Celebrating 17 Years of Film.Biz.Fans.
by Tom Hall
February 13, 2013 8:57 AM
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Where Would the Money Come From? On Film Festivals, Distribution and the Economies of Change

As the economy continues to struggle, the film industry has also felt the effect across the board, from film investment and production to the dramatic cost shift from traditional theatrical distribution (and the marketing dollars required for success) to a diversified approach that has seen a dramatic rise in video on demand (VOD) utilization across a number of platformed distribution strategies. And so, filmmakers and many distributors, facing a new environment where theatrical distribution grows more costly (and therefore unlikely for many) while the marketplace for VOD grows more crowded, are looking for new revenue streams to replace the diminishing likelihood of wider distribution and revenue

So, why not film festivals? They are, in many cases, the only opportunity for a film to screen in a movie theater in many communities. They appear to be spending money on things that, when seen by a filmmaker struggling to make investors whole, appear relatively superfluous-- parties, hotels and plane tickets, etc. The new thinking is that since the decline of the theatrical market for most independents, film festivals have become a "de facto" distribution strategy unto themselves. So, why not apply the old distribution model to festivals to replace what was lost in the ongoing theatrical decline and transition?

Why should we be applying a failing and uncertain economic model to any organization at this point?
First and foremost, the reason the traditional distribution economy is failing and changing is because it didn't make economic sense for distributors and exhibitors themselves. Why should we be applying a failing and uncertain economic model to any organization at this point?  The recent example of Indomina shuttering its theatrical distribution arm in the wake of releasing two of the most acclaimed films of the year is only a small example of how difficult distribution and exhibition of independent, non-fiction and foreign films are today. The theatrical film experience is competing against a dizzying array of choices for the consumer, from home VOD to other forms of entertainment, while consumer dollars remain relatively flat or in, many cases, decline.

And of all the structures in place to generate revenue for films, the least profitable and viable is the film festival. At each screening of a film, my festival loses money. The cost of theater rentals, projection rentals and technical staffing, building and implementing a stand alone ticketing system online and on site, marketing our films and promoting them to the press, staffing the theaters and often traveling filmmakers to the festival means that ticket sales do not cover the cost of any screening.  Yes, festivals raise money outside of ticket sales, but they do so in order to not only supplement film exhibition costs, but to create the kind of environment and event that actually drives an audience into the theaters to see films.

Which is to say that yes, you can have a film festival without filmmakers, press and community events that create an environment outside of theatrical norms, but I am not sure how that helps anyone. Without building the event itself, there is no audience. Just take a look at a weekend’s per-screen average for some of the most interesting work that has played the festival circuit.  Even with five screenings a day in cities full of millions of people, there are films losing money against the cost of exhibition and P&A.  Film festivals are not simply exhibitors, generating revenue on concession stands and throwing a print on a screen, they are there to create a living environment where the experience of seeing a film matters. Where there is dialogue and engagement, where word of mouth can be a powerful force for a film’s future. Film festivals are marketing partners and audience builders, platforms from which filmmakers can and should be launching an integrated campaign for their VOD and ancillary distribution strategy. We live in world where, aside from the biggest studio films, theatrical exhibition is a loss leader for the long tail of VOD and home video revenues.

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  • Tim | February 14, 2013 4:08 AMReply

    This is an interesting discussion, and a vital one for anyone who cares about independent film, especially film as an art form. I think it would be useful to frame the subject by all of us first acknowledging the sad fact that, even though most filmmakers and festivals have the best of intentions, the status quo of independent film as an industry is nevertheless dysfunctional in so many ways. We must also all acknowledge that, despite our best intentions, we are all still complicit in perpetuating the dysfunctionality as players within the ecosystem and as consumers in the marketplace.

    If the logic we're using here is that of good intentions and "fairness", the solvency/insolvency of a festival itself is actually irrelevant if their very existence is almost entirely dependent on insolvent films and insolvent filmmakers, and the festival is not creating enough value for those insolvent filmmakers. But, if the logic is just business, well then let's be clear to admit it and just call it what it is. There are good festivals in some of the richest parts of the country who sell expensive gala tickets and spend a lot of money flying their programmers all over the world, and it would seem the ethical imperative is certainly on them to either be breaking new films in a big way or paying filmmakers.

    "Fair trade" is good language to use, because regular people are familiar with it, and because we are dealing with very similar problems related to the supply or value chain of products that consumers buy. Film festivals and film societies, in their capacities of curators, tastemakers, and film markets, are in a perfect position to use their influence to shape the ecosystem to fairer outcomes and to educate their audiences about the fairness of the supply chain they rely on to consume their content.

    The status quo is dysfunctional largely because the logic of risk and return in independent film is essentially inverted, with various layers of distributors taking a very large percentage of the aggregate upside that likely bears no relation to their risk-taking. There are a few very good reasons why that is able to persist, and a main one is because the system of independent film in the US is built upon a large supply of speculative and eventually insolvent films and insolvent filmmakers that is seemingly never-ending, as it is fueled by the desperation of current filmmakers and the hopes of the next generation waiting to take their place.

    Anyone who cares about independent film should care about this issue, because it is a recipe for continual mediocrity in the art form, and it doesn't allow even much of the best talent to grow into real filmmaking careers. Hopefully, a combination of educating the audience so they won't let Hollywood crowd out independent film as much, greater VOD access and a more over-the-top world, and conscious decisions to buy more direct will eventually bring us to a fairer place. But film festivals are in a position to lead by example, not least by buying direct themselves through ideas like revenue sharing -- and generally putting their money where their mouth is to add value in as many other ways as they can and becoming real long-term partners in the films they believe in.

  • seafar | February 13, 2013 9:11 PMReply

    just catching up with the continued discussion around last week's piece (a little fuzzy on a semi-late Berlin eve)...really pleased with all the discussion, and especially that IW editor's choose somebody experienced and articulate to respond in such a thoughtful way as Tom has. And have learned lots form the comments on D-Word, across facebook, etc....i intentionally came up with a b&w proposal (the 35% thing) as a kind of provocation (and benchmark)...I understand that festivals are hardly one-size fits all, struggle financially to do good work, etc...but honorariums for visiting filmmakers, fostering direct connections to audiences, less restrictive premiere policies, more leniency toward day/date VOD, and, most importantly, transparency are all stepping stones toward recognizing that filmmakers are key economic actors in the enterprise of festivals....and we all need and want them to be able to make a living at this....BUT, I've modeled budgets that could make this work (and could be a selling point to sponsors, philantropists, gov't and festival audiences)....so ultimately I hold to the goal of transforming festival economics, whilst maintaining curatorial integrity. believe it can be done.

  • Dan Mirvish | February 13, 2013 8:25 PMReply

    Great piece, Tom! Nicely said, and definitely dovetails with the recent IFP-led discussions about best practice standards for festivals and accreditation.

    At Slamdance we gave out 10% of our box office to filmmakers last year. It wasn't much, but the thought was there and our filmmakers appreciated it (enough to buy a beer or two after the screenings). But that's not necessarily a model that's going to work for all festivals.

    I think some gay and other specialized festivals (ie. Jewish/Israeli) have paid screening fees for years - because there wasn't a robust theatrical market for those films, so the festival circuits became the theatrical release. It is time for other festivals to start to recognize the stark reality of the current theatrical state of things.

    In general, my feeling is the filmmakers should be getting SOMETHING out of the festival experience. In some cases, that may well be cash. In other cases (as Elliot Grove mentions below), it could be a database for your audience - nice idea! But it can also range from a number of other less quantifiable things like finding distributors, getting reviews, meeting other filmmakers, competing for cash awards, going on a nice vacation, picking up laurels for your poster, sight-seeing or just getting laid. At Slamdance this year, two of our filmmakers even got ENGAGED during the festival. Some festivals may - for example - give a choice to a filmmaker: Get a free trip here, or take some cash and Skype in your Q-and-A.

    The point is, as long as filmmakers are getting some kind of uniquely positive experience from the festival, then they should submit and go. But if they're not, then they shouldn't. It's kind of a free market.

    But free markets only work with full access to information (or so I vaguely remember from getting a C+ in Econ 101 - obviously the reason I went into filmmaking).

    So one of the things that we talked about at these IFP festival meetings was to create some kind of user-generated Yelp-ish system for filmmakers (as well as audiences and others) to rate or otherwise fairly evaluate their experiences. Up until now, it's just been a cryptic word-of-mouth basis for deciding what festivals to go to. Withoutabox doesn't have a system for this (and it probably shouldn't anyway). IndieWire doesn't do this (but maybe could). Chris Gore's Ultimate Film Festival Survival Guide was the best qualitative test of festivals, but it's been a while since an edition's come out.

    Playing at several international festivals this year with my new film "Between Us", I was surprised at how few US festivals European, Asian and Latin American filmmakers were submitting to. When I asked, the most common answer was that their foreign sales companies do their submissions for them and only submit to festivals which pay screening fees. So, maybe US festivals are just late to this game. I dunno.

    But I would suggest people read my opening night poem this year at Slamdance called "Putting the Festiv Back into Festivals" - basically making the point that there's a ton of great reasons to go to festivals even if it's not some fancy "premiere" festival. (you can find it at Film Threat - but apparently I can't link to it here)

    Thanks again to Sean and Tom for discussing the value of festivals in such a great thoughtful manner!

  • Luca Zamai | February 14, 2013 3:31 PM

    Dan, so good you mention this Yelp-ish system. After several years on the circuit with my short films and lots of talks with fellow filmmakers, it's exactly what I felt was missing: information on a global scale. So, a little less than a year ago I started FilmFestivalLife - it builds around a user-generated festival rating tool (filmfestivallife.com/Berlin-International-Film-Festival) on top of a curated festival database with some other nice features to help film professionals plan their festival careers. It's not as easy to get filmmakers and industry people to seriously share their experiences though. It would be amazing if you're shout out would help move the discussion there.

  • Elliot Grove | February 13, 2013 7:25 PMReply

    An excellent article Tom. I'm pondering your comments on premiere status. We introduced UK premiere status for features 3 years ago and it has really helped our profile.

    Here at Raindance (in Europe) we are constantly asked for screening fees, usually by sales agents. We can't afford to pay screening fees. Box office receipts account for just 24% of our annual budget. If we were to pay screening fees this would come from our marketing budget which would spell the death knoll after 21 years, and I'm not about to do that.

    We try our hardest to attract distributors to our screenings. In 2012 forty-one of the 101 features secured a deal. To the remaininig films we hope and pray that their experience in London was worthy of their trip and effort.

    This year we are trying to devise a system as James suggests here to share audience with filmmakers but are hampered by the arcane UK data protection laws. We are also doing our best to keep the memory of films from years gone by fresh in our publics mind - the long tail.

    Which leads me to ask myself again: why bother? Running a film festival is probably as much or even more work than making a feature. And we at Raindance all have kids who need shoes, and Tom: I totally agree that film festivals have to be constantly re- invented.

    Why do we do it? Because we believe in it. When it's working, when the cinema is full, when the filmmakers are applauded, when there is a real buzz, it's fantastic.

  • Stewart | February 13, 2013 6:23 PMReply

    There is something basically wrong here. Not only financially, but also morally. Filmmakers work for years, sacrifice for years, they have to eat every day, their kids require spending money every week, yet when their films are screened at a festival they receive zilch of the admissions. Wrong. The percentage of payment may vary depending on the festival, but something should be paid. If a festival can't afford even an honorarium, then it should close up.

  • James Belfer | February 13, 2013 4:23 PMReply

    I think this is a pretty sound argument. Saying that festivals should pay filmmakers is almost too easy and is a bandaid on a gaping wound. Let's take a brief look at the math. I screen my film four times at the Library Theater at Sundance to a full house of ticket buyers ONLY (no passes, no press or buyers comps, etc.). That's 448 seats X $15/seat X 4 screenings X 35% which equals $9,408. That's peanuts and and not taking into account that much of the audience is comped sometimes even by the filmmakers buying tickets out of pocket themselves! Asking for money isn't the key. Asking for 1,800 people that saw my movie at the Library is...

    Suppose you had to register an email address or a Facebook account with Sundance in order to buy any tickets (online or in person). That list of your first eyes on your film is VITAL to the word of mouth and beginning steps towards building your audience. I don't want Sundance to give me money, I want Sundance to give me my audience. I want to interact with them, poll them, incentivize them to tell their friends about my film, and maybe even reward them for choosing my film over the hundreds of other films playing at the fest. But I can't do this. On a similar topic, there should be better ways to regulate who comes into screenings with badges. Relying on a few junior sales agents standing at the door writing down notes on their iPhone about what buyers are attending my film is a wildly inefficient process. Better scanning options won't take up any more time in the admission process and will provide so much value and take away stress from the film's team.

    If festivals gave me my audience I could do incredible things with it. I could A/B test SEO and inbound marketing techniques. I could use it as a springboard towards self distribution. I could even make new friends and family for my film. These things will lead to a stronger audience overall, a higher chance of becoming cash flow positive, and maybe even use it as leverage to show proof of concept when negotiating distribution deals. Don't give me money, give me my audience!

  • Ron Brown | February 13, 2013 7:31 PM

    James, I agree totally. When I attend trade shows I have to register, give my particulars and get issued a bar coded badge which gives me admission to the venues and a means of recording my visit to the various stands. Cannot such a scheme be implemented at festivals, and the audience list with particulars be provided back to the producers or distributors of the films for marketing purposes? It would also allow segmentation of the list between public, industry and media/press.

  • Laurie Kirby | February 13, 2013 4:13 PMReply

    As a former festival director and now ED of the IFFS, I know first-hand the struggles of keeping a film festival afloat (which included 5 years at Newport amongst others). I used to say, and not in jest, that if I did away with the films and the filmmakers, I could make a profit. Standing alone, the ticket revenue from films did not support the festival. What sustained us was sponsorship, grants, membership & events. The core of the festival is the filmmaker and the film but this idea only robs Peter to pay Paul. And Peter is the venue for possible distribution with third parties, not the distributor. We believed taking care of our filmmakers was the paramount objective but paying a percentage of revenues would have been unwieldy & would only further bootstrap an already struggling industry.

  • Ron Brown | February 13, 2013 7:30 PM

    James, I agree totally. When I attend trade shows I have to register, give my particulars and get issued a bar coded badge which gives me admission to the venues and a means of recording my visit to the various stands. Cannot such a scheme be implemented at festivals, and the audience list with particulars be provided back to the producers or distributors of the films for marketing purposes? It would also allow segmentation of the list between public, industry and media/press.

  • brian fantana | February 13, 2013 3:53 PMReply

    Mr Hall's comments are incredibly insightful and spot on - he would be the complete package if he could play defense

  • Sujewa Ekanayake | February 13, 2013 12:28 PMReply

    Both articles (this one - Tom's response - and the original one that initiated the convo) are good, make valid arguments about the state of things for indie filmmakers and indie film festivals. things being where they are right now, as a filmmaker i have a Start of Distribution expenses item in my budgets for current projects, and cost of submitting to film festivals, etc is covered under that (meaning when I fundraise that's one of the essential expenses that i try to raise $s for). On the film fest end, I like what NewFilmmakers NY (& probably others) does - as a part of the submission process they create a digital copy of the film & set up options to sell downloads, etc (i believe), anyway, additional services such as those will probably make most filmmakers happy. it's interesting that we have this convo at all, it's possible that indie filmmaking & film festivals have grown to be a unique aspect of american culture, i don't think any other country produces as many indie films or as many indie film festivals (and this is probably a positive thing or can be framed as a positive thing).

    - Sujewa Ekanayake
    Director of 2013 indie film Breakthrough Weekend