There are several ways in which a documentary can earn revenue. Maximizing each revenue stream, while minimizing the costs associated with revenue collection and the time required to collect revenues, is the key to creating a financially profitable film.
Films can be distributed in the following ways:
- US Theatrical Release
- Foreign Theatrical Release
- Pay Per View/Video On Demand
- Cable Television
- Broadcast Television
- DVD, YouTube, UnBox
- Foreign Cable, PPV, VOD & DVD Sales
From a financial perspective, a theatrical release is key to the financial success of most very profitable and widely seen documentary feature films. Without a theatrical release, even well produced films about hot topics and with support by famous guests or narrators, end up going directly to DVD. Some documentaries may end up on cable or broadcast television without a theatrical release, but if they have a good theatrical release that transition is usually guaranteed.
Even a very small but profitable theatrical release, ten to twenty screens over two to four weeks, is enough to greatly increase a documentary film’s value. If reviews during that time period are very good, because the film is tightly marketed to exactly the right audience, success is assured.
Now you know why so many documentary film makers seek theatrical release. However, in recent years US theatrical releases have not proven profitable for most production companies. In fact, they have proven an expensive “loss leader” instead.
This is because:
- Movie theaters, called Exhibitors, typically take 50% of US Domestic ticket sales.
- Traditional distributors frequently demand 30%-50% of US Domestic ticket sales.
- Producers/Investors typically receive just 0-20% of US Domestic ticket sales Actually the situation is worse than that.
Distributors frequently require that independent film producers invest several hundred thousand to several million dollars in Prints & Advertising budget in order to cover the distributor’s costs and to minimize the distributor’s risk as they promote the film. This is particularly true in the case of a documentary film because they are perceived to have a smaller market than most feature films. If you look at the table of successful documentary feature films listed earlier in this book you will understand that some documentary feature films have very, very large markets.
In order to get a Distributor to give a film a theatrical release, producers and their investors end up investing far more money than they are likely to see in direct revenues from the release.
Distributors also determine the marketing plan for a film’s release and negotiate terms with exhibitors.
Sometimes the posters, ads and other materials created by the distributor are inappropriate to the film. The result is a project which never finds its market.
Distributors sometimes decide not to release a film despite the impact of that decision on the filmmaker. This happened to Michael Moore with FAHRENHEIT 9/11.
Sometimes Distributors will favor one of their films over another, meaning that while one film gets a great release another film with the same budget will get a poorly negotiated one.
Finally, in addition to a percentage of ticket sales, distributors who take on a film prior to theatrical release take up to 25% of revenues from some or all subsequent right sales including PPV, Cable, Foreign Sales, etc.
These days, many films are being released to the market via a service deal distribution. Under this model, production companies pay for theatrical release. The “film distributor” provides only very specific services in return for payment up front. Productions create and execute their own marketing campaign with dedicated professional help, depending on distributors only to handle media delivery and selected other tasks which vary from production to production. The result is that production companies keep a much larger percentage of the money received from theatrical release.
The place to begin evaluating your distribution is see how films similar to yours were distributed. One way to do this is by checking out websites likewww.filmspecific.com, www.boxofficemojo.com and www.the-numbers.com. You can also hire experts to suggest distribution strategies for your film. Stacy Parks of www.filmspecific.com is a great resource.
If you are producing your documentary for distribution to a very select market, it may make sense to self-distribute it though www.createspace.com orwww.kunaki.com. This is feasible when you are producing a documentary for an organization or charity with a large number of potential customers that you can reach via email or presentations.
Before you start shooting your film, you should know exactly how it will reach its market.
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