IP assets and film finance - a primer on standard practices in the U.S

This paper offers a primer on the basic economics of film finance and standard practices in the U.S. movie industry. It takes the U.S. movie industry as a case in point to study how excess risk and uncertainty around financing new projects are processed and managed by private sector entities and what market-based solutions are developed to prevent market failure. The paper summarizes the most common types of financial deals on the ground and reoccurring funding sources for new content production and distribution in the past twenty years. In particular, this research discusses the prominent role of intellectual property (IP) in financial transactions in the audiovisual sector. Research findings are based on a series of semi-structured interviews, commissioned expert memoranda, and a dedicated panel held with selected industry experts in November 2022. In addition, we conduct exploratory analysis and provide descriptive evidence on credit and intangible collateral use in the industry using data from Uniform Commercial Code (UCC) filings and official IP registers. In light of the digital transformation of the audiovisual sector, the research documents industry trends and the most recent changes in the financing of U.S. film. We conclude with an outline of generic policy options for an upgrade of the financing environment in the U.S. and beyond.