Saudi Arabia Pays $1 Billion to Open a New Hollywood Studio (& What That Means for Filmmakers)

The question that keeps every filmmaker up at night is "Where do I get the money to make my masterpiece?" As fun as just shooting something with your friends can be, it's also nice to work with a studio and to make a living.

So, where do you get the money to make a movie?

For decades, the answers have been familiar: studios, private equity, grants, crowdfunding. But the financial map of Hollywood is being redrawn by money from out of town: namely, Saudi Arabia.

The latest venture is a major deal involving Erik Feig, the producer behind hits like The Hunger Games and La La Land.

Feig's production company, Picturestart, has partnered with Japanese gaming giant SNK to launch Arena SNK Studios, a new movie studio in Hollywood.

But the real headline is the money behind the curtain. The venture is significantly financed by Saudi Arabia’s Public Investment Fund (PIF), the nation's sovereign wealth fund. This isn't just another studio deal; it's a sign of a much larger trend that every filmmaker needs to understand.

Let's dive in.

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Money is Power in Hollywood

Fresh off the heels of the very controversial Riyadh Comedy Festival, where comedians like Bill Burr, Louis CK, and Dave Chappelle (among many others) went to Saudi Arabia to tell jokes, we're seeing a more massive investment in working with the West.

When it comes to Hollywood, Saudi Arabia offers a highly competitive cash rebate of up to 40% for qualifying productions that shoot within the country. This aggressive incentive is designed to compete with other established global filming destinations.

These efforts are all part of Saudi Arabia's Vision 2030, a plan spearheaded by Crown Prince Mohammed bin Salman to diversify the nation's economy and open up its society, and to improve the quality of life for its citizens.

The establishment of the Red Sea International Film Festival and various grants and educational programs are aimed at nurturing Saudi and regional filmmakers.

But there is no such thing as free money.

Ethical Questions

This influx of Saudi capital can be an exciting development for people trying to get their movies financed, but it also comes in the wake of alleged human rights violations from the nation, most notably the 2018 killing of journalist Jamal Khashoggi.

The website for the Human Rights Watch lists numerous transgressions by both the kingdom and the crown prince.

“The seventh anniversary of [slain Saudi journalist] Jamal Khashoggi’s brutal murder is no laughing matter, and comedians receiving hefty sums from Saudi authorities shouldn’t be silent on prohibited topics in Saudi-like human rights or free speech,” HRW Researcher Joey Shea said in a press release about the Riyadh Comedy Festival. He continued, “Everyone performing in Riyadh should use this high-profile opportunity to call for the release of detained Saudi activists.”

And look, we've seen this washing of money before. The PIF has poured money into sports, acquiring the LIV Golf league and English Premier League team Newcastle United.

It has become a majority investor in gaming companies and other entertainment avenues. Now, by backing a Hollywood studio, the PIF is making its most direct move yet into the engine room of Western content creation.

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The Filmmaker's Dilemma: Cash vs. Conscience

We saw the public outcry over the Riyadh Comedy Festival reach a fever pitch last week, with comedians like Bill Burr and Whitney Cummings clapping back about wanting to bring free speech and jokes to a community, as well as arguing that this money is no more or less dirty than what already is passed around Hollywood.

Comic Bill Burr said on his own podcast, “Everybody’s phony about this stuff...You go to China, Dubai, Saudi Arabia — it’s all complicated. But meeting audiences who just want to laugh? That’s real.”

And for filmmakers struggling to get projects off the ground in a risk-averse industry, this new firehose of capital is undeniably tempting.

We're not here to argue one way or another; we just wanted to lay down the facts you should be aware of as this new player enters the fold.

The Riyadh Comedy Festival came with a list of things the comedians could not talk or joke about. Will they do the same with the content of their films?

This creates a profound dilemma that is no longer theoretical for creators:

• Would you take money from the PIF to fund your dream project?
• Does accepting the funding imply an endorsement of its source?
• Is it possible to separate the art from the investor?

There are no easy answers here. And these are all questions people often wrestle with. Filmmaking is increasingly hard to make a living from, and checks that cash are scarce.

For some, the opportunity to create and employ hundreds of people will outweigh the source of the funds. For others, the ethical line is clear and uncrossable.

Perhaps the most obvious worry any filmmaker should have is the idea that this new wave of Saudi-backed financing comes with strings attached.

Historically, foreign investment in Hollywood has sometimes led to subtle (and not-so-subtle) shifts in content to appeal to specific markets or avoid sensitive topics.

Keep your eyes open for creative mandates and censorship.

Add to this the even more complicated matter that we wonder if people will care where the money came from if you made a great movie -- and also, will they care about what happened with those comedians?

People's minds and tastes are in constant flux.

Not taking money now to avoid bad headlines might seem smart, and then if there's a cultural shift later, you may not have the opportunity again.

It's a lot for people to weigh.

Summing It All Up

This deal and influx of money showcase the globalization of finance and the difficult questions that come with it.

The only thing that remains true is that you should always follow the money to see where it comes from, and make the choice that's not just best for you, but for your movie as well.

Let us know what you think in the comments.