The Complete Guide to Film Distribution

A film distribution company is responsible for the marketing and distribution of your films to the general public. Films can be distributed through theatrical, video on demand (Netflix, Hulu, Amazon Prime, etc.), DVD, and new media.

When looking into distribution options for your films, research the cautionary tales of filmmakers who have gone before you. Unfortunately, it's not uncommon for indie filmmakers to get taken for fools and end up getting ripped off.

We're going to talk about what you need to look out for when getting ready to sign an agreement with a distribution company and how to best protect yourself and your product.

What Are Ancillary Rights?

It used to be that films would just show up in a theater, stay for a while, and then disappear. It's hard to imagine a film not advertised. No posters. No T-shirts. No billboards. No trailers. How do you even know if you want to go see it?! Is it worth the...well, pennies back then?

Ancillary rights are supplementary or subordinate rights arising from a primary reason.

In entertainment, this is a contractual agreement in which a percentage of the profits are received and derived from the sale of posters, T-shirts, action figures, books, DVDs, etc. relating to the film.

This deal is made between the distribution company and the filmmaker. GET A LAWYER- one who regularly works on cases involving the entertainment industry. Just like the film insurance agent you hire must know the industry and the specific needs filmmaking requires, so does your lawyer.

Ensure your budget for a lawyer as part of your distribution costs as ancillary rights are just one of the areas filmmakers start to lose their profits.

A quick Google search of "Entertainment Lawyers" will provide you with a list of lawyers.

Or contact other filmmakers you know or have worked with in the past to see which lawyers they have hired and get their personal recommendations.

Plan Distribution Early

If you are looking for investment for your film, chances are, you won't even get an investor until you have your distribution plan figured out.

Investors want to know how you are going to make them money. Is their money safe with you? The film industry is a very high risk for investors, so make your plan is foolproof.

Another reason why you should plan distribution early is to make sure you have it in the budget. Distribution is EXPENSIVE, especially if you are headed for theaters. Your marketing budget will, at a minimum, have to match your film's production budget up to $35M.

If your film hits theaters, at best, you will only walk away with 35% of each ticket. If you sold $100M worth of tickets, your distributor would only see $65M of that amount, at best. And if you had a $33M production budget with a $33M P&A budget, you just broke even… barley.

Different Types of Distribution

There are two types of distribution: leasing and profit-sharing.

Leasing, the distributor agrees to pay a fixed amount for the rights to distribute the film.

Profit-sharing, the distributor gets a percentage of the profits made from the film. This percentage is usually between 10-50%. (Never go for the 50/50 split. You won't make any money.)

Either option has it's pros and cons and depends mostly on how well your film does at the box office. It's the job of the distribution company and the studio to decide which option will benefit them the most.

How to Get Distribution

Several factors can lock in your likelihood of getting distribution:

• Big named talent: Have you ever gone to see a movie just because an actor you like was in it? What about your favorite directors or producers? People are funny about entertainment. They want the guarantee that they'll enjoy themselves. We have all been conditioned to believe that certain actors and directors and producers will always put out exceptional content. We believe that, because this was produced by the Russo Brothers or because Chris Hemsworth is in it, it will be good. It's like each person who goes to see your film is a mini investor, "Is this film worth spending $15 and two hours of my time?" Big-name talent sells films because people trust them with their money.

• Season: The time of year is a huge factor in whether or not your film will be distributed. Horror films generally do better in the autumn than they do in the spring. And Christmas movies do better in the winter than they do in the summer.

• Major studio backing: People trust the quality of major studios.

• Story quality: Poor story quality can really ruin your run. You may have some of the other elements to draw your audience to the theater or convince them to download your film, but if the story flops, the people who watch it, won't be telling their friends to go see- or worse, will tell their friends not to view it. Word of mouth and peer pressure are significant factors in a film's success. Don't believe me? Take a look at Napoleon Dynamite! Word of mouth drove the film's success, Fox Searchlight knew that it would be and totally leaned into it with their marketing strategy.

• Target audience: What is the age range and demographic that this film targets? Where do they watch their movies? What types of films are they interested in? Is that current demographic over-saturated with cinema?

• Social Media: Are people talking about the film? Do the cast members have a high number of followers on their Twitter, Instagram, Facebook, etc. accounts? Are people searching YouTube for behind the scenes footage and interviews? Are people in forums discussing the possible plot lines? How many people are engaged or could quickly become engaged online? The level of social media presence is an indicator of the film's success.

If you can hit all of these areas, you're likely to find distribution. But if you can't get the big names involved or major studio backing, you can still find success by getting the right season, the right target audience, a high-quality story, and boosting your social media presence and involvement.

If your film is set up at a major studio, chances are, distribution is already guaranteed through their partners. But if you are making an independent film and want feature film distribution, you have several options.

Film Festivals

There's a reason why film festivals are located all around the country and world. It's not just for fun or showing people your talent. It's often for the chance that a distribution company will pick your film (or a couple companies and end up with a bidding war).

Different film festivals have different categories of film. Some focus only on short films, others are primarily horror. Search for festivals near your area that fit your film best.

What films is your film similar to? Which festivals did they find their success? What did they do well? What could they have done better? What was their marketing strategy while they were at the festival?

There is a delicate line between familiar and new that the filmmaker needs to walk to get the desired distribution.

Film Freeway is a helpful tool to get you submitted into film festivals like Sundance Film Festival, Slamdance, Miami Film Festival, The Animator Showcase, and so much more.

As you are looking into the festival circuit, you can filter by genre, entry fees, film festivals, screenwriting contests, music contests, and others. Be sure to note when the submission deadlines are so you don't miss it.

Distribution Screenings

In order to really pull off this option, you need to be well connected to film distributors and/or have a very talented sales agent who can sway the right people to appear at the private screening.

Sales Agents

The job of the sales agent is to connect your project to the right distributor… for a fee. A good sales agent should have good connections and a reputation for making sales.

Filmhub

Filmhub is an exciting option for the independent filmmaker. Simply submit your film for free, streaming channels will discover, order, and stream your work worldwide while keeping a whopping 80%. They work with many different streaming services like Fandango, Amazon Prime, Dove Channel, and dozens of others.

With Filmhub, you'll have to do a lot of the leg-work to market your film yourself or hire a separate marketing firm, but it may be worth it for you.

Self Distribute

You can put your feature film on Vimeo or YouTube. Or you can get your movie on VOD platforms like Amazon, Netflix, iTunes, and other digital platforms. Another option is to make and sell DVDs or Blu-Rays.

You could also hire a theatrical film booker and do a limited theatrical release in select theaters. Napoleon Dynamite started with a limited release in a handful of theaters and slowly grew into more and more movie theaters until it was nationwide.

If you have an excellent product, sometimes you just need to be adamant about getting it in front of people. With so much content creation and so many platforms, it's too easy to get lost in the shuffle.

Whatever you can do to get your film viewed, creating champions along the way, get it done. Film marketing can be difficult, but it can also be enjoyable.

Getting Into Theaters

Let's be honest, that's every filmmaker's dream, right? Get your film released in theaters, have your film watched by millions on the big screen, be the film that gets applauded, and win all the awards.

Ah, yes, a dream indeed. An expensive dream. And not usually very lucrative for the independent filmmaker. But it may still be worth it because of all the critical notices it can receive from newspapers, magazines, and online reviews.

Let's say you get into Sundance Film Festival and land a distribution company (Woohoo! Go you!), and they want to get your film into movie theaters.

Each theater needs its own print of your film. Each print costs between $1,500 and $2,000 to make.

There are 37,000 theaters in the United States.

The distribution company needs to decide how many theaters and which locations would be the best fit for your film.

They will need to look at the demographics and population of each area...what are the odds that they'll fill the seats enough to offset the high cost of the prints alone?

Not to mention all the "marketing" that they (may or may not) have done.

Most movie theaters use buyers to represent them when negotiating a film with the distribution companies.

Apparently, this can be very "political" in that the buyers will often accept a movie they aren't particularly interested in in order to get a film that they really want coming down the pipes.

All the while, maintaining the delicate balance of having good relationships across the board so everyone can get what they need.

Each theater competes with every other theater in their area to try to get the best movies at the best prices, and the distribution companies need to ensure all of the theaters will all continue working with them.

Once a buyer is interested in a movie, the lease terms are discussed. There are two ways for a movie theater to lease a movie:

• Bidding: Bidding is when the theater pays a fixed amount for the right to show the film. For example, the theater could bid $100,000 for a four-week long commitment to a film. If the film brings in more than that $100,000, the theater makes a profit. If they bring in less, the theater has a loss. Bidding isn't commonplace with most distribution companies anymore.

• Percentage: With a percentage deal, the distributor and the movie theater negotiate several aspects.

• The House Allowance - the weekly box office that theoretically allows a theatre to break-even.

• The percentage split for the net box office. (What the box office is left with after the deduction of the house allowance).

• The percentage for the gross box office is set.

• The length of engagement (usually 4-6 weeks).

The agreement gives the distributor a greater percentage between the net or gross box office, and the distributor ends up making the majority of the money. To make up for the deficit, theaters charge outrageous amounts of money for concessions.

The theaters get paid by ticket percentages and concessions. The distributors get paid by percentages of sales. How do you get paid?

Technically, you'd get a percentage as well. How much of a percentage depends on how good of a lawyer you have, really. Distribution companies are mostly looking out for their bottom line. They are not looking out for you.

From their portion of sales, film distributors will deduct all the costs associated with the film's release. It's common for them to write in a "cross-collateralization clause," which means they can offset theatrical losses against profits from other windows.

Cross-collateralization can occur when the distributor is licensing the producer's work in a package along with a number of other works.

In these situations, the costs and advances for all the works in the package are offset against the revenues from any of the works, including the producer's work.

The producer will want to include language that specifies that the revenues attributed to the producer's work will not be subject to the costs and obligations of other titles in the package (i.e., the producer's work will not be cross-collateralized with other works in a package).

Cross-collateralization is a concern where the producer's work may be sold in a package to support the sale of weaker titles.

The second way in which cross-collateralization can be applied is by crossing the expenses from one market in which the producer's work is distributed against revenues attributed to other markets.

If the producer has the bargaining power, the producer may be able to get each market and territory separately to avoid cross-collateralization among markets and territories. Filmmaker Magazine

What to Watch Out For

We've already established that a majority of independent distribution companies don't have your best interest in mind, and we have all heard the unfortunate horror stories of the filmmakers who got swindled. So, how do you protect yourself and your product and make a fat wad of cash and get the name recognition that you've always wanted?

• Hire a lawyer. Seriously, your best bet is to budget in the cost of a really good entertainment lawyer.

• Recommend and push for an itemized list of the ways they intend on marketing your indie film (how, when, where, cost of each thing). Make sure you get the exact numbers! Distribution companies will try to hide profits from you. When your film starts making money, and without that itemized list, your distributor might claim that they need to recoup some of their marketing expenses out of the cash that should go to you.

• Negotiate a shorter term length. Right now, the average term length for most distributors is 10-15 years. That's 10-15 years where you have no rights to your film. The product that you put all of your blood, sweat, and tears into. What if the distribution company does a horrible job of getting your film out there? You have the option of negotiating a performance requirement in the contract. This provision requires the distribution company to generate specific sales levels within a certain time limit and gives you the right to terminate the contract. This can help ensure your distributor gets their butts in gear and doesn't sit on your film for years and gives you a second chance at getting your film to market within a reasonable time frame if they don't follow through.

• The bigger the deal, the less control you have.

• Cap film distribution expenses. If you negotiate split profits after expenses, all of your profit will disappear into their "marketing budget." Be sure to cap their expenses so they can't redistribute your money into their pockets.

Deliverables

Deliverables include things like the film, paperwork, documentation, legal documents, trailers, key art, raw film, etc. Distributors just want everything! I recommend keeping it all stored in files in the cloud where nothing bad can happen to it. Below is a detailed list of the things you should keep stored in your "Deliverables" folder, so it's easy to hand over whatever your distribution company requires.

Legal

• Archival Clip Licenses
• Cast and Crew Restrictions
• Certificate of Authorship
• Certificate of Origin
• Chain of Title
• Credit Items
• E&O (Not all distributors ask for Errors and Omissions, but it's a good idea to include it to cover your butt- just in case).
• Literary Materials
• MPAA Documentation
• Music
• Other Agreements

Film/Audio

• Feature film on HDCam or digital file
• Original aspect ratio
• Native frame rate
• 5.1 mix
• Trailer
• Additional versions: Clean output (without titles), DME separated

Key art/Poster art

• 300 dpi
• separated art layers

Audio output:

• Channel 1: 5.1 track: Left
• Channel 2: 5.1 track: Right
• Channel 3: 5.1 track: Center
• Channel 4: 5.1 track: Lfe
• Channel 5: 5.1 track: Left Surround
• Channel 6: 5.1 track: Right Surround
• Channels 7+8: Full Mix Stereo L&R
• Channels 9+10: M&E Stereo L&R

Pre-Production Materials

• Audition tapes, storyboards, script meetings, etc. that might make good DVD "extras" or promotional tools.
• Talent agreements

Production

• Behind the scenes footage
• Still photography
• Cast and film crew interviews

Editing

• Narration
• DME
• Music
• Outtakes/deleted scenes
• Alternative Endings
• Press Kit

Getting your film distributed can be a daunting task. This is why we highly, highly recommend getting a lawyer experienced in the film business world. Whether you're fresh out of film school or you're a seasoned indie filmmaker, there is always something more to learn, and it's best not to get duped in the process of creating distribution deals.