Step Deal
Contract structure providing incremental payments and options as a project progresses through development, pre-production, and production phases
Definition
A step deal is a contractual arrangement that structures payments and commitments in incremental phases as a project advances through development, pre-production, and production stages. Each step includes specific deliverables and payment schedules with options to proceed or terminate.
Step deals protect both parties by limiting financial exposure while projects remain uncertain, allowing talent and producers to evaluate project viability at each phase. Common steps include development, pre-production, principal photography, and post-production, each with defined obligations and compensation.
Why It Matters
Step deals enable project development while managing financial risk for all parties, allowing scripts, directors, and talent to be secured incrementally without full production commitment until viability is established through market testing and financing confirmation.
For talent, step deals provide guaranteed compensation at each phase while preserving opportunities to exit projects that may not develop as expected, while producers gain flexibility to make changes or halt development without excessive financial penalties.
Examples in Practice
Marvel Studios often uses step deals with directors for franchise films, providing development fees for initial creative work with options for production and sequel commitments based on script development and studio approval of creative direction.
Netflix employs step deals for original series development, paying creators for script development with options for pilot production and series orders based on internal review processes and market research results.
Independent producers frequently structure step deals with screenwriters, providing payment for initial drafts with options for rewrites and production participation based on securing financing and distribution commitments.