Hooray For Hollywood! Running Out Of Options

As it's been a while both since I both (a) subjected you all to my Tinsel  Town insights; and (b) talked about some of the building-blocks of Hollywood business practices, I figured now was a good time to kill two birds with one stone.

Today, executives in Hollywood compete desperately with one another in the desire to sound more like Economist articles than old Army Archerd columns -- their "impressive metrics" replacing yesteryear's "boffo box-office".

In many ways, it's not so much a culture-clash as it is the more traditional game of Hollywood players indulging in rounds of make-believe -- in this case, entertainment as a business just like any other.

The fallacy of this reveals itself most potently any time the heads of these divisions make forays into other arenas and are, often, soundly thrashed:

A film may "bomb", but the reasons for the failure are usually hard to quantify simply. When an entire line of SUVs won't brake properly, you can bet there was a memo sent up the chain from somewhere in R&D or modeling foretelling this exact issue ahead of time.

It's this surety that Hollywood has been aching after for more than a hundred years.

When you design and build a toaster, you know if it works or not.

Right away.

Not after a $250-million dollar marketing campaign falls flat on its face during opening weekend.

The closest model the studios have been able to ape seems to be the chain-restaurant formula. 

Much like the Cheesecake Factory, each of the remaining studios goes through an endless series of contortions in order to delivery high-calorie meals, big on serving size but lacking flavor so as to alienate as few as possible.

(The soul-searching this can cause for even those loyal to the tentpole machinery seems to be the gist of Jon Favreau's recent Chef, a sweet little slice -- I thought -- of post-Cowboys & Aliens self-reflection.)

But even as the Industry tries to sound more and more like a proper "division" within their respective multi-national hierarchies, some terms remain the same on both sides of the studio gates.

My personal favorite?

The "option", the business equivalent of "kind of pregnant".

Within the parameters of Hollywood studio-level deal-making, nothing sums up
the CYA-ness of the town like an option. It seems to say: 

"Hey, we REALLY believe in this project! So long as someone else does, you know?"

Put simply, an option deal allows the studio to "rent" a script from a WGA writer.

Instead of paying the full purchase price in exchange for owning the material outright, universally and in perpetuity, the studio is able to have the exclusive right -- the option -- to produce the material for a mere 10% of that purchase price (which, under the newly ratified 2014 Minimum
Bargaining Agreement, could be as little as $4,550 dollars) for a period of up to 18 months.

At the end of the 18 months, if the studio hasn't paid the purchase price, there are two ways it can go: the option lapses, all rights for the optioned draft reverting back to the screenwriter; or they can execute a second (or third) option which is usually a little more money than the
first option period charged.

Speaking as a studio hack, I love options -- all the potential and none of the  risk of buying something. You get to see if anyone who matters to your boss is interested and -- if not -- you haven't blown six figures on a hunch.

But speaking as a screenwriter... I also love options and for the same reason.

Because while you can make a crap-load of money from a studio script sale, the truth is this: they are not going to make your movie.

That's not me being a cynic, that's just stats.

The studios, traditionally, take on about 150 new projects each fiscal year. 

Of those, maybe 1% ever get made.

ONE. PERCENT.

Would you want to be that .5 of a film?

And while it used to be that an optioned project that wasn't picked up had a certain stigma attached to it, I don't think that's remotely the case anymore.

Now when the project isn't picked up and the rights revert back to the  screenwriter, they have the opportunity to find a new financier who might be interested. Or to go after the actor or actress that THEY think the studio should have gone after instead.

Is it an uphill slog? Duh. Welcome to Hollywood.

But what about a non-studio deal, something in the wider independent world?

Glad you asked.

I think an option for a non-studio project is an even BETTER deal for all involved.

Here's why:

When a writer is writing "on spec", they are not just creating a script that they own, they are creating the underlying copyright. No one may have paid for them to do the writing, but they managed to create true value anyway.

Producers, on the other hand, are usually looking for material, not creating it. But they are doing that "on spec" as well. So unless they are independently wealthy -- and, to be sure, a few are -- they are working for themselves for free without the asset creation inherent in the work of a writer.

The only person who has it rougher than a writer or an actor, imo, is an independent producer.

Which is why they CARE.

That producer on the lot, the one who used to be an exec at that studio?

I can't tell you what they care about. 

It might be their dinner reservations. 

It might be keeping your project from a rival they hate or the IPO shares  they're angling for from this start-up they're "advising" on the side.

Whatever it is, it's probably not your project. 

If anything, it's whichever project the person who took their job when they left likes at the moment.

The independent producer?

They care about your project.

Why?

Because the only thing they have is their time and, unlike money, it is fully a non-replenishable resource. So they are not about to waste it. If they want to be involved in your project, it means they believe in your project.

Now, do you believe in them? Yes? Good! Then sign an option deal with them.

Without the Guild MBA to run roughshod over you (assuming you are a non-Guild writer), you and your producer can make the option terms anything you feel comfortable with.

One dollar for one year is pretty common.

If you have the resources, I'd recommend using an entertainment attorney to draft the actual agreement.

Sure, James Cameron sold the right to produce to Gale Anne Hurd -- for a dollar and the right to direct -- on a napkin, but they were also on their way to getting married.

And divorced.

Any independent producer worth their salt is going to want to see you have committed -- and binding -- faith in them, via an option agreement.

Oh. You're working with one who says you guys "don't need one"? Hm...

"But I really, like, trust them."

Great! In that case... have them sign an option agreement.

Remember, kids, it's not  "show friends", it's "show business".

It's better for you. It's better for them. Everybody knows where they stand and hurt feelings are less likely down the road if things don't work out.

Or, especially, if they do.