Application of risk management methods in the production of film and television projects

Introduction

Film production and television content creation involve substantial financial investments with a high degree of uncertainty regarding the outcome. The contemporary entertainment industry demands from producers not only a creative vision but also accurate perception and a deep understanding of risk management principles. Consequently, modern researchers analyze key methodological approaches to identifying, assessing, and mitigating risk factors in this field.

Under current conditions, there is a growing need to resolve the contradiction between the increasing demand of the film and television industry for effective risk management tools and the limitations of applying classical risk management methods amid the high uncertainty of the creative process and transformations in media consumption models. This divergence is further exacerbated by the digitization of production processes and the emergence of new content distribution formats, necessitating the development of specialized approaches to identify, assess, and minimize adverse manifestations in the audiovisual field.

Methods and materials

The preparation of this article involved comparative analysis, systematization, classification, and generalization. An analysis of scientific publications on the subject highlights several of the most popular research directions. The first group consists of studies dedicated to the application of modern technologies in managing the film and television industries, with a focus on relevant risks. In this regard, W. Wu [8] explores the potential for integrating intelligent algorithms and big data analytics into the production of film and television projects. Similar issues are examined by R. Fang, J. Yuan, M. Yu, and M. Ye [2, p. 33-36], who emphasize the impact of Big Data technologies on the development of the film industry. D. Ridwan and J. Heikal [5, p. 922-930] analyze strategies for applying artificial intelligence in television management.

The second group of works focuses on specific aspects of risk management in audiovisual content production. H. Sun [6, p. 19-26] characterizes the unique features of risk management in the production of television dramas in China, using a case study approach. Y. Wang [7, p. 990-1001] investigates the application of real options tools in the creation of film franchises. H. Harmonis and A. Shabana [3, p. 185] analyze managerial nuances in the broadcasting sector, using the Indonesian market as an example.

The third category includes studies in which the authors describe cultural and ideological aspects of the development of the film and television industries. Sh. Chen and J. Zhang [1, p. 74-81] investigate the corresponding functions and features of management, while Z. Ye [10, p. 120-124] examines the geopolitical aspects of film distribution.

Particular attention is given to studies focused on the application of machine learning in forecasting the development of the industry. W. Xiao-ling, L. Zhi-long, and Z. Madina [9, p. 763-770] present a model for the evolution of the Japanese film industry based on this approach. S. Puspitasari, D. Andriyani, and A. Gafur [4, p. 5131-5139] focus on developing practical guidelines for managing television broadcasting.

The review of publications revealed several contradictions and underexplored areas. First, a gap exists between theoretical risk management models and their practical applicability in a rapidly changing media environment. Second, there is a divergence between the global nature of the film industry and the local specificity of risk management in different regions. Among the insufficiently covered topics, it is worth noting the impact of streaming platforms on the transformation of risk management approaches, methods for assessing creative risks in the context of production digitization, the integration of traditional practices with new technological solutions, and the managerial specifics of creating transmedia content.

Results and discussion

The production of film and television projects is characterized by a unique set of risks (Table 1) determined by the specific features of the creative process and market conditions. Monetization of film products occurs significantly later than the initial investment, creating a time lag between costs and potential profits. A critical determinant is audience perception, which is nearly impossible to predict with high accuracy.

Table 1

Classification of risks in the production of film and television projects [2, p. 33-36; 4, p. 5131-5139; 8; 10, p. 120-124]

Thus, the production of film and television projects is associated with a variety of risks that are differentiated across several categories. A primary concern is financial risk, as a lack of funding or budget overruns invariably leads to halted production or a decrease in the quality of the final product. Such risks can be partially managed through detailed planning and strict control, though the impact of box office returns and ratings often remains unpredictable.

Legal and regulatory risks relate to compliance with contractual obligations and licensing requirements, which are particularly relevant for large-scale projects with international involvement. Violations in these areas result in fines or even bans on release. Equipment malfunctions and scheduling disruptions also affect release timelines and expenses, making these key “control points”.

Creative risk factors pertain to script quality, casting, and collaboration with the director. These aspects significantly influence viewer appeal, and disagreements here can seriously impact outcomes. Success or failure at the distribution stage is also directly linked to the producers' understanding of the audience and ability to manage the project’s perception through marketing.

Reputational risks become critical when public criticism or negative reviews are widespread, leading to significant losses. Addressing this requires careful management of audience expectations and the development of a strong marketing campaign.

Modern risk management in film production and television projects is based on quantitative and qualitative methods of analysis. Mathematical modeling assesses the likelihood of adverse events and their potential impact. Meanwhile, qualitative assessment involves expert analysis of the script, cast, and directorial concept. Segmenting risks into the categories identified above is essential.

Insurance is a fundamental tool for mitigating risks in film production and television projects. Insurance policies cover a wide range of events, from accidents on set to production delays.

Diversification of funding sources helps distribute risk among multiple investors. Pre-sales of rights across various territories minimize market risks and provide partial returns on investments before production is complete.

Artificial intelligence and machine learning resources are transforming approaches to assessing risk factors in this field. Algorithms analyze large datasets on previous projects, audience preferences, and market trends. Neural networks can predict a project’s potential success by factoring in a multitude of parameters–from genre selection to release timing [5, p. 922-930; 7, p. 990-1001].

Effective management in this field requires the creation of an integrated monitoring system at all production stages. A key component is the establishment of a reserve fund, the size of which is determined by the project’s risk level. Regular process audits enable timely detection of deviations from the plan and the implementation of corrective actions. Television, unlike cinema, is characterized by the cyclicality and long-term nature of projects, necessitating specific approaches to risk management. The pilot production method minimizes financial risks when launching new television formats. Creating an initial episode followed by testing with focus groups allows for an assessment of potential with relatively low costs.

Vertical production, where all season episodes are filmed sequentially by one director, reduces the risk of stylistic inconsistencies and enhances artistic coherence. Meanwhile, the horizontal model, which emphasizes the parallel work of multiple filming teams, significantly shortens the production cycle, though it requires more complex coordination.

The flexible planning method for the filming process takes into account the seasonality of television viewing and the advertising market. The production schedule is structured so that the premiere coincides with periods of peak viewer activity, increasing the likelihood of commercial success.

The pre-sale of advertising time is an effective tool for mitigating financial risks in television projects. Long-term contracts with advertisers ensure a stable cash flow even before production begins.

The syndicated model, where multiple television channels or platforms jointly finance content creation, helps distribute risks and expand the potential audience. This approach is particularly significant for high-budget dramatic series and large-scale entertainment shows [1, p. 74-81].

The implementation of virtual studios and augmented reality technologies significantly reduces risk factors associated with location filming. The use of LED screens and real-time rendering provides flexibility in creating visual content at lower production costs. Cloud-based production management systems enable continuous monitoring of all content creation aspects. Automated tracking of budgets, schedules, and resources allows for the timely identification of potential issues and the implementation of preventive measures. The method of having a group of writers working under a showrunner mitigates the likelihood of creative burnout and ensures continuity in the production process. The parallel development of multiple storylines enables a quick response to viewer feedback and timely narrative adjustments. Based on the conducted analysis, table 2 reflects the author's perspective on the advantages and limitations of management methods.

Table 2

Characteristics of risk management methods in the production of film and television projects [1, p. 74-81; 3, p. 185; 9, p. 763-770]

The evolution of streaming platforms and the shift in content consumption models create new challenges for risk management in the film industry and the execution of television projects. The importance of analyzing data on viewer behavior and preferences is increasing. Blockchain technologies offer opportunities for developing new financing tools. The diagram (fig.) highlights the key promising directions for the development of this field.

Fig. Promising directions for the development of risk management methods in the production of film and television projects [4, p. 5131-5139; 6, p. 19-26; 8; 9, p. 763-770]

Thus, the modernization of management mechanisms in this field serves as a strategically significant goal, contributing to the minimization of financial and reputational risks amid increasing digitalization and evolving audience demands. The implementation of advanced technologies (artificial intelligence, blockchain, etc.), along with the adaptation of flexible approaches, enhances forecasting accuracy, protects intellectual assets, and reduces operational risks. The integration of big data analysis provides a means to thoroughly examine and anticipate market trends, which, combined with cybersecurity measures and specialized insurance, ensures stable operations and the competitive viability of production projects.

Conclusions

Modern risk management in the audiovisual industry constitutes a multi-level methodological system that considers the specific characteristics of both film and television production. The conducted research demonstrates that effective risk management requires synergy among financial, production, and creative solutions.

Management methods in the production of film and television projects range from strategic and financial to operational, aimed at minimizing various types of risks.

Certain approaches, such as insurance and cost control, contribute to reducing direct financial risks but often require substantial investments and continuous monitoring. Meanwhile, diversification and portfolio management help distribute risks and resources across projects, thereby reducing losses, though they also increase project management complexity.

Reputational and legal risks can be mitigated through careful assessment and monitoring, necessitating constant expert support. Forecasting and focus group testing reduce the risk of project failure, though their outcomes are not always predictable and are subject to market changes.

Collectively, each method has its strengths and limitations. Using multiple methods concurrently allows for more effective management, but it is essential to consider the project’s specifics and to adapt risk management techniques to specific objectives, resources, and external conditions.