How To Finance Movies With VOD Sales Projections

Do you know the most popular question filmmakers ask me?

I’ll give you a hint. It has to do with video on demand.

Ready. . .

Without too much variation, the most popular question is: “Can you provide some VOD sales projections?”

I understand the motive behind this question.

Believe me, I do.

You’re a filmmaker. You either made an awesome movie and you’re trying to use VOD sales projections to convince your partners that VOD is the way to go. Or you are in the process of making a movie and you need to convince your investors that VOD is awesome. In both scenarios, you’re trying to find proof that movies make money in VOD.

I get that. . . But. . .

Let’s make one thing clear. Asking for VOD sales projections is asking the wrong question!

If you dig around, examples of VOD Sales successes are out there. Check out what The Polish Brothers did. And if that’s not enough, Google the case study around Indie Game the movie.

But the truth is, one filmmaker’s past success does not guarantee that your movie will be successful.

Read that statement over and over again. And if you need a little more clarity, take a look at what the cat is saying here:

VOD Sales Projections

Realizing that VOD sales projections are BS is essential for your success. And I am going to explain how you can use your new found understanding for good, very soon…

But before I go there, let’s talk about why people invest in independent film.

Why Investors Invest In Indie Film

Independent movie investors invest because (aside from having an appetite for risk and an interest in the film business) most of these people want a return on their money. If you are doing things by the book, you probably created a marketing strategy as part of your business plan. This plan provides prospective investors an overview of how investment dollars will be budgeted, spent and hopefully recouped.

In the past, trying to convince investors movies were a good investment involved projecting returns based on speculative data. To guess how much money a movie may make, filmmakers would compare their project to other successful movies.

Creating indie movie comparables is complete BS.

The reason for this is simple.

Just because you make a low budget horror movie does not guarantee your movie will have the same success as Paranormal Activity.

In fact, Paranormal Activity is an outlier. It is not a fair comparison. And using breakout hits as examples, while ignoring the thousands of unsuccessful horror movies made each year, is short-sited at best and I dare say a little unethical.

Video On Demand Sales Projections

Given the birth of VOD distribution, as a filmmaker you now have the ability to access and enter into a non-discriminatory marketplace as soon as your movie is ready. And because many of these marketplaces exist online, much of your sales will come from internet traffic.

This is actually awesome news.

It means that you can boost your sales by using a very common marketing concept called…

[Seriously… Are you ready? You are about to receive the secret sauce of modern, indie movie marketing.]

More important than VOD Sales Projections is:

Conversion Rates

What is a conversion rate?

Conversion Rate Defined, According to Wikipedia:

Your conversion rate is the proportion of visits to a website who take action to go beyond a casual content view or website visit, as a result of subtle or direct requests from marketers, advertisers, and content creators.

Conversion_Rate

In other words, if you send one-hundred people to your movie website and two people buy your movie, your conversion rate is two percent. This is profound. This is life changing for indie filmmakers!

Question: Why should filmmakers be enthusiastic about the internet marketing, nerd concept of conversion rates?

Answer: If you know your conversion rates, you can model and potentially project more accurate movie sales projections from day one.

But before you start noodling around to find your conversion rates, it helps to answer the following questions:

Modern MovieMaking Model

  1. Who Is Your Target Audience?
  2. How Large Is Your Target Audience?
  3. How Will You Reach Your Audience?
  4. What Is Your Marketing Strategy?
  5. How Many VOD Sales To Break Even?

While I won’t get into the actual mechanics of marketing and selling your movie here (My Action Guide How To Sell Your Movie provides you with an actual step-by-step plan for getting your movie seen and sold), I will simply note that a marketing plan must now be included with your business plan.

The Secret VOD Sales Projection Formula

When you create (or refine) your marketing plan, you must now include some marketing math.

Truth be told, math is a weak subject for me and I dare say, most of the filmmakers I know. But luckily there are many spreadsheet templates that allow you to test several conversion rate scenarios. You can use these scenarios as a guideline to ballpark the potential ROI for your movie.

Here is a basic website conversion rate calculator you can utilize: http://bit.ly/17TSCrt

Before you get overly excited (like I am) calculating your movie website conversion rate is only one metric to determine your movie’s potential for profitability. You still need to figure out how to price your movie. And at the same time, you will need to determine how much targeted internet traffic will cost you.

Generating Internet traffic is the result of executing four strategies. You can either get free traffic online, free traffic offline, paid traffic offline or paid traffic online.

For the sake of this example, I am going to incorporate pay per visit advertising. With pay per visit advertising, you simply pay for someone to visit your movie website.

One example of Pay Per Visit traffic is StumbleUpon. It’s a social bookmarking site that also allows you to pay for semi-targeted traffic. This works well if you have a movie with a dose of controversy and a strong hook.

And again, if you’d like more info on specific traffic generating strategies, check out my indie guide to distribution.

Ok. Here is our first example…

Let’s assume only 1% of the targeted folks who actually visit your website, buy. Then how many visits will you need to sell 100 units?

100 units = Our goal for this ad campaign.
$.05 = Amount you may pay advertiser per visit.
X = Number of Visitors Needed to buy 100 units if only 1% buy.

(X).01 = 100 units
EQUATES TO: X= 10,000
THEN 10,000($.05) = $500 paid for targeted traffic.

So in other words, if you were lucky enough to get a 1% return, you just paid $500 dollars in pay per visit advertising to sell 100 units of your movie. But let’s go one step further. Let’s assume you’re like me – and you hate order fulfillment and shipping. So you decide to let a company like Amazon’s Create Space or iTunes (or some other popular marketplace) handle your order.

Video On Demand For Rent (Electronic Sell Through)
100 units ($3) = $300 – 50% paid to marketplace = $150
minus $500 paid for advertising = -$350 NEGATIVE

In this VOD rental scenario, the Pay Per Visit Ad numbers don’t work, unless you like losing money.

Video On Demand For Download (Electronic Sell Through)
100 units ($10) = $1000 – 50% paid to marketplace = $500
minus $500 paid for advertising = BREAK EVEN

In this VOD download to own scenario, the numbers work a little bit better. Assuming you’re lucky enough to get 1% of your money returned, at least the advertising pays for itself. But unless you can increase your conversion rates, pay per visit advertising is going to be very difficult method for returning money to your investors.

Physical DVD Sales
100 units ($20) = $2000 – 50% paid to marketplace = $1000
minus $500 paid for advertising = $500 in profit.

Ah ha! If you’re fortunate enough to get 1% return on your pay per visit advertising, you can see how physical DVD’s (or units) sold at $20 dollars may offer a slight profit margin. In other words, in this scenario, for every $.50 cents you spend, you get $1 dollar back.

So let’s tackle the bigger problem. Let’s try to get a return on our 1Million dollar movie, selling physical DVD sales and using pay per visit advertising alone:

Movie Budget = 1 Million dollars
Physical DVD Sales using Pay Per Visit Advertising

$1,000,000 divided by $20 per unit = 50,000 Units

Since we will give 50% to the marketplace for all sales, we will need to project for double our budget.

100,000 units = Our goal for this ad campaign.
$.05 = Amount you may pay advertiser per visit.
X = Number of Visitors Needed to buy 100,000 units if only 1% buy.

(X).01 = 100,000 units
EQUATES TO: X= 10,000,000 (Yes, TEN MILLION people.)
THEN 10,000,000($.05) = $500,000 paid for targeted traffic.

100,000 units ($20) = $2,000,000 – 50% paid to marketplace = $1,000,000
minus $500,000 paid for advertising = $500,000 in profit.

So to break even, you would need to sell 100,000 units and make $2,000,000.

Some Sales Conclusions

Based on this scenario, as a filmmaker you will (obviously) need to expand your promotion beyond pay-per-visit advertising!

But importantly and most AWESOMELY, you can treat your movie business like any other small business. With VOD Sales projections, you can find the marketing formula that works for your movie and crunch your numbers until you find a scenario that brings you profits.

Create a plan that included your marketing costs in your budget.

While there are no guarantees in any business, having a plan for marketing, sales and distribution sure beats the old days when your only plan for ROI involved crossing your fingers in the hopes someone will offer you a profitable, traditional deal.

While these may not be the VOD Sales Projections you were looking for, hopefully you now realize the power of knowing your conversion rates.

Treating your movie business like any small business simply means you don’t have to ask permission. You can make your movie NOW! And your prospective investors might take notice…

Also, can you do me a favor? If you liked this filmmaking article, could you kindly retweet or share this article with your friends?

Future filmmaking BOOK Coming Soon!

For those of you following filmmaking stuff, you know that I have been working on an awesome and comprehensive filmmaking book for quite some time.

I am pleased to announce that the filmmaking book is almost complete. (Update – the book is complete and available here.)

One of the biggest challenges I had was coming up with a title. Thankfully one of our Filmmaking Stuff readers wrote me on the Filmmaking Stuff facebook wall: “How about: Filmmaking Stuff-The Book.”

While the idea seemed simple, the more I thought about it – the more I realized this was the correct course of action! First of all, most of you know me (or you do now) and secondly, if you didn’t know about Filmmaking Stuff, after reading the book you will. I look at this as a win-win for our growing community.

The next step was coming up with a synopsis. I had something written down, but my friend, screenwriter Jurgen Wolff took my crappy writing and cleaned it up a bit. As a result, the following sums up the book pretty well:

“The future of filmmaking is not Hollywood. It’s the thousands of independent filmmakers empowered by the digital revolution. This book shows them how to write the script, use crowdfunding to raise the money, make the journey from screenplay to screen, distribute the movie, and build an audience anxious to see their next one.”

Once I had the content, the title and the synopsis, the next task was creating a preliminary cover design. For this, I chose the famed graphic artist, Ian Hannin.

As a sneak peek, I have included the current iteration of our cover design. You can tell that the cover is based on the aesthetics of the filmmaking stuff site – which is intentional brand consistency.

Right now I am awaiting some quotes from some VIP filmmaker types. I have reached out the usual suspects. And I am eager to get this book into YOUR hands.

With that said, the book is almost ready for the presses. I will initially release it as a hard cover book that you can order through Amazon and other retailers.

Then later, you will be able to grab a copy on your kindle. If you want to be the first to know about the book, make sure you sign up for the Filmmaking Stuff mailing list.

Anyway, happy filmmaking!

(Super excited to get this Filmmaking Book into YOUR hands!)

 

 

 

Final Sundance Recap

If you were one of the readers of Filmmaking Stuff who got to meet me at Sundance, you know that the Sundance Film Festival was a blast. Snow. Cold. Wet feet – And a gazillion filmmakers all trudging through the elements to just be part of the action. And my action these days is Movie Distribution and crowdfunding.

Specifically, I enjoy showing filmmakers how to leverage the internet to source an audience – so that you can get movies seen and selling.

Inline with this passion, I was invited to participate on a crowdfunding and distribution panel with some folks.

John Rustin (BnY), Jerad Anderson (Watchbox Media, Inc.), Jason Brubaker (Filmmaking Stuff), Danae Ringelmann (IndieGoGo), Moderated by John Corser

This panel was interesting. I was impressed by Danae Ringelmann (of IndieGoGo) and some of the tips she shared on successful crowdfunding. Such as: Start early. Know why you want to make your movie. Have some idea of how to reach your target audience.

After that the conversation moved over to distribution and sourcing an audience… During this time, I shared a few of my usual tips on how to market and sell your movie. And this led us to the topic of streaming platforms. I was totally excited about Jerad Anderson of Watchbox and what he shared about his new streaming platform for filmmakers.

Later in the talk, Adam Chapnick from Distribber walked into the room. Distribber allows you to get your movie seen and selling on all the popular video on demand marketplaces without the creative accounting usually found in traditional distribution deals.

And finally… If you missed Sudance but you want to get the good stuff, check out www.HowToSellYourMovie.com

 

Why Two Movies in One Day Is Good For Filmmakers

The movie Super 8 is good for filmmakers

Super 8 Image via Wikipedia

Like most filmmakers, I constantly spend my life pushing myself from project to my next project. I have been in LA for close to six years, and in that time, I’ve garnered producer credits on four features. Pretty fun.

But I gotta tell you, as we enter the remaining six months of 2011, I am trying very hard to do a little less grinding, and hopefully finding time to have a lot more fun.

Yesterday I sat through two movies. And during that time, with my phone turned off, I realized once again why it’s awesome to make movies. We make movies because sharing our work with the world is special and magical. We have stories and we need to tell them.

As a filmmaker, it’s essential to recharge your creative batteries at least once a week… I’m interested to know what you do to unwind. Filmmaking comments welcome below >>

 

Modern Marketing For Filmmakers

Modern Marketing For Filmmakers

When it comes to marketing your movie, you need to become proficient at driving targeted traffic to your movie website. While old school filmmakers could rely on various video stores and retail outlets to sell their movies, these days the popular marketplaces are Amazon and iTunes.

Both of these markets are web based. And both are accessible through my partner distribber. But just because your movie gets into the market doesn’t mean people will find you. This means, you’ll have to drive traffic to your movie website. But before you start driving traffic, you must first figure out your filmmaker website strategy.

I suggest creating something my internet marketing friend, Fred Gleeck calls a conversion funnel. Basically it looks like this:

Filmmaker Conversion Funnel

This simple movie marketing model demonstrates that  not everybody who visits your  movie website will buy your movie. But by working to get more and more targeted prospects into the top of your funnel, you will increase your chances of making more sales at the bottom. Additionally, in the event a prospect tries to leave your movie website prematurely (abandon the funnel), you will ask these folks to “opt-in” to your audience list.

Once these prospects opt-in, they will get to know you and know more your movie. Utilizing this “lead capture” strategy, your odds of converting a prospect into customer increases.