A Research On Influencing Factors Of Film Financing From The Value Creation Perspective

Under the knowledge economy background, much attention has been paid to the industries which represent a country’s soft power. The film industry which provides the cultural content and has the potential to foster sustainable economy with independent national identity becomes a part of the industrialization process in creative sectors. This article focuses on the influencing factors of film financing from a value creation perspective and classifies those factors into three dimensions. On this basis, a generalized structure of film financing has been established. All analyzes are based on the descriptions and comparisons of film industries in different countries.Financing is defined as activities to raise funds which will help to create value in the future. Film as a cultural output, reflects the contradiction between individual value judgments and the social values, which brings demand uncertainty. Thus film production often has two forms, supply-oriented with arts activities and demand-oriented with commercial activities. In addition, film as a content output, the diversity and uniqueness means that the film production tends to diseconomies of scale. Thus, whether the value of films can be realized depends on the cultural backgrounds and the operations. Cultural backgrounds determine the recognition of the potential value in films while the operations try to transform the potential value into future income.Therefore, researching on film financing from value creation perspective involves three aspects, the nature of product, modes of production and supply and the risk control mechanism. Market-oriented production makes American film industry a large business filled with genre films and dominated by the six major companies. Genre film, corporate production system and the mega-entertainment supply chain help American film industry to achieve economies of scale and scope. The value realization system of American films includes theatrical release, expanding issue windows (TV, Internet, video products etc.), film library and derivatives (games, books, theme parks etc.). Producer system, film insurance, copyright valuation system and other risk control mechanism have also been established in American film industry. Completion of an American film whether mainstream commercial films or independent involves various funds resources from large Film and Television Groups, banks, private investment, advertisers, and foreign groups. Obviously, the American film industry has formed a multi-layered financing structure.However, on the other side of the commercial American film industry is the French film industry labeled by government intervention, flexible and independent production. Government funding and guarantee system has been setup to protect the diversity of artistic creation. The government also assigned the film investment obligations to television industries. French films’revenues constitute the domestic box office, television sales, audio products as well as overseas theatrical income. These finally lead to a simple financing structure involving funds from producers, television stations and government.Chinese film industry has been on its way to advanced industrialization and cross-media integration. Although there are various forms of funds including private investment, bank credit and commercial credit, the investment activities on films reflect a polarization pattern. The reason lies in the contradictions between the author film production system and market-oriented capital operation, between a single value creation mode and the diversified sources of funding, also between the high investment risk and the lack of risk control mechanisms. Based on the above analysis, the factors which affect film financing are classified in three dimensions,(1) product positioning,(2) production and supply modes and (3) risk control system. Furthermore, a generalized financing structure has been built on the supply (source of funding) and demand (budget) conceptions. The different combinations of the above factors bring out various film operations which finally lead to different means of financing.