Let’s turn status quo on its ear!

 
26 Nov 2013 Posted by Cary Floyd in Inside Scoop, NWD News

Innovation and determination are what drive change.

So I asked  filmmakers “What do you think you need in a Film Distribution Partner?” Based on my experience with filmmakers (me being one myself) I realized that most filmmakers are still thinking like a customer and not a partner?

Status quo. A filmmaker seeks distribution for their film and most of the time they are looking for a vendor to navigate the endless distribution outlet highway for the best and widest possible reach for their film, to deal with all the broadcast contract negotiations, rent the theaters to premier it and then… to market and promote their film through social platforms, tv buys and radio ads maybe even billboards and buses and flyers.  They want all this for a percentage of the returns.  They got the financing together to make the film and they finally produced it and edited it and created the movie poster and sometimes even the DVD artwork. So why shouldn’t someone think it’s a great deal to pick up their film for distribution and promote it.  Right?

Status quo. A film distributor is a company or individual responsible for the marketing of a film. The distributor may set the release date of a film and the method by which a film is to be exhibited or made available for viewing: for example, directly to the public either theatrically or for home viewing (DVD, video-on-demand, download, television programs through broadcast syndication etc.). A distributor may do this directly, if the distributor owns the theaters or film distribution networks, or through theatrical exhibitors and other sub-distributors. A limited distributor may deal only with particular products, such as DVDs or Blu-ray, or may act in a particular country or market.

Once a distributor is interested in a film, the two parties arrive at a distribution agreement based on one of two financial models: Leasing or Profit-sharing.

In the leasing model, the distributor agrees to pay a fixed amount for the rights to distribute the film. If the distributor and the studio have a profit-sharing relationship, on the other hand, the distributor gets a percentage (typically anywhere from 10 to 50 percent) of the net profits made from the movie. Both models can be good or bad, depending on how well a movie does at the box office. The goal of both the studio and the distribution company is to predict which model will benefit them the most.

movie-camera 400Because of the enormous amount of cost in money and time involved in distributing a movie, a distributor must feel confident that they can  make a sufficient return on their investment. Having the backing of a major studio or a well known director or star can greatly improve the chances of securing a good distribution deal. Independent filmmakers often use film festivals as an opportunity to get the attention of distributors.

DVD retailers may offer distributors a 2 year streaming deal for six titles at $24,000 total, but there will be a cost to get them QC’d properly (which comes out of your cut, after the middlemen take their share of course!).

As for iTunes, there are standards barring graphic sex for films in the US and in some countries, they are now requiring a rating from the local ratings authority in order to sell from the iTunes Movie store. The cost of this can run into the thousands (based on run time) per country. Also, subtitling will be required for English language films, another cost.

The major companies in cable VOD (Comcast, Time Warner, Verizon etc) are now requiring a significant theatrical release (about 15 cities) before showing interest in working with a title. They are predominantly interested in titles with significant marketing effort behind them. The cable operators often do not offer advances and you must go through an aggregator to access. If the aggregator refuses your film, that’s it.

How Revenue Flows Through the Marketplace

The main revenue streams for filmed entertainment are:

Theatrical exhibition – about 25% of the total revenues

Video/DVD rental, Video/DVD retail (or sell-through) – about 40% of the total revenue

Pay Per View Television, Subscription or Pay Television and Free Television – about 28% of the total revenue

Ancillary streams – account for the remaining 7% of total revenues

You try to maximize revenues at each stage of the value chain and avoid any clashes in the marketplace. These windows are starting to close up as the non-theatrical streams start to eclipse the original release in terms of revenue generation (although the cinematic shop window still remains the main driver of revenues throughout the chain in most cases) but are roughly as indicated below:

Theatric: 0 – 6 Months
Video/DVD: 6 – 15 Months
Pay Per View: 15 – 18 Months
Pay TV: 18 – 30 Months
Free TV: 30 + Months

(NOTE: In practice there may be “dark” months between windows to enable greater differentiation between them.)

nwdprojector

 

Now let’s turn status quo on it’s ear! Recent shifts in release windows by the major studios and distributors and Internet VOD has changed the distribution landscape for distributors and filmmakers alike. Mark Cuban claims “…movies should simultaneously be made available on all media allowing viewers to choose whether to see it at home or at the theater.” Wow! talk about shaking the money tree and the status quo! Now add to that better and cheaper cameras and editing software which have made it much less cost prohibitive for filmmakers to produce films.  And here we are today with more product and more outlets but with limited access and limited profit margins. The ground is shifting under our feet.

Coming from the Music Industry, we have seen this paradigm shift before and the music business is still reeling from it!  So when we tried to find distribution for our own films, what we found was an opportunity and armed with foresight, innovation and determination we created New World Distribution. Sure, we were called crazy.  “Where the hell did you come from?”, “How did you come up with that?”, “How does that work?” These are a few of the responses we came up against, but didn’t Steve Jobs hear the same things?

After Apple’s iTunes Music Store debuted on April 28, 2003, sales of 99-cent digital singles surged. But that had a disastrous impact on overall music revenue. One of the major reason’s that it was the kiss of death for them, was that it killed the walk in retail trade which was historically very profitable. You must also remember, that the Industry agreed to do this!!

At NWD we understand the nature of release windows and have developed partnerships with theaters, broadcasters, VOD and DVD retailers around the globe. We have the experience to optimize the value chain for our filmmakers and together with your NWD team we can make a difference; as partners carving out new territories and breaking new ground. We work intimately with our producers, so we are very selective about the films & the filmmakers we partner with.

The qualities that define us and who we want to work with at NWD are:

Problem solving. We are always looking for new ways to achieve goals; so thinking in the abstract serves us well.
Creative thinking. We find inspiration from various sources and synthesize them in unique ways, making us some of the best artists and inventors.
Developing a vision. We are unafraid to go into uncharted territory as it pertains to the business or the status quo. Our ambition drives us to be the best and our determination helps us stick to our guns.
Analyzing the environment. We are the ultimate multi-taskers, always connecting the dots of different concepts on several levels. Nothing gets by us.

These are the qualities we look for in a filmmaker as well.

We hope this article has given you the filmmaker a bigger picture of who we are at NWD, where we come from and why we approach film distribution the way we do.  If you have vision and wish to explore new avenues of revenue for your film, we’d love to hear from you!

  • For NWD Media Enquiries

  • Contact: Donna Love
  • by email: drlove@newworlddistro.com
  • or phone: 949 613 5118

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