I think the concept of Distribution In Reverse naturally lends itself to the question of this:
What budget level is realistic if you want to recoup your film’s budget via distribution?
And a good place to start is to look at how much money independent films are making right now and back into your budget that way. But how many filmmakers actually go through this exercise?
It requires you take an HONEST look at potential sales projections for other films in the same genre as yours, with the same level of cast as yours, and having the same track record as your and your team. I find that most filmmakers overshoot and come up with unrealistic budget levels that they can’t possibly recoup via traditional or self-distribution.
Crunch numbers. Look at what films are selling for in the current marketplace. Decide what your direct sales revenue will bring in, your screening revenues,foreign sales revenue, and your VOD revenue. Add it all up. Does it equal the million dollar plus budget that you want to make your film for? If not, lower your budget. If you come out ahead, give yourself permission to scale up a bit.
I can’t tell you how many filmmakers who come to me with $4-$5 million budgeted films and want my help creating a business plan. Now there’s no way I can in good conscience take on a project like that because I know darn well NO ONE is paying those numbers right now (and actually haven’t been for a few years now!) See for yourself – follow the Sundance acquisition prices in the coming weeks.
So what is YOUR budget level? And how are you justifying it? Show me your recoupment plan… I’d love to see how all the numbers add up. And hopefully I can give you some ideas too!
Incidentally I’ll spend significant time covering budgets and sales projections and recoupment strategies during my upcoming Distribution In Reverse Group Coaching Program. I would love for you to join me!
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Hi Stacey. Thanks for the great post, as always.
Do you have any recommended ways for doing sales projections based on Netflix sales? We’re looking into some micro-budgeted films where that would be one of our main avenues of distribution, but Netflix deal information is fairly scare in our experience.
Thanks so much,
Matthew
Hi Stacey,
I’ve just finished my first feature documentary film (which is very sellable). I would love to recoup the money I spent (which is nothing compared to the figures you mentioned), but the problem is that so far, I’ve been very disappointed with every distributor I’ve worked with, and I’ve worked with quite a few.
Thanks,
Gary
I believe this is a fatal flaw that almost every filmmaker makes. I am seeing more and more examples on a daily basis where filmmakers overbudgeted their films and they end up being stuck with a film that they cannot recoup their money on.
Matthew, I wish I knew more about Netflix deals myself. I have heard of different and more enticing deals in the past. I know INK got a flat fee deal with Netflix for the 1st year and it was not that much money in the grand scheme of things. After the first year, they have the right to negotiate a new deal based on its success. (So far it has been rated 61,000 times in 2 months which is unheard of for a DIY film) Netflix provides amazing exposure, not so sure it provides amazing money.
You can listen to Jamin Winans and Kiowa Winans talk openly about their distribution path here http://filmcourage.podbean.com/2009/11/02/filmmakers-jamin-winans-and-kiowa-winans-on-la-talk-radios-film-courage/
I actually try to do this kind of research continually. Breaking down how many screens a film plays on how much it makes in foregin vs domestic markets etc.
However, I find the difficult thing is getting sales stats for small films. Especially when it is straight to DVD type stuff. This makes it hard to estimate a realistic sales expectation I think. For example how many people sell 40k -50K units? How diificult is it to sell 100k units? Is even 5k units realistic? Would love to somehow find this out.
Re: the Netflix comment, they way it works is they buy a certain number of DVD’s off you (for example 100 @ $10 each) so you’d get paid $1000, and that’s it unless the film really takes off and they want to purchase more units.
Re: realistic numbers of DVD units sold — 10K is usually on the high end for an indie film, 35K you’re doing REALLY well, and 60K is a home run. 5K and under is usually the norm.
I agree, anywhere from 500 to 5000 DVDs for a DIY release. A good distributor can do 10,000 to 20,000 for a low budget horror… and for a home run, I’ve heard as high as 60,000… but that was through Walmart in the $5 bin. Do the math and you realize that’s not a whole lot of money when you consider a $2.50 wholesale price to get into the $5 bin.
In this economy, I would take 90% of your budget an put it toward marketing… then figure out how to make your movie on 10%. Making a movie is the easy part… selling it is hard.
Distribution is the goal most film makers, producers seeks. To really eastablish groos, net or profit any film. Producers must have a great understanding of a couple of areas (sub phases included) and they are: Development, Funding, Production, Distribution, Industry Marketing, Consumer Marketing and Reconcilliation of all distribution medians. Marketing is just as important as production due to the fact you now have some many distribution alternatives. You can noe lease theatres at very reasonable rates for theatrical exhibition. Tickemaster provides great accountability for reconcilliation of all ticket sales admission. Finally any one can purchase consumer opriented media. Concern yourself with understanding and implementing effective distribution, marketing and reconcilliation strategies to make money.