As we wind down the calendar year and our ADventures in Law team starts to look back at the trends we have seen this year, one that stands out in the past couple of years is an increasing number of brands building in-house film studios. This trend is largely driven by the desire to create brand-funded films that go beyond traditional advertising. Perhaps one of the most interesting examples is Northwell Studios, created by Northwell Health in New York City. Northwell Studios has released several health-related documentaries that are critically acclaimed and award-nominated. “The First Wave,” a documentary that follows the frontline healthcare workers during the first few months of the COVID-19 pandemic, won six of the 16 awards it was nominated for and has an 85/100 rating on the film review website Metacritic.
Neutrogena launched Neutrogena Studios to produce “In the Sun,” a film produced by Kerry Washington that focuses on skin health education with barely any overt product placement. Brands in various industries – from energy drink companies to international hotel chains and e-commerce giants – have all made significant investments in production studios and content (both branded and unbranded).
While brand-funded films aim to educate, entertain, or simply promote a brand, they still fall under traditional advertising regulations. Brands must ensure that their films comply with the FTC Endorsement Guides and should include disclaimers and ensure that any endorsements are genuine and not deceptive. The content should also clearly and conspicuously indicate all endorsements, sponsorships, and product placements.
In-house production companies allow brands to create unique content that might not otherwise be picked up by a traditional studio, but they also open the door to novel legal risks for such brands. Creating in-house content means brands have to balance the integrity of the content while navigating complex IP landscapes, engaging with talent (e.g., actors, directors, crew), and negotiating licensing and distribution agreements – all while remaining compliant with traditional advertising regulations. It can be (and has been for some) a worthwhile endeavor, but brands embarking on this journey should consider the following:
- Permitting: Filming often requires permits, especially when shooting in public or at private third-party locations. Brand teams should analyze and seek to obtain the necessary permits and location agreements early in the process.
- Insurance: The insurance coverage required for film production will likely include coverage for things that are not in a brand’s standard company insurance policy. On top of general liability insurance, brands will likely need coverage for copyright infringement and equipment damage. Brands might also need specialty coverage depending on what kind of content is being created. Coverage for a film set on a deep-sea oil rig will be vastly different than that for a documentary taking place in a hospital.
- Union Considerations: Creating Hollywood content means engaging with the Hollywood unions – SAG-AFTRA, the Writer’s Guild, the Director’s Guild, the Teamsters, and more. These unions have specific requirements for working conditions and often require payment of additional fees on top of those paid to the union members.
- Distribution: Once the film is produced, brands have to navigate the complexities of distribution and licensing agreements. This includes negotiating terms with streaming platforms, broadcasters, and other distribution channels. Finding a platform that aligns with your brand and is interested in your content may be difficult, and negotiating distribution to more than one platform requires precise contracting.
- International Considerations: For brands operating and distributing content globally, it’s essential to comply with international laws and regulations. This includes understanding the legal requirements in different jurisdictions, such as censorship laws, content regulations, and jurisdictional advertising regulations.
- Data Privacy: In-house film studios often collect and analyze viewer data to measure the success of their content. Brands must handle this data responsibly, adhering to data privacy laws such as the GDPR and CCPA. This includes obtaining explicit consent from viewers, providing clear privacy notices, and ensuring data security.
What brand wouldn’t want the publicity of an Academy Award nomination or the honor of being the most binge-worthy new series? Whether your brand is considering a full-fledged in-house production studio or a one-off project, the legal considerations will likely be different (and perhaps more complicated) from those that your legal department deals with on a day-to-day basis. But while there certainly is risk, there is also the potential for a BLOCKBUSTER reward.
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