When Should You Use Internet Distribution

Maybe not, maybe today

It's complicated

Experiences are known to be mixed. The field is changing very rapidly.

  • Know what the market wants to see and make that
  • Make a very good quality movie
  • Advertise - and do it well
  • Production cost under $100,000 to 2 Million - Ultra low to Low Budget

The Internet marketplace is a rapidly growing, rapidly changing, technological achievement offering boundless opportunities. Home theater is the preferred viewing venue of most people, while movie theaters are reserved for a night out. Soon all movies, except Hollywood extravaganzas, will go to this form of distribution sooner rather than later. The question is not if, but when is the time right to use it.

One thing you need to be aware of is that "Smart Devices" are taking over the online distribution market. Only around a third of the audience that watched Netflix by hooking their computer, Roku®, or Boxee® to their TV in 2007, are now doing so. They watch NETFLIX® over Smart Devices that limit their viewing options to only pay movie sites. The PC market will likely always be here, but as a niche market. So if you are planning on distributing using online sites, it is either get on the pay sites or plan on a small audience.

The market for movies is undergoing a slow transformation as new distribution venues become available and people vote with their feet. Theater ticket sales are flat, and theaters are struggling to stay in business. Home theater is preferred over going out for most movies. Hollywood movies cost an average of $50,000.00 to make, have millions in advertising, and these extravaganzas drive millions to the theater, followed by several release windows in other venues. They break even on a $35,000.00 movie at around 35,000 in theater sales.

Competing in the movie theater market is very difficult for Independents, even though theaters badly want movies that draw audiences. The reality in the theater market is that theaters make their actual profit selling popcorn and other items. (This is not unusual - many businesses survive on the extras they sell, not the actual product.) Showing an Independent movie is a big bet for both the distributor and the theaters. And you often have to go to expensive film festivals for a year or more to get attention from distributors for your movie. (Foreign sales through distributors are much better.) It's a lot easier for an Independent, or a Hollywood movie with a small audience, to go online and other venues, and it can be very profitable if done well. Venues other than theaters are where studios make most of their money on smaller movies.

The online movie distribution pay sites include Vudu™, YouTube®, Hulu®, Amazon, CinemaNow™, Sony®, BlockBuster®, FIos® (Verizon), and a host of cable TV and other sites. You can use distribber or some other distributor to get you on several of them. Payment varies by site, and acceptance varies. It is still up to you to advertise. NETFLIX®, and other subscription sites, do not pay very much for movies.

Next: Distributing existing movies

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Distributing existing movies

If you have already made a movie, use a market savvy representative, who knows distribution outlets and marketing, to get your movie offered to theatrical and other outlets. In reality, few producers have the capacity or ability to be a one man show and do production, distribution, and marketing at the same time. Let those already in the market be the judge of the best place to distribute your movie.

Film festivals are still an option for getting your movie noticed by those in the theatrical release market.

A representative will likely try theatrical distribution if the movie warrants it. Theatrical distributors might actually offer you enough money ("buy the movie" rights) to cover the cost of making the movie (this is where Independents tend to be in the market - if you are Village Roadshow or another very successful Independent with consistent major studio deals, you aren't going to be looking here). Movies may get test releases in US theaters, or may go straight to the foreign market and DVD. Right now (2012) opportunities for independents in theatrical release are more limited than in recent history. Keep in mind that even major studios gain most of their profits from other venues, not theaters.

If theatrical distribution is not happening for you, ask yourself why. If distributors aren't seeing market potential for your movie, maybe the movie has a limited audience, or is just not that good. Or maybe it's just that their basket is full. Ask what you need to improve to get distribution. If it's a "our basket is full" problem, you can go straight to video and maybe get picked up by online distributors or TV VOD. But keep in mind that people won't buy movies that they aren't interested in, or "crap" movies.

Movie Stream Productions maintains a public list on MSP Insider of 20 Ways to Distribute Your Movie at Alternative Distribution Methods. Additions are always welcome.

Next: Making movies as a lifestyle - No profit motive

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Making movies as a lifestyle

No profit motive

If you just love making movies, or you just want the experience, and profitability would be nice but not imperative, there are many ways to put your movie online. Distribute it on YouTube or DVD, or any one of the many other Independent distribution sites, and make a buck for each viewing. The difficulty in these venues is people can't find the movie. But if it would happen to go viral, you may make a good sum.

Documentary makers should follow the advice in the next part, Making movies for profit.

Movie Stream Productions maintains a public list on MSP Insider of 20 Ways to Distribute Your Movie at Alternative Distribution Methods. Additions are always welcome.

Next: Making movies for profit

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Making movies for profit

There are some critical rules.

Rule 1 is know what the market is looking for. This is a moving target, and people don't watch movies that they aren't interested in.

Rule 2 is write a good screenplay. This is the single most important thing cited frequently and consistently by people in the business. People don't watch movies that they aren't interested in, and it takes excellent writing to attract a profitable audience. It is best to test the screenplay before a test audience, with an enactment of some kind, before going to production. It's very hard to change a movie after it is produced.

Rule 3 is advertise. People won't see a movie that they don't know is there, and there is no other way to get an audience large enough to pay for a movie without advertising.

Rule 4 is know how you are going to get the money. Without money, nothing gets done, and people won't talk to you.

You "can" make a movie by borrowing equipment, and having everyone work for free, or on contingency. The chances are not good that you will make a movie that people want to see, without investing a substantial amount of money in it. An Ultra-low Budget movie is below $200,000.00. By the time you rent or buy production equipment, pay your actors and crew the minimum amounts ($100.00 a day Ultra-low), and do post production, you are going to have at least $100,000.00 invested. The equipment, which you might borrow, is a small part of the cost.

If you make the wisest advertising choices possible and create your own ads, it will cost you $30,000 to 100,000.00 to advertise the movie effectively in various venues. If you go to the national broadcast television networks, your advertising cost will multiply by a factor of around 10. The primary advertising audience for online and TV VOD is online connected people - cable and Internet. The mobile market (smart cell phones) is incidental, but the tablet market is growing.

You will need to raise a minimum $100,000 to 2 million to produce an Ultra-low Budget to Low Budget movie. The old way of making the movie and then selling it to a theatrical distributor to pay for it most likely will not work today... maybe if the movie theater market improves. It is very difficult to raise over a few thousand on IndieGoGo or other crowd funding sites, except in rare circumstances. You will have to get local investors to begin, and then angel investors to actually do production. Both will have to be "Accredited Investors".

The angels will likely want to see an experienced, audience appealing actor and a successful director in the project. They will want an ROI of at least 20%, and you won't be able to advertise publicly for them (possibly in Jan. 2013, depending on new Dodd-Frank rules), although you can contact them. So you need to know or find a lot of someones with money. Find people with an interest in movies that think this would be fun. Other investors won't invest in movies.

Angel investors who specialize in movie finance are gatekeepers. They won't finance a bad movie or a producer/production they don't have confidence in. If you can't get past them, appraise your project's viability and rethink your production strategy. But be careful of angel investors - many of them simply want to own your business, have controlling interest, or own the product, which means you build the business for their enrichment, not yours. Sometimes this can be a good thing - it gets you going.

At this point, a really good premium movie can command a $9.00 beginning viewing price, and potentially can pay for itself and make a profit if properly advertised in various media. If "ticket" prices fall below $3.00, profitability looks unlikely, and really should not fall below $4.00.

Profitability on a movie goes up with advertising. If you can get your movie into all distribution venues, other than movie theaters, and advertise it effectively, based on the current number of online viewing devices available, TV VOD outlets, DVD sales, and other factors, such as audience interest, the potential is there to make between $1.7 and 35 million in profit.

Keep in mind that even the largest movie studios sometimes fail to deliver a movie that has audience interest and make a profit. So rather than waste everyone's money and time, take $10,000 to 15,000.00 and test the screenplay, with an enactment of some kind, before a test audience, and make adjustments for maximum audience appeal. From experience, focus group test audiences will tell you what is wrong, and whether they will pay to see it. This is the best way to ensure the success of your movie and avoid a debacle.

Movie Stream Productions maintains a public list on MSP Insider of 20 Ways to Distribute Your Movie at Alternative Distribution Methods. Additions are always welcome.

- Dorian

Next: Reference


Companies mentioned, or commonly mentioned on this Web site:

Amazon.com® is a Registered Trademark of Amazon.com, Inc.
AOL® is a Registered Trademark of AOL Inc.
BOXEE® is a Registered Word Mark of Boxee Inc.
BLOCKBUSTER® is Registered Trademark of Blockbuster L.L.C.
iTunes® is a Registered Trademark of Apple®
CINEMANOW™ is a trademark of BBY Solutions, Inc.
Comcast® is a Registered Trademark of Comcast Corporation
Disney is a business name of Disney Enterprises, Inc.
Fandango℠ is a proprietary service mark of Fandango, Inc.
FIos® is a Registered Trademark of Verizon Trademark Service
HBO® is Registered Trademark of Home Box Office, Inc.
HULU® is Registered Trademark of HULU®, LLC.
Moviefone® and Moviefone.com® are Registered Service Marks of AOL Inc.
MOVIES.COM® is a Registered Trademark of Fandango, Inc.
MOVIEWEB® is a Registered Service Mark of MovieWeb, Inc.
NETFLIX® is a Registered Trademark of NETFLIX®, INC.
REDBOX® is a Registered Trademark of Redbox Automated Retail, LLC
ROKU® is a Registered Word Mark of Roku, Inc.
Sony® is a Registered Word Mark of Sony Corporation
Sundance Institute is not trademarked, but is used since 1981 by Sundance Institute, which hosts the Sundance Film Festival
Sundance Channel® is a Registered trademark of Sundance Enterprises, Inc.
TiVo® is a Registered trademarks of TiVo Inc.
VUDU™ is a trademark of VUDU, Inc.
XBOX® is Registered Trademark of Microsoft Corporation.
YouTube® is a Registered Trademark and Service Mark of Google, Inc.
Any trademark not listed out of oversight is a Trademark or Registered Trademark of it's respective owner.

Mention of any business in this article is not intended to endorse, disparage, or favor any business.

Movie names that are mentioned are not given reference citations. This is because numerous studios are involved in production, and they then assign distribution rights to multiple distributors, and these rights can be sold to other distributors. For production and distribution information on any movie mentioned, consult the Internet Movie Database, or other authoritative listing.

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