As the New Year rings in, countless options are placed on the proverbial plate for you filmmakers. With that mind, I thought today we’d discuss “options” of the motion picture kind. For those of you who are unfamiliar with what an option is, it’s basically when a producer/filmmaker leases the rights to an intellectual property for a specified period of time, for the purpose of selling the property to a third party before the “option” expires. If this seems a bit confusing, don’t worry. It makes more sense when it’s laid out, so here’s an example:
- Dolly wants $100,000 sale price for her screenplay.
- A producer/filmmaker pays Dolly $5,000 for a 12 month “option” term, against the $100,000 total script purchase price.
- During the “option term,” the producer/filmmaker holds exclusive rights to the intellectual property. This means if an entity wants to buy the project during the option term, they must purchase it from the holder of the option.
- The holder of the option can develop the project as he or she sees fit; with or without having the writer involved. Yes, this means they can have the script rewritten and or story changed as required by those entities interested in buying (don’t worry, most indie producers/filmmakers will try to work with the original writer to get the script in shape to sell).
- The producer/filmmaker must pay Dolly the balance of her script’s sale price ($95,000 in this scenario) before the end of the option, or all rights to her script revert back to Dolly.
- If the project goes unsold at the end of the option term, Dolly keeps the initial $5,000 given to her at the beginning of the option, and becomes free to option her script elsewhere.
There are several pluses and minuses for both the writer and the option holder who engage in options, so let’s go over some.
From The Writer’s Standpoint:
The Pluses (+)
- Money in hand. Options make the author(s) a paid writer(s).
- Agents and managers may take notice (if it’s a big option).
- A healthy option amount will raise the value of the writer.
- The writer’s other works may increase in value.
- Depending on the agreement, a healthy sized option may help the writer qualify or get closer to qualifying for the WGA.
The Minuses (–)
- The “money in hand” may be as little as $1.
- Writers lose control of their work during the option period.
- Most options do not result in a sale.
- Unless the option amount is substantial, agents and managers won’t take notice of the writer.
- Option holders acquire multiple options, so it’s difficult for writers to know how much time is being spent on their script.
From The Producer/Filmmaker Standpoint:
The Pluses (+)
- Acquiring the option on a “hot property,” will suddenly thrust you into the limelight with studios, agents, and talent.
- An option is the legal document needed to tie you to a property, so you can negotiate your involvement upon its sale.
- Investors may take you more seriously if you hold the rights to a property that peaks their interest.
- Optioning something “hot” may jumpstart your career.
- You will be seen as being “in the game” by other players.
The Minuses (–)
- Cost! Options cost money – a lot of money – all of which you will lose unless you sell the option within the option period.
- Most writers will be reluctant to making drastic changes to their script. Thus, should you feel drastic changes are needed, you’re going to have to spend even more money to hire another writer, with no guarantee the new writer will get you any closer to a sale than the first writer did.
- Submissions take time. Sending an optioned property to a major studio, Production Company or financing entity will take several weeks to several months before they decide on the fate of your submission. Thus, you may only be able to submit your optioned property to four or five places in one year’s time. That is, if you chose to submit your project to one place at a time.
- You can submit your property to several places at the same time, but doing so comes with its own risks. This is because if your submission doesn’t sell right away, companies will pass on it merely because none of their competitors want it. They’ll think, “I’m not going to make an offer on this script if nobody else is.” Should this happen, the companies will fall like dominos and your submission will die everywhere at once.
- Regardless of how much time, money and tireless effort you put into trying to sell the property during the option period, if you fail to do so, you lose the rights and the writer has no legal requirement to allow you to extend your option (unless such an extension is clearly offered in the initial option).
Aside from the pluses and minuses, here are a five more elements of motion picture options to consider:
The $1 Option
Don’t freak; if the right producer or filmmaker wants to option your property for $1, it may be worth it just to be tied to that person. Of course, the person wanting the $1 option would have to be a) highly respected and b) have deep contacts. Granting a $1 option to a novice producer/filmmaker is a huge mistake, because you’ll have little guarantee that they can deliver a sale if they have not done so before.
The 10% Option Rule
One general belief is that writers should receive an option price equal to 10% of the property’s total purchase price. However, it is highly unlikely for a writer to command such a payment, unless the writer has been sold and produced many times before. New writers almost never command a decent option price, much less 10% of the sale price.
Normal Option Prices
Most options for previously unsold writers range from $500-$2,500 per year, with some writers getting $5,000 or more.
Normal Option Term Lengths
One to two years, generally speaking. Some are shorter, (i.e. 6 months), but few are longer than 2 years unless a substantial amount of money was paid up front for the option, or invested into the project’s development.
The Re-Option
Most options have a built-in re-option, meaning that if the option holder pays the amount to secure the re-option before the end of the initial option term, then the contract extends to the date agreed upon in the initial option agreement.
Options are a vital element in developing motion pictures, thus understanding how they work will only help you filmmakers out there when the time comes for you to land one. I know we only covered the basics of “options” today, but next week we’ll discuss strategies on how to land an option (as a producer/filmmaker) through negotiating strategies, and what to put in your option contract (as a writer) to ensure your safety, sanity and relative harmony throughout the process.
Until next Tuesday, thanks for lending me your eyes!
Great article. There are a lot of great tips and advice in this piece.