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?

Untapped Crowdfunding Site For Filmmakers

As a filmmaker, one of the challenges you face is how to finance a film. When I was starting out, things were much different. Back then, if you wanted to finance a movie, you had to cross your fingers and wait for someone to grant you permission…

The problem is, many people in Hollywood are still waiting for someone else to give them permission. Permission to make a movie. Permission to be successful. Permission to live the best life possible. UGH!

Here is a little secret. If you’re looking to raise money for your movie, set up a crowdfunding campaign. This allows you to test your concept from day one. And if successful, crowdfunding also allows you to find the people who may be most interested in your movie. In addition to providing you with funding, some of these folks will help you spread word of mouth.

Two popular crowdfunding platforms are IndieGoGo and KickStarter.

 

Why Do Filmmakers Need A List?

Like it or not, many social networking sites run the risk of going out of vogue. So as a filmmaker, if you are working to build a relationship with your audience – From day one, you will want to migrate your fans off the social networking sites and get them into your own email, mailing list.

For this, I recommend using a reputable third-party email marketing service such as www.AudienceList.com.

In full disclosure, the company does pay me to promote, but it is the company I utilize for my own business.

With this tool, as soon as you sign up for one of their inexpensive accounts, you can easily create ways for your movie fans to connect with you. For an example of how this works, STOP: If you would like over $47 dollars in useful filmmaking tools for FREE, sign up below:

 

If you just clicked that link, you probably got an email asking you to confirm your subscription. Assuming you clicked, you were then redirected to a “Thank You Page.” And on that page you were able to download all sorts of premium filmmaking tools, for free. This is what legitimate email marketers call the “double-opt-in” process.

While I am obviously utilizing list-building to create a more meaningful relationship with filmmakers (and YOU), this model can be (and should be) applied to your own movie business.

The major difference between email marketing and traditional movie marketing methods is that members of your target audience find you, and give YOU permission to email them. This is important, because unlike traditional movie marketing methods, with email marketing, you will only communicate with people actually interested in your movie.

To make this easy, your audience list is simply a collection of email addresses. Most filmmakers will also collect the person’s first name with the email address so that they can personalize the email. So instead of saying “Hello Zombie Movie Lover”, you can say “Hey, Jason!”

While I usually stick to just collecting a name and email address, www.AudienceList.com also makes it easy to collect information such as the address and phone number of your site visitor. While this extra information may help refine your  marketing strategy – the truth is, most of your movie website visitors will not take time to fill out an extensive opt-in form.

An opt-in form is a little box that asks visitors to provide you with their name and email address. Here is an example:

 

With services like www.AudienceList.com, as soon as your visitor opts-in, the contact information is added to your database and managed for you, automatically! These subscribers are now part of your “list,” and you can email them with updates, deals and movie festival screening times – to name a few examples.

The other week I gave a talk at the UCLA film school. And someone asked me why I emphasize audience list building so much – So this is important. Given the disruption to traditional distribution sales channels, building an audience list for your movie and your career might be one of the most important decisions you ever make. Why? Because regardless of how the independent movie industry changes, one constant will always hold true. YOU will need to get people to sit down and watch your movie, and hopefully pay you for this privilege. www.AudienceList.com can help you get started.

Movie Marketing: Are Film Festivals Losing Relevance?

Filmmakers often utilize film festivals as a way to get their work seen and hopefully sold. And while acceptance to top-tier festivals is super exciting – the reality is, many filmmakers do not get in.

As a result, many of these semi-dejected filmmakers take a shotgun approach to their festival strategy. They start applying for most every regional and local film festival, everywhere. And aside from outlandish application fees, upon arrival to these festivals – instead of  meeting a bunch of VIP acquisitions executives, most second tier festivals are populated by a bunch of other desperate filmmakers shoving postcards in your face, eagerly advertising their screening times to, well, other filmmakers.

Sometimes this includes free beer. (Most times not.)

While having delusions of distribution grandeur is still part of the film festival fun – with the demise of DVD distribution, and the odds that you won’t get into Sundance – it is vitally important that you create a film festival strategy PLAN B.

What is a film festival strategy PLAN B?

Simply put, if you are serious about making your movie profitable, YOU are now responsible for marketing, promotion and distribution of your movie. And inline with this strategy, you must view regional and second tier festivals as an opportunity to build your audience list. But instead of handing out postcards to other filmmakers, your marketing strategy will be smarter.

Here are five tips on making film festivals relevant to your movie business:

  1. Write a press release specific to the festival and then distribute to the local press. This also involves picking up the phone and personally inviting the press to attend your screening. Many festivals will have a press list. You can use this – but I would also advise conducting additional internet searches for other press outlets.
  2. Many local towns have a filmmaker community. Reach out to them. If you are traveling, it’s great to have someone to pal around with. The secondary benefit to this is, many of these same people will have relationships with the festival staff – always good to know people on the staff.
  3. If the festival allows it, see if you can take several clipboards into your screening. You’ll want to collect the names and email addresses of each viewer and get their permission to email them. Later you will enter this data into your audience list.
  4. If your film website does not include a blog component, add one. Then update frequently. Add pictures and video. Let the world know your movie is screening. People like this stuff.
  5. And finally, most regional festivals have panel discussions with industry experts. Make sure you attend these. Take your business cards. And then try to build relationships with whomever is on the panel. (And as a side note, if you know anybody looking for a panelist – I suggest inviting Jason Brubaker from Filmmaking Stuff? Just sayin’)

Out of everthing I mentioned, the most important strategy for your movie and your modern moviemaking career is grow your own fan base. This way, when you focus on building your audience list, you stress a lot less about the traditional distribution deal you may or may not have received at one of the notorious festivals.

So yes. Film festivals are still relevant. They offer a great way to source an audience for a minimal marketing investment.

Also, I’d like to thank one of our filmmaking stuff readers named Michael for this question. If you would like to get on the filmmaking stuff VIP list, click here >>

Sell Your Movie For Maximum Profit

If you’re already a seasoned feature filmmaker, take a moment and think back: Do you remember when the idea of making movies seemed like a far away dream?

Do you remember when you first got the idea for your movie? Do you remember Your first day of production? Do you remember your first screening and how well everyone loved your work?

That happened to me with my first feature. Like you, I thought our movie would get into Sundance, play well, build buzz and if we were really lucky, we had hoped the movie would garner us a 3 picture deal. But that didn’t happen.

Sure, we got some offers, but they were not “deals.” (A deal actually pays money!)

So instead of exchanging our movie for an empty promise, we decided to try selling our movie on the internet. Little did I know, this one decision has changed the course of my movie making life. That was five years ago…

And since that time, the internet as evolved. If you’re a filmmaker with a movie, you need to get it selling in all the popular internet marketplaces, including Amazon and iTunes.

You don’t need a middle-man to make this profitable. I am going to show you my internet marketing secrets…

You can check out my “How To Sell Your Movie” system by visiting the website here.