In the

film industry The film industry or motion picture industry comprises the technological and commercial institutions of filmmaking, i.e., film production companies, film studios, cinematography, animation, film production, screenwriting, pre-production, p ...

, an option is a

contract A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tran ...

ual agreement pertaining to

film rights A film also called a movie, motion picture, moving picture, picture, photoplay or (slang) flick is a work of visual art that simulates experiences and otherwise communicates ideas, stories, perceptions, feelings, beauty, or atmosphere ...

between a potential film producer (such as a movie studio, a

production company A production company, production house, production studio, or a production team is a studio that creates works in the fields of performing arts, new media art, film, television, radio, comics, interactive arts, video games, websites, music, and ...

, or an individual) and the author of source material, such as a book, play, or screenplay, for an exclusive, but temporary, right to purchase the screenplay, given the film producer lives up to the terms of the contract.

Overview

The agreement details the exclusive rights, including the specified time period and financial obligations. The producer usually has to advance the essential elements, such as financing and talent, towards the creation of a film based on the work being optioned. Similarly, producers can also option articles, video games, songs, or any other conceivable work of

intellectual property Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, cop ...

. Financially, the contract qualifies as a financial option and may be valued by applying

real options analysis Real options valuation, also often termed real options analysis,Adam Borison ( Stanford University)''Real Options Analysis: Where are the Emperor's Clothes?'' (ROV or ROA) applies option valuation techniques to capital budgeting decisions.Campb ...

. The term is often used as a verb in Hollywood. For example, "

Paramount Paramount (from the word ''paramount'' meaning "above all others") may refer to: Entertainment and music companies * Paramount Global, also known simply as Paramount, an American mass media company formerly known as ViacomCBS. The following busin ...

optioned a short story by Philip K. Dick."

Subject of option

To be more specific, when a screenplay is optioned, the producer has not actually purchased the right to use the screenplay; the producer has simply purchased the "exclusive right" to purchase the screenplay at some point in the future, if the producer is successful in setting up a deal to actually film a movie based on the screenplay. This is usually a slow process in which a "package" of sorts is created. During this time, the producer must: # Get the screenplay written (if the option was on a book or other work, and not a screenplay); # Obtain informal agreements with the

director Director may refer to: Literature * ''Director'' (magazine), a British magazine * ''The Director'' (novel), a 1971 novel by Henry Denker * ''The Director'' (play), a 2000 play by Nancy Hasty Music * Director (band), an Irish rock band * ''D ...

, the principal actors, and the financiers; # Take it to a movie studio or other potential financier and potentially help with distribution ( pre-sales); # Finalize the screenplay to the agreement of all stakeholders—the exclusivity of the option allows this step without risk of a rival attempt to produce the same property. This process can last for a prolonged period of time known as development hell. If all this tentative planning falls into place, meaning actual agreements are signed and financing is secured, then the producer can start the pre-production phase. A portion of the financing is usually used to exercise the option.

Exclusivity

Film options are exclusive, usually for an initial period of 12–18 months. After the expiration date, the producer no longer has an exclusive right to buy the screenplay, and the writer can option it to a different producer. Most option agreements specify the prices of additional extensions (most commonly one extension, also for 12–18 months), should the producer be unable to put the movie together in the originally specified term, and choose to extend. The fee for the first option period is normally applicable to the option exercise price, while the fee for the extension (if exercised) typically is not applicable, though that is not always the case.

Options in Hollywood

Options are not expensive by the standards of

Hollywood movie The cinema of the United States, consisting mainly of major film studios (also known as Hollywood) along with some independent film, has had a large effect on the global film industry since the early 20th century. The dominant style of Am ...

s. For ''

True Romance ''True Romance'' is a 1993 American romantic crime film directed by Tony Scott and written by Quentin Tarantino. It features an ensemble cast led by Christian Slater and Patricia Arquette, with Dennis Hopper, Val Kilmer, Gary Oldman, Brad Pitt ...

'',

Quentin Tarantino Quentin Jerome Tarantino (; born March 27, 1963) is an American film director, writer, producer, and actor. His films are characterized by stylized violence, extended dialogue, profanity, dark humor, non-linear storylines, cameos, ensembl ...

received

US$ The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...

50,000 to option his script.''

Reservoir Dogs ''Reservoir Dogs'' is a 1992 American crime film written and directed by Quentin Tarantino in his feature-length debut. It stars Harvey Keitel, Tim Roth, Chris Penn, Steve Buscemi, Lawrence Tierney, Michael Madsen, Tarantino, and Edward B ...

'':

Lawrence Bender Lawrence Bender (born October 17, 1957) is an American film producer. Throughout his career, Bender-produced films have received 36 Academy Award nominations, resulting in eight wins. Bender rose to fame by producing '' Reservoir Dogs'' in 1992 a ...

's Commentary on DVD Special Edition Many writers are happy to receive a few thousand dollars. Option contracts typically do specify the eventual cost of the screenplay, if the producer does end up exercising the option. Since optioning a screenplay is far cheaper than buying it, options are very popular in Hollywood for speculative projects.

Theatrical options

The above rules generally also apply to the option contract for a completed play between

playwrights A playwright or dramatist is a person who writes plays. Etymology The word "play" is from Middle English pleye, from Old English plæġ, pleġa, plæġa ("play, exercise; sport, game; drama, applause"). The word "wright" is an archaic English ...

and theatrical producers. A significant difference is that the playwright may refuse to allow their product to be changed in any way without consent and involvement. The option will provide for the provisions triggered by the production of the play when the producer has put his investors and money together. Occasionally, a play will be commissioned by a producing organization, and in that case the writer will not be working "

on spec ''On Spec'' is a digest-sized, perfect-bound, Canadian quarterly magazine publishing stories and poetry in science fiction, fantasy, and allied genres broadly grouped under the "speculative fiction" umbrella. History and profile Based in Edmon ...

", and the notion of an option will not arise.

References