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Distribution Fees Examples

This section will explain a scenario, utilizing hypothetical projected profits of screeners, to show how profit is returned to the LLC from the gross sales of the film.

  • On International, Distributor is to first receive 25% commission and 150k marketing.
  • On Domestic theatrical, Distributor is to recoup 125% of P&A expense and then investors will share 50/50 with producer.
  • Distributor to receive 25% commission on all other domestic (standard deal).
Distribution

200 Screen Theatrical

Estimating a release to 200 theatres
Total Budget = $1,000,000
Theatrical P&A (Estimate) = $1,000,000
for Distributor to release to 200 theatres ($5000/screen estimate)

Theatrical Revenue: $5,800,000
Exhibitor: $2,900,000
Remaining: $2,900,000
Distributor: $1,250,000
Currently at $1,650,000 to LLC
Gross Profit from DVD, VOD (Video on Demand), Foreign, TV: $2,500,000

$100,000 Marketing Cap
$4,050,000 remaining to split
25% to Distributor: $1,012,500
75% to LLC: $3,037,500
Example of LLC Pay out = $3,037,500

50 Screen Theatrical

Estimating a release to 50 theatres
Total Budget = $1,000,000
Theatrical P&A (Estimate) = $500,000
for Distributor to release to 50 theatres ($5000/screen estimate)

Theatrical Revenue: $3,800,000
Exhibitor: $1,900,000
Remaining: $1,900,000
Distributor: $625,000
Currently at $1,275,000 to LLC
Gross Profit from DVD, VOD (Video on Demand), Foreign, TV: $1,800,000

$100,000 Marketing Cap
$2,975,000 remaining to split
25% to Distributor: $743,750
75% to LLC: $2,231,250
Example of LLC Pay out = $2,231,250

VOD Only

Total Budget = $1,000,000
Gross Profit from Cable, VOD (Video on Demand), Foreign, TV: $2,200,000

$50,000 Marketing Cap
$2,050,000 remaining to split
25% to Distributor: $512,500
75% to LLC: $1,537,500
Example of LLC Pay out = $1,537,500

Distribution Targets

The Company has developed a list of targets within each revenue stream to achieve distribution agreements. The Company plans to use sequential distribution to maximize producer income by making their product available in different markets in succession.

Theatrical Release

Phase 1 = Film Festivals (Sundance, Cannes, AFI, Slam Dance, Los Angeles, New York, Berlin, Austin, Vancouver)

Phase 2 = Limited Release – Theaters (AMC, Universal, Loews, Edwards, Mann, etc) = 200 Screens in Chicago, New York, Miami, Los Angeles, Dallas.

The Company has selected the following distributors with with negotiate theatrical: Universal Studios, Lionsgate, Paramount, Fox Searchlight, A24 and Film District.

Streaming

Netflix
Amazon
Hulu
Youtube
HBO Max
iNDemand
On Demand (Hotel, Airplane)

Dish Network

Amazon
Netflix
HBO
Disney Plus
Hulu
Amazon Prime Video
Sling TV
Fubo TV
Crackle

Direct TV

BET
Bravo
Lifetime
OWN
TV One
FOX

Time Warner

Oxygen
HBO
Hallmark
We Tv
Vh-1
Starz

Blu-Ray

Rental Outlets

iTunes
Redbox
Amazon

Blu-Ray

Retail Outlets

Costco
Best Buy
Target
Walmart
iTunes

Distribution Tactics

NO SNEAK PREVIEWS: Unfinished films are viewed as amateurish.

SCREEN IT BEFORE A CROWD: A positive live audience reaction influences the distributor’s perception of the quality of the film and their likelihood to acquire it.

MAKE THE BUYERS COMPETE AGAINST EACH OTHER: The film will be screened at the same time for all distributors. We must maintain distributor’s intrigue and create the bidding war environment.

STRATEGIC FESTIVAL PREMIER: The Company has carefully planned its festival strategy to include the major festivals first, then the minors.

SOCIAL MEDIA: The Company will employ proven marketing strategies and use social networking websites such as Facebook, message boards, blogs and music to spread news and buzz about our film. We will also seek co – op marketing arrangements with leading retailers and service providers who want to incorporate THE MARK into their product and brand images.

TIMING: Distributors that acquire films for foreign distribution plan their activities around a market calendar. The major film markets are 1) AFM in early November in Santa Monica, 2) Cannes in May in Cannes, France, and 3) MIFED in late October in Milan, Italy. In addition, there are a number of important television markets including NATPE in the U.S., and MIP and MIP – COM in France. The best time to approach distributors is 60 – 90 days before a market. Negotiations can take a month or more to negotiate the deal.

Distributors license the film to both domestic and foreign exhibitors, for a percentage of the box office gross. The best possible initial release for a feature film produced domestically is release in theaters because it creates public awareness for the film. Not all films earn the prestige that a theatrical release will garner. However, a theatrical release drives the price upward for the rest of the media releases, such as DVD, pay TV, etc. It is in the Company’ s and the investors’ best interest for the Company to seek a distribution advance against revenues, or to seek a negative pick – up, from a distribution Company. An advance against revenues means that in exchange for the rights to the Project, the distributor would pay the Company a sum of money upfront. PortIons of this advance can then be used to recoup those amounts expended in the production process. While many distributors do not pay advances on features, the Company plans to utilize this strategy when negotiating with distributors.