To continue the discussion comparing distributor/filmmaker revenue models…
In the past, my context was, for example, a distributor pays $X for a film.
As soon as they have made $X back + $1, they are profitable. They have little reason to take risks to increase profits unless it is clear the film will breakout.
In all likelihood, the filmmaker is still in the red with little control or ability to push the distributor to continue to market the film.
The filmmaker might be left feeling like the distributor didn’t do enough, but in fact, the distributor did exactly what is right for their business (even if they overpromised.)
The Theatrical-At-Home streaming platform gives me a more granular glimpse into how this plays out order by order.
Theatrical-At-Home is a platform not a distributor, but if it were…
Example (not real numbers):
- Customer spends $10
- $1.0–10% platform fee (or distributor fee — often up to 50%)
- $4.5–45% filmmaker (50/50 with partner after costs)
- $4.5–45% partner
In the above example, assume the distributor’s cost of running business is 5% per order, so they make $0.50 profit per order.
This seems like so little. But add that $0.50 up over thousands of customers and hundreds of films.
All of a sudden, the distributor has a sustainable business.
This really hits home as I release films on Theatrical-At-Home. The platform might make $50 on one film and then $1,000 on another. But even the $50 is still profit… The platform doesn’t lose. It grows.
The filmmakers in both cases don’t come close to breaking even on their production costs. If I was a distributor responsible for marketing these films, at some point, I would need to walk away and move on to the next film — having done my job.
Sadly, it is hard to get enough people to buy online without massive amounts of marketing dollars. The studios spend tens of millions per film, but it doesn’t make sense for smaller distributors to take that risk.
Most distributors are not getting rich, but they do have the possibility of running sustainable, profitable businesses by making small profits on multiple films.
If distributors take the risks filmmakers hope they will (spending excess on marketing and working exclusively on their films for months — which may be necessary to acheive profitability on a film) distributors risk going under and losing their businesses.
The only answer is to start seeing distributors as vendors instead of saviors. Each individual film is its own business, and ultimately, the filmmaker is the CEO — the only one in it for the long haul. Distributors are collaborators working for the filmmaker.
In other industries, vendors and collaborators are hired as needed, then leave to serve other clients. When serving other clients, they do not take their previous clients’ products and set them on a forgotten shelf.
Rewriting the nature of the distributor / filmmaker relationship will relieve the unnecessary stress on both parties. Distributors can do their job without the burden of being responsible for a filmmaker’s career. Filmmakers can continue to sell and control their product (their film) even after the distributor has justifiably set it aside.