Mainstream Movie Distribution: The Basics

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Tyson, J. (n.d.). Lots More Information - How Movie Distribution Works. Retrieved December 10, 2014, from http://entertainment.howstuffworks.com/movie-distribution3.htm

"How stuff works" is a website that serves as a huge provider of information for subjects over a wide range of interests: from adventure, to culture, and even technology.  The site pulls the information in its articles from legitimate sources, and presents it in a factual yet entertaining way.  This particular article from "How stuff works" in the entertainment section is titled, "How Movie Distribution works."  Not very surprisingly, the article does just as it implies.  It explains the basics behind the multilayered processes of distribution which are so behind the scenes of the film world that many aren't aware how imperative distribution is to the success of the movies.

Quotes and Explanations:

1. As you can see, there is a lot that goes on before a movie is ever shown to a paying audience!
• Movies aren't just created over night! The art of filmmaking and producing requires a lot of time and effort.  It is hard to realize how important the distribution aspect of film is because it is often accepted that these movies are being showed for our entertainment, yet rarely questioned regarding the processes that go behind it.
2. It has been said that making a movie is not nearly as difficult as getting it distributed. Because of the enormous amount of cost in money and time involved in distributing a movie, a distributor must feel confident that they can make a sufficient return on their investment.
• Marketing and distributing a film on a large scale requires a lot of money.  With that being said, distributors are more likely to fund the release of a film that they are sure is likely to gross high in the box offices.  At the least, a distributor is looking to get their investment back after the release of a movie , and hopefully bring in even more money.  Making a movie is just the beginning.  After production, marketing is followed by distribution...and this step is not as light and breezy as it may seem.
3. Obviously, a movie that has everything -- major studio backing, big stars and a great story -- is probably going to open big and do very well.
• These are the essentials for a lucrative blockbuster hit.  Distributors will look for films with the features above, because name recognition is likely to attract a fan base, major studio backing means good marketing exposure, and a great story is what almost everyone wants in a film.  Just like moviegoers are more likely to invest in the viewing of films they feel they will enjoy, distributors will fund a film's release that they are sure will do well in theaters.

To keep it simple...

This article pretty much entails the processes within the film business that ultimately lead to distribution: the journey from the initial concept of a movie in a director's mind, all the way to its showing in theaters across the globe.  

The flow of money originates with the producer, who makes a film which is invested in by distributors, and often bought to be sold by the theaters themselves.  Next, customers purchase tickets in order to view the film, and this money is initially part of the theater's revenue.  Ultimately, the monetary success is brought back to the distribution company and flows right back up to the producer.  In the midst of all this madness, the distribution aspect of film remains firmly in the middle between the initial production and the final viewings.

Distribution may vary depending on how successful the film is likely to be.  For example, movies directed by big name directors starring well-known actors are likely to receive the backing of major distribution companies, while independent films tend to use film festivals as a way of attracting the attention of distributors.  As discussed in earlier postings, a lot of independent film makers have even adopted methods of self/alternative distribution using new technological web tools and platforms.  Regardless, distribution agreements usually follow two kinds of models between two parties (a director and a distributor):

1. leasing model
• This is the simpler form of a distribution agreement, because the distributors pay a fixed amount of money in order to own the rights of a film for purposes of distributions.
• also known as "bidding"
2. profit sharing model
• A certain percentage of net profits generated by the film (usually 10-50%) go directly to the distribution company
• also known as "percentage"
• more common in modern distribution deals
• the "nut" is negotiated with the distributer, which is a set amount to cover the theater's weekly expenses
• the percentage of revenue shared between the distribution company and the theater is set

Both models of distribution can be good or bad, largely depending on the success of the film.  Generally, in a world that revolves around money, both the distribution company and the studio will try to settle on a deal that is lucrative for their particular side.  Many major film studios own their own companies for distribution, and the effects of this dual ownership can either wind up to be extremely beneficial or detrimental.  In the case that the film is a hit in the box offices, the studio will reap all profits considering it owns the distribution rights as well.  On the contrary, if a majorly funded film winds up being a flop, the costs rest solely on the studio.

In addition to rights over distribution, some distribution companies also obtain ancillary rights.  This consists of the ability to distribute a film after the initial release in modes such as DVD, VHS, network TV, etc.  Ancillary rights may also consist of the rights to a variety of spinoff merchandise such as soundtracks, games, and toys.  

So a big question remains.  Once a film is leased to a distribution company, what are the necessary factors in achieving a successful opening film?  Some of the basic components include:

1. a targeted (niche audience)..which is discussed in depth in one of the previous blog postings
2. major studio backing
3. star power/the factor of celebrities
4. the film's season
• obviously a patriotic war film is likely to do better in the box offices on the fourth of July, rather than Christmas day.
5. and most importantly...buzz!!

Of course there are exceptions.  For example, a film with sufficient star power that doesn't have "legs" means it's not likely to do well over the long run.  This may be for a variety of reasons, and theaters may compensate for this by showing the film in special engagements, which is likely to attract targeted audiences in masses on specific dates/times.  Other films that prove to be extremely successful in the box office may be "held over", meaning the movie lease has been extended. 

 

In order to work out these kinds of agreements, movie theaters hire 'buyers' who manage negotiations with film distribution companies.  This is an extremely important link between theaters and distributors because the movie will not be leased unless the buyer is interested.  Generally, movie theaters will be less inclined to show films that did not generate enough interest while being promoted.  There is often a lack of 'buzz'  when there has not been enough official information released about the movie or the actors are not well known.  On the other hand, some films that generate a lot of buzz are not likely to be popular among mass audiences, perhaps because the targeted audience is too specific and not broad enough.    

 

For reasons such as these, it is important that the distributor decides the optimal amount of prints to make for each film.  Considering that each print costs $1,500-2,000 dollars to make, the accuracy of this decision is imperative!  The costs of distributing films are only worthwhile when the film is likely to attract audiences and bring enough money to satisfy the costs.  On the other hand, the theater must also make up for the costs lost after leasing the rights to a movie from distribution companies.  Movies shown in theaters are merely "loss leaders", meant to bring in a crowd.  Most of a movie theater's revenue comes from the sale of concessions, and perhaps this is why your extra large slurpee and tub of popcorn winds up costing as much as a full meal at many restaurants...

 

Regardless, it is becoming clear that although the film industry is mainly an institution of entertainment, it is also a business.  Often times, the business aspects of film are overlooked by common moviegoers, but that doesn't mean they don't exist.  In the next blog posting, major distribution companies will be discussed and focused on.