The Key to Control for Producers, Content Creators and Filmmakers: Exercising Film Option Rights
For professionals working in the film industry, you may likely have come across a popular form of IP called ‘Film Option’. This is quite popular internationally but less so in Nigeria and Africa. As the demand for quality ‘black’ content grows and the need to tell more authentic African stories simultaneously, we predict a boom in the demand for Film Options. But for the benefit of those new to this area, let us first of all address the pertinent question. What exactly is an option? An option is a contractual agreement that grants a producer or studio or third party, the exclusive right to purchase the rights to a book, screenplay, or another creative property within a specific period.[1]
This option essentially reserves the work for the producer, allowing them to explore its potential for adaptation without committing to the full purchase of the rights upfront.[2] During this option period, the producer or studio can develop the property into a movie, series, documentary, franchise or any other cinematic model, which may include creating a script, securing financing, attaching key talents like directors or actors, and conducting market research to assess the viability of the project.[3] If the producer decides to move forward, they ‘exercise the option’, meaning they proceed with purchasing the full rights and interests that allow for production and distribution. Exercising option rights involves various legal and strategic steps, such as negotiating the purchase price and securing all necessary permissions to adapt the work. It often comes after a period of evaluation of the project’s potential to determine both creative success and commercial viability of the project once the option is exercised, the producer or studio gains full control over the creative work’s adaptation, thus securing the intellectual properties such as trademark, creative assets and copyrights for cinematic or television adaptation.
A. The Option Agreement
An Option Agreement is a contract in which the original owner or author of the work, typically a writer or rights holder, grants the Producer temporary rights to develop their work for a film or television adaptation.[4] In reality, an option period may last between six to twenty-four months.[5] During this option period, the Producer focuses on key development tasks, such as securing financing, attracting top-tier talent, and developing the screenplay or other creative materials.
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B. Key elements of the option agreement include:
- Option Fee: A non-refundable payment made to the rights holder or author for reserving the exclusive rights to the Producer for an agreed period known as the Option Period.[6]
- Option Period: The duration for which the Producer holds exclusive rights to develop the property.
- Purchase Price: The agreed amount the producer will pay for the full rights to adapt the work if the option is exercised.
- Renewal of Option: If the producer requires more time for development, they may negotiate an extension of the option period for an additional fee.
- Reversion of Rights: If the option is not exercised within the agreed period, the rights revert to the original owner, and the producer loses the exclusive claim.[7]
- Rights Granted: Defines the scope of rights being optioned, such as film, television, or digital adaptations.
- Assignment: Specifies if the producer can transfer or assign the option rights to a third party.
- Warranties and Representations: Assurances from the rights holder on the originality, ownership, and clearance of the property.
- Approval Rights: Indicates any creative approvals or controls retained by the original rights holder over the adaptation process.
- Payment Terms: Details the timing and structure of option payments, as well as the final purchase price if the option is exercised.
- Copyright Notice and Credit: Outlines how the original creator will be credited in the adaptation and any copyright notices required.
- Termination Clause: Specifies conditions under which either party can terminate the agreement during the option period.
- Indemnity: Protects the producer from any legal claims related to ownership or infringement issues tied to the original work.
- Dispute Resolution: Defines the method for handling disputes, often through arbitration or mediation, to avoid court litigation.
C. Exercising the Option
Exercising the right to the option occurs when the producer decides to proceed with the project, typically after securing the necessary resources and determining that the project is viable.[8] This step activates the purchase of the full rights, allowing the producer to adapt and distribute the work as a film or series.[9] Upon exercising the option, the rights holder is paid the agreed-upon purchase price, and the producer or studio assumes full control of the creative work, including the rights to produce, distribute, and profit from the adaptation.[10]
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D. Considerations in Exercising Option Rights
Before exercising an option, a Producer must be confident in several key areas:
- Financial Viability: The producer must ensure that they can secure adequate funding to produce the film. This may be through venture capital high net worth individuals or even crowdfunding. Financing from studios usually comes before securing the distribution channels. Without financial backing, the project will never see the light of day. Finding the right Executive PRODUCER is critical. However, the EP wants to ensure his or her investment is safe equally. Securing a film option is an essential aspect of the film financing process. Your ability to secure funding hinges on the IP.
- Creative Alignment: The producer needs to believe that the original story can be successfully adapted into a compelling screenplay that fits within the film or television format. This involves evaluating whether the themes, characters, and narrative can be effectively translated to a visual medium to capture audience interest.
- Market Demand: The producer will also assess current industry trends and the success of similar adaptations to gauge the potential audience for the project. If the genre is in demand and similar works have been successful, it increases the likelihood of commercial success.
Only when financial viability, creative potential, and market demand are aligned will a producer typically decide to exercise the option and proceed with production.
E. Failure to Exercise the Option
If the producer fails to exercise the option within the option period, the rights revert to the original owner, and the producer forfeits the exclusive claim. In some cases, if the producer needs additional time for development, they may negotiate an extension of the option period by paying an additional fee. However, if the option is not extended or exercised, the project is essentially abandoned.[11]
F. Option vs. Purchase Rights
It is crucial to understand that holding an option does not grant the producer the full rights to produce the property into a film. It only gives the producer the exclusive right to purchase the adaptation rights within a specified period. The full rights to adapt and distribute the work are only obtained once the option is exercised, and the purchase of rights is completed.[12]
G. Examples in Practice
Some notable examples of the local film options in Nigeria and the option process is the Production of the movie Things Fall Apart written by Professor Chinua Achebe and Half of a Yellow Sun, written by Chief Chimamanda Adichie. In both instances, the producers in the case Yewande Sadiku formerly of Stanbic IBTC, for Half of a Yellow Sun initially secured an option on the book rights. During the option period, the producers developed the project, secured financing, and evaluated the commercial potential. Only after extensive development did they exercise the option to adapt the books into the blockbuster film franchise. This example illustrates the critical role that exercising option rights plays in moving a project from the development phase into full production.[13]
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H. The Development Phase
The option period is primarily focused on development. During this time, producers typically work on several key tasks:
- Script Development: Screenwriters are hired to adapt the original work into a screenplay that is suited for the film format.
- Securing Financing: Producers seek funding from investors or studios to cover the production costs.
- Attaching Talent: Key personnel, such as directors and lead actors, are brought on board to ensure the project can attract a wide audience and secure distribution.
I. Production and Distribution
After the option is exercised, the project moves into the production and distribution phases.[14] This includes:
- Pre-production: Finalising the screenplay, casting, and planning the logistics of the film shoot.
- Production: Filming the movie, including all on-set activities.
- Post-production: Editing the film, adding visual effects, and finalising the soundtrack.
- Distribution: Releasing the film in theatres, on streaming platforms, or through other distribution channels.
Key Considerations when Exercising Option Rights in Film Production.
- Renewal of Option: If additional time is needed, the producer may negotiate to extend the option period for an additional fee.
- Reversion of Rights: If the option is not exercised within the set timeframe, the rights revert to the original owner.[15]
- Legal and Financial Risks: Both the producer and rights holder should be aware of the legal and financial risks associated with the option agreement, particularly regarding the failure to exercise the option or challenges during production.[16]
CONCLUSION
Exercising option rights is a milestone in the film industry, marking the transition from mere possibility to concrete action in adapting a creative work. When a producer exercises an option, they are committing to the full-scale development and production of the project, signalling that the time for preliminary exploration has ended and the real work of bringing the story to life begins. This step is not taken lightly, as it involves not only the formal acquisition of the rights but also substantial financial and creative investments.
Producers must have a clear understanding of the stakes involved both creative and financial. From a creative standpoint, it’s crucial to honour the integrity of the original material whilst adapting it in a way that resonates with a wider audience, often requiring skilful screenplay writing, directorial vision, and casting choices. Financially, the costs associated with developing the script, securing talent, and preparing for production must be carefully balanced against the anticipated return on investment.
REFERENCES
[1] D Bailes, ‘A Producer’s Guide to Option Agreements’ https://www.wrapbook.com/blog/option-agreement Accessed 10th October 2024
[2] Ibd
[3] Ibd
[4] The Authors Guide, ‘Model Film and TV Option Contract’ https://authorsguild.org/resource/model-film-tv-option-contract. Accessed 10th October 2024
[5] ‘Option agreement from class: Craft of Film’ Writinghttps://library.fiveable.me/key-terms/the-craft-of-writing-film-focus/option-agreement Accessed 10th October 2024
[6]M Hargrave ‘Options Contract: What It Is, How It Works, Types of Contracts’ https://www.investopedia.com/terms/o/optionscontract.asp Accessed 10th October 2024
[7] ibid
[8] S Schmidt ‘Option agreements for film and TV – what should producers look out for?’ https://raindance.org/option-agreements-for-film-and-tv-what-should-producers-look-out-for/. Accessed 10th October 2024
[9] ‘Option (filmmaking)’ https://en.wikipedia.org/wiki/Option_%28filmmaking%29 Accessed 10th October 2024
[10] Practical Law, ‘Option and “shopping” agreements for film and TV’ https://www.lw.com/en/people/admin/upload/SiteAttachments/Option%20and%20shopping%20agreements%20for%20film%20and%20TV%20%28w-034-2532%29.pdf Accessed 10th October 2024
[11] The Authors Guide ‘The Ins and Outs of Literary Film/TV Option Agreements’ https://authorsguild.org/app/uploads/2022/10/The-Ins-and-Outs-of-Literary-Option-Agreements.cd_.pdf Accessed 10th October 2024
[12] Erin Moskal ‘Option Agreement – Ask a Lawyer Series’ https://edwardslaw.ca/blog/option-agreement-ask-a-lawyer-series/ Accessed 10th October 2024
[13] T Tapp ‘Harry Potter’ TV Series Due To Hit HBO In 2026: Everything We Know About The Cast, Who’s Creating It, What J.K. Rowling Says & More https://deadline.com/2024/09/harry-potter-tv-series-max-release-date-cast-1235323284/ Accessed 10th October 2024
[14] Master’s Class ‘Understanding Filmmaking: The 5 Stages of Film Production’ https://www.masterclass.com/articles/understanding-the-stages-of-film-production. Accessed 10th October 2024
[15] Ibdm
[16] S j Schmidt ‘10 Things every party to an option agreement for film and tv rights needs to think about’ https://silviaschmidt.org/blog/2020/8/23/10-things-every-party-to-an-option-agreement-for-film-and-tv-rights-needs-to-think-about Accessed 10th October 2024
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