In yesterday’s blog, Julian Richards – part film director, part film sales businessman – talked about the two horror films he made this year – Daddy’s Girl and Reborn.

In today’s blog, he puts on his sales agent hat…

JOHN: You direct movies but you also work as a sales agent, through your company Jinga Films. Surely film-making and sales are two different mind-sets.

JULIAN: It’s full of contradictions: sales and production. But it does improve your skills in terms of film-making and the tail doesn’t necessarily wag the dog. Making decisions from a sales point of view can be creative.

JOHN: Directing is a vocation and sales is a profession.

JULIAN: But I enjoy it as well, maybe because I have achieved a certain level of success with it, which was kind of unexpected. Also it provides me with a regular income and quite a degree of autonomy.

JOHN: You have said that horror films are better money-makers than thrillers.

JULIAN: Absolutely. Horror has a very loyal fan base. People don’t go and see a horror film because of the cast. They go to see the core ingredients of the genre. Whereas a thriller needs a central cast member that is going to draw the audience in.

There are basically three niches in the mainstream movie market – there’s horror, Faith and sports documentaries.

JOHN: And sex.

JULIAN: And sex. Porn.

JOHN: Why Faith?

JULIAN: Because there’s an awful lot of Christians out there who will watch a film that is Faith based. And not just Christians. Other religions as well. A film like The Shack.

JOHN: The Shack?

JULIAN: It is from a best-selling, Faith-based novel. I think it made something like $60 million in the US on something like a $20 million production.

JOHN: The rule-of-thumb used to be that the break-even point for a movie was 2½ times your negative cost.

JULIAN: Probably the same now. But another statistic is that it costs around $20 million to release a film theatrically in the US on 1,000 screens for the first week. So you can make a film for $100,000 but it is still going to cost $20 million to get it in theatres.

From a business and investment point of view, a lot of people talk about Box Office Gross… “Oh! I made a film for $100.000 and it made $25 million at the box office!” … But when you subtract $20 million for P&A – Prints and Advertising – then the whole idea of profit comes right down.

When somebody says to me: “The film made such-and-such, I am not interested in Box Office; I am interested in how much the film sold for to distributors via the sales agent. What really matters is the money that comes back to the sales agent from the distributor. That is the only money that ever comes back. The rest is consumed by marketing costs. What comes back is surprisingly small.

Right now, I think the sweet spot is around $300,000. That is what most horror films will sell for, outside of the studio system, no matter what the budget. So, if you make the film for $100,000, you are in profit. If you make it for $1 million, someone is losing a lot of money.

JOHN: There can be tax incentives.

JULIAN: Yes.. If you make a film in the UK, you make 25% back. If you shoot in Georgia in Eastern Europe, you get 25% back. But you can’t really make a film for $100,000 and expect it to compete in the market. What are you going to do? An anthology? A single location? It’s gonna look cheap and you are entering a very competitive market. There is too much product and the shelf space has shrunk enormously.

A few years ago, you might have been able to get a ‘found footage’ film or an anthology into that space. Now you maybe even need ‘cast’ because it’s become so competitive.

You need to find money that doesn’t need to be returned to the investor – which is usually some kind of tax deal or it’s…

JOHN: …money laundering.”

JULIAN: (LAUGHS) Well, there’s that and there’s a lot of that goes on.

JOHN: Can I print that?”

JULIAN: Yeah. I’ve been involved in a number of productions where that has been an issue. The question of it being ‘laundering’ or being ‘avoidance’ is another issue. There are a lot of grey areas with finance through the EIS and the SEIS and Sale & Leaseback. I have worked with producers who are now in prison, serving 9-year sentences for raising finance through tax incentive schemes that they thought were kosher but, retrospectively, ten years down the line, they have been the subject on an HMRC witch hunt. So it is scary.

JOHN: Elsewhere, you have said there is no real theatrical market for horror films in the UK, Germany and America. The market is really places like Vietnam.

JULIAN: Yeah. Latin America and South East Asia. The reason being that, in the past, these films never went to those territories, because the cost of a 35mm print was too expensive. Now that it has all been digitised, releasing a film theatrically in Vietnam or in Peru is achievable. It’s pretty cheap, apart from the licensing fee, which is a nightmare: they will charge a distributor $500 to use a digital projector which is really crushing for any independent film scenario.

JOHN: I’m surprised there is any theatrical distribution left. Surely everything gets pirated out of profit by Indonesian and Serbian and Western criminals?

JULIAN: Erm… You can buy yourself what they call a ‘black window’. In China, the Chinese distributors have to pay the pirates a sum of money to hold back the piracy of the film so they have a ‘black window’ to release their film.

JOHN: How long is the black window?

JULIAN: I don’t know. Probably about three months.

JOHN: I’m surprised the Chinese government tolerates piracy in such a sensitive cultural area as movies.

JULIAN: If you do it legitimately in China, you run into all sorts of problems: to do with censorship and the quota. You CAN get independent films through, but you are up against all the Hollywood studio films. If you are just doing transactional VOD, though, then all of those rules and regulations don’t apply in the same way, so it is possible to get a small, independent horror movie released in China.