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?

Lessons Learned as a Director

Over the past four years, Jenn Page has directed four Independent feature films. Having worked with some of Hollywood’s top talent, she stopped by Filmmaking Stuff to share her lessons learned as a director.

As a director you are completely responsible for everything on your movie set, one way or another. Everything…

Of all that you deal with, the hardest part of being a director is not getting final cut of your baby. You have put in all the work to make the writer’s script the best it can be, you have hired the most talented cast possible (or even more likely you’ve been handed a cast that you didn’t pick and have had to work hard to make them brilliant), you’ve dealt with numerous fires on set and managed to get through without anyone dying.

Unless you are funding the movie, music video, TV show or web series yourself – Or if you have Ron Howard status, you are not getting final cut. Even if the paper says you are getting final cut, you are not.

Directing Lesson 1 – Know What You Want

Only shoot exactly what you want to be edited in to the movie. Don’t get the ‘just in-case’ shot or ‘since we have it here’ shot. Know exactly how you want the scene to be edited and only shoot that. And if you don’t know how to edit the scene, it is time to learn because you need to be editing on set, in your head.

That takes confidence in your work and decisions, but as a director you should be confident (even when you are wrong). If you have any say in the matter, surround yourself with talent (cast & crew) and listen to their advice, needs and opinions. But in the end it is YOUR name on the project so you have to take responsibility from minute one (and minute one is choosing the right script) and never stop taking responsibility.

Jenn Page Camera

Directing Lesson 2 – Be Diplomatic On Set

It is harsh when you can’t choose your team and you get an argumentative personality on set. It really halts production to have to constantly explain your reasoning to your DP or Producers. It also kills your morale and passion for the film. As soon as you start trying to please the producer (or DP) to keep the peace, you get stuck with a mishmash of ideas that are half yours and half someone else’s and not strong in any voice.

You will always end up with a boring movie if there is no clear point of view.

Directing Lesson 3 – Radiate Optimism

Maybe you’ve hit day 12 with 6 more days to go, and you would rather tell the producer to stick the camera where the sun doesn’t shine while you go find the jelly donuts than continue to feel disrespected. You are not the first director to decide that you want to quit now and show them how much they needed you. However, the one steady truth remains: your name will be on the film or tarnished by giving up, so you can’t. You have to be the one person on set who stays positive, motivated, and keeps marching through no matter how ridiculous the set becomes.

In future articles I will dig deeper into the director/producer and director/DP relationships, but the bottom line is no matter what is happening on set, you need to be the one making the choices. So even when your DP insists on a closeup but you know you don’t want one in that moment then you have to trust your gut and move on. If you film that closeup to make him happy, I guarantee the producers will want to use that shot when it’s time to edit. Don’t even give them the opportunity.

Directing Lesson 4 – Go Easy On Coverage

When we are first starting out as directors we often think coverage means shooting anything and everything we can in a scene. Master, medium, medium closeup, closeup, extreme close up, try from this angle, maybe put the camera over here and shoot from this angle… The list could go on and on. You don’t need all that. Stop wasting precious time on set. When you mentally edit the film as you are going you know exactly what you need to make the scene be impactful.

Many of you think that you have done this in advance with your storyboards, but even if you have had the rare luxury of a storyboard artist on your film you will rarely have the luxury of time to shoot everything as you planned it. Until you are making big studio films where you get to work on one scene all day, you are in the land of independent features where your storyboards, shot lists, and any thoughts of how the day will go are thrown out the window.

Jenn Page - Blocking The Shot

There is never enough time. Never. Being able to edit while you shoot will actually give you much lost time back.

Directing Lesson 5 – Get The Performance

The digital age has created an “It’s not film” mentality. However, we should always shoot like we are shooting film. Make specific choices and don’t waste resources shooting too much. Okay, okay, I am the first person to say “just keep rolling” when on set, but not because I am not sure about what I want, quite the opposite. I keep rolling so my actors can keep working without the break in momentum. When an actor is in the zone, calling cut can actually be detrimental.

Letting the camera roll long enough to get the performance is still editing. You know you are close to getting the performance you need from them so you keep letting them move through it until the scene is nailed. Now that you have the performance and angle you need, you can move on. There’s no need to get anything else, no matter how much the DP might really want another take for himself. You got what you need, move on.

Directing Lesson 6 – Remember Good Collaborators

I have worked with some of the most giving, talented, open-minded, collaborative, hard-working people on the planet. Producers, DP’s, writers, gaffers, grips, sound mixers, actors, and beyond. I have people that I just adore and will take with me to the top of the mountain. Those are the people you want to have around you on every set, even if you can only get one in, having that person there to back your decisions or just be a lunch buddy, will help make you a better (more relaxed) director.

Jenn Page with Corey Feldman

If you are lucky enough to find a DP that you work well with and they are also an editor, then you are really in for a treat! The two of you will move through shots like they are warm butter. I rarely have to deal with anyone who isn’t a team player, but it does happen. It will happen to you at some point, and when anything is wrong or off in the finished film, I promise all eyes, fingers, and toes are pointed at you.

– – –
Jenn Page has been lucky enough to direct 4 Independent feature films in the past two years, working with some of Hollywood’s top talent. The mission of her production company Luminave Films, is to create great projects for women to star in, produce, direct, and even crew on. Since it’s inception she has directed, written, and or produced nearly a 100 projects including web series, music videos, and award-winning profit-generating short films for, by, and starring women. Click here to find out more about Jenn Page.

YouTube Rentals?

Since originally writing this article, YouTube Rentals has become part of Google Play.

But if you’re one of the many independent feature filmmakers trying to navigate the ever changing world of digital self distribution (so you can still make a living by making independent movies). . .

I have an AWESOME solution for you.

And No. I’m not talking about iTunes and their indie movie selection mechanisms. Nor am I talking about Hulu’s wonderful platform.

But RATHER, I am referring to an even bigger player. One that can’t be ignored.

YES! I’m talking about Google. Specifically, I’m referring to YouTube and their partner program.

With YouTube, filmmakers are able to upload movies and expand reach. And this amazing VOD outlet will provide short filmmakers with an awesomely cool way to generate revenue.

Here are 5 reasons why you should check out YouTube:

  1. Familiarity – Most people are already conditioned to watch YouTube videos.
  2. Community – Your fan base can subscribe to your profile, get updates, make comments and tell you how much they love you or hate you.
  3. Trust – People trust YouTube.
  4. Marketplace – Like iTunes and Amazon, you already have a gazillion people on the website. Just being at the party increases your odds for revenue.
  5. Communication – When you make a short film, how cool will it be to email your list and say “check my movie out. It’s on YouTube.”

So if you’re interested in making your content available for rent on YouTube, you can find more info by following this link to their partner program.

Asking For Filmmaking Advice

5th floor lecture hall at Baruch College. Take...

Asking for Filmmaking Advice Image via Wikipedia

When I was working to produce my first feature, I had no idea what I was doing. I knew I wanted to see my name in the credits, but didn’t know how to do it.

Fortunately, I also had the phone number of someone who had traveled the same path years before. I contacted this person and asked for advice.

When venturing into new areas of understanding, it is essential to seek out advice from people who have real-world experience. Asking the wrong person for advice may create conversational fluff, but won’t get you what you need. For example, if you wanted to learn how to develop six-pack abs, would it make sense to ask an obese person for advice?

Remember, just because someone has a title or education doesn’t mean they are fully qualified to help you. Find the people living what they teach. Sure, it’s possible an obese person may have a fitness education; but based on experience, they aren’t living it. A person’s advice is limited by their experience.

Later, when I was looking for ways to self distribute an indie feature on the internet, I asked a former studio executive for advice. It was a mistake. After a long conversation, I found out the “expert” had never made an independent feature or any money self-distributing an independent feature. Yet, he was happy to provide advice.

So whenever you’re asking for filmmaking advice, be careful!

Independent Film Financing

United States one-dollar bill

Today, I’m going to offer yet another bit of perspective on the whole question of how to raise money for movies.

As you may or may not know, independent film funding can be a little overwhelming. If you’ve ever dabbled in the business side of making a movie, you know what I mean. The first time I heard people talk about writing a business plan or offering a private placement memorandum, I suddenly felt like I was on another planet. And if you’re like most filmmakers, you would much rather focus on actually getting your movie made, instead of cold calling rich and successful people to set up random pitch meetings.

  • So, the first challenge you have in the world of film finance is: How do I find investors for my movie?
  • The second challenge is: How will my feature film provide enough ROI (return on investment) for my investor?

Assuming you’ve followed some of my previous advice on creating relationships with rich and successful people, even if you do make a favorable impression on a few rich folks, your potential film investors may still shy away from making an investment in your project. Why? Because without star talent, a known director, a film distribution outlet and an experienced crew – it’s very tough to answer the important question of ROI.

Your potential investors want to know how you plan on spending their money, how you plan on getting their money back, and when. Can you provide your investors with this information? If not, then you can understand why independent film financing, especially for your first feature, can be a pain in the butt.

However, having worked as an account executive for one of the biggest investment banks in the world, I would like to share some thoughts and end today’s article on a positive note. If you can come up with a plan that at least attempts to answer the question of ROI – then you’re in the ball park. While I can’t say it’s common, there are a few potential investors out there, for which their excess cash sometimes burns a hole in their pocket. These folks will assess the potential for gain and loss, and despite the risk (which you will always disclose and never hide!), they will still choose to do business with you.

I have a friend (who I’ll interview in a few weeks) – but anyway, he made a short film that went viral on the internet. One day he gets a call from a random multimillionaire who says he has always wanted to produce a movie. Suffice it to say, my buddy is now in pre-production on his first independent feature film.

Stranger things have happened. What’s important is that you keep pushing forward!

– – –

If you are wondering how to get money for your movie – Almost every resource will tell you that you need a business plan. Very few resources will tell you how to actually go out, find prospective investors, qualify them, contact them, get a meeting and build a relationship.

Since getting money for movies was such a frustrating experience for me, I spent the last few months creating: The Independent Producer’s Guide To Financing Your Movie. In it, YOU will gain valuable insider experience so you can avoid my past mistakes, find investors and make your movie. To learn more CLICK HERE