Filmmakers need to get a good, rock-solid understanding of how film distribution works. Successful filmmakers – and by that I mean filmmakers who successfully recoup their budget and repay investors, are the ones who develop a distribution strategy before they embark on the filmmaking process, and sometimes before they write the script.
I have been meeting filmmakers, sales agents and distributors since 1993 at the Raindance Film Festival. In 2011, nearly 30% of the features or feature documentaries screened found a distribution deal following their festival screening. Although I am not privvy to the fine details of their specific deals, I do have a pretty good idea how things are shaping up in a very competitive marketplace.
And though I am not a lawyer, I have grasped enough over time to know how distribution deals are structured.
Consider these 10 essential points filmmakers need to be aware of:
1. Forget the global deal. Split rights is where deals are at
Gone are the days when a major distributor would swoop down on your movie post Sundance, Toronto or Cannes and offer you a universal all-media buyout.
Sure there are exceptions like Fox Searchlight’s acquiring Another Earth at Sundance 2011, but it would be a foolish person to make a film on the hope that a global deal will happen.
Commonplace are split rights deals, where distributors cherry pick territories and then decide which national rights they want. It could be they are interested only in TV, or DVD for example, leaving the other pieces of the distribution window to the producer to try to max out money-wise.
2. Getting your film into cinemas costs a fortune
Booking ad space in newspapers and magazines has become very costly. Add to that the cost of PR and social media assets the cost of a theatrical release starts to look like the budget of a small nation. Remember that the exhibitor (theatre owner) takes a fair whack, and the distribution company will take a third off the top, and the amount left in the pot from all those cinema admissions starts to shrivel. From the ‘profit’, the distributor then deducts the costs associated with the release.
Distributors aren’t in business to make a loss, so they commonly write in a cross-collateralization clause meaning they can offset theatrical losses against profits from other windows.
Why do a theatrical release for your film? The biggest asset is that a theatrical release guarantees critical notices in all the main newspapers in the country it has been released. This brings the film to the public’s attention, and creates an increased perceived value for the film when it is available in other formats, such as DVD or online streaming through a portal like Netflicks, Lovefilm, or the excellent British service, Blinkbox.com.
3. Service deals can work
In a service deal, the filmmaker hires a specialist who takes over the distribution process for a fee. Preview screenings are set up for cinema booking agents and then specialists are booked. Advertising and publicity campaigns are designed and launched, and the money is returned to the filmmaker less the money spent.
Service deals can offer a greater amount of flexibility and control to the filmmaker. Essentially, the distributor is working for you. Generally, the more engaged and involved the filmmaker is in the campaign, the greater the rewards.
Remember that regardless of the film distribution deal you do, you will need to provide film Distribution Deliverable Essentials.
4. The Bigger the deal the less control you have
Dah. Of course. The bigger the company, the bigger the stakes.
If fortune places your darling, cute, sweetheart film into the arms of a big distribution company you will have to learn quickly how to dance to their tune. And if you don’t like how they are playing, you can pretty much forget about your voice, and very likely you will be totally ignored while the big boys decide how to best maximise the return on their investment. And if they don’t get it right by your books, and screw it all up, you can pretty much kiss your movie goodbye. They can re-cut, re-do the artwork, and basically do whatever they want without consulting you. Make sure your contract is very clear on what the approval process is for key marketing decisions.
Then cash the cheque and move on.
5. Cap Film Distribution Expenses
Any marketing campaign is expensive. If your deal calls for a split of profits after expenses, make very sure you have capped the expenses, or any profit will simply melt away.
6. The Cheque is in the post
Money from your film can take an infuriatingly long time to arrive. For your much-lauded theatrical release, don’t forget that the distributor has to wait to get the money from the exhibitor (theatre owner). From DVD sales the wait is even longer. Delays of 12 and even 15 months are not uncommon. This is because retailers often place a holdback on cash owing to account for unsold items.
For digital sales to the likes of Lovefilm and Netflix – remember that reporting to filmmakers is virtually non-existent. Once you have piqued their interest to the point that they want your baby, it would be prudent to expect nothing more than the initial license fee they offer you. and that often can be very small. London filmmaker Chris Jones was offered $75.00 for each of his first 2 award winning features. Read What Your Film Is Really Worth To Lovefilm.
7. Beware the middleman
Certain middlemen exist to represent slates of films by newcomers on the premise that they have an excellent filtering process through which they cherry pick the best of the new, raw, undiscovered talent to prospective distributors.
This becomes much more formal in the digital world. These middlemen, or aggregators, perform two functions. They prep your film for digital distribution, encoding it into a wide variety of CODECs for everything from Playstation to mobile phones to web viewing. Then they do the actual selling to large platforms like iTunes and Netflix. They charge additional fees for this, and the filmmaker can end up with a fraction of the total revenue once the platform and the aggregator have taken their whack.
As the large platforms only deal with a small number of aggregators, you are pretty much stuffed. Do watch out for this: some aggregators and platforms try to get exclusive contracts. Signing anything BUT a non-exclusive contract would be, in my opinion, pretty dumb.
Also, be wary of aggregators who do not have direct links with distributors – but rather submit to another larger aggregator meaning another layer of fees.
8. Nothing can be guaranteed
All relationships in life grow and develop (or disintegrate). A wise filmmaker will often sign a distribution deal in which the filmmaker can leave the distributor if a certain minimal revenue stream has not been reached. It is also common to draft into your distribution agreement a void clause should your film not be released within a certain time frame.
9. R.O.I. and all that
All films have a revenue potential. The trick is to understand what the revenue potential for your film is, and then make your film for less than the amount you expect to earn. Get good at this, and potential investors will start to trust your acumen and start investing in your next project.
10. Network like mad
It’s a small industry, and it’s a people industry. The more you network with fellow filmmakers, the more you will learn about the industry and the good ‘uns and the bad ‘uns.
And, of course, the more you will learn about my next bug bear – film Distribution Deliverable Essentials..
Don’t let this lengthy list overwhelm you. It’s all part of the craft. And remember, to get really good at anything in life, sometimes you need to do what you don’t like doing.