Option Agreements vs Shopping Agreements: Turning a Screenplay, Novel, Board Game, Video Game and more into Film and Television

Whether a creator has designed an immersive tabletop game, written a page turning novel, or developed an innovative video game – receiving interest from others in turning their creative work (Property) into a television show or movie is an exciting prospect. But the terminology of Option Agreements, Shopping Agreements, Attachment Agreements and more can be overwhelming and confusing for someone who is not familiar with the film and television production process. This blog post will break down the two main agreements that producers will approach creators with to acquire the rights to that creators’ property.

The main two agreements for acquiring rights to develop a Property into a film or television project (Project) are the Option Agreement and Shopping Agreement (sometimes also referred to as an Attachment Agreement). Typically these agreements are between a producer (Producer) and an owner of the Property (who is oftentimes the original creator of the property) (Owner). However, studios, directors, and even actors may try to acquire rights to a Property.

Option Agreements

An Option Agreement grants the Producer an exclusive option, but not obligation, to purchase the rights to develop the property. The Producer will typically pay an upfront fee called an Option Fee to retain the option which lasts anywhere from a few months to two or three years (the Option Period). Sometimes, the Producer may have the right to renew the option for an additional fee. During the Option Period, the Producer may exercise the option to purchase the rights to develop the property for an additional Purchase Price. If the Producer doesn’t exercise their option before the expiration of the Option Period, then the rights will revert back to the Owner and the Owner will be free to seek other parties who are interested in developing a Project based on the Property.

With an Option Agreement, the Producer enjoys exclusive rights to produce the Project during the Option Period. The Producer is also typically permitted to engage in certain development activities before principal photography including pitching the Project to potential financiers, preparing screenplays and scripts, and finding talent for the Project. While the Owner is able to receive some upfront payment, they cede much of the control over the Project over to the Producer. However, an Owner might feel this is worth it as the money already invested by the Producer will serve as an incentive to further develop the Project.

Some important terms that the parties will have to consider are whether the Option Fee will be applicable against the Purchase Price, what rights and credits the Owner will have over the eventual Project to be developed, what rights the Owner will reserve for themself, whether the Producer should be granted a right of first refusal or right of first negotiation over sequel projects or derivative works, and if those rights to develop the Project should revert to Owner if the Producer fails to develop the Project after exercising their option.

Shopping Agreement

With a Shopping Agreement or Attachment Agreement, the Owner will instead grant the Producer a right to “shop” the Project to buyers such as studios, production companies, networks, or other platforms.

Compared to an Option Agreement, Shopping Agreements tend to be much simpler. The period that the Producer has to successfully shop the Project tends to be shorter lasting from a few months to just over a year. The Producer does not pay an upfront Option Fee under a Shopping Agreement. However, the Owner usually has greater control over which deals to agree to and move forward with. Once a deal is found, the Producer and the Owner will separately negotiate their specific rights and roles with any eventual studio, investor, or buyer.

Like an Option Agreement, the parties may consider whether the Producer should have a right of negotiation or first refusal to produce sequel or derivative works. However, such discussions may be premature for a Shopping Agreement because a studio or buyer has not been found and therefore terms cannot be finalized. Another concern that the Owner may have is that a Producer under a Shopping Agreement may sit on their rights and not actively work on sourcing deals for the Project. Unlike an Option Agreement, the Producer has not invested any money into the Project in the form of an “Option Fee” and therefore has very little downside if no deal is found during the term of the Shopping Agreement. Negotiating the length of the agreement and the Owner’s reversion rights is important if this is a concern.

While both the Option Agreement and Shopping Agreement are methods to develop a Owner’s work into a film or television show, there are key differences between them. Each agreement has its own advantages and disadvantages. A lawyer familiar with these agreements as well as the different mediums and genres of the works can help determine which agreement is better suited for an Owner or Producer and what terms should be negotiated.

Kevin Dong

Kevin is an attorney at Odin Law and Media focused on corporate and entertainment transactions. He can be reached at kevin at odin law dot com.

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