FILM DISTRIBUTION
(Some Fundamentals, Facts and Tips)
A film distributor is responsible
for the marketing of a film. The distribution company is usually different from
the production company. Distribution deals are an important part of financing a
film.
Film distribution is the process
of making a movie available for viewing by an audience. This is normally the
task of a professional film distributor, who would determine the marketing
strategy for the film, the media by which a film is to be exhibited or made
available for viewing, and who may set the release date and other matters. The
film may be exhibited directly to the public either through a movie theater or
television, or personal home viewing (including VHS, video-on-demand, download,
television programs through broadcast syndication etc.). For commercial
projects, film distribution is usually accompanied by film promotion.
When a film is initially
produced, a feature film is often shown to audiences in a movie theater.
Typically, one film is the featured presentation (or feature film). Before the
1970s, there were "double features"; typically, a high quality "A
picture" rented by an independent theater for a lump sum, and a "B
picture" of lower quality rented for a percentage of the gross receipts.
Today, the bulk of the material shown before the feature film consists of
previews for upcoming movies (also known as trailers) and paid advertisements.
STANDARD RELEASE
The standard release routine for
a movie is regulated by a business model called "release windows".
The release windows system was first conceived in the early 1980s, on the brink
of the VHS home entertainment market, as a strategy to keep different instances
of a movie from competing with each other, allowing the movie to take advantage
of different markets (cinema, home video, TV, etc.) at different times.
In the standard process, a movie
is first released through movie theaters (theatrical window), then, after
approximately 16 and one-half weeks, it is released to VHS and VOD services
(entering its video window). After an additional number of months, it is
usually released to Pay TV, and approximately two years after its theatrical
release date, it is made available for free-to-air TV.
SIMULTANEOUS RELEASE
A simultaneous release takes
place when a movie is made available on many media (cinema, DVD, internet...)
at the same time or with very little difference in timing.
Simultaneous releases offer great
advantages to both consumers, who can choose the medium that most suits their
needs, and production studios that only have to run one marketing campaign for
all releases. The flip side, though, is that such distribution efforts are
often regarded as experimental and thus do not receive substantial investment or
promotion.
In the course of the years
simultaneous release approaches have gained both praise, with Mark Cuban
claiming movies should simultaneously be made available on all media allowing
viewers to choose whether to see it at home or at the theater, and disapproval,
with director M. Night Shyamalan claiming it could potentially destroy the
"magic" of movie going.
Cinema owners can be affected
seriously in case they have to share their opportunity window, especially at
the beginning of the movie life cycle, since, according to Disney, about 95% of
all box office tickets for a film are sold within the first six weeks after
initial distribution.
STRAIGHT-TO-VIDEO RELEASE
A straight to video (or
straight-to-DVD or straight-to-Blu-ray depending on the media upon which the
movie is made available) release occurs when a movie is released on home video
formats (such as VHS, DVD, etc.) without being released in theaters first,
thereby not taking into consideration the "theatrical window".
As a result of strong DVD sales,
Direct-to-video releases also achieved higher success and have become a profitable
market lately, especially for independent movie makers and companies.
INTERNET RELEASE
Internet research is still new
when it comes to the film distribution platform. The volume of downloaded
movies is difficult to find but none compares to the even more problematical
discovery of their origin.
TELEVISION DISTRIBUTION
Television distribution is a
growing industry. On the back of the Communications Act developments, more
distributors are setting up to take advantage of the expected growth in
available product. Distributors range from broadcaster-owned companies through
larger independent companies to smaller niche players.
Securing a distribution deal
prior to production of a feature film in advance is a major plus point when
raising finance: it demonstrates that there is a route to market for the film.
Feature film distribution differs from television in that often the best route
to distributors is by appointing a sales agent, who then handles the
distribution of the film in territories and liaises with the distributors in
those territories. The sales agent will attend festivals and markets and sell
the film in return for a commission based on a percentage of the money earned
from the deal with distributors.
Choosing the correct distributor
for your product is about weighing up the financial deal that is on the table
with the likelihood that the distributor can deliver on making product
available to meet demand, has good industry contacts (including, if appropriate
international contacts) and generally has expertise. It is always worth asking
to see the distributor's catalog of programs and "dropping in" on
them at film and television markets to get a feel for the type of work that
they deal with and how much of a presence they are. Remember that a smaller
niche player may have just the contacts that you need for your particular
programme, even if they do not have the general brand name.
COMMON PROVISIONS IN DISTRIBUTION AGREEMENTS
Often the distributor will
produce a standard form contract. The main issues to consider when reviewing it
are the commission to be charged, the media covered, the territories that it is
to cover and the duration of the license.
COMMISSION
Distributors tend to charge a
commission on revenue generated from exploitation of the product. This is
usually based on "gross revenues," which is the amount actually
received by the distributor from the purchaser of the film or programme.
However, the distributor will also want to deduct its costs before sending you
any money. It is important to check carefully the deductions that the
distributor can make to ensure that these are legitimate and that the
distributor is not adding in matters such as general staff overhead, which it
should be covering from its commission.
Usual deductible costs would
include the cost of shipping the product to broadcasters or cinemas,
advertising and marketing the product and creating additional prints/tapes.
With feature films, first time
producers are often shocked by the tiny percentage of revenue they actually see
from distribution. The exhibitors (cinemas) will deduct almost half of the
revenue off the top and then from the balance comes off the distributor's
commission and costs before any of the investors in the film start to recoup
their investment. Only after the investors recoup does the producer see any
profit.
Ensure that the distribution
agreement contains obligations on the distributor to account to you for revenue
earned, deductions made etc. on a regular basis (no less than six monthly). You
should also insert provisions to allow you to have an independent person audit
the figures you are given if you are doubtful as to whether they are accurate.
TERRITORIES
Most distributors would rather
get a worldwide license of a programme: it gives them more scope to earn
revenue. However, if the distributor is only really known in their country then
their ability to make you money in international territories will be limited. Therefore
you should weigh up the simplicity of dealing with only one distributor against
the chance of making money from these territories. The main territories are
Europe, North America, Asia, South America, Africa and Middle East.
DURATION
The license term is always
negotiable. It is important to strike a balance between giving the distributor
enough time to exploit the rights and not tying the rights up indefinitely with
someone who is not performing. A compromise can be to extend the term, but
negotiate in a "get out" clause if revenue fails to reach a certain
target. It is also important that the license contains explicit termination
provisions if the distributor becomes insolvent or defaults on any of its
obligations, such as the very important obligation to pay you.
MEDIA
To maximize revenue the
distributor is likely to want the right to sell the full range of media. This
will include standard TV, pay TV, interactive TV, online transmission and
video/DVD. The distributor may also look for secondary rights in the programme
or film, such as merchandising, soundtrack etc.
OTHER ISSUES
It is always worth questioning
the distributor closely about the marketing planned for your programme or film
and, if you can, enshrine this in the contract as a commitment. That way you
can ensure that you and the distributor agree up-front about the direction that
the marketing campaign is to take. Sometimes a distributor may look for an
option to distribute any sequel to the work. For television programs in
particular it often makes sense to give them this since the distributor will
then have the advantage in the marketplace of being able to negotiate with a
package of programs, which can get you better deals. However, always try to
negotiate an additional financial benefit from the distributor in return for
granting these additional tie-in rights and/or a "get out" if they
have not performed against targets in the original deal.
SECONDARY RIGHTS
Making a programme or a feature
film is not the end of the story regarding rights exploitation: it is possible
to make decent revenue from exploiting secondary rights, such as soundtracks,
merchandising and tie-ins with complementary businesses. Good examples of this
in television are Bob the Builder, Teletubbies and Who Wants to be a
Millionaire. In films, Harry Potter, Star Wars and any of the recent
Disney/Pixar releases are great examples of the power of secondary rights.
Deciding how best to exploit these opportunities depends on how capable you
feel and how much time you have. If either of these areas score low then it is
better to employ a merchandising agent to negotiate deals on your behalf.
It is important that exploitation
of secondary rights fits in with the primary programme or film: it makes sense
to ensure that the programme or film establishes the name in the minds of the
public to give the merchandise a better chance of selling. However it is also
important to ensure that the merchandising material is available to meet demand
when it is high.
You should also ensure that you
have the right to exploit secondary rights. For example, when you acquired
permission to use a song in your film, did you also get permission to include
it in a soundtrack?
Common provisions in a secondary
rights agreement will include approval rights over the material (it is
important that this does not risk the primary product), territorial
restrictions on where products can be sold and provisions obliging any agent to
account for commissions earned.
CONCLUSION
Opportunities have never been
greater for generating revenue from the exploitation of film and television
rights. Producers have more media than ever over which to deliver content to
consumers. It is important to get distribution deals right so that exploitation
generates rewards for the producer as well as the "middle men."
Sources: Google, Wikipedia,
Out-Law.com, indiewire.com, entertainment.howstuffworks.com, distribution.la
