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September 16, 2008 9:00 AM
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FIRST PERSON | Peter Broderick: "Welcome To The New World of Distribution," Part 2

EDITORS NOTE: Peter Broderick's look at the distribution concludes today at indieWIRE. While almost everyone seems to have an opinion about the state of the Old World of Distribution, the New World is much harder to assess. Although its population is growing rapidly and there are a number of boomtowns, much of it remains unexplored. There are no maps or guidebooks. Fortunately I have accompanied hundreds of filmmakers on their journeys, and many others have sent me reports from the frontiers. Here is an overview of what many independents have discovered so far about the geography of the New World:

FILM FESTIVALS are more important for most films. Because it has gotten harder to achieve theatrical distribution, filmmakers likely to get little or no exposure in theaters must make the most of festivals to start building press and public awareness. Festivals continue to play an important role in attracting distributors. But in the New World it is more likely that rights will be split among several distributors in deals signed months after the festival premiere than through an all-rights deal made at 3 AM in a condo at Sundance.

Filmmakers have begun selling DVDs at festival screenings. The documentary feature "Lumo" sold 80 DVDs at a single festival screening. Since today there are a greater number and diversity of festivals and markets than ever before, filmmakers are developing customized festival strategies, and then continually refining them as they receive invitations and start playing festivals.

In the NW (New World), a notable minority of films are skipping festivals entirely, having determined they aren't worth the substantial investment of money time, and effort. This includes films that have avid core audiences and don't need festivals (e.g. "The Secret"), films that have urgent political content and can't wait for festivals (e.g. Robert Greenwald's "Iraq for Sale"), and films that have immediate commercial opportunities which could be lost during months spent on the festival circuit.

Peter Broderick, pictured on Sunday in Manhattan. Photo by Eugene Hernandez/indieWIRE

THEATRICAL DISTRIBUTION in the NW is under the filmmaker's control. Many filmmakers work with a booker or service deal company, enabling them to fully control their theatrical launch while retaining all their distribution rights. To secure a theatrical release in the OW (Old World), filmmakers must give a single company all their U.S. (or North American) distribution rights and total control of their film's marketing and distribution. Some filmmakers want theatrical distribution so badly that they agree to overall deals even though there is no advance and no chance of receiving a financial return.

The current state of theatrical distribution is dismal for most independent features and documentaries. Theaters are overcrowded with studio films and higher-budget independents (including many mediocre equity-financed movies). When twenty-one new pictures open on a Friday in NY and LA, what chance do films with limited advertising budgets have?

In the NW, many filmmakers view a theatrical release as desirable but not essential. They make pragmatic assessments of the value of a theatrical run and whether they have (or can find) the resources to do one cost-effectively. Rather than hoping for wide release in hundreds of cities, they explore very limited theatrical releases in one to six markets (via regular bookings and/or four-wall arrangements in which they rent theaters and keep all ticket sales). Filmmakers determine whether the possible benefits (reviews, awareness, Academy Award eligibility, career opportunities, etc.) outweigh the costs. If they decide on a theatrical release, they need to be as diligent about managing their expectations as controlling costs. While they can hope that their initial theatrical engagements will go well enough to allow them to go wider, they must be prepared for minimal ticket sales and no expansion to other cities. Some filmmakers decide theatrical isn't worth it and premier on television or video.

NONTHEATRICAL DISTRIBUTION can generate significant revenues for NW filmmakers. While the costs of theatrical distribution are almost always greater than the revenues, filmmakers can make money from every booking on a campus or at a museum. For each screening, an initial rental fee is paid as an advance on 35-50% of ticket sales. If filmmakers attend, they also receive a speaker's fee, usually at least $750 plus expenses. Filmmakers also sell DVDs at these screenings. At $20 per DVD, these sales can add up quickly. Some filmmakers work through nontheatrical distributors, splitting rental fees 50/50. Others do it themselves. Benefiting from all the publicity they generated during their theatrical release, the "King Corn" filmmakers organized 150 community screenings across the country.

HOME VIDEO DISTRIBUTION is the biggest source of revenue for most filmmakers in the NW. Choosing the right retail video distributor, structuring a fair deal, and maximizing direct sales from the filmmaker's website are all critically important. In the OW, filmmakers who make overall deals do not get to select their video distributor or structure the video deal. They are often discouraged or prohibited from selling DVDs directly. Some OW distributors believe that they are operating in a zero sum framework in which they will lose a DVD sale every time a filmmaker makes one. In the NW, most video distributors allow filmmakers to sell directly from their websites. Retail sales have often increased when filmmakers have actively promoted and sold their films online.

NW filmmakers use hybrid video distribution strategies to make the most of retail and direct sales. They often first make a limited edition DVD (just the film, no extras) available exclusively from their website and at screenings. During this window before their film is in stores or on Amazon, filmmakers can maintain their price point (since no retailers are discounting it), receive 100% of revenues within a few days of a buyer ordering it online with a credit card, and acquire the email address of every customer. After this initial window of 3 or 4 months, their home video distributor makes a retail edition of the film (enhanced with extras) available to stores, Netflix, and Amazon. The filmmaker simultaneously sells this edition from the website and at screenings. NW filmmakers often receive a greater percentage of retail video revenues through 50/50 deals or distribution fee deals than OW filmmakers make through standard royalty deals.

EDUCATIONAL DISTRIBUTION can also garner significant revenues for NW filmmakers, but the choices are more complicated than they used to be. In the OW, filmmakers who controlled their own rights often had to chose between making a deal with a home video distributor or making one with an educational distributor who would sell copies to colleges, universities, libraries, and organizations. If filmmakers made an educational deal, they usually had to agree to postpone the home video release of their film, sometimes for as long as five years. Educational distributors were afraid that once a consumer DVD was available for $25, they would no longer be able to sell their educational version for $250.

In the NW, home video rights are more valuable, so many educational distributors are learning to coexist with home video. They have shortened the window they require of exclusive educational availability and are allowing filmmakers to sell from their websites. Some filmmakers have opted to do their own educational distribution, hiring someone part-time to handle it, buying mailing lists, sending emails or postcards to educators, selling directly through their websites, and using their own fulfillment company. It is much more work and is likely to produce fewer sales than an educational distributor can, but some filmmakers would rather keep all revenues after their costs than receive a 30% royalty. Filmmakers who believe they can make more money doing it themselves should consider whether the time required could be better spent on other aspects of their distribution, such as outreach to organizations.

TELEVISION can be an important source of direct and indirect revenues. Domestic television licensing fees range from hundreds of thousands of dollars down to thousands of dollars. For films that have had little or no theatrical distribution, a national television airing may make it easier to make a retail video deal and sell DVDs. Some filmmakers let PBS air their film for no fee if they are allowed to sell spots at the head and tail of the broadcast to underwriters for sums that could total their entire budget. To maximize television sales overseas, filmmakers need a good foreign sales agent and, if it is a documentary, a version of their film that will fit a one-hour slot.

The innovative IFC First Take program demonstrates the growing importance of video on demand (VOD), which enables consumers to virtually rent individual movies for limited viewing periods. Collapsing traditional release windows, IFC First Take simultaneously launches films in theaters and on VOD through Comcast and other cable and satellite operators. The program was so successful that, this year, IFC started Festival Direct, which, skipping theaters altogether, premieres films on VOD.

DIGITAL RIGHTS are the most complicated and contentious rights in the NW. Unlike in the past when rights were clearly separated, today they often overlap. Everyone seems to want some of your digital rights. The digital rights home video distributors want may conflict with the digital rights required in the TV deal which may conflict with the rights needed by Netflix for Watch Now. Few companies are now making much money from digital downloads, but most are hoping they soon will. The notable exception is iTunes, which is best approached through one of its designated content aggregators. Filmmakers must carefully structure any deals that include digital rights so that they are complementary rather than in conflict.

Digital distribution is in its formative stages. While it is impossible to predict its future, it is clear that digital rights will become more valuable. For now, many savvy filmmakers are holding onto as many of their digital rights as possible, including the right to do digital downloads directly from their own websites. They are avoiding long non-exclusive deals. They also recognize that in many cases it isn't be possible to separate digital rights from analog rights, and that many deals will require a mix of both.

INTERNATIONAL DISTRIBUTION in the NW is still driven by television sales. Independents taking a hybrid approach are working with foreign sales agents to sell their rights territory-by-territory, while retaining the right to sell directly into countries where they don't have video distribution. Many filmmakers are making their films available to consumers around the world through DVD sales and digital downloads from their websites. In the OW, many filmmakers can't find a foreign sales agent and have no foreign distribution.

* * * * *

If you're ready to venture into the New World, here's the best advice from the explorers and trailblazers that have gone before you:

Be strategic - In the Old World, most filmmakers have reactions not strategies. They chose the best offer from those they receive. It is essential to be proactive in the New World. You need a strategy to navigate it successfully.

Think long term - Be clear about your goals. Are you creating a business around a group of films with common content? Are you building a career as an artist with a core personal audience?

Stay flexible - Implement your strategy stage by stage and modify it as you go. You learn valuable information in every stage that will enable you to improve your plan for the next stage.

Split rights - Retain overall control of your distribution. Take a hybrid approach, dividing certain rights among distributors and retaining the right to do direct sales.

Target audiences - Research, test, and refine your approach to core audiences. Understand who is most responsive to your films, and how to reach them most effectively.

Find partners - Look for national nonprofits, websites, sponsors, and distributors to team up with to bring your film to their members, subscribers, and customers.

Build a team - Find teammates who can help with the website, outreach, fulfillment, theatrical, domestic sales, and foreign sales.

Harness the internet - Use your website to build awareness, develop a mailing list, attract user-contributed content, and make direct sales. Design a compelling site that will have a life of its own.

Be creative - Avoid formulaic distribution ruts. Apply the same creativity to distribution as production. It is often harder to bring a movie into the world than to produce it. An innovative approach to distribution can make all the difference.

Make distribution happen - Design a distribution strategy and find the distributors, partners, and teammates to help you implement it.

Life in the New World isn't easy. Determination, persistence, and grit are required. There are no magical solutions and success is not assured. But for all the obstacles and dangers, there are unparalleled opportunities. Free at last to reach audiences directly, independent filmmakers can now take control of their distribution and reap the rewards.

(c) 2008 Peter Broderick

indieWIRE's coverage of IFP's 208 Independent Film Week will continue throughout the week in our special New York section. Part one from Peter Broderick was published Monday.

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5 Comments

  • pete conrad | September 19, 2008 4:20 AMReply

    Being a writer now delving into production I've been steeping myself in the world of distribution. And I must say that it's fairly harrowing. Perhaps those of us 40ish and younger are quicker to adapt to a world that has changed significantly since the 1980's and are more open to a new world way of getting our films out there. I tend to sway to a simultaneous release which appeals to a broad audience.

    The writing world has been barraged with an influx of "writing competitions" as of late just as, it seems, every city and town in America now has its' very own film festival. Fees, fees and more fees - very detracting.

    I just want to make and release my films...

    Great info. Nice site Orly, as well.

  • orly ravid | September 18, 2008 7:47 AMReply

    Just a couple broad general comments to all the digital distribution talk -- 1. I like to think of digital platforms just like home video stores, meaning, get your films to all of them (why not augment exposure and probability of consumption, though certainly some will fail you and we have yet to see which services can best market and which technologies will emerge to win consumer favor) and 2. since we now recognize the value of niche & issue-oriented marketing what we need is more thoughtful curating and programming and then marketing behind the digital exhibition platforms such that people can find what meets their interests just as they do via the magazines they choose read. All this just to supplement the sophisticated algorithms already in use by Netflix, Amazon, etc. And if anyone missed my (accidentally two) postings of this before - for a digital distribution overview (ever in-progress) feel free to download our PDF at http://www.newamericanvision.com/digitaldistribution

  • green screen cinema | September 17, 2008 8:08 AMReply

    I don't know Doug. As soon as I posted this comment I got a nice, threatening email from film@sxsw.com (I'll post an article on the whole thing later today). Organizations that generate this much revenue are quick to squash free speech. It's the old "you'll never work in this town again" ethos. Once someone sets themselves up as a gatekeeper they become much too interested in guarding the gate.

  • dougwhyte | September 17, 2008 7:45 AMReply

    I have to say I disagree with the above comment. Have you ever run a film festival? There are much better ways to make money in this world than film festivals. You are correct that there are a few bad apples out there that have this scheme, but they never last because they realize it is not a money maker (and they usually don't put on a decent festival, thus it crashes and burns.) Most festivals are in it for the love of film and unfortunately have to charge fees because of the lack of government, foundation and sponsor support in this country. Most festivals in Europe don't charge entry fees because they have a much easier time getting support for their promotion of film as art. I think that if you asked most festivals, they would be happy to get rid of entry fees if they had the support they need to survive.

  • green screen cinema | September 16, 2008 10:57 AMReply

    Great two-part article! I would only take point with the usefulness of film festivals in the New World. The idea that a single gatekeeper can decide if your film should be screened or not (and that you would actually PAY for this decision making step via an entrance fee) is ludicrous. It's safe to say there is a glut of film festivals at present, which seem to exist mainly for the mining of entrance fees. Because of this most of the money spent on entrance fees by filmmakers is wasted. For those few that are accepted the audience is limited (compared to online distribution).

    The biggest crime to date is the concept of the online film festival. Your sponsor (SXSW) tried this out this year, and it was great for them. They got to keep oodles of entrance fee money, and all they had to do was post a couple videos online. The temptation to rip off filmmakers in this manner is strong, but eventually fewer filmmakers will fall prey to this scam.

    As web distribution matures it will certainly cut into the monetary side of the festival business. Hopefully at that point festivals can return to promoting film (and resist the temptation to rip off filmmakers).