The document discusses issues with the Australian film industry, specifically regarding The Rover's $12 million budget and poor box office returns. It argues the industry has perverse incentives, like fees being based on budget percentages, that encourage inflated budgets without regard for audience or box office potential. It suggests moving to flat fees and linking funding to past success and box office returns to incentivize lower budgets and audience-focused filmmaking.

1. The Rover
Dr Steve Gaunson
COMM1033, Australian Cinema,
RMIT University

2. The Rover
international and/or self-sustainable?
The Rover
• Budget: $12m
• Box office:
– Domestic: $1,114,423
– Foreign: $1,181,000
• Overall: $2,295,423
All time
• 2 Australia (2008)
$37,555,757
• 29 Ned Kelly (2003)
$8,365,984
• 36 Rabbit-Proof Fence (2002)
$7,562,439
• 39 Kath & Kimderella (2012)
$6,081,439
• 41 Chopper (2000)
$5,912,119
• 42 Two Hands (1999)
$5,478,485
• 45 Jindabyne (2006)
$5,302,912

3. The problem of The Rover is the
problem of audiences – or lack of…
• When it comes to Australian films – audiences
don’t entirely matter…
• The industry provides producers (very) little
incentive for successful box office
• Producers glean their income from within the
budget – not box office success
• Bigger the budget – bigger the take-home
wage

4. Payment system of industry
• Fees are based on % the film’s budget
• Director – 3% (average)
• Budget - $5m: Director - $150 000
• Budget - $500000: Director - $15 000
• Not paid for contribution
• No incentive for filmmakers to work with small
budgets
• No incentive for successful box office

5. Industry – based on Perverse
Incentives
• These are factors that reward individuals for taking actions that
produce negative consequences.
• These include:
a) Fees based on a percentage of the budget – forcing producers to
increase the budget
b) Not mandatory income reward profits for successful films
c) Government investments that are sometimes conditional on the
attachment of marquee cast (this puts pressure on the cost line)
d) Government investments are driven by the percentage of the
budget – encouraging the producer to inflate the budget
• Connolly: The industry should eliminate perverse incentive by
discouraging percentage-based remuneration
– Doesn’t encourage producers to work with smaller budgets

6. Connolly is arguing for ‘positive
incentives’
• Filmmakers contribution should be based on a
flat fee – regardless of the budget.
• Government funding in accordance with the
producer’s track record
• This will encourage:
1. Faster turnaround between budgets
2. Experienced producers to work with smaller
budgets
3. Everybody working to make ‘successful’ films

7. Better model
• A more effective approach is to take a developed
screenplay — and the proposed creative team
– Calculate a budget level that could be financed
• Budgets based on what’s required to get the film
made
– The Rover cost $12m
– WHY???
• Films should have a realistic budget goal – that
justifies the final film and box office potential
– Was The Rover ever going to be a box office bonanza?

8. The answer – involve audiences
• Hollywood – depends on good box office.
– The successful of one film helps support the next
• This doesn’t apply in Australia – everybody is
already paid once the film comes out
– If payment was based on box office…
• Audiences would matter.

9. The problem with The Rover – most of
its problems could have been fixed
• The problem of the film – is in the screenplay
• Films should be budgeted on the screenplay
and proposed creative team
• Not – stars and story: great stories and great
stars don’t automatically make ‘great films’.

10. Films need to justify stars – and
realistically budget for them
• Marquee Australian stars now expect as much
as 10% of the total budget
– based on the Hollywood model of payment
• The cast member is rewarded for helping
attract finance with a larger fee – and
rewarded for attracting an audience with a
share of the film’s profit
• Question: Does the ‘star’ cast reflect the
market value?

11. Pros and cons of seeking funding
outside of Australia?
“You can’t make these $20 million movies without going
overseas to get money. The Australian film industry can’t
sustain that. One of the main reasons the local industry
can’t sustain such a production is that it doesn’t work
with the audience in mind. Filmmaking is, by its very
nature, commercial, and money spent on production has
to at least be attempted to be recouped. You should feel
a responsibility to make that money back. You can’t make
a $20 million movie and expect to recoup that money by
targeting just an Australian audience”.
- Peter Spierig