Consider the distribution strategy

Opening a film theatrically is an expensive business, with films often losing money at the box office. The theatrical release is seen as an essential part of the distribution strategy because it generates awareness for a film, which hopefully translates into DVD sales further down the road.

Deals vary, but in a "standard distribution deal" once theatre-owners have taken their slice, say, 50% of box office gross, the distributor has taken his fee, typically 35% of gross, and the distributor has recouped the cost of prints and advertising (P&A), the filmmaker can easily be in debt. It can take some time for ancillary revenues, in particular, from the big revenue-maker DVD sales, to get the filmmaker into the black.

Some filmmakers are responding to this situation by getting more proactive in their distribution strategy. Rather than aim for a conventional distribution deal whatever the terms, producers are focusing on distribution strategies that maximize their opportunities to earn revenue from their film - and that usually means hanging on to as many rights as possible, and getting into a position where they can negotiate from a more favorable position.

Service Deal: a better deal

Wealthier producers are showing that service deals are an effective distribution strategy. In a service deal, the filmmaker fronts the bill for prints and advertising costs (P&A) and hires a company to provide distribution services, from promoting the film to collecting revenues from exhibitors. The filmmaker is in effect renting the distribution system for theatrical releases, but pays less for the distribution fee (around 10%-25% of gross, rather than the classic 35% of gross). The producer is risking his or her own money, but retains control over the film and continues to have final say in the promotion and costs. Some films that had been service deals, some which may ring a bell: Fahrenheit 9/11, Monster, and My Big Fat Greek Wedding.

The latter, a $5 million, ethnic comedy with no big-name stars, grossed over $241 million at the U.S. box office. The advertising budget was around $1million and the distributors, IFC Films, were paid a flat fee of $300,000. Even the reported 7-figure sum they negotiated as bonus payments with the film's producers after it became a tearaway success would be dwarfed if they had entered into a conventional distribution deal.

Where the cost of a service deal ($50,000 upwards) is prohibitive, filmmakers are using theatre bookers. "A fair amount...aren't so much service deals as people have hired a theatre booker who has relationships with theatre owners to help them put the movies in theatres.

Booking cinemas yourself

Another option is four-walling, where the filmmakers take on the risk of a film doing well at the box office by renting a theatre and showing their film. If the producer is going the theatrical self-distribution route, we suggest looking for a theatre that can screen a film for critics, has a mailing list or some way of reaching their audience, and a theatre with "some kind of prestige for getting into that theatre." Whether the producer is renting out cinemas or brokering revenue-share deals with cinema owners, self-distribution is a slog that few filmmakers relish, but it's not impossible to make a go of it.

What the Bleep Do We Know as a rare success story. "The Bleep" as it became affectionately known, created great grass roots buzz in a small town in Washington, played the Baghdad Theater in Portland for a record 19 weeks, before the producers made a deal with Samuel Goldwyn and Roadside Attractions, the distribution team behind Super Size Me.

More options

"Even if you have no theatrical or even if you had a failed theatrical that doesn't mean that the film wouldn't work on television and that you couldn't have a DVD strategy that was effective. I think of theatrical as something that is nice to have, but it's not essential. In the old model, the traditional model, theatrical is essential.

"I don't recommend that filmmakers go it alone and try and reinvent the wheel. But I also don't recommend that they just blindly go into making overall deals assuming that all their problems will be solved by this one company, whatever it may be.