Inside the Strange and Prickly World of Ad-Supported Indie Film Distribution

AVOD streamers license movies that would otherwise be stuck in the bargain bin, but filmmakers may need "a million" views to make money.
"By Deception" AVOD Streaming
"By Deception"
Courtesy of Samuel Morrison Jr./Homestead Entertainment

By Deception,” a feature from Philadelphia-based filmmaker Samuel Morrison, Jr., has no stars, no buzz, no theatrical release, and almost no production budget — $20,000. It’s a miracle it got made; perhaps even more miraculous is the movie is available for streaming on Peacock, Tubi, and Plex. It might even stand to turn a tiny profit.

“By Deception” is a psychological thriller about a writer who finds his friend murdered in his home but has no memory of the incident. It’s one of the hundreds, maybe thousands, of independent films that appear on streamers via non-exclusive, ad-based licensing agreements. A streamer didn’t buy Morrison’s film, but by generating enough ad impressions through on-demand views, it’s slowly but surely paying out.

Morrison knows his film isn’t destined for awards. After making multiple short films and music videos, he went into production on the largely self-financed “By Deception” as the COVID-19 pandemic began. He said it was hardly the film he envisioned, but his wife encouraged him to see it through rather than cut his losses.

“The ratings have been decent, and people have been reaching out that I don’t know saying, ‘We were on the edge of our seats,’” said Morrison via email. “It’s always dreaming of having a film on Netflix, HBO Max, Hulu, etc., but not having the budget or production value to realistically obtain such. My goal with ‘By Deception’ was initially to complete a film and show Hollywood decision makers the possibility of what we can do, and I have achieved that.”

AVOD (advertising-based video on demand) streamers often license unknown or obscure movies in bulk from distributors like FilmRise, Gravitas Ventures, Shout! Factory, Cinedigm, and others, but those companies didn’t acquire “By Deception.” Instead, Morrison licensed it via Homestead Entertainment, a tiny distributor in Laguna Beach, California that specializes in working with filmmakers to access non-exclusive AVOD deals on dozens of services.

Homestead principals Sean Armstrong and Rob Johnson told IndieWire they convinced one of its directors to pass on a $100,000 SVOD licensing deal and instead release through Tubi via a non-exclusive deal. They say it allowed the movie to make six to seven times more. (They declined to name the figure or the film.) “The whole space has evolved,” Armstrong told IndieWire. “Now these people are writing checks.”

“We’ve seen filmmakers’ lives literally changing,” Johnson added. “In the pre-streaming era, even as close as pre-pandemic, these filmmakers would never have even had the ability to get a distribution deal or a licensing deal.”

No one confuses AVOD dealmaking with Sundance auctions. The overwhelming majority of the titles handled by companies like Homestead and FilmHub come from low-to-microbudget filmmakers and it’s not the first, second or even third option for festival darlings with modest budgets.

However, a nonexclusive AVOD deal allows filmmakers to get their movies discovered across multiple platforms and make at least a little money, but rates are inconsistent and often undisclosed, usually pennies on the view. They’re also based entirely on performance: It’s a 50-50 share of ad revenue (minus distributor expenses) and there’s no upfront payment.

For AVOD and FAST streamers, these deals are increasingly appealing. If they need, say, a curated Christmas channel, a non-exclusive deal lets them license 50-100 titles at a time and create with hundreds of hours of content. No need to take long-term exclusive rights, or overpay for original content out of a film festival. (According to one insider source at a streamer, some streamers meticulously view trailers before licensing, while others will seemingly take “anything.”)

Filmhub homepage
Filmhub works with over 100 streamers including Amazon Prime Video, IMDb TV, Tubi, and The Roku Channel.

Also in the game are self-service film aggregators. Filmhub cofounder Alan d’Escragnolle said his company has distributed more than 17,000 movies since January 2020, supplying as much as 15 percent of Tubi’s 50,000-film library. He said FilmHub works with upward of 100 services and claimed distributors have started leaning on them to reach more niche or international streamers.

Similar to the principals at Homestead, d’Escragnolle claimed that a low-budget filmmaker who has released several movies via FilmHub grossed between $60,000-$90,000 on each title within the first year. (He also declined to name the filmmaker.)

“Filmmakers who are doing this well and are playing to the right audience are able to make a living off this,” he said. “You want to know what your distributor is doing, where they’ve distributed your title, where it’s live, where it’s monetizing and when you’re going to get paid.”

Filmhub takes a 20 percent cut of whatever a movie earns. Johnson didn’t disclose Homestead’s fees, but (naturally) argued that it offered a superior service with a choreographed release strategy rather than putting your film everywhere.

“It’s a preference,” he said. “Filmhub does a service, and do you want to go to a self-serve restaurant or a Michelin star? Sometimes we do get filmmakers who come from those types of places [who] say, ‘We want a different experience.'”

Do the math – as any filmmaker who has gone this route certainly has – and a film might need to be viewed thousands of times before it can accrue even a modest sum. What no streamer does is publicly disclose their CPMs or reveal viewership data, and that goes for the filmmakers, too.

“While the per-view generally is not as much, I would argue that roughly the breadth and availability you have and access to people changes that,” d’Escragnolle said. “So yes, you might have to get your film watched a million times to make money, but guess what? Getting to that million is much easier now.”

It also leads to filmmakers becoming detectives to figure out how much services pay — and complaining to gatekeepers like d’Escragnolle that some services are worse than others.

“[Filmmakers are] saying, ‘I’m making all this money on Freevee, but nothing on Xumo. Xumo doesn’t pay me!'” d’Escragnolle said. “It’s all based on the viewership. The rate you’re getting paid is roughly the same, but it depends on the amount of viewers on that platform and the amount of time your film gets viewed. That’s what filmmakers have to think about as they go into this: You’re not getting an upfront license. It’s based on the viewership. It’s based upon the success of your film. That’s where filmmakers need to understand: ‘If my film isn’t making money, it’s not because people aren’t paying, it’s because people aren’t watching my film that much.’”

A film production executive who asked to remain anonymous said even on sites like Tubi, which have tens of thousands of titles, the majority of the viewing goes to the top 10 percent of content. Without homepage placement, the odds of being seen are terrible. “Who goes scrolling down a hundred pages?” the executive said. “The economics are so bad. You need so much volume, you even need decent volume for like a thousand dollars. A lot of people need to watch your movie.”

Actress-turned-filmmaker Victoria Vertuga directed, wrote, produced, and starred in “Lexi,” which she said had an ultra-low budget of just $5,000. She distributed through Filmhub. “We saw it as a unique opportunity to self-distribute, get that data and learn what that landscape looks like, what the numbers look like, with the hopes that would empower us for future projects,” Vertuga said. “This is what we did on our own. This is what we can do on our own.”

"Lexi" poster
Poster for Victoria Vertuga’s “Lexi”Courtesy of Victoria Vertuga

Vertuga placed “Lexi” on as many as 15 different platforms, including Plex, Xumo, and Tubi. She said “Lexi” will make its money back; Filmhub payments are itemized and timely. However, each streamer has its own tech specs and these nonexclusive films are not their top priorities. That made coordinating the platforms’ release dates impossible. Vertuga said she wasn’t even notified when her film became available.

“That means literally checking every platform that you’ve been delivered to like a friggin’ maniac,” she said. “Of the 15 we’ve been delivered to, I’m not even sure that we’re live on all of them. Some of them have terrible search functions. You’re waiting until you see your insights or your statements. ‘There we go, we’re getting paid by this weird one. I guess we’re live there.’ It’s kind of an adventure in that way.”

Streamers and distributors can be inconsistent in issuing payments; some pay monthly, others quarterly. Some pay six months after “insights” — the data points distributors share with filmmakers — become available. It made Vertuga question whether the model makes sense for the average filmmaker.

“I have no idea what it comes out to in math,” she said. “No one really does. That’s why it’s kind of weird. It’s very elusive. There are filmmakers I’ve spoken to that are making comfortably six figures off of a handful of projects on Tubi alone and they do no marketing. But I don’t think that is the norm and I don’t think that you can bank on that… I think it’s far more likely that filmmakers are making hundreds of dollars a month, not $10,000.”

Troy Carlton said he is one of the lucky ones. After spending 10 years trying to get his golf comedy “Birdies” to the screen, Carlton said he found that after meeting with distributors he decided that the strategies they use to release and promote movies were ones he could manage himself.

“We were ebbing toward self distribution, feeling that we would service this project better than somebody just trying to add to their library, and I think we were right,” Carlton said. “It’s a very wishy-washy process. The market is changing, and everyone’s trying to figure out what’s going on with this streaming service, and it seems a little more accessible for the little guys like me to be able to get my film exposed, seen, and get an audience. I don’t have to use these shady agents and distributors who have big promises but don’t have big plans.”

“Birdies” first launched on Amazon’s Prime Video Direct, which set a price of $6.99 to rent and $12.99 to buy (Amazon sets its own prices for TVOD transactions). The algorithms were in his favor: Carlton said “Birdies” was listed among Prime Video’s new releases, next to blockbusters. Best of all, he was delighted to learn that “the revenue is real.”

Carlton used what he made through Prime Video Direct to bankroll more marketing and events. His Amazon deal wasn’t exclusive, so he used Filmhub to push “Birdies” out as a rental via iTunes and for free with ads on Tubi and Plex. To date, his movie has made roughly $100,000 across all platforms.

“What more could I ask for?” he said. “I feel like we did the right thing when it comes to distribution, because I don’t think we would’ve seen anywhere near those numbers, and we would’ve done a disservice handing it to somebody else. This is something that doesn’t pay off immediately, but could pay off and is paying off. For me, it feels amazing: We’ve paid our cash investors back, and we’ve put our own money into it, and that’s what we’re getting back ourselves. That feels great.”

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