The Preliminary Study on Film Financing Mechanism and Contract Framework--A Case of Hollywood Model

• Main Authors: Chen-Tin Wu, 吳承庭
• Other Authors: 陳思寬
• Format: Others
• Language: zh-TW
• Published: 2005
• Online Access: http://ndltd.ncl.edu.tw/handle/67564794032066448962

碩士 === 國立臺灣大學 === 國際企業學研究所 === 93 === This research regards Hollywood film contract and financing mechanism as main discussion point. I expect this exploratory studying can find out the issue worth further discussing, and take Hollywood operation pattern as benchmark to make proposals to Taiwan movie industry. Based on the foundation mode of film production of the special project, from inputting key elements to gathering professionals, all the factors for producing movies temporarily crowd together by single market transaction. Additionally, neither the company nor the formal mechanism of interior organization maintains the cooperative relationship and integrates the resources; however, only various contracts and agreements are able to handle those. Because of the high uncertainty of movie demand, the film production becomes a very risky business. In the initial stage of the special project, every participant faces such high uncertainty that enhances the complexity of contract design and financing. There’re several characteristics of the production, product itself, and the demand: the production needs the combination of many complementary skills; the special project team consists of many members with different motivations and preferences; the movie demand is extremely uncertain. On account of these characteristics, the transactions and contracts of each movie production stage-from obtaining the story content, developing the play, assembling the project team, financing, to issuing the film- become more complicated. While some contract problems can be solved through mechanism design, others must be solved by the negotiation. Therefore, in the process of movie creation, we not only need the abilities of legislation and contract design, but well performance of our negotiator, especially the producer who plays a very important role in the special project. The Harvard Professor Mihir A. Desai divided the main risks these films faced into three different kinds: completion risk, performance risk, and financial risk. And these risks make movie industry become the business with high risks. This research sums up and lies in four main kinds of mechanisms in Hollywood to reduce the investment risk, to offer more plural channel and to attract more capital into this industry: completion bond, utilize intangible asset as pledge, project-based investment, reducing risks by investing portfolio. Finally, I think we can find the contract negotiation and agreement discussion are important activities in the production in the industry with frequently non-repeated trade through Holly’s operation way. And move is a business with high risks. So, the producer plays a significant role in this industry. Investment incentive is very important for the industry. As for Taiwan, movie industry lacks producers and investment incentive.