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by Anthony Kaufman
April 4, 2012 12:37 PM
16 Comments
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Here's the 6 Reasons Why You Don't Know More About VOD Numbers

Some distributors want this to change. Dylan Marchetti, founder of theatrical distributor Variance Films, has worked with several companies on titles’ VOD releases; he calls the lack of of transparency "stunning and infuriating.

“I know filmmakers who have been surprised to receive $600 after being on VOD for six months and filmmakers who have gotten $100,000,” he said. “The surprise is not appropriate."

Some distributors suggest that it may be as simple as a fear of the unknown. "I don't think anyone wants to be the first," said Nancy Schafer, executive VP of Tribeca Enterprises, parent company of theatrical and VOD distributor Tribeca Film.

Gallagher took that chance at SXSW earlier this month when he released a document that showed the breakdown of the VOD numbers for a handful of Gravitas-released films, including a detailed numbers behind films such as "The Bill Hicks Story" as well as the narrative film "5 Star Day" and the documentaries "Billionaire" "Elephant in the Living Room," "DMT: The Spirit Molecule" and "Fat Sick & Nearly Dead."

But a lot of distributors don’t. IFC Films, which said it releases about 50 VOD titles annually, declined to make any further comment for this story. And Eamonn Bowles at Magnolia Pictures, which and pioneered the “ultraVOD”  model (i.e., films released on VOD before their theatrical dates) argues that simple number-crunching isn’t good for the business.

"It's such a simplistic abstraction," says Bowles. "It doesn't account for money spent and all the other parts of the equation. It doesn't reflect economies of scale. If we go down that reductive road, it doesn't help us. There's no context for those numbers.

"We’re not about bragging," he continues. "That's the problem with the industry, all the dick-wagging that goes on. When you start going to the lowest common denominator, it makes it harder, not easier."

Bowles also notes that the indie films’ numbers aren’t terribly attractive compared to their studio counterparts. "You don't want to be lumped in with the 'Twilights,'" he said.

Still, looking for change? Watch TV. As the VOD market matures, "data analysis will be increasingly important," Gallagher said. "And the market will demand better data to make better decisions."

As to when that moment will come, it probably will be after VOD data for TV is made public. Goerlich said he believes that TV VOD reporting will mature faster because it has to: networks rely on viewer statistics to support ad revenue. "In an advertising-supported business, they need to have more transparency," he said. "There are no hidden numbers in those businesses."

However, since movie VOD is a transaction between cable operators and film companies, there's less incentive for that information to be made public. "And going from a closed market to an open market doesn’t do anything to help the cable operators," he said.

In the meantime, filmmakers can do it for themselves. If companies won't educate filmmakers about the revenue VOD generates, Marchetti suggested that producers should share that information amongst themselves. 

"The one thing that I always preach is that filmmakers do eventually get their numbers, so the more they put that information out there, we can create a database of information," he said. "If filmmakers can say, 'This is exactly what I made,’ this will be able to help other filmmakers plan better, market better and cash-project better."

Marchetti also said that the more information there is about VOD grosses, the more theater owners might feel less threatened about theatrical and VOD day-and-date releases. "It's not necessarily an antagonistic relationship," he says.

But industry sources suggest that it's still going to take time for companies to come forward. "My philosophy," says Tribeca Film general manager Todd Green, "is that I'm not concerned with how other companies are doing. I know VOD is working for us. And when the industry is ready to share, it'll happen organically."

But when we asked Green about what kind of numbers Tribeca's top VOD success, the reality TV horror film "Grave Encounters" grossed, he replied, "I'm not going to answer that."

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16 Comments

  • brian fantana | April 10, 2012 11:00 AMReply

    it is kind of humorous to see the rants about transparency about the VOD #'s - why aren't these same folks ranting about transparency about TV revenues or Netflix/Amazon/Hulu streaming revenues (I won't include Snag in that as apparently there are no revenues there) or DVD or airline/hotel revenues? Movie ultimates (and the success and failure of all movies) are based upon all of these revenue streams and only one (Box Office) is listed in the trades - Rant about transparency around all revenue streams - that is what will give you the better picture of success/failure - the successful companies/films that aren't being "transparent" all look to have happy filmmakers and movies showing up in top categories in iTunes, on pay tv, on DVD, etc etc etc - why isn't Anthony Kaufman taking the studios to task for not releasing all these other revenue streams to the public - they are just as meaningful and to not understand these basic economic principles of the movie business and merely holding up transparency of VOD reporting is very simplistic

  • Orly Ravid | April 6, 2012 9:05 PMReply

    Folks! We published real numbers including VOD (and the very ones used at the SXSW panel which I moderated) in the book SELLING YOUR FILM WITHOUT SELLING YOUR SOUL (www.SellingYourFilm.com). Thanks again to the filmmakers of American: The Bill Hicks Story and Gravitas and all the others who were transparent about their numbers. The REAL NUMBERS can be found here too (via this PDF link):

    http://www.thefilmcollaborative.org/sxsw/American_VOD_SXSW2012.pdf

    May all the distributors and filmmakers be transparent for the betterment of the filmmaking community as a whole. Happy Trails.

  • Dave | April 5, 2012 2:36 PMReply

    I must say that, as a writer-producer-director (ie, a "filmmaker"), I am greatly offended by those who would say I wouldn't understand how to interpret VOD numbers.

    Anyone with a brain & experience in this business understands that Box Office figures are not a final indication of a film's profitability and knows what the cash really goes through when trickling back.

    So, it's likewise our job to learn how these different VOD venues work and understand them. But we're not stupid nor incapable of figuring it out.

    Let's have the information. These figures are essential for us to perform our jobs as producers.

    Judging from the situation at the moment--and setting all the rhetorical doubletalk aside--we can at least make the "qualitative" observations that [a] VOD revenues are much better than anyone is fessing-up to, though they certainly may not overall be up to the DVD sell-through days--but you knew that was going to end anyway (okay, the majors obviously didn't but that's no surprise), [b] a studio/distrib makes more money from a VOD transaction than a disk sale because it does not have to manufacture a tangible item, and [c] Redbox and S-VOD (ala Netflix) are undermining decent film revenues for everyone.

    One thing not mentioned here so far is that fact that there are often too many middlemen involved in the VOD process. When one aggregator has to go to another aggregator who has to go to yet another to place a film on a single service, it goes beyond the absurd. And THAT has got to stop.

  • J. Courshon | April 16, 2012 12:24 AM

    "[b] a studio/distrib makes more money from a VOD transaction than a disk sale because it does not have to manufacture a tangible item..."

    Actually, that's not true. Unless it's a significant Premium VOD transaction. The studios' DVDs and Blu-rays at wholesale price to the retailers (and rentailers) -- even after deducting the cost of manufacturing and shipping -- is quite a bit more than their share of the $5.99 price of a new release on VOD from Vudu or YouTube rentals or the cable/satellite/telcos platforms. DVDs and Blu-rays are still the largest revenue generating market for the studios.

    http://www.Distribution.LA

  • Benjamin | April 5, 2012 5:44 PM

    I think you might be taking this too personally. No one is condescending and saying you're too ignorant to interpret VOD numbers - it's just that there really is nothing to interpret. Honestly. You pretty much answered why that is with your tirade against having too many aggregators. No one is hiding information from producers either. If you have a deal with a distributor or an aggregator you will get a report on how well your film did and the money you are entitled to. If you want to make that information public - that's up to you and whomever you made an exploitation deal with. What were talking about here is something akin to a weekly Box Office report that's officially reported by the trades. The box office reports are useful in determining which markets to open in, the life of a film after it's theatrical run and how much to further spend in theatrical marketing. VOD reports really wouldn't aid in any of this. Because of the number of entities and wildly different deals that people have right now - I'm not even sure what numbers you would want reported for which platforms or how that would assist you in your job producing films in any way. On the one hand you're saying VOD revenues are up and on the other you are saying that too many people have their hands in that pool. You're answering your own argument.

  • Rania | April 5, 2012 12:23 PMReply

    To add to this discussion, check out this story on digital distribution, which includes interesting quotes from filmmaker Morgan Spurlock and Snag CEO Rick Allen.

    http://www.indiewire.com/article/digital_distribution_gigantic_exposure_pathetic_revenues

  • Ellen | April 4, 2012 5:38 PMReply

    Where's Gallagher's document with the info he shared? Anybody have it?

  • Laura | April 4, 2012 8:35 PM

    Here you go! It's the American: Bill Hicks case study
    http://www.indiewire.com/article/you-want-vod-numbers-weve-got-vod-numbers

  • Brian Newman | April 4, 2012 3:43 PMReply

    This is a great start of the conversation, and IndieWire should keep pushing on this. Internet VOD is a big part of this, and it would, ahem, seem like a good place to start is with Snag.

  • jingmei | April 4, 2012 9:40 PM

    You said it. 8)

  • J. Courshon | April 4, 2012 3:29 PMReply

    From this article:
    "Bowles also notes that the indie films’ numbers aren’t terribly attractive compared to their studio counterparts. 'You don't want to be lumped in with the Twilights,' he said."

    This is not a reason for not releasing VOD numbers, but of course it's true that indie films do not typically perform anywhere close to the Studios' films. Lack of advertising money spent by the indies, lack of awareness (if the film didn't have a major theatrical release), and lack of being on some VOD systems. DirecTV, for example, rarely offers indie films on their (roughly) 75 VOD channels. Maybe a couple times a month, they'll offer a film that didn't have a major release (or any release), and DirecTV has a huge subscriber base. This is going to have quite an impact on an indie movie's bottom line, on these cable/telco/satellite systems.

    It's vitally important for Producers & Directors today to think about strategy and approaches prior to making deals with VOD providers, or exploiting the VOD landscape if DIY'ing their film. It is not enough to simply have your film up on the VOD platforms, and hope people will find it & buy it.

    JC
    ----------
    "THE SECRETS TO DISTRIBUTION: Get Your Movie Distributed Now!"
    http://www.Distribution.LA
    http://www.facebook.com/FilmDistribution

  • Richard Atkinson | April 4, 2012 3:25 PMReply

    Our latest award winning indie Dogs Lie starring Ewa Da Cruz, Samrat Chakrabarti and Frank Boyd will be released 4/24/2012 by Vanguard Cinema. http://www.dogslie.com. As producer and director I too have had trouble with previous films getting a handle on VOD revenues and thought your article informative and realistic.

  • eliz | April 4, 2012 3:11 PMReply

    I'm a producer, and if there are any numbers out there, on any platform....I wanna see them....I wanna know where to put my energies, and to do that I need as much information as I can get about my audience.....because it is already a moving target......one can work backwards from the numbers and try to figure out what they actually mean at any given point in time....we re not talking about brain surgery or space travel....without numbers we're really working in a vacuum. Sure its hard to compare performance of films in that each one is unique....but we all want the same thing,we 're going for the same audience, we want as many people as possible to watch our films and we wanna make enough money to make more films....and pay the rent.

  • Benjamin | April 4, 2012 5:39 PM

    Well of course it isn't brain surgery but the process is, in fact, quite byzantine. In order for anyone to make sense of VOD numbers they would have to process them against what has been spent on marketing and put that in relation to a specific distributor's agreement with a specific VOD platform. And since every distributor has a difference relationship and a different deal with many different platforms - this comparison is almost impossible to calculate. As a producer you have the right to audit every report that is given to you - that report should have title specific VOD information on it anyway. But even that won't allow you to really see how your film is doing vs. another. I don't think any producer or distributor in their right mind would want to make a film's financials, in their entirety, public knowledge. Also the VOD audience is vast - you're actually NOT going to be after the same audience (hypothetically speaking) as another film in a different genre.

  • James Glasscock | April 4, 2012 3:02 PMReply

    I've studied VOD title data from Rentrak for nearly 6 years.
    Lots of good points in this article.

    Here is the 1 sentence synopsis.
    Transparency does not benefit distributors who have overheads and distribution/marketing expense line items they prefer you not be able to correlate to granular revenue or order volume.
    Ok and a 2nd sentence: creative filmmakers do not usually have a strong understanding of distribution economics and consumer behavior. If they did, there would be less filmmaking and less film investors in the market. Distributors much prefer a model of where content supply > demand.

    The good news is transparency is a natural evolution for this business. Many DIY models, albeit small, already have this. The Hollywood Accounting model is an endangered species. God bless the filmmakers who are long due deserving this!

  • Benjamin | April 4, 2012 2:09 PMReply

    I think this article is an excellent jumping off point for further discussion. But it attempts to cover the spectrum of film distribution in relation to potential VOD reporting.

    To begin with - Box Office reporting is already somewhat misleading in regards to the profit of the film vs. how much was money was spent on the backend. I think what filmmakers really want to know is: "how much money am I getting back?" A very valid question / concern indeed.

    But I don't see that reporting VOD in any official fashion is going to aid them in the answer to this query. In fact, it could serve the opposite purpose.

    But it all depends on what type of film we're talking about and the distribution model it went through.

    There's a MAJOR difference between Magnolia's process of distribution vs. Variance - a major difference between having a reputable company distribute your films vs. a service deal or even being on your own.

    If any sort of "information center" on VOD numbers were to be created it really would only serve those using the self-distribution or service deal model. But based on the sales at Berlin, Sundance and SXSW it seems that filmmakers/producers would rather have an experienced company behind them as said companies have potent relationships in both the theatrical and VOD landscape.

    If the established companies who specialize in independent distribution or otherwise were to report it could potentially confuse filmmakers and other distributors alike whose deals with different VOD outlets are going to be radically different. The numbers would simply not be that valuable in determining the profitability of the film.