Getting a Distribution Deal and What to Expect
So how do you actually go about getting distribution deals for your film? In the previous chapters, I discussed things you can do during each stage of the production process that will give your film infinitely better chances at getting distribution. So now that you’ve mastered that, how do you actually secure deals for your film and what should you expect?
As I explained in previous chapters, traditional distribution deals have become harder and harder to come by in recent years. But the good news is that, by contrast, DIY or self-distribution has become more and more accessible.
The five distribution platforms we’re going to discuss are
• Theatrical
• DVD
• Broadcast
• Video-on-demand (VOD)
• Foreign
Within this list, I cover both traditional and DIY distribution as it applies to each platform where appropriate.
THE FIVE TYPES OF DISTRIBUTION
Theatrical
TRADITIONAL THEATRICAL
Traditional theatrical distribution has been the dream of every filmmaker for many years. It involves getting picked up by one of the studios or mini-majors such as Sony, Universal, Fox Searchlight, Focus Features, Lionsgate, and so on, and having a broad rollout of the film across the country in movie theaters everywhere. Unfortunately, traditional theatrical deals are extremely rare these days and, in fact, happen to only a select few filmmakers who get their films accepted into a top-tier festival such as Sundance or Toronto, but even then, they’re still rare!
What happened along the way? Once again, the answer is down to simple supply and demand. Since the late 90s, the supply of independently made films has gone through the roof, so much so that there aren’t enough theatrical distributors or theaters to exhibit them. So in short, traditional theatrical distribution is a dying model and out of reach for most independent producers, which is why I instead focus on the direct distribution model of DIY theatrical.
DIY THEATRICAL
If you want to do a DIY theatrical release—or platform theatrical release, as it is often called—basically you would release your film in one or two local theaters, start to generate significant buzz, and then slowly and strategically release it in additional theaters.
A platform theatrical release normally requires raising additional capital because you’ll need both prints and sufficient advertising to get booked into a theater. For example, when you approach theater owners to see if they will book your film for a weekend, they will normally require you show proof that you have purchased advertising in local newspapers. The purpose of the advertising is to ensure, of course, that there is at least a minimum guarantee that people will show up to see your movie. Booking a theater for a weekend takes precious real estate for theater owners. For them to take the risk with your film, they will definitely want to know your plan for driving ticket sales.
If you can prove yourself to theater owners, they will agree to book your film for a weekend. If the film does good numbers for the weekend, they will extend you another week. If your film does good numbers for another week, they will extend you again. And so on.
Conversely, if your film happens to tank that opening weekend, by Monday it will be removed. I’ve seen this happen many times with films that have impressive casts but just couldn’t garner an audience. So keep in mind that the key to keeping a platform theatrical release going is to market your film as hard as you possibly can. Get creative and start early. Hire a publicist. Get press and interviews, and do guerilla marketing to your core audience. You have to do whatever it is you can to drive ticket sales.
Of course, if you have a traditional distributor for your film, these are all the things it would handle, but the distributor would be under the same pressure as you to sell tickets. And if your film didn’t sell tickets, it would be out of the theaters after one weekend even if you had a big distributor behind you. The theater owners do not discriminate when it comes to ticket sales.
Ultimately, if you have the resources to go the route of a platform theatrical release, I strongly encourage doing so. This effort might just give you the bump you need to get noticed by a major distributor.
Keep in mind that opening your film in one of the bigger markets (New York or Los Angeles) will cost significantly more money, and you will be competing with numerous other films for viewers. Alternatively, if you open in a smaller market, advertising costs will be cheaper, and viewers may consider your film a welcome alternative to studio fare.
If you don’t have money left in your budget to do a platform theatrical release of your film, you can hire an independent sales rep to do sales projections and a cash flow statement for you, which you could use to raise the necessary capital from investors. The point is that having a U.S. theatrical release of your film raises the value of the film internationally and thus opens you up to international sales potential. However, I must say that, from my personal experience, international buyers will want to know how many theaters the film was released in, what the gross ticket sales were, and so on. It’s not enough just to say your film had a theatrical release. You really need to put the marketing muscle behind your film to make it successful enough to grow “legs” and spread to more theaters in your market and then additional markets.
For example, I was working with a filmmaker who had a very well-produced independent film, complete with an A-list movie star and a very popular TV star. So far, so good. We decided to do a platform theatrical release and began marketing the film about four months prior to the release. We got a national television interview, several radio interviews, and blurbs in a couple major magazines. We also paid for advertising in the major newspapers and purchased billboards. We even had a huge premiere party. There was tremendous buzz for this little film.
The film opened in one theater in Los Angeles, and even with all the marketing and advertising behind the picture, there were hardly any ticket sales, so after one weekend, the film was dropped. That’s the danger of opening in a market like Los Angeles. This film had all the right ingredients for success but no ticket sales to back it up.
In any case, we took all the press the film had garnered and made quite an impressive press kit that I used to try to make international sales of the film. I screened the well-made trailer for buyers, showed the press kit, and touted the fact that the film had enjoyed a U.S. theatrical release. The first thing the buyers asked me was how many theaters and what were gross ticket sales. After they found out the film was in only one theater for one weekend, they weren’t interested.
The moral of the story? If you can pull together a platform theatrical release for your film, great. However, like I said before, make sure you not only market the daylights out of it to get people to come and see it, but also seriously consider the market in which you’re opening. Also, if you’re borrowing more money from investors to make the platform release happen, be clear that unless the film is a sell-out success in your first few theaters, it will never reach other theaters and markets, which is where your investors’ money would be recouped.
DIY Theatrical Case Study: Doug Block, On His Film The Kids Grow Up (http://www.thekidsgrowup.com)
Q: For your most recent film, The Kids Grow Up, you did a theatrical self-release and partnered with a theatrical service company. How did that work out for you?
A: Our main goal was to utilize a theatrical release to distinguish The Kids Grow Up from the hundreds and hundreds of other film titles coming out this past year. We already had a U.S. television presale (to HBO), so the idea was to utilize what we anticipated would be strong reviews, press coverage, and word of mouth to create long-term value for all the other ancillaries. The big challenge was to do all this without losing our shirts in the process. It requires that you enter the fray ever hopeful but with very realistic expectations.
We would have loved to do better at the box office. It’s all relative, of course, and with such a grim economy, it’s a tough time for documentaries theatrically, in general. Still, it was a disappointment.
On the other hand, the theatrical release paid off in every other way. Our distributor, Shadow Distribution, managed to book The Kids into Manhattan’s premiere art house, the Angelika Film Center, and our publicist, Susan Norget, did a great job of positioning the film as one of the season’s notable indie releases. We got some amazing reviews (the lead New York Times film critic, A.O. Scott, called the film “remarkable”) and had any number of feature articles in major publications. Furthermore, as the follow-up film to a very successful personal doc (51 Birch Street), The Kids Grow Up further cemented my reputation as a director, and my producing partner Lori Cheatle’s reputation as a producer. So, all in all, mission accomplished.
Q: How did film festivals play a part in your release strategy?
A: We learned from our distribution experience with 51 Birch Street that our HBO sale would all but rule out going the normal distributor route. The larger distribution companies are corporate rivals of HBO’s owner, Time Warner, and the smaller ones depend on a U.S. TV sale to offset the losses they anticipate from the theatrical release. So we pretty much knew from the start we were going to do a service deal.
Our festival strategy therefore became all about raising the film’s profile, especially within the documentary world. That meant primarily going after documentary festivals, and happily we wound up being shown in virtually all of the world’s leading ones, including IDFA, Full Frame, Hot Docs, Silverdocs, and Sheffield. Winning the Special Jury Prize at Silverdocs helped enormously, especially in later securing a Washington, DC, theatrical booking (which earned us the mother of all great reviews from Ann Hornaday at the Washington Post).
Not having the pressure of needing to whip up a frenzy of attention and buzz in order to attract a distributor enabled me and my family and our small film team to really enjoy the festival experience. And that’s hugely important. Making documentaries is tough work, and personal docs are difficult on every level. So traveling with The Kids Grow Up to cities like Amsterdam, Toronto, Kosovo, and Helsinki, and having such a deeply personal story resonate with large and appreciative audiences from very different cultures, well, it’s why we do what we do. And makes it worth the torturous parts of the process.
Q: What type of distribution did you seek out after your theatrical release, and did you find the theatrical release helped getting other distribution for the film?
A: Having a theatrical release in place certainly helped us to secure a DVD and digital rights deal (with New Video), but I’m not sure it was absolutely necessary. And we already had our U.S. and international broadcast rights locked up. So, in this case, I think it mostly added value to what we already had.
Q: What are the specifics of your service deal, and how did you find it? Did it turn out to be a profitable endeavor or more of a loss leader?
A: We had a total budget of just $50,000 for our entire theatrical release, which we squirreled away from what we raised for the production. We had a budget line item of $30,000 for song rights, which was what we spent on them for 51 Birch Street, but we wound up using only original music. And Lori and I each put in $10,000 of salary we were owed upon delivery of the finished film to our broadcast partners.
From that $50,000, we paid Shadow (which also took a split of the box office), the publicist, an outreach team, our associate producer, a few small print ads, posters, postcards, screeners, and a surprisingly large amount to FedEx. We had to really resist the temptation to spend a penny more than we had, so when Shadow pushed us to make 35 mm prints, we never seriously pursued investors, and we didn’t bother spending the minimum $20,000 it would have cost to qualify for Academy Award consideration.
In the end, theatrical turned out to be mostly a loss leader, but we always looked at it primarily as a marketing tool for the DVD and digital release, which is where we have the most potential to make some serious money. I think we’ll eventually see our money back and perhaps even more, but only time will tell.
Q: What did you find to be the most successful promotional strategies for your release? What were the least successful ones?
A: Ironically, the least successful strategy may well turn out to be our most successful strategy, in the end. The Kids Grow Up is mostly about my daughter’s last year at home before leaving for college, as both a husband and father dealing with the prospect of letting my only child go. We felt from the beginning that the film would appeal to a wide general audience, and it does, but that the core audience who would relate to it most strongly and emotionally is parents.
Aside from the usual outreach to parent groups and organizations, we spent a lot of time and energy putting together a database of the most popular and influential mom and dad bloggers from the millions of them out there reading and writing blogs about parenting. It wasn’t until shortly before our New York theatrical premiere that we realized it would be a huge waste to have them write about a film that their huge national readership either wouldn’t be able to see or wouldn’t want to pay babysitters on top of steep ticket prices to see in a theater. So we decided to hold off for many months and utilize the parent bloggers for the HBO broadcast and DVD release (which happens a month after that).
We also caught a break when HBO decided to premiere The Kids Grow Up on Father’s Day, which got a lot of fatherhood organizations and dad bloggers very excited. We decided to put a greater emphasis on one of the film’s themes of the changing roles of fathers and how much more involved in their children’s lives dads have become. This gave much more interesting fodder for bloggers to write about than simply commenting on whether the film works for them or not as a story.
Finally, New Video has a generous affiliate program that enables anyone who joins to embed a small banner link on their website or blog that links directly to their order page for the DVD. Any sales that come directly through that link return 10 percent to the affiliate. So for the more popular bloggers and national organizations, apart from supporting the film, there’s the potential for them to earn some decent money in return.
As of this writing, it’s a couple of months before the HBO broadcast and DVD release, so, again, only time will tell. But New Video has a very favorable split with producers, and we stand to do quite well if we sell as many units as we did with 51 Birch Street.
TRADITIONAL DVD
Traditional DVD distribution is kind of in the same boat as traditional theatrical distribution: it has gone the way of the dinosaur! Well, not really as much, but with the decline in DVD consumption overall, many DVD distributors themselves have become extinct. And as the number of DVD distributors has declined, obviously so has the deal volume in this area. Nowadays, it’s actually pretty rare to get a traditional DVD deal for an independent film unless the film is in one of the more marketable genres such as horror, action, thriller, sci-fi, or family … but make no mistake, even then it’s rare!
So how do filmmakers go about getting traditional DVD deals in today’s market? Well, if there’s one pattern that I’m seeing with regard to which films get picked up for DVD distribution, it’s films that have name cast involved because that seems to be the only piece of insurance left for distributors that they will actually be able to sell the films to audiences. The second biggest factor is in line with what I said previously and relates to the genre of the films: the higher the concept film you have, the better chances of getting picked up for distribution.
DIY DVD
DIY DVD distribution is one of the most profitable distribution platforms there are. If you decide you want to do DIY DVD distribution, you can either choose to manufacture and fulfill your own orders or do On-Demand DVD manufacturing.
On-Demand DVD distribution is one of the easiest and most profitable do-it-yourself distribution strategies. You are able to sell professional-quality DVDs without stocking your own inventory (and storing it in your spare room or garage). Instead, the On-Demand DVD companies manufacture and ship discs as customers order them.
On-Demand DVD distribution is an affordable and low-risk way to make your film available to millions of customers. Furthermore, you get to keep control of your title and earn royalties from dollar one. Plus, you are free to remove your film at any time should you land a traditional distribution deal.
Rather than wasting time managing production of your DVD and shipping the orders yourself, you’re able to focus on marketing your film while the On-Demand DVD companies handle the order-taking, manufacturing of units, shipping, and customer support.
When you open your film to the massive audience online, there is an opportunity for your work to be discovered and for people to buy your film. Several filmmakers I know have landed traditional distribution deals after they have successfully built buzz by selling their films through On-Demand DVD channels.
To get started with On-Demand DVD distribution, you must own all the needed rights to your film, and it must meet certain content guidelines. Usually, there are no setup fees, and you send the company your DVD master. If you don’t have a DVD master, these companies will even digitize your film for you from a tape format. Then you set your title’s suggested list price, and the company will send you commission checks, normally on a monthly basis.
Unlike traditional distribution deals, with On-Demand DVD companies, you maintain the rights to your film. And there is normally no commitment period or exclusive terms, so you can sell it on as many On-Demand DVD sites as you wish.
Currently, the biggest player in on-demand DVD distribution space is CreateSpace (www.createspace.com), which is owned by Amazon.com. When you use the CreateSpace service, you are guaranteed exposure to the tens of millions of customers who visit Amazon.com on a daily basis.
Interview with Producer Sue Maslin, On Direct Distribution of DVDs (www.filmartmedia.com)
Q: I know you’ve had some success directly distributing your DVDs. Did you turn to that by choice? Or did you try for traditional distribution first?
A: I have been producing documentaries and feature films for the past 25 years, and up until 3 years ago, I had always placed those films with traditional distributors. Despite the commercial and critical success of many of the titles …, the films always seemed to return income to the sales agents, the distributors, the investors, but never to the producer. This has a number of undesirable outcomes, including diminishing any incentive for the producer to become proactively involved in distribution of their product over the medium or long term, even when there are clear indications that significant returns could be achieved.
My business partner, Daryl Dellora, and I decided to radically change that approach in 2008 in an attempt to gain financial reward from the success of our films, a return from our marketing efforts, as well as build a business model whereby returns could contribute to our ongoing sustainability.
We did not set out to become distributors so much as vertically integrate our development, production, and distribution activities so that we remained in control of managing content rights throughout the entire process. In August 2008 we launched a new company, Film Art Media (www.filmartmedia.com), and theatrically released our first title, the feature documentary Celebrity: Dominick Dunne, later that year.
In summary, Film Art Media is an innovative development and rights management company. We develop screen content (film, television, digital media), [and] then assign rights to a special-purpose production company or our production company, Film Art Doco, to produce the work. Film Art Media then acquires the rights upon completion in order to market and distribute the work. We consistently work across media platforms (William Bligh, www.abc.net.au/bligh; Re-enchantment, www.abc.net.au/re-enchantment; Rekindling Venus, www.rekindlingvenus.com) and have effectively exploited the online platform in the publicity, marketing, and sales of our screen content.
Q: What has been the biggest challenge doing direct distribution of your DVDs? What about the biggest upside?
A: The biggest challenge is having available capital and resources to successfully market and distribute. There are many outgoings before any returns start flowing. We started this process without any major backing capital and sought sales for back catalogue content by relicensing in-flight, pay television, and free-to-air television licences that had expired. This is not always possible for titles. so we also took out loans with “soft” terms to fund marketing costs and repaid the loans within 6–12 months from returns. Each DVD title needs at least $10,000–$20,000 for DVD authoring, design, production, packaging, and promotion costs, not to mention web marketing and advertising costs. A theatrical release doco needs a further $30,000–$50,000 for P&A; however, costs can be reduced by distributing digitally on hard drive to selected cinemas.
Our core business has always been and remains developing and producing content, so we have needed to keep the balance right so we are not overwhelmed by the demands of self-distribution. This has meant bringing on more people (and being able to pay their salaries!) and being careful about how many titles we release in any one year (at present around two per year). We need to assess the amount we can do in-house and what needs to be outsourced. At present, we do all trailers, design materials, marketing, social media campaigns, dispatch in-house but we have outsourced website development and accounting services. The renewed energy around the company has attracted many interns and volunteers who, in turn, want experience with Film Art Media, and this has been invaluable, particularly in terms of labour-intensive online and social media marketing (Facebook and Twitter). We have had interns from as far away as Denmark working with us, and many are highly skilled and web literate.
The biggest upside is that our films are earning higher revenue, and returns are now going into our bank account and not someone else’s! For example, in 2008, The Edge of the Possible (1998) was an underperforming back catalogue title about the design and building of the Sydney Opera House and featured a rare interview with the architect, Jorn Utzon. It was ten years after the initial successful release delivered by the distributor.
Q: Do you agree that the key to a successful DVD release is in the marketing and promotion? What types of marketing and promotion have worked best for your films?
A: Strategic marketing and promotion and plain hard work [are] the key to maximizing returns. We tailor a specific marketing strategy for each title and actively market across all platforms in Australia and nontheatrical outlets overseas (i.e., public institutions, libraries, architecture, and cultural institutes, etc.).
Essentially, our strategy has been to hold as many rights back for new content and reacquire back catalogue content rights; identify markets not previously tapped into by existing distributors; and proactively market our content to multiple niche audiences using online, direct, and retail marketing strategies.
Our competitive edge is that we do not market “product” but high-value screen content that is directly linked to experiences, locations, and characters. That is, we link The Edge of the Possible DVD to the wonder of the Sydney Opera House experienced by visitors and make sales via online sites, blogs, and retail outlets at the Sydney Opera House, airports, architectural libraries, conferences, galleries, museums. We link Michael Kirby: Don’t Forget the Justice Bit to the charismatic experience of prominent Australian judicial figure Michael Kirby via his website (www.michaelkirby.com.au), his public appearances, conferences, publications, relevance for specialist law book shops, educational institutions, etc. The DVD was launched during Australia Law Week in 2010, and we built on their substantial national publicity campaign by hosting sponsored Law Week screenings in capital cities.
We link Re-enchantment to the fascination and, at times, obsession people have for fairy tales. We readily find these communities online, amongst artist and writer groups, psychological organizations, and teaching and research institutions. This interactive work about the hidden meanings of fairy tales for adults is available online as well as a 10 × 3-minute television series, a radio series, and an interactive study guide for educational institutions. Devising work for release across platforms is increasingly the key to future success.
We don’t have the financial or human resources at this stage needed to actively market to international film and television markets, so we still work with foreign sales agents for sales to these windows and assign only those rights as necessary. Likewise, we will work with cinema distributors on a joint venture basis for features if we are planning a theatrical release that requires a scale of P&A beyond our resources.
Q: Any tips for filmmakers who wish to follow in your footsteps and take on direct distribution on their own?
A: Good strategy and a passion for reaching audiences [are] one-half of the equation, but it needs to be backed by adequate startup capital, or you will be destined to fail. Always take the long-tail approach to distribution and don’t underestimate the value of the educational sector. We are now building our first interactive study guide for use on iPads and tablets and doing this in conjunction with the major supplier of educational resources in Australia, ATOM (Australian Teachers of Media). Joint ventures for initiatives like this should always lead to returns back to the producers’ company.
Finally, in the short time that we have been actively marketing and distributing our screen content, the online tools have exploded and not only enable us to better reach our multiple niche markets, but also track our audiences and buyers via the analytics available in more and more refined ways.
Ultimately, we are seeking to establish a recognized brand for delivering quality content as well as a two-way relationship with our audiences as they start to participate in our interactive online content. And hopefully continue to value and pay for our content!
Broadcast
Broadcast distribution in today’s market means getting your film on cable TV. Unfortunately, this, too, has become more and more rare for independently made films. What happened? Well, basically, the big cable channels such as HBO, Showtime, and Starz all signed big output deals with the studios so they can have a steady pipeline of well-made, mostly star-laden movies to fill their pipeline and at this point rarely if ever have a need to acquire independent films. So that leaves out the big cable nets!
Then there’s the “indie-friendly” networks such as IFC and Sundance, but the majority of their acquisitions comes from the big festivals such as Sundance, Toronto, Cannes, and SXSW. So if you get into one of these festivals, you at least have a decent chance of getting a broadcast deal with one of the “indie” channels. There are also U.S. networks such as Lifetime, Syfy, A&E, and Discovery, but these networks actually acquire fewer third-party films these days and instead prefer to either develop and produce their films in-house, or work with established producers they already have a relationship with. This is not to say these networks never acquire independently produced films from unknowns, but in reality it’s rare.
In contrast to On-Demand DVD distribution where end users receive a physical DVD of your movie, video-on-demand distribution allows end users to download your movie to their computer and watch it right then and there.
Several different companies offer different types of services, but in general you send a DVD master of your film to a VOD company, the company digitizes it and uploads it to its servers, and then customers pay a fee to download your film and watch it. The download time, of course, varies by type of VOD service and speed of the customers’ Internet connection, but the idea is that instead of waiting for a DVD to be shipped to them, they have instant access to their purchase.
Like On-Demand DVD companies, VOD companies also send you monthly checks for your share of the revenue. For example, if the VOD company charges $9.99 for a download of your film, you might receive a 30 percent royalty on that amount. Your share may not seem like much, but it can definitely add up over time. Plus, VOD companies license content on a nonexclusive basis, so technically you can license your movie to as many VOD companies as you like and benefit from the royalties of all of them at once.
One advantage to distributing your film on video-on-demand platforms is that customers get to see your film right away. This helps create a buzz quicker. And the fact that the viewing experience is all online helps spread buzz quicker because satisfied customers can post the link to your film on various message boards and chat rooms, as well as easily email to their friends and family. With video-on-demand distribution, you can see how word travels fast!
One disadvantage of video-on-demand distribution is that it still isn’t a big enough source of revenue to rely on for recouping the investment in your movie. Most royalty checks that I have witnessed are only a few hundred bucks per quarter, or even per year. Over time, of course, as Internet distribution becomes more and more relied upon, the economics may change. Perhaps in the future, you will be able to recoup your investment just through Internet distribution as physical DVDs fall by the wayside. But for now, the revenue from VOD is still minuscule compared to the revenue from DVD distribution and even theatrical distribution.
Interview with Michael Murphy, EVP Digital Aggregator, Gravitas Ventures (www.gravitasventures.com)
Q: Gravitas is a VOD aggregator. What does that mean, and why do filmmakers need one?
A: A VOD aggregator is the entity between the licensor (a distributor, sales agent, producer, filmmaker) and the VOD platform (cable/satellite/telco—e.g., Comcast, DirecTV, Dish, Time Warner Cable, Cox, Charter, Verizon FiOS, AT&T U-verse, etc., or online—Apple iTunes, Amazon VOD/Prime, Vudu, Xbox, Netflix, PlayStation, etc.).
While the VOD platforms desire independent content for their customers, there is a limit to the number of programmers or suppliers that they have resources to handle efficiently. If a VOD platform had to do a license agreement with every filmmaker, deals just wouldn’t get done. They’d be bogged down in legal departments, and accounting would be challenging, too.
It’s generally in the best interest of a filmmaker to use an aggregator who specializes in VOD because the aggregator is best positioned to license the film to the platforms. If a filmmaker decided to “go it alone,” it’s doubtful that he or she would be able to distribute the film as far and wide as an aggregator. Aggregators are also better positioned to negotiate favorable splits with respect to revenue sharing because they may be working on hundreds of films with a VOD platform, not just one or two.
Filmmakers should also consider using an aggregator for VOD because a good VOD aggregator lives and breathes VOD. That is, there’s a big difference between licensing content to VOD platforms and licensing and understanding VOD platforms. Consumers aren’t generally browsing the shelves of video stores anymore, but they are browsing the “digital storefront.” … [H]ow a film is merchandized within the digital storefront (this is also known as the guide user interface [GUI], user interface [UI], or menu) can have a big impact on impressions and the bottom line. A good aggregator/programmer understands the nuances of each guide for each VOD platform and has a dialogue with those on the VOD platform side charged with mapping those unique guides.
Q: What are some examples of the most profitable VOD platforms in today’s market, and how can filmmakers best support their VOD release to squeeze out maximum revenue?
A: We generally think of VOD platforms in three broad categories:
1. Transactional VOD, which incorporates cable, satellite, telco, and online VOD. Some of the most well-known transactional platforms include Comcast, Time Warner, Cox, Charter, Apple iTunes, Amazon Instant Video, Xbox, PlayStation, Vudu.
2. Subscription VOD (SVOD), which is more an “all you can eat” proposition. A consumer generally pays a monthly fee in exchange for all the films on a platform. The best-known examples include Netflix Watch Instantly, Amazon Prime, and Hulu Plus.
3. Ad-Sponsored VOD (AVOD) generally makes content available on a “free” basis to consumers/users, but it is laced with advertisements. The distributor and VOD platform share in the ad revenues. Popular sites that offer AVOD include Hulu, Google/YouTube, and Daily Motion. The best way filmmakers can maximize their revenues on any of these platforms is to understand where their content might perform best. For example the gaming platforms (Xbox and PlayStation) may do well with male-focused action content, but “high-brow” documentaries might really perform on Hulu or Netflix. Generally, our strategy is to make sure that content is distributed as far and wide as possible and that the content enjoys a healthy transactional window before exploiting other opportunities.
Q: What does potential VOD revenue look like these days, and can filmmakers bank on VOD revenue to recoup budgets of their film?
A: VOD revenue is increasing overall, but there is definitely more and more content vying for VOD distribution and in some cases limited shelf space. Filmmakers can count on VOD revenue, but how much is definitely on a case-by-case and film-by-film basis. We at Gravitas will always try and give realistic expectations from the outset. It’s no secret that DVD sales for independents are challenged. On film budgets, the most important thing a filmmaker can do is make sure that they aren’t using a 2005 or 2006 playbook for a 2012 distribution landscape and reality.
Q: At what point in the distribution process should filmmakers seek out VOD distribution for their films?
A: Filmmakers should start thinking about all distribution, not just VOD distribution, at the onset of the project. When they have a finished film, they or their sales agent should send it out to distributors for acquisition feedback.
Q: What does “day and date” mean, and when should filmmakers utilize this?
A: “Day and date” has a few different meanings, but generally refers to the concept of exploiting multiple rights on the same day. Today, we believe that it’s in the filmmakers’ best interest to almost always exploit VOD and DVD on the same day—and in some cases exploit VOD before DVD. VOD platforms are increasingly sensitive about having the ability to release a program at the same time as DVD. Indeed as DVD revenues decrease and a filmmaker wants to maximize his or her revenue in the VOD window, he or she can incentivize VOD platforms to carry and promote their films by going at least day and date with VOD/DVD.
“Day and date” can also mean releasing a film theatrically and on VOD at the same time. We think this is a great approach for a lot of films. A filmmaker’s marketing budget can be used more efficiently when they are exploiting multiple windows at the same time. The idea is [to] put the film everywhere and let the consumers decide how they want to watch. Many VOD platforms may also give premium pricing and placement to a film that is on VOD while in theaters.
Q: What are the biggest mistakes filmmakers make when seeking VOD distribution for their films?
A: Here are three:
1. Starting social media (Facebook, Twitter, websites) in the 11th hour—right before the film premieres on VOD or in theaters. Social media has to start at the ground floor of the project. Social media also means working it every day and being creative. If you think you can set up a FB site and call it quits, you’re wrong. I am truly impressed by the filmmakers who send us screeners and good one sheets with links to what they’ve been up to—especially when their film has amassed tens of thousands of fans or followers. They then have a built-in base of people who can take action to buy, stream, download, rent, embed, or spread when the time is right.
2. Putting the film on one or two VOD platforms because they can. I believe that 99 percent of the time a filmmaker will be better served by having an entity like Gravitas distribute their film to potentially over 100 VOD platforms than trying to go it alone. Distributors who are sent films that have already been exploited in one or two VOD platforms may be disincentivized from working on a project because previous exploitation may prevent future exploitation on some VOD platforms. There are some windowing rules that should be followed. Our advice is talk to a few experts and fellow filmmakers who have been through the process before going it alone.
3. Not setting themselves apart from the crowd. We look at more than 2,000 films annually. Your aggregator/distributor should be excited about working on your project, but you can help. Bringing some executable ideas on marketing to the table that are unique to your film is great. You know your project better than anyone.
Foreign
TRADITIONAL
Working with foreign sales agents can be very effective in getting international distribution for your film. The main reason is that is what they are dedicated to. Their whole reason for being is finding international distribution deals for independent films.
One benefit of working with foreign sales agents is that they will bear the cost of taking your film to all the international film markets and therefore exposing your film to a very large contingent of buyers from all over the world. Going to the film markets is no small expense and is something you would be hard-pressed to do on your own, so for this reason alone, there is a huge value in working with foreign sales agents.
One downside to working with foreign sales agents is that their high costs of doing business get passed on to you in the form of high commissions per sale and recoupable expenses allowed. Therefore, at the end of the day, you may not actually see much money from the foreign distribution deals because the first $30,000–$50,000 in sales will go toward covering the agency’s marketing and other hard costs. This is frustrating for many filmmakers (understandably so) because the acquisitions prices in the international marketplace are so low to begin with.
DIY
If the thought of working with foreign sales agents doesn’t appeal to you, you can always go the do-it-yourself route. However, I must warn you that the do-it-yourself route to foreign distribution is not only more difficult than that domestically, but much more expensive. Be prepared for shipping costs, high phone bills, travel expenses, and film market expenses.
If you decide to go for it anyway, the first question is “Who ARE the foreign DVD companies and broadcasters that buy independent films?” You can buy lists on the Internet, but are they current and correct? Honestly, the best advice I have here is to see whether you can get some word-of-mouth recommendations from other filmmakers who have gotten foreign distribution for their films and then start contacting these companies directly. Internet message boards are a great source of word-of-mouth recommendations for foreign buyers.
The best approach I have found for filmmakers to contact foreign distributors directly is first via email (send an introductory email with a link to your website and trailer) and then follow up with a phone call. If a distributor requests a screening copy of your film, be sure to send it via FedEx or UPS so that you can get a tracking number. It is customary to follow up with an email and phone call to make sure the distributor received your package.
Another way to track down foreign buyers is to attend the international film markets. Filmmakers are now creating co-ops and pooling their funds together to get a booth in the actual market. This can be an affordable option if you can get five to ten filmmakers together. When you are registered as a seller at a film market, you will be given access to the entire buyers’ list. This list is golden because it will serve you not only for the particular market you are attending, but for long after the market is over. When you have access to the buyers’ list prior to a market, it is customary to send out emails to buyers requesting meetings. Of course, you will need to come up with a listing of all the films you’re selling at the market, complete with JPEG images of the cover art. You can email this list and direct buyers to your website(s) where they can view trailers. The goal is to set as many appointments as possible for the market. When you are there, you should hire someone who has experience selling at a market to be in the booth with you. Hiring an experienced person will be well worth the money, and his services will end up paying for themselves.
APPROACHING TRADITIONAL DISTRIBUTORS YOURSELF
As I mentioned previously, getting a traditional distribution deal these days is quite a feat. Many filmmakers ask me if they should start submitting to traditional distributors themselves after they have a completed film. My answer is always NOT YET.
What I recommend doing with traditional distributors is first waiting to see whether you get accepted to any of the Tier One film festivals. The reason is that if you end up premiering your film at one of these festivals, you will have much more leverage with distributors than if you go to them BEFORE the festivals. So Plan A is to wait and see whether you get into a Tier One festival.
If you are not applying to any Tier One festivals, or you do not get accepted to any, Plan B could be to submit to traditional distributors yourself. Now, I don’t mean you should start submitting in a haphazard fashion. Rather, I mean you should start at the top and work your way down. If one of the bigger distribution companies decides to acquire your film and take all rights, great! If not, as you work your way down the traditional distributors target list you’ve created, just make sure that you separate out DVD companies from broadcasters and so on.
Here is a step-by-step list of what to do if you want to approach traditional distributors yourself:
1. Take an honest look at your film and decide which distributor you think it’s a fit for. Study distributors’ websites as well as their past and present slates. Determine whether they only distribute movies with a big cast or if they specialize in foreign films or everything they distribute is from a star director. If your film doesn’t fit into what their model is, don’t waste your time or theirs.
2. Research distributors that have had success with your type of film. At this point, you’re probably looking at straight-to-DVD distribution, so head back to the video store or do a search on Amazon to see what companies put out your type of product. Make a list of them and investigate their websites. You’ll be able to contact an acquisitions executive from there. Prepare an email to them with a link to your website, trailer, and synopsis so they can decide whether they would like to consider your film for distribution. After you send the email, if you haven’t heard anything back within a week, it is okay to follow up with a phone call.
3. Research broadcasters that have had success with your type of film. Do your research by flipping through the cable channels and checking out who broadcasts independent films these days. Again, go to their websites and look for submission guidelines. Send an email with a link to your website and trailer and, if requested, send a full screener copy of your movie. I’ve heard broadcast executives say they wish more filmmakers would contact them directly, so you can definitely do it yourself!
Regarding foreign distribution, unfortunately, these deals don’t bring in the money they once did, but the good news is that there are still several types of foreign distribution deals to be made.
I’ll start by saying that if you’re lucky enough to get an all-rights deal from a U.S. distributor (like one of the mini-majors), you won’t have to worry about getting foreign distribution for your film because it will be distributed in foreign territories through the various partnerships that exist between U.S. mini-majors and foreign theatrical and DVD distributors and foreign broadcasters. How does this work? Because most of the mini-majors fall under the big umbrella of a studio (for example, Focus Features is part of Universal Studios, and Sony Classics is a part of Sony), they automatically get to take advantage of the output deals that exist with foreign distribution channels, as well as international operations like local offices, and so on.
For the mini-majors that do not fall under the umbrella of a studio (Lionsgate, for example), the situation is a little different. Fortunately, by virtue of having domestic theatrical distribution through one of these high-level companies, you will have a much easier time finding foreign distribution because these nonstudio mini-majors are so well respected.
Distribution Expenses
Whether you sign directly with a distributor, go through a foreign sales agency, or self-distribute, you should be familiar with the expenses required to market and distribute a film—especially because you will be charged these expenses before you are allowed to share in the profits.
As you can imagine, it is very expensive to market and distribute an independent film. That is why when you sign a deal with distributors, they will want to recoup anywhere from $10,000 to $25,000, or more in some cases, before they begin sharing profits with you. Because they are investing this much in marketing and distributing your film, it is only fair that they get their investment back through the sales of your film.
When you are signed on with a domestic distributor or foreign sales agency, you will be accounted to quarterly, biannually, or annually in a producers’ report. The producers’ report will outline the expenses incurred for the period in question, and you will be able to see how close the distributor is to recouping the contractual marketing expenses. When the distributor recoups the agreed amount of expenses, you will start receiving checks with your producers’ report for your portion of the profit share.
You can expect to receive a producers’ report or accounting statement normally 30–45 days AFTER the quarter, half-year, or year has ended. So if you are due quarterly accounting reports, and Q1 ends on September 30, you should get your accounting report around October 30 or November 15.
In the past when you got a traditional distribution deal, you typically sold all these rights at once (for example, a DVD distributor also took broadcast and foreign rights). However, in today’s market, filmmakers are able to split up their rights among different distribution “partners” who specialize in each rights group that can sometimes work in their favor. There are advantages and disadvantages to both.
The advantage of selling all your rights to a single distributor is that you should see a bigger upfront payment as an advance. For example, say your film wins an award at the Sundance Film Festival. If that is the case, you will most likely be approached by distributors who want to sign an all-rights deal with you on your film. Realistically, the only companies that should be offering these types of deals to you are the mini-majors (the independent arms of the major studios) because they are the ones with the deep pockets. A partial list of these companies includes Sony Pictures Classics, Focus Features, Fox Searchlight, and Lionsgate.
The disadvantage to selling all your rights to one distributor is that whatever payment you get from that one distributor is all you get. You do not have the opportunity to go after any other distribution deals or pursue DIY distribution. So if the advance offered isn’t enough to pay back your investors, tough luck; you won’t be able to go out and earn additional revenue on your film.
During negotiation with a traditional distributor, you should always at least TRY to carve out certain rights for yourself. For example, if you are negotiating with a DVD distributor, try to carve out broadcast and foreign rights from the contract as well as the right to self-distribute the DVD from your own website. Fortunately, this type of agreement is becoming more and more common, and many distributors are agreeing to split rights terms. However, be aware that some distributors will not allow you to carve out rights for yourself, so you need to decide whether this is a deal breaker for you or not (for many filmmakers, it definitely is!). Keep in mind that if you are successful at carving out some rights for yourself, you will have the opportunity to sell them directly to, say, a broadcaster and foreign sales agent and have the revenue from those rights groups go in your pocket instead of the distributor’s.
One issue to look out for in the traditional distribution realm is that many sales agencies (not distributors) will offer you a distribution deal for little or no advance up front. This is a very common scenario for independent films because, as you can imagine, the Sundance example I outlined previously is for only a small handful of people each year. In fact, unless you get into Sundance or one of the other Tier One festivals, you have very little chance of getting an all-rights distribution deal with one of the mini-majors and a big payout.
My advice to you is the following: if you get offered a distribution deal by a sales agency, look very carefully at who it is and the types of films the agency sells. First of all, know that the agency is not offering you a “distribution” deal. It is offering to take all your rights to your film and sell those rights off to various distributors. So don’t get confused by the terminology! I hear so many filmmakers saying they have been offered distribution deals, but in reality, they have just received an offer from a sales agency that is going to turn around and sell their film to distributors.
Bottom line is that if you are going to sign with a sales agency for distribution, do NOT do an all-rights deal if you can help it. I recommend signing away only foreign rights to the sales agency and keeping your domestic rights for yourself. The reason is that it is much easier to approach domestic companies directly, so you do not necessarily need the services of sales agents for that task, BUT you may want their expertise with selling the foreign distribution rights.
What to Expect from a Distribution Deal: Interview with Orly Ravid from the Film Collaborative (www.thefilmcollaborative.com)
Q: What’s it like for filmmakers these days in terms of getting traditional theatrical, broadcast, and DVD distribution deals for their films?
A: I think that film, like any business, is affected by market forces. There’s more supply than there has ever been. The means of production have become less expensive and more accessible, and film has gotten even more and more popular as evidenced by the proliferation of film festivals and film schools and corporate brands who have initiatives relating to film (contests and such). There are thousands of films for sale in markets such as Cannes and AFM each year, and that’s not counting the projects in development, also for sale.
So the bottom line is that there’s simply an excess of supply over demand. And the other factor that has changed is the attrition, if not the collapse, of the middle B2B infrastructure that did emerge and sustain with VHS and DVD, but that does not maintain with digital distribution. The reason being is that when there were many DVD stores (and VHS before that), the businesses were in competition, and they all needed product and weren’t always sure of what would sell or rent well, so they actually stocked up, which gave the distributors a huge upside and that potential upside led to healthy competition, which led to a healthier business. These days, many video stores are out of business, and the ones that still exist (such as Walmart) buy cheap and then return what does not sell (not that that did not happen before, but to a lesser extent), and so the traditional distributors proceed with greater caution when it comes to acquiring new films for the pipeline.
Then there’s the other issue of piracy, which leads to less consumption overall and now over 20,000,000 subscribers wait for a film to be available on Netflix, which can be healthy business for smaller films that otherwise could not sell well, BUT it’s not great for films that could or would sell otherwise.
The theatrical business is also hurt by both oversupply and by the “Netflixing” of the U.S. market. Digital distribution is there. But again the oversupply makes things competitive, and the price points are different, so volume is critical. Hence, the middle man aggregator can do well—it has a breadth of content—but individual producers need to have a film that competes very well in order to be made whole.
And then lastly, there’s the broadcast market. Well, as TV and the Internet become one, TV buying is less of a reliable source of revenue, prices have come down considerably, and more rights/revenue streams are impacted when prices are higher such that the net is affected. Of course, bigger films can be exceptions, and studios have their deals. But for the independents and smaller films, broadcast deals are harder to get and worth less when one gets them. And nothing but a change in supply can change any of this because technology is certainly not going backwards.
Q: I know you’ve been a champion of “newer” distribution platforms like video-on-demand (VOD), but what’s in it for the filmmakers?
A: I don’t champion them as much as I address that cable VOD is responsible for 80 percent of the revenue in the digital space, which is not the same as all VOD. Films that do well in VOD can make five and six figures in revenue. By contrast, films that don’t do well make much less and sometimes almost nothing. The truth is VOD is not some magic pill; it’s simply a new delivery mechanism, with some advantages over physical media in terms of accessibility, and with some disadvantages in terms of even greater glut and not always great recommendation engines or as easy of time to market (images are smaller; you don’t have as much real estate to market the film). The proliferation of the iPad is expected to increase the transactional rental business (ex: Netflix) and that interface is also seemingly more filmmaker/film consumption friendly. In any case, no one in distribution thinks DVD and physical media is going up; it’s only going down, so for home entertainment or entertainment on the go (e.g., mobile), digital is here; we have to make the most of it.
Q: In your opinion, do film festivals still play a key role in helping filmmakers find distribution for their films? Or have you seen cases where skipping the festival route and going straight to distribution is okay, too?
A: If your film is festival-worthy or festival-appropriate, going that route can never hurt and, in fact, often helps. The better the festivals are, the better the film can succeed in terms of sales and also often in terms of audience awareness and interest. Skipping festivals makes sense for non-festival-type films. For example, genre films normally don’t need festivals although sometimes they can be helped by a good festival strategy. I think now more than ever festivals play a key role in helping audiences find films and filmmakers find audiences. AND, since at least five years ago, I have been championing festivals getting involved more in distribution. I expressed that enthusiastically to the folks at Sundance starting in 2009 and also to other niche festivals.… I truly believe that a more distribution-centric strategy makes sense for both filmmakers and festivals, though only for festivals with a strong brand or niche appeal.
Q: What about foreign distribution? In your experience, is this still a major revenue stream for the filmmakers you’re working with?
A: Only for some of our filmmakers—for example, genre filmmakers, niche filmmakers, and some of the more commercial documentaries. For the others, it’s not really a viable option. The money for foreign distribution deals is so small for most films, so we end up licensing the films when possible for a good enough deal and otherwise invoke a direct digital distribution and DIY strategy.
Q: What are some things filmmakers need to look out for when making any distribution deal? In other words, what are some of the biggest mistakes you see filmmakers making in regard to negotiating distribution deals?
A: I covered this a bit in my recent blog post, and I do encourage filmmakers to read the blog when the topic relates to them because it covers a lot. Some of the key mistakes in short are
1. Not getting references and checking on those in order to evaluate the verity of the distributor’s claims.
2. Not knowing enough and analyzing enough the degree of middlemen between the distributor and each key revenue stream.
3. Not having enough protection for material breach.
4. Not defining and also capping recoupable costs properly.
5. Giving up too many rights for too little reason.
6. Having blind faith and being too passive in one’s own responsibility to know the film’s audience and how to reach it.
7. Not having good photography or images to help market the film.
8. And on the pro distributor side, sometimes filmmakers think they know better and can do a better trailer, for example. They may be right, but they can be wrong too and be too close to the film to know how to “sell it.”
Generic Deliverables List (for Nontheatrical Release)
This guide is a standard list of deliverables for a nontheatrical distribution agreement for feature films seeking distribution in both the United States and internationally.
This is not a definitive list of deliverables, but rather a generic guide to the deliverables a producer’s reps, sales agent, and/or distributor in the United States or abroad may require in order to distribute an independent film. Deliverable requirements may differ substantially among sales agents, distributors, territories, and release platforms. This list is not meant for a theatrical release. Depending on the company and release platform, there may be fewer items required to satisfy an actual distribution agreement.
HDCam SR (1080p 23.98)
• Channel 1—Stereo Composite Left
• Channel 2—Stereo Composite Right
• Channel 3—Stereo Left Fully Filled Music and Effects
• Channel 4—Stereo Right Fully Filled Music and Effects
• Channel 5—Left (5.1)
• Channel 6—Right (5.1)
• Channel 7—Center (5.1)
• Channel 8—Left Surround (5.1)
• Channel 10—Right Surround (5.1)
• Channel 11—Commentary Left (Optional)
• Channel 12—Commentary Right (Optional)
NTSC DBC (16X9 1:85 LBX)
• Channel 1—Stereo Composite Left
• Channel 2—Stereo Composite Right
• Channel 3—Stereo Left Fully Filled Music and Effects
• Channel 4—Stereo Right Fully Filled Music and Effects
• Channel 1—Stereo Composite Left
• Channel 2—Stereo Composite Right
• Channel 3—Stereo Left Fully Filled Music and Effects
• Channel 4—Stereo Right Fully Filled Music and Effects
NTSC DBC (4X3 1:85 LBX)
• Channel 1—Stereo Composite Left
• Channel 2—Stereo Composite Right
• Channel 3—Stereo Left Fully Filled Music and Effects
• Channel 4—Stereo Right Fully Filled Music and Effects
PAL DBC (4X3 1:85 LBX)
• Channel 1—Stereo Composite Left
• Channel 2—Stereo Composite Right
• Channel 3—Stereo Left Fully Filled Music and Effects
• Channel 4—Stereo Right Fully Filled Music and Effects
DBC PAL & NTSC—Trailer
• One (1) NTSC screening cassette and one (1) PAL screening cassette of final version of the trailer
• DBC EPK (PAL & NTSC)
• On-set video interviews and comments if available
Key Art
• Both texted (composed) and textless, for the purpose of creating poster and/or video sleeves
DVD Cover/CD
• If available, minimum of 20 printed video sleeves
VHS Cover/CD
• If available, minimum of 20 printed video sleeves
Press Kit
• Both printed and on disk, including synopsis, biographies of key cast and crew, press releases, and press clippings
Dialogue/Action Continuity Spotting List
• Includes a detailed Subtitle Spotting List of the completed picture and trailer, conforming in all respects to and with the action and dialogue contained in the completed picture and trailer, in form and condition suitable for submission to various censorship boards
Production Notes
• Wrap file consisting of Production Calendar
• Crew List
• Vendor Contact List
• Final Script Supervisor’s Script and Notes
• Final Script with Color Pages
• Call Sheets
• Shooting Schedule
• One-Liner or Boards
• Day-Out-of-Days (all available)
• Production Reports
• Actor’s Time Cards
• Location Agreements
• Location Maps
• Sound Reports
• Visual/Audio-Visual Releases
• Product Releases
• Final Cast List
• Talent Agreements
• Extra Releases
Music Cue Sheet
• Two (2) copies of Music Cue Sheets listing (i) the title of the music compositions and sound recordings; (ii) name(s) of the composer(s) and their performing rights society affiliation; (iii) names of recording artists; (iv) the nature, extent, and exact timing of the uses made of each musical composition
Composer’s Agreement
• Two (2) copies of DAT copy of the conductor’s musical score
Certificate of Origin
• Ten (10) original notarized Certificates of Origin
Certificate of Authorship
• Ten (10) original Certificates of Authorship, notarized for use in foreign territories, for each writer who receives screen credit (either screenplay or story)
Copyright Certificate
Paid Advertising and Credit Obligation/Main and End Title Credits
• A complete statement of final credits to be accorded in the main and end titles, paid advertising credit obligations, and photo kill obligations in connection with the picture
Title Research Report
• One (1) copy of a Thomson and Thomson Title Research Report
Copyright Search Report
• One (1) copy of a Thomson and Thomson Copyright Search Report
Lab Access Letters
Script
• One (1) copy of script
E&O Certificate
• From a qualified insurance company with liability limits of not less than one million U.S. dollars (US$1,000,000) per occurrence and three million U.S. dollars (US$3,000,000) in the aggregate with a maximum deductible of ten thousand U.S. dollars (US$10,000), to remain in effect for a period of three (3) years following date of delivery of picture.
MPAA Rating Certificate
Characteristics of Picture
• Statement of the exact running time, aspect ratio, and film stock
• Approved QC Reports
Interview with Michael Murphy on “Making VOD Distribution Work for You”: http://www.filmspecific.com/MichaelMurphy
Interview with Orly Ravid on “Minimum Guarantee vs. Back-End: How to Decide Which Is Best for Your Film”: http://www.filmspecific.com/Orly
Virtual Seminar on “Selling to Foreign Distributors … On Your Own”: www.FilmSpecific.com/Foreign