With three sequels grossing more than $300m apiece at the North American box office and another half dozen passing $100m, summer 2007 proved the point yet again: sequels can be very big and very reliable business. No wonder the sequel rights market appears to be growing.

By acquiring sequel rights to dormant or interrupted franchises, independent producers have found they can get into a game usually dominated by the Hollywood studios - whose financial muscle allows them to corral most of the new franchise-generating scripts and properties.

For a relatively modest outlay, an indie can buy into a recognisable brand that can help sell new sequels theatrically and in international, ancillary and emerging markets.

The strategy does not guarantee success: witness last year's flop Basic Instinct 2, the C2 Pictures sequel to Carolco Pictures' hit 1992 thriller. But it can pay off handsomely: see 2003's Terminator 3: Rise Of The Machines, another C2 addition to a Carolco franchise. And it can result in a steady supply of solid earners, such as the three Halloween sequels - led by 1998's Halloween: H20, which grossed $55m domestically - made so far by Dimension Films.

Dimension has more experience in the field than most. In the mid-1990s it acquired rights to continue not just the Halloween franchise (from Trancas International Films) but also the Hellraiser and Children Of The Corn horror series (started by New World), each of which has so far yielded two theatrical and four direct-to-video sequels for the company.

'They were known entities and I thought some of them could be revitalised,' says Dimension chief and The Weinstein Company co-chairman Bob Weinstein of his early sequel rights deals. 'There's a business there, but you've got to pick them right. You can't take any title.'

Now Dimension has 're-envisioned' the original Halloween in a just-released ninth franchise entry (see box, p15) from director Rob Zombie. Similar treatment is being considered for Hellraiser, Weinstein reports.

Dimension is also working with Lionsgate to distribute upcoming First Blood sequel John Rambo in North America. And it holds the sequel, prequel and remake rights to Total Recall, acquired for a reported $3.2m - a sizeable sum in the sequel rights market - in the 1997 Carolco bankruptcy auction.

Re-whetting audience appetites

Igniting new interest in a franchise that may have been dormant for a decade or more is one of the big challenges faced by buyers of sequel rights.

With the new Rambo project, production company and international seller Nu Image/Millennium Films acquired the franchise rights from Dimension (which had acquired them in the Carolco auction) for $2.5m. The team is hoping that director and star Sylvester Stallone, who created the Rambo character in the three original films, and a 1980s action flavour will bring audiences back - even though its last instalment was released nearly 20 years ago.

'Sly's got millions of fans,' says Avi Lerner, co-chairman of Nu Image/Millennium with partners Danny Dimbort and Trevor Short. He adds, 'People are tired of comic book and CGI movies. Even young people want something from the 1980s. This is as real as it can be.'

Nu Image/Millennium, which in the past has made sequels to 1980s action films such as Delta Force and American Ninja, recently acquired rights to make a new series of movies based on the Conan The Barbarian character.

Some producers look to stimulate fresh interest by making a sequel that takes a franchise into a new area, perhaps literally.

Singapore-based talent management and production company RGM Entertainment is developing a sequel to 1991 thriller Point Break, which used Southern California's surfing scene as its backdrop.

The sequel rights (and other derivative rights) were acquired from original producer Largo Entertainment by former Largo executive Chris Taylor, now COO of RGM.

RGM plans to make an English- language sequel set in South-east Asia, with Peter Iliff - co-writer of the original - directing from his own script.

The original movie, says RGM's Taylor, was a solid box office hit - it took $43.2m in North America and $40.3m internationally - and did especially well on TV.

'But the plan with the sequel,' he says, 'is to do a film that stands on its own. We're going to make a great and relevant action movie - the fact that we can have it associated with a successful action film, regardless of when it was released, is a huge bonus.'

Pitfalls for producers

For all the opportunities it offers, however, the sequel rights market can present pitfalls for indie producers. Chief among them is the danger of legal entanglements over the 'chain of title' to a franchise (the links between previous rights deals on the property) that can slow down or stop a producer's efforts to exploit newly acquired rights.

As Los Angeles entertainment attorney Mark Litwak warns, 'You want to be very careful that you're getting something that's exploitable, especially if you're putting up a significant amount of money for the rights.' Two major sequel rights arrangements in particular are currently under scrutiny in North American courts.

In one case, a subsidiary of the Halcyon Company - which in May announced its acquisition of the Terminator franchise rights and plans for a fourth Terminator film - has filed a complaint claiming that MGM is interfering with its right to negotiate a distribution deal for the film.

In announcing the acquisition, Halcyon (whose co-CEOs Derek Anderson and Victor Kubicek declined to be interviewed) described Terminator as 'by far the most popular and successful franchise not owned by a major studio' and 'a cornerstone of Halcyon's future business plans'.

MGM has denied the allegations and filed a cross complaint claiming that what it says is its contractual right of first negotiation for worldwide distribution rights to the film (a right the studio says was acquired through the bankruptcy proceedings of original Terminator distributor Orion Pictures) has been breached. In the other case, Columbia Pictures and the Weinstein Company are at loggerheads in a Canadian court over rights to sequel and prequel novels to the book on which director Ang Lee's surprise martial arts hit Crouching Tiger, Hidden Dragon - which grossed more than $200m worldwide in 2000 and 2001 - was based.

Both companies claim they have an agreement with the son of author Wang Du Lu for rights to the other four books in the so-called Crane-Iron Pentalogy, of which the Crouching Tiger novel is a part. With the case having already dragged on for more than a year, this valuable film franchise's future may only be resolved by a legal showdown as deft and deadly as those featured in the original movie.

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