Whew! You did it! You shot your movie, figured out your workflow, created a great looking picture, mastered it and got it through QC. Now you're ready to distribute your work.
Knowing your audience is one thing, reaching them is another. Wandering through the wilderness of film distribution can be a lonely experience, especially for those new to the process.
Juri Koll, a guerilla Los Angeles filmmaker and distribution consultant wrote the following overview that will provide you a good insight into the various distribution options available for you.
Distribute - Strategy Overview
Most movies generate the vast majority of their revenues within two years of their release, and substantially all of their revenues within five years following their initial release.
Following promotional screenings on the international festival circuit, a cornerstone of the marketing and distribution strategy of most domestic and Canadian distribution companies is the exploitation of that film in the U.S. Box Office. Depending on the marquee value and box office track record of the cast being assembled, the U.S. theatrical market is an important first step on the project’s journey to success in the marketplace. For every independent film, a theatrical run is only possible if there has been positive buzz, or word of mouth, generated by the festival run. Sometimes these runs need to last a year or more to generate the buzz needed to secure a deal. Obviously, films with unknown cast members have an even steeper hill to climb. A theatrical run could mean 2 screens for one week only, in LA and NYC. (That’s the minimum required to qualify for nomination for the Academy Awards.) Or, it could mean more. But this is just the beginning - the foundation - for a successful distribution strategy.
After, or while, all of the above have been attempted or are being accomplished; the most important element of the strategy is to pursue revenue streams from Home Video, DVD, TV, and VOD worldwide.
But, let’s take a step back...
Distribution - Industry Overview
Distribution companies usually view a completed (or nearly completed) film before they decide whether or not they will invest their energies and resources in it. The exceptions are beyond the scope of this article.
To begin with, distributors license a film to a domestic exhibitor, for a percentage of the box office gross, otherwise known as “film rentals”. If the film is successful, the distributors are able to build on the film’s word-of-mouth, and gradually will widen the “platform release” to add more cities and more screens to the schedule. Positive buzz, festival success and strong reviews all add to a film’s ability to stay in theaters. Finally, as film rentals diminish over the length of a theatrical run, the next phases of revenue begin in succession. First is a DVD release, followed by Cable, TV, and finally PPV and VOD services.
After the distributor recoups its distribution fee, P&A expenses and distribution expenses, the producers and investors are entitled to a percentage of film rentals income. Independent production companies that have insight into distribution companies’ practices are at an advantage when negotiating for a film’s distribution agreement. It is in the best interest of the Company to seek one of three options, which are as follows: (1) a distribution advance against revenues, (2) a negative pick-up, or (3) a distribution services deal, which is much more beneficial to investors, but requires more upfront costs and a good deal of time and expertise to be successful.
An advance against revenues means that in exchange for the rights to the Project, the distributor would pay the LLC a sum of money upfront. Portions of this advance can then be used to recoup those amounts expended in the production process. It is an important strategy for a producer to utilize when negotiating with distributors.
A negative pick-up means that a distributor pays the actual costs of creating the negative of the film. This cost factors in development, pre-production, production and post-production. Depending on the distribution agreement, the relationship can end there with the distributor buying the producer out, or the producer can then share in net proceeds from the film after the distributor has recouped its distribution fee, negative pick-up costs, marketing and distribution expenses through a fixed-term licensing fee.
Finally, a distribution services agreement is one in which the producer decides, with the consultation and services of an established distributor, where and when to distribute the film, and all aspects of marketing and expenses. This option is sometimes preferred, if it can be afforded. The typical service deal costs approximately $100,000 to bring a film to 4-5 major markets in the U.S.
Established Distribution Practices - The Negative View
Distributors are sometimes notorious for their evasive and duplicitous accounting practices. By some estimates only 2% of all filmmakers are even somewhat happy with their distribution agreements. The problems with overall distribution deals include lack of control over marketing materials, marketing support, dubious accounting, and marketing decisions, to name a few.
Distribution Without A Negative
It is entirely cost effective to pursue the release of a film without striking a negative, because of the explosion of digitally projected screens worldwide. The number of digital screens in the US alone has increased from 324 to 4,632 in the past 3 years. In a limited release, typically 10-50 prints are struck, and 200 prints may eventually be required. At a minimum cost of approximately $25K each, one can easily see savings in the several millions of dollars on a successful platform release via digital screens.
An innovative and progressive distribution strategy will best position a film to perform handsomely for its investors.
Indie vs. Studios
Independent distributors have an advantage in releasing low-budget films, since they have the experience and patience necessary to handle the slower “platform” method of release. That is how they survive. Studios, on the other hand, have massively extensive resources, and have guaranteed exhibition of their product. But the probability of being exploited by the studio system is like death and taxes. It will happen, one way or another.
Each system, studio or independent, offers advantages and disadvantages with respect to the distribution strategy. A company should negotiate with either an independent distributor or a studio, via one of the three ways listed above, depending on which distributor offers the Project the strongest release pattern, platform or wide, to the largest audience possible. Size of audience must be balanced with the film’s potential profitability, to ensure the greatest return on investment.
Ancillary Market (Home Video/DVD/TV/VOD)
A company should be in a position to capitalize on a solid contact base, otherwise known as core audience, to ensure that ancillary returns, along with international sales, will contribute greatly to generating profits to investors.
Typical ancillary activity includes home video and DVD sell-through deals, in which companies like Blockbuster and Netflix take a consignment of product and return the profits of all sales and rentals to the producers following the deduction of the distributors’ share of the income. Other ancillary distributors will make commitments in which it pays an advance on distribution rights and continues to share income on a royalty basis. Another option is to market the film through companies such as Amazon, in which DVD's are produced only after orders are received. This eliminates the possibility of having a run of DVD's dumped on the market after the distributor has stopped actively marketing the Picture. Following the DVD/VOD release, the Picture will then be licensed to the Free TV and Cable markets, including Free Video on Demand options, creating additional revenue streams.
The Cutting Edge - Distribution A New Way
Hybrid Distribution - Ancillary Market Sales/Online A production company should retain the rights to sell DVD's, and VOD via its own website, on a non-exclusive basis. A distributor will then be free to pursue sources of revenue for the film from large, better-positioned online marketers, such as iTunes, and Blockbuster.
The major online marketers recognize the importance of self-distribution in today’s marketplace. They all happily acquire content from independent producers, providing them free and transparent information about their film’s sales, and therefore a more secure knowledge that they are being fairly compensated. They guard and protect private details about a film’s customers (or core audience), which prove their incredible value. The core audience will remain a part of the LLC, for this and future projects, and eventually would become part of the bargain in any agreement with a distributor.
A Companies’ carefully cultivated core audience is crucial to remaining on the cutting edge of its business and distribution practices.
A company should begin to gather its core audience during pre-production of the film, continuing during the festival circuit and on through its initial release and beyond. It should collect email addresses, and where possible, other demographic information about interested customers. The company should reach out to people who are known to have a passionate interest in the lifestyles presented in the film.
This is your core audience. You could secure your targeted market via product placement, mailing lists gathered at market and festival screenings, via your website, and mailing lists purchased and traded among websites with similar demographics and via links to others.
Splitting Rights and Customizing Strategies - This gives the LLC greater control over costs and benefits. Contact Juri for me details.
After exploiting your core audience, a qualified and reputable distributor will be free to pursue revenue for your film from large, better-positioned online marketers, such as iTunes, Blockbuster and Netflix.
Real World Examples:
Iraq for Sale - During 10 days of Internet fundraising, Robert Greenwald earned $385,000 in contributions for production of his award-winning documentary.
Four-Eyed Monsters became famous when the producers used video podcasts to get the word out, and released the film for free on YouTube and Myspace, where it was viewed over a million times. Then, they offered their viewers the opportunity to attend a screening in their hometowns - if they would request a screening online. They used that email list to secure a theatrical run across the U.S. The resulting cache secured a distribution deal with IFC.
The Secret, when completed, was streamed (or purchased) at the film’s website, and was kept out of theaters, TV, and stores. When the book became a bestseller, the DVD was made available, and sold 2 million copies in it’s first year through Amazon and other retail stores. Their strategy made it clear that releasing a film, or a portion of it, on the Internet for a brief period of time actually increases the possibility of success for a given project.
Helvetica issued limited edition DVD’s and posters of it’s design-oriented documentary to raise funds for the film, and offered screen credit to investors as an incentive to contribute. It made it’s worldwide screenings exclusive, and slightly more costly - a single night in each major city - to build the cache of the film. They reaped the benefits of their strategy, and are already in production on their second film, which is fully funded by Helvetica.
The Princess of Nebraska, by renowned filmmaker Wayne Wang, will follow in these footsteps when it is premiered in The YouTube Screening Room on October 17.
There are numerous examples of films marketed in similar ways during the last several years that have recouped their expenses and paid their investors a profit. This has allowed the film producers/directors enough profit to produce other, still more profitable films. A solid distribution plan makes it much more probable that a successful and profitable distribution agreement can be obtained.
In one example, Blockbuster kept coming back to a film producer whose online sales kept increasing long after he’d gone into profit. The deal became more and more beneficial to the filmmaker with each of Blockbuster’s attempts to secure the rights, and when a deal was finally struck, the film’s popularity skyrocketed, due to the ability of Blockbuster to reach exponentially more customers, albeit with a fraction of the revenue going back to the creators. So it goes.
Bottom line is, think before you shoot. It's creative to think about who will buy your film. Why? Because it’s your core audience who cares!
Dig it. JK, November 20, 2008.
More Than Kin, LLC
6143 Paseo Canyon Drive
Malibu, California 90265
Skype: basslinefilms http://web.mac.com/lessthankindfilm
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