a place that’s hosting a film festival, you could always try renting a room on Airbnb to claim your piece of the film festival economy.

Bottom Line

The Economics of Film Festivals

For some filmmakers, bringing a prestigious film to a festival is a stepping stone to serious Hollywood money. For example, Colin Trevorrow made the independent film Safety Not Guaranteed for $750,000. He brought the film to Sundance where he and the film caught the eye of Hollywood studio bigwigs. He was tapped to direct Jurassic World, with a budget of $150 million.

Investment Tips

  • A financial advisor can help you with questions beyond film festivals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Use our no-cost investment calculator to get a quick estimate of how your investments will grow over time.

Photo credit: © Carlos Gomez Bové, © EdStock, © YaskoCreative