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Amazon Advertising Find, attract, and engage customers. Amazon Drive Cloud storage from Amazon. In the film industry , an option is a contractual agreement between a potential film producer such as a movie studio , a production company , or an individual and the author of source material, such as a book, play, or screenplay , [1] for an exclusive, but temporary, right to purchase the screenplay, given the film producer lives up to the terms of the contract.
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. Financially, the contract qualifies as a financial option and may be valued by applying real options analysis. The term is often used as a verb in Hollywood.
For example, " Paramount optioned the short story by Philip K. 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.
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This is usually a slow process in which a "package" of sorts is created. During this time, the producer must:. This process can last for a prolonged period of time known as development hell.
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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. 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.
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Options are not expensive by the standards of Hollywood movies. Option contracts typically do specify the eventual cost of the screenplay, if the producer does end up exercising the option.