Magic Dumpling Entertainment’s Tofu Boy is a model of a modern international co-production. To accompany our feature on funding independent animations in issue 155, we asked CEO Kevin Geiger how the studio found investors willing to put up the movie’s estimated $5 million budget. Read his top tips and the extended interview here…
As part of Indie Film Week we bring you this interview from Magic Dumpling Entertainment’s CEO Kevin Geiger who reveals how he poured in funds from his own pocket to get Tofu Boy started, before he found $5m worth of investment for the feature!
Tofu Boy is a modern Chinese spin on Pinocchio. It is planned as a $5m animated feature, plus accompanying TV series, social media and gaming apps. Find out how it all happened…
3D World: How do you find backers for a movie like Tofu Boy?
Kevin Geiger: We came out of the gate by introducing ourselves at [Italian animation festival] Cartoons on the Bay, and the rest of 2010 was occupied by similar opportunities.
We were also accepted into the project pitch sessions for the Shanghai International Film Festival, which was our big ‘coming out’ for potential investors in China and surrounding Asian territories.
I also participated in [US trade show] the American Film Market, and because I’m lucky enough to have executive-level contacts at most major studios, set up meetings with potential US distributors.
To fund Tofu Boy and its four other development projects, Magic Dumpling has entered negotiations with investors and distributors in the US, China and other Asian territories
3DW: What are those early discussions like?
KG: Financing is like dating: it’s a courtship process, and you have to find out who’s serious and who’s fishing around. We had to wade through a lot of people who came disguised as investors but were actually just casing the project, particularly in China.
Now we’re at the point where if everybody’s in, we can complete the financing : the next hurdle is getting all those puzzle pieces together. For example, US investors typically want to see a completion bond in place, but many Chinese investors are unfamiliar with the concept and question why you’re going to put up 2-4 per cent of your budget for insurance on the completion of the film.
3DW: What’s more important: the strength of your pitch, or that of your business plan?
KG: You can be great in the room, but at the end of the day, the business decisions are really what rule. The vast majority of films lose money, and there’s no guarantee of profit from quality. I’m not saying that quality is unimportant – it’s extremely important – but just because a film is good, there’s no guarantee it will do well.
Investors typically look for a slate of projects: just like a good mutual fund, they want a collection of properties that in the aggregate will give them a good return on their investment. That means you need a compelling business plan not only for your property but for your company. The research you put into leveraging ancillary revenue streams is very important to potential investors.
3DW: Once an investor is interested, how do you close the deal?
KG: You need to find their magic button, their tipping point. Of course, profit is paramount, but what else are you offering?
For example, a studio might be interested in a project to build their reputation in the industry. And there are some investors who are looking to have a little fun. If your budget is pocket change to them, relatively speaking, they often don’t mind investing in exchange for an executive producer credit and the chance to come by the studio and check out the work.
3DW: In order to get to that point, you need to be able to show investors the script and the concept art. How do you fund that development work?
KG: It’s a combination of angel investment, some from my own pocket, and work for hire. We do story work and design work for other companies where it’s just cash on the barrrel; and consulting worth, both for Chinese studios looking to become more international, and American companies who want to get involved in China but don’t know where to start.
One advantage of being in China is that we can work cheaper than almost anywhere in the world. Also, our executive salaries our deferred, so neither I nor my co-founders currently take anything other than the bare minimum we need to make rent. That focuses our start-up capital on our artistic talent and affords us the luxury of time to develop the project properly.
3DW: You mentioned ancillary revenue streams. Can you elaborate on that?
KG: Right from the start, there should be a co-ordinated effort to link the theatrical release of the film to other media.
In the case of Tofu Boy, we have a comprehensive ‘transmedia bible’ that shows how the storyline develops across three feature films, two seasons of a TV series and a variety of social media and gaming apps. As a producer, this exponentially compounds the planning you have to do, but it gives you a bigger sandbox to play in.
Merchandising is unfortunately a necessary evil: "It may sound like heresy, but it’s a reality. Given the huge cost of production, you’re lucky to break even from the theatrical or DVD release alone," admits CEO Kevin Geiger
3DW: Is advertising revenue a consideration for Tofu Boy?
KG: Yes, we’re talking to major internet portals in mainland China. But you have to be careful, because you don’t want to be crass and clutter up the [online presence] with a lot of ads that reduces the suspension of disbelief which is essential for any project. And in my mind, outright product placement has no place within animated content . It’s very easy for an animation project to date itself by including advertising.
3DW: What about merchandising? Is it a necessary evil?
KG: Yes. Given the huge cost of production, you’re lucky to break even from the theatrical or DVD release alone, so in essence, the feature is advertising for the toys. That may sound like heresy, but it’s a reality. I can picture readers looking at that line and wanting to puke, but it’s something you want to address rather than avoid. You see many people whose ‘merchandising plan’ is a PowerPoint slide that shows their character slapped onto T-shirts and coffee mugs, and that’s just mindless.
3DW: How important is it to find global distribution?
KG: As an indie producer, you need to think internationally. Europeans have been ahead of the curve on this due to geography, and Americans now see that in order to maximise profits, international distribution should no longer be treated as an extra, but as an essential. You need to consider not only the size of each territory, but how it has responded to similar projects in the past. For example, although India has 17-18 per cent of the world population, it represents about 1 per cent of our projected revenues from Tofu Boy, because India has traditionally not embraced Chinese-themed content.
3DW: Are there any ‘don’ts’ when it comes to negotiating funding?
KG: I think the only ‘don’t’ is: ‘Don’t rule anything out’. It’s very natural to be protective of your creation, but it’s a mistake to hold on too tightly. Sharing control can actually be to your benefit, because the advice an experienced distributor has to offer can be quite valuable.
The bottom line is that copyright is something you should actually want to cash in at some point : just to the right person, and for the right terms. We all hear horror stories about how the creators of Superman gave up the rights for $500, and that’s not what I’m advocating., The conversion of copyright to cash is what enables you to stay alive to do the next project. It’s wise to stay involved in terms of some percentage of profit share, but you have to be careful that participation isn’t structured in such a way that you’ll never see it.
Actually, there is another ‘don’t’: ‘Don’t do your own legal’. Make sure that you as a producer can handle the main talking points of the deal, but when it comes to the actual contract, get aqualified lawyer, preferably one who understands international IP law, to set eyes on the paper.
Tofu Boy is currently in the final stages of development and is entering into pre-production. The movie is planned for a cinematic release in Asia and a DVD release in the West.
Find out how you can get finiancial support for your very own CG movie, and meet the artists who have won funding and brought their own visions to a global audience
Killer tips for indie producers distilled from Kevin’s experiences in the US and China.
01 | Build brand awareness
If you aren’t based on an existing book or game, consider giving away teaser content for free.
02 | Don’t hide your development work
The best insurance against having your work stolen is to let the world know it’s yours from the start.
03 | Learn from your pitches
If something falls flat when you pitch it to investors, feed this back to the creative team.
04 | Get to know your potential investors
Are they serious about the project, or just fishing? What do they stand to gain by investing?
05 | Don’t just think in terms of animation
Investors usually invest in other industries too – many of which offer higher, faster rates of return.
06 | Partner with other studios
It enables you to scale up more quickly. Illumination Entertainment did this for Despicable Me.
07 | Think ‘transmedia’
Don’t think about TV or web spin-offs once the film becomes successful: plan these from the start.
08 | Take control of merchandising
It’s better to plan your tie-in products creatively than to be forced into incompatible directions.
09 | Negotiate internationally
Overseas distribution and co-productions are essentials, not optional extras.
10 | Get a good lawyer
Know enough about IP law to negotiate major deal points – then hand the contract over to the professionals.
Posted on Friday, April 27th, 2012 at 9:59 am under Features. You can subscribe to comments. You can leave a comment, or trackback from your own site.
Tags: 3D animation, funding, independent animations, independent CG shorts, independent films, Indie Film Week:, indie filmmakers, indie filmmaking, indie films, Kevin Geiger, Magic Dumpling Entertainment, Tofu Boy
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