Where Does the Revenue Come from in Indie Film?

Oh where, oh where does the revenue come from in indie film? Unless you have a film in the marketplace, it's hard to know exactly where the revenue comes from. There are so many avenues to think about - domestic and foreign sales in theatrical, television/cable, Video-on-Demand (VOD), DVD, and nontheatrical/educational.

What I have found through the sales of my own titles is that most of the revenue from an independent film is generated from VOD. This means I have seen most of the sales of my films through On Demand via cable and digital distribution online through sites like iTunes, Amazon, Vudu, Netflix, and Hulu.

Theatrical releases for independent films are very hard to justify. They're costly and time-consuming and more often than not - a bust. It's very hard to fill theaters in cities where you have no friends or family to rally people to see your film on the big screen. When was the last time you went to see a random indie flick at your local theater? If you're like me, it takes publicity for me to even know about the film (and strong publicity usually takes time and money to generate) or a colleague/friend to push me to go. So unless you have a very niche audience to which you can market and have the time and money to build a strong grassroots campaign, doing a theatrical usually doesn't make sense for a small indie film.

So what's the solution to seeing your film on the big screen? Film festivals. Use film festivals as your theatrical release. Lean on the festivals to help you fill the theater and use the publicity from the screenings to build buzz that can help you sell the film once it hits the VOD platforms. And some festivals do pay screening fees so you can even earn some revenue from your screenings. Or you can use the festival circuit to travel the world, meet your audience, gather their email addresses, and get help building a fan base.

What about DVD? Unfortunately, DVD deals are mainly dead at this point unless you have a genre flick or a very popular indie film that Redbox cares about. In that case, you can strike a DVD deal. In other cases, a DVD manufacturer will either ask for a piece of your VOD or you will need to figure out how to create and sell DVDs on your own. We sell our film The Diary of Preston Plummer through Amazon's CreateSpace. It's not a huge moneymaker but every sale helps so it's worth doing.

Television sales of indie films are hard to come by these days. The networks have gotten to the point of only considering films with big-name actors. If you are lucky to break through this prerequisite (it's definitely possible - I've done it) and snag one, good for you! The sale of a small indie film to a TV network probably won't make a significant dent in your budget - unless your budget was teeny-tiny - but television sales certainly help with visibility of your film, which can help translate to more VOD revenue.

Foreign sales. Oy. Just oy. First, foreign buyers love to see big-name actors in the films they buy. And foreign countries don't have strong streaming solutions yet so most of the sales are for television, which means there are less markets in which to sell. To reach foreign buyers, you usually have to go through foreign sales agents because they have all the relationships to the buyers and these agents will have high expenses and take about 20% to 25% of your revenue from your foreign sales. There's definitely revenue to be had in the foreign market but the question is how to get most of it coming back to the filmmakers instead of it just lining the pockets of the foreign sales agents. It's a conundrum and trust me, I'm working on figuring out a solution.

Nontheatrical avenues like airlines and museums are viable arenas for sales but not every film will make sense for these buyers. Definitely go after them because again, every sale helps!

And, one of the biggest lessons I have learned is to forego all-rights deals, unless the distributor is paying off the debt, deferrals and investors. All-rights deals allow distributors to steal from Peter to pay Paul. For example, let's say your DVD sales tanked and you actually owe money in expenses for making the DVDs. The distributor will take revenue from your VOD sales and apply it towards their losses in the DVD deal. If you had sold the rights separately then you would have received all of your VOD revenue and the DVD distributor would have been in the red that quarter (something you don't want but it's even worse if your hard-earned revenue is sucked up by losses in another market).

Additionally, all-rights deals often come with a high sales fee, like 20%, and their expense caps are typically high with no oversight on how much they're spending on fulfilling each deal. It can cost $1500 to deliver to iTunes alone and the distributor may be tacking on additional fees to process the sale. How do you really know?

The best thing you can do is hold on to as many rights as you can and sell them individually. How do you do this? Hire a sales agent who has successfully sold the rights to their titles individually and agrees that selling the rights to your title separately is the best strategy for your film.

The money trail in indie film can be hard to follow. That's why there's a big push right now for more transparency from filmmakers about the kinds of deals they're getting. And filmmakers are speaking out. You can see case studies in the books by the Film Collaborative here. They offer free copies online.

Transparency will only increase our chances of successfully budgeting and paying off our films. Knowledge is power!

Making Foreign Sales for Indie Films Yourself

Looking back at my indie films and how they performed in both the domestic and foreign markets, I am coming away with the thinking that we need a much better system for selling small independent films into the foreign markets.

Duh!, you say. And rightly so. I am a broken record but it really hits home when you personally experience the inequities that exist for small indie films.

It's such a struggle to find a foreign sales agent to take on a small indie film. And once you do find that company, they will present you with deals that don't have you earning any money until after they have recouped tens of thousands of expenses.

I understand there are expenses to travel the world and sell titles to foreign buyers but indie films can't bear tens of thousands of expenses. Too often all of your revenue is eaten up by these expenses. So you spend years making a movie and then you get excited to share it with the world and earn some money to pay your investors and yourself only to find out that ALL the money is lining the pockets of your sales agents. It's a harsh reality and one that needs to change.

So how do we sell our small indie films into the foreign markets without foreign sales agents? That is the question.

Sure, you can email foreign distributors and ask them if they want to consider your title. I have had some success doing this and I have sold one of my small films myself in a foreign territory in the past. But what happens if you do reach out to foreign buyers yourself and you aren't able to get any deals that way either?

I don't have all the answers - yet. But I'm working on it.

Right now, I am seriously considering sites like IndieReign or Distrify. I just have to get to that point where I feel that our title has a chance to reach a large audience through these sites. I have a couple of shorts on IndieReign right now. Their performance isn't great but they are shorts and I don't have time to actively promote them so their underperforming is largely my fault. I think a feature that I and my team actively promote will do much better.

The fear is that you load your film on these sites and then you have no way to market the film to an audience in these global territories and then your film lies idle in that territory. At least with a deal through a foreign sales agent, you are assured of getting your film distributed and exposed to an audience in the territories they sell. The problem is you may never see any revenue from that sale.

So is it better to get exposure through your foreign sales agent's deals and the real possibility of seeing no revenue or is it better to control the rights yourself, approach foreign distributors yourself and/or put it on a site like IndieReign, and take the possibility of getting little exposure and the high probability of little to no sales? It's a Catch-22 to be sure.

I'm leaning toward controlling my own foreign rights on the small indie films I make. I have great appreciation for the work of foreign sales agents. But they are best for larger films that have the ability to garner major sales. And I think they would agree with me.

When it comes to small indies, I'm thinking it's better for me to control the foreign and establish my own way of selling into these markets through relationships I establish or through marketing efforts we employ.

The upside to a site like IndieReign is that you do control the rights to your film. The success of your film is up to you and you can get creative on how to promote your film on these kinds of sites.

The downside is that once you expose your film in that foreign territory, you run the risk of that country's distributors never wanting your title in the future because you have already exposed it in their territory. A sale to a major distributor in one country can be significant to your bottomline so you don't want to take this decision lightly.

In the end it comes down to a fear of the unknown - could you one day get a sale in that foreign country so hold onto those rights or is it better to take your chances on a self-distribution platform and risk the sale to a distributor? It's a tough question.

Whatever you do, you need to think about the best interest of your film and investors. Do your research and come to an educated opinion about what the best path may be for your title.

I am definitely a risk-taker and I think we may be ready to embark on the road less taken and start making our films available in foreign territories ourselves. We just need to make that leap!

Has anyone else been able to sell foreign themselves? What are your stories?

A Current Look at International Film Sales for Independent Film

I came across this excellent Q&A, The State of International Sales for Independent Film, with Ariel Veneziano of Recreation Media on the Film Collaborative Web site.  I thought I would share it.

Everything that Ariel discusses in this Q&A rings very true based on the experiences I've had with international sales. In today's market, what we have come to find out is that indie dramas really have no foreign sales value unless they were directed by an A-list director and premiere at a major festival (Cannes, Berlin, Venice) and star major actors. I find it interesting that according to Ariel, the foreign market doesn't care about Sundance or Toronto premieres (two of the most coveted premieres for American indie filmmakers).

No foreign value for indie dramas actually goes against what a large number of indie filmmakers with minimal foreign sales experience believe. I often hear new filmmakers say, I'll make money in the foreign market because other countries like dramas much more than the American market.

Well, it's quite possible that foreign audiences may like indie dramas more than American audiences (I'm not sure that's true), but that doesn't matter if foreign sales agents won't rep them and foreign buyers will not buy them. And that is exactly what is happening.

So when you are putting together your business plan for your indie drama, do not expect foreign monies for your film. This breaks my indie filmmaker heart but we all need to come to terms with this reality and plan appropriately for our next films.

Also, from my experience, sales projections can change based on the current economy and they have the ability to plummet should certain sales not be realized. So make your film for the least amount of money that you possibly can because sales projections can radically change on you, often due to factors outside of your control.

1) There could be high expenses that eat up your revenue.
2) You could have a dishonest sales agent who doesn't pay.
3) You could have a sale you were counting on, fall through.
4) The world economy could sink just as it has in recent years, resulting in less sales and lower advances and even no advances.

I will often budget a film for as low as I can and then cut it in half and figure out how to make the film for that amount. The cuts hurt but I can usually figure out how to make the film happen and I have delivered every film I've made to date. I have never had to stop filming or the finishing of a project because I ran out of money. Where there's a will, there's always a way!

This report is discouraging but it's also a wake-up call that we all need to hear. There's no way indie filmmaking can survive if we aren't realistic about the sales market and creating appropriate business plans for our films and investors.

I know you are probably thinking, how can I make an indie drama as a first-time director with no-name actors? And you're right to be asking yourself this question. You need to figure out why you want to make this film - because money will not be the goal. Then you need to decide if your reasons are worth the money needed to make the film.

For example, you may decided that you want to make this film as a calling card for your writing, directing or acting career. If that's the case, you and your investors may decide that is worth $60k, knowing you may never see that money back. It's quite possible you will make the money back, but you need to go into it being okay with the fact that you may not get your money back.

Having no guarantee of a return on a film is true for any film investment for films of all shapes and sizes. Even the studios can struggle making back their money on $100 million movies, directed by top directors and starring A-list actors, so we're not alone in the battle for film investment recoupment. But let's make sure when we go into battle that we are well-armed and have a great battle plan. Hoo-ah!