Karin Chien on Independent Film Distribution – Part 1

This is a third continuation of WinGateFilms’ coverage of Karin Chien’s Filmmaking Outside the Box: Smart Strategies for Independent Producing workshop, focusing on independent film distribution. Karin’s presentation concluded with a comparison of the traditional distribution model with the emerging, changing digital and DIY distribution landscape.

Those closely following the film industry are aware of the current distribution crisis evidenced by Warner Brothers’ virtual folding of indie distribution divisions Picturehouse (a joint venture of New Line Cinema and HBO Films) and Warner Independent, the massive layoffs and reabsorption of New Line Cinema and Paramount Vantage, and the financial woes of ThinkFilm, to name a few examples.1 It used to be the case that about 7 films would open each weekend; today maybe 15 films are competing to open each weekend domestically.

The traditional distribution model is still relevant, though the future of film distribution is rapidly evolving.2 Under the traditional model, a feature film is exploited in different outlet media in progressive “windows” of release (e.g., theatrical, non-theatrical, DVD, pay-per-view, premium cable, and free tv/basic cable). In a typical traditional distribution deal, the distributor applies cross-collateralization of revenues and expenses against each of these windows (e.g., losses from theatrical release are balanced against profits from DVD release before net profits are payable to the filmmaker).

Theatrical release, while highly coveted both as a badge of accomplishment and as a boost to PR and marketing, is generally a loss leader due to the difficulty of recouping against high P&A (prints & advertising) costs. In contrast, DVD sales are often highly profitable on a per unit basis. Some independent filmmakers have experienced success in the traditional model with pursuing DIY domestic theatrical strategies, coupled with selling off ancillary rights separately. Other films experienced good results through platform release, i.e., opening first in limited release (such as NYC and LA), then adding other cities and opening wide as audience demand supported spending additional P&A monies spread out throughout the release period.

The emergence of digital outlets has led to the rise of digital aggregators, collapsed windows, reversed windows, and more DIY options for filmmakers. Aggregators provide an internet marketing portal through outlets such as Shorts International (www.britshorts.com), iTunes downloads, video-on-demand (VOD) (e.g., www.vudu.com), and streaming content through advertising supported free online tv (e.g., www.joost.com and www.jaman.com) and Netflix.

Collapsed windows is a strategy for distributors to reduce the risk of theatrical release by combining marketing efforts to support, for example, day-and-date release of films in theaters and VOD (or simultaneous release on VOD and DVD) on the same day. IFC Films’ First Take program was launched in 2006, combining limited theatrical release with VOD availability the same day.

The latest current trend is reversed distribution windows, such as HBO Films first releasing a project on pay cable, then subsequently arranging theatrical release powered by the pay tv premiere. Mark Cuban’s HDNet Movies is another example of an outlet utilizing collapsed or reversed distribution windows strategy.

Michael
WinGateFilms
www.wingatefilms

1 Mark Gill’s recent address at the 2008 L.A. Film Festival Financing Conference, “Yes, The Sky Really Is Falling” eloquently expressed the difficulties facing independent filmmakers seeking distribution for films. (For full text of Mark’s remarks, go to: www.indiewire.com/biz/2008/06/irst_person_fil.html).

2 The annual Focus 2008: World Film Market Trends report prepared in connection with the Marches du Cannes can be downloaded conveniently (along with past annual reports) free at: www.obs.coe.int/online_publication/reports/focus2008.html.

Tags: cross-collateralization, day-and-date release, digital aggregator, distribution windows, dvd distribution, film distribution, film market trends, film marketing, independent film, Karin Chien, Marche du Cannes, Mark Gill, P&A, prints and advertising, theatrical exhibition, video-on-demand