Once your investment is in and the film is made, how do you retain a return?
A) SALES AGENT
At completion, a film becomes a creative product, available to sell to buyers.
Sales agencies are third-parties who are well connected, versed, and networked with distributors. They have the expertise and understanding of where and how to best sell the film to a distributor and retain the best return.
Through a commission incentive, sales agencies will take on the task of selling the film to buyers, including domestic and foreign, theatrical and home media, television and streaming.
B) TERRITORIES & PLATFORMS
There are virtually 65 industry-recognized sales territories in the world for which a film can sell to.
There are around 8 forms of media for which a film can sell to: theatrical, television, DVD, Blu-Ray, Video-On-Demand (VOD), ad-based Video-On-Demand (AVOD), transactional Video-on-Demand (TVOD), and subscription-based Video-on-Demand (SVOD).
One could sell the worldwide distribution rights for all media to a singular buyer. Or one could sell each individual media right to different buyers, as well as sell each territory to different buyers, exclusively and non-exclusively, to potentially amounting to 520+ deals. Generally, the latter is not exactly the case, however the current market does allow for a diverse variety of options when it comes to the number of sales a film can make to distributors.
C) MINIMUM GUARANTEE
Distributors seek out content that they can sell to their audience. Whether it is screening the film at a giant multiplex, selling DVDs, or placing the film on a streaming platform, distributors are in the business of entertaining their audiences through content that they have acquired.
As the film gains popularity on the festival circuit and earned press, the sales agency will court offers from buyers. In order to compete, distributors must offer attractive minimum guarantees.
The minimum guarantee is an initial sum of money offered to the producer to acquire the exclusive right to distribute the film within their respective territory and/or platform.
This is usually the first stream of revenue that is returned to the production. Depending on the territory and the media, minimum guarantees vary. For example, a worldwide acquisition in all media could be a $6 Million minimum guarantee, whereas a streaming acquisition in France could be a $30,000 minimum guarantee.
Once a distributor has acquired the film, they then can use their resources and staff to market and sell the film to their respective audiences.
Usually, the distributor retains the right to collect all revenue until they have a return on their minimum guarantee, corporate overhead, and cost of marketing and distribution.
Once the distribution company has retained the costs of distributing the film, the net profit is then split with a certain percentage to the distributor as a distribution fee, and the remaining becoming the net proceeds to the production.
Following a sale to a distributor and a successful sale of the film to audiences, investors will then see an additional return in the form of net proceeds from the distributor.