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.

VOD Sales Projections

Photo © drubig-photo / Dollar Photo Club

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?

How To Create a Film Website (So You Can Sell Your Movie)

Your filmmaker website will go through two stages.

The first stage of your film website is your pre-launch promotional stage. During this time, your film website will consist of your movie title, a synopsis and some fancy images that express what your are tying to accomplish. You should also include a blog.

When we launched the film website for Toxic Soup, we focused on getting environmental activists to join our newsletter. In addition capturing emails, the Toxic Soup landing page had another goal – We wanted to let people know that Toxic Soup was more than just a movie. It was a movement. And we wanted to get our audience to help spread the message.

film website

Share Your Story

In addition to your email registration form, your film website should include a video that tells your prospective fan about your movie. A good example of this can be found at Cow Power, a documentary focused on turning cow poop into fuel.

Cow power film website

I met the filmmaker, Allison Gillette when she attended my panel discussion at WestDoc. And I especially like her email registration form. Do you see how it is limited to just asking for the email? Many marketers agree that asking for less is more.

In addition to emphasizing your movie, your prospective audience will also want to know a thing about you and why you are making the movie. Why should people watch your movie? How will it entertain them? What do you hope to accomplish with the movie?

Indecently, taking time to answer questions in your intro film website video may also set you up for a crowdfunding pitch video.

Add Testimonials On Your Film Website

Just because you do not yet have a movie, does not mean you cannot find at least one early fan excited about the prospect of your movie. An example might be “Hey Jason – I can’t wait to see your ninja zombie movie!”

These early testimonials simply need to demonstrate that someone else knows about your movie. To do this, you will want to contact your subscribers and ask them if they’d be willing to give you a testimonial about why they signed up for your mailing list.

The purpose of an audience list and why you need it!

The primary objective of your film website during the promotional stage is to get people to enroll in your mailing list. To do this, you will want to research several 3rd party email providers.

The two most popular are MailChimp and Aweber. I use Aweber to manage the Filmmaking Stuff mailing list and have been more than satisfied with their service. (Full disclosure, in addition to using the service, I do get paid to promote Aweber.)

After selecting your  preferred email management service, your next step is to actually create the registration form.

As mentioned previously, you should only ask for the most essential information. In my testing, asking for anything more than a name and email dramatically diminishes opt-ins. Both MailChimp and Aweber make this very easy, as they allow to customize registration forms you can embed on your website.

As a filmmaker, depending on the word of mouth potential of your movie, having a promotional film website can help you take advantage of initial movie marketing opportunity.

film website

How To Create a Film Website

The first step in getting your website established, involves reserving website hosting and a domain name for both your production company, as well as separate sites for each of your movies.

If you already know the name of your movie, you will want to reserve it as soon as you can (before somebody else grabs it).

To reserve your domain and set up a film website, head over to my friends at www.MovieSiteHost.com – Like most links I mention, this is my affiliate link for Bluehost. I have utilized MovieSiteHost for many of my websites, for years, without issue. In the few instances when I needed to reach someone in customer service, my calls were always answered.

In terms of setting up your actual site, I no longer recommend building a site from scratch. Instead, consider using something called a content management system – or CMS. With a CMS, you can have your own film website in minutes…

Movie_Site_Host

Just in case some of these terms of confusing, let’s recap: Website hosting can be compared to the vacant lot where you’ll eventually build your office building. Your domain name can be compared to your street address. The CMS is the raw materials needed to build your office building, or in this case, a sophisticated website.

And assuming you are utilizing www.MovieSiteHost.com for your hosting, these elements can be implement in a few clicks of a mouse.

When you arrive at MovieSiteHost, you will first need to reserve a domain name for your movie.

Pick-DomainTo set up your initial website, after you reserve your domain name, you will be redirected to your control panel. Once there, click on an icon called “WordPress.”

Choose_Word_Press

From there, you will START a brand new install WordPress on your server.

Start_Install

After a minute or two, WordPress will be installed in your account. You will then be issued with a username and a password. Once you have it, you can log into your new website and begin your customization.

Websites-for-filmmakers-made-easy-300x198

In my opinion, WordPress is one of the most robust and powerful content management systems in the world. And the reason I recommend installing a CMS for filmmakers, over building a traditional website is because once you set up WordPress, you will be able to create and modify your content and change the entire look and feel of your website, with the ease of sending an email.

sell your movieBy making these tweaks yourself, you will save the cost of constantly contacting your webmaster.

If you like this tip, you’ll love this film distribution resource.

How Do Filmmakers Compete?

The inside of an 8-track cartridge. The black ...

DVDs are going the way of the 8-Track Image via Wikipedia

With video on demand distribution and the emergence of several new VOD aggregators, independent movie distribution has become non-discriminatory. This means ALL filmmakers can access the marketplace without asking permission.

While this is exciting, it now means the market is flooded with content. Couple this paradigm shift with the demise of DVD sales channels, and you’ll find many traditional distributors are now offering VOD deals to unsuspecting filmmakers, in the hopes something sticks. While these deals hardly every include any upfront cash advances, filmmakers are usually attracted to the silly promise that these distributors will get their titles into iTunes.

But you don’t need those people. With companies like distribber YOU can get your movie onto iTunes without the middel-man.

And as my friend Jared says, anybody with a HDSRL camera can make a back yard barbeque look cinematic. Granted, this technology doesn’t automatically create good cinema – but it does flood the market with competing product.

What this shift represents to filmmakers is in ways akin to what happens when widget factory owners suddenly find themselves in the market, competing with sweat shop labor and cheaply produced goods of a comparable quality.

As a result, the widget that once sold for $100 dollars can no longer compete. And taking this a step further, if your widget company cannot make enough sales to be profitable – my question is:

What happens to the widget factory workers? Do they get pay raises or do they get laid off?

The good news is competition, technological innovations and change has impacted most every other industry since the beginning of capitalism. And despite these challenges, history is full of entrepreneurial innovation – stories of people who have rode the waves of change and prospered.

I believe independent filmmakers can do the same.

What we are facing as filmmakers is no different than any other business. In fact, I would say that we have just stepped into the era of the mini-studio. Filmmaking has become the next small business.

So how do we compete?

Market and Sell Your Movie On The Internet

Netflix, Inc.

Netflix is Now Available for Indie Filmmakers on The iPad. This Image via Wikipedia

A few years back traveling the festival circuit with a newly produced movie seemed to offer and air of excitement and promise for a great career making movies.

If you think about it, as a filmmaker, getting a movie financed and actually produced was (and still is) an incredible achievement. However, as you probably noticed – things are changing quite a bit in the world of distribution.

And while it would be nice to get a grandiose distribution deal, or even the validation of seeing your movie somewhere in the local Blockbuster, the reality is – this will probably not be a reality for many filmmakers.

However, if you’re ready to face the future of independent movie distribution, you’re in good shape. With the release of the iPad, and the new NetFlix application, we now have clear indication that Video On Demand has arrived in a majorly portable way. And while many of you will argue that the iPad is not the most ideal way to watch a movie – few of us can argue that the future of movie delivery has arrived.

Check out the following iPad clip featuring the NetFlix application:

So as movie distribution becomes more and more portable, what is a filmmaker to do? Here are five digital self distribution tips I have for you:

  1. Know your target market. Just because there are more tools that can instantly deliver your movie to millions of people doesn’t mean every one will like your movie. In fact, only a small percentage will. Your job is to find that small percentage and market accordingly.
  2. Build a fan base. Over time, having a few thousand people on your mailing list who like your work and are always up to date on your productions will help you sell more and more movies. Think of bands building a fan base. You have to do the same thing.
  3. Stick out from the crowd. As you can guess, the market will soon be flooded with a whole ton of movies. This doesn’t mean every movie is worth watching. In fact, you will have to figure out a way to make your movie better. What is your unique hook?
  4. Don’t be afraid to make people hate you. Seriously. There should be two types of audiences for your work. The audience that hates you and your work. And the audience that loves you and your work. Anybody in-between will not be profitable.
  5. Your website is a hub to help your prospective audience find your movie, buy your movie – or at least get on your mailing list. Make this easy for your prospective fan – or suffer the loss of independent movie revenue.  And please, please, please ask for the order.

And in case you’re wondering how I learned this stuff – Like YOU, we got a few bad deals and a lot of rejection with our first feature. But thankfully, digital self distribution allowed us to find our audience (In an AWESOME way!)

As a result, our first feature is still selling like crazy over the internet – And believe me, waking up with an email that reads “You Got Money!” (without a middle-man) goes really well with coffee. In fact, it goes a lot better than the months I spent watching our first feature collect dust on a book shelf.

So, if YOU have a feature film that flat-lined, don’t worry! Your time to resurrect your title(s) is coming! Stay tuned – in a week or so, I will have a digital self distribution surprise for you. . .

ALSO: I am gearing up to share my digital self movie distribution tactics all over the country. So if you know of a workshop or a festival that could benefit from this kind of information, let me know.

Richard Abramowitz Talks About Independent Movie Distribution

The world of motion picture distribution is changing at an amazing rate. Video on Demand and internet outlets like CreateSpace and iTunes are opening up opportunities for independent filmmakers in ways never-before-seen. I have said it before, but it is only a matter of time until all motion pictures (both studio and independent) will be available globally, whenever there is a demand.

Richard Abramowitz is president of Abramorama, a consulting firm specializing in the production, marketing, distribution and representation of independent films. Earlier this week, Richard took a few minutes to answer some questions regarding the current state of independent movie distribution.

Jason Brubaker
Hello Richard. Thanks for taking time to chat with us today.

Richard Abramowitz
It’s my pleasure.

Jason Brubaker
Could you tell our readers a little about what you do and how your business works?

Richard Abramowitz
I do a variety of things related to independently made movies. Most of my day is devoted to marketing and distributing features – both narrative fiction and documentary – theatrically and semi-theatrically.

I also consult with filmmakers during all parts of the process: development, production, distribution, etc., to help them navigate the constantly changing environment and get their films seen.

Jason Brubaker
Where do you find most of your material? Festivals? Submissions? Recommendations?

Richard Abramowitz
I go to quite a few festivals to stay current with what’s being made – and because watching 5 or 6 movies a day is my idea of heaven – but most of the films I work on come to me from recommendations, usually from filmmakers I’ve worked with in the past.

Jason Brubaker
What do you look for when selecting a movie to represent?

Richard Abramowitz
Quality, which is subjective of course; the filmmaker, which is to say, someone who understands the distribution process, or is willing to learn, and participate actively; and, marketability, so that we can define the audience or audiences and determine how to reach them.

I’m interested in a distinctive voice, a filmmaker who’s looking to collaborate, and a film that has an audience or audiences that can be defined and addressed in a cost-effective way.

Jason Brubaker
OK. Let’s say you’re a filmmaker, setting out to make a first feature. What sorts of things do distributors look for when they pick up a movie? For example, over the years we’ve heard countless stories of filmmaker who got a deal based on the DVD cover art or poster. Is this stuff just a myth?

Richard Abramowitz
That kind of thing may have happened some years ago when the video/DVD market was thriving but it doesn’t happen anymore, at least not with any frequency.

I’m interested in a distinctive voice, a filmmaker who’s looking to collaborate, and a film that has an audience or audiences that can be defined and addressed in a cost-effective way.

Jason Brubaker
What format should filmmakers stick to? In the past, it seemed like you had to shoot film or it wasn’t a real movie. Is it now acceptable to shoot HD?

Richard Abramowitz
The technology is the least important aspect of the process at this point. Five or six years ago I released a film that was shot on Super8 and blown up to 35mm. The material worked – thrived – with that look. So I’d say you can use anything that makes sense.

Jason Brubaker
When a filmmaker is deciding on a first feature, based on your experience, would you say there is a genre that seems to have more sales potential?

Richard Abramowitz
As I’ve said, films with definable, addressable audiences are a good place to start. But, to answer more directly, horror films have worked in that way historically, and I’d say gay films, as well.

Jason Brubaker
In sales 101, friends always buy from friends. When representing a movie, how much do your personal relationships with buyers influence a deal?

Richard Abramowitz
I wouldn’t necessarily use the word “friend,” but it certainly helps to have known and worked with people over the years. And, even if you don’t know everyone personally, the reputation you develop over time, combined with a broad scope of associations, makes it easier to reach out to people you need in order to do the right thing on any particular project.

Jason Brubaker
There is a lot of talk in the film community about Video On Demand and how services like CreateSpace and iTunes are altering the distribution model. Do you also utilize these services as an option when working with filmmakers to recoup the investment?

Richard Abramowitz
It’s clear that VOD, et al, are becoming absolutely essential sources of revenue so, yes, that’s part of the equation.

Jason Brubaker
How has VOD affected traditional straight to video outlets?

Richard Abramowitz
VOD, along with a number of other factors, has substantially diminished the value of traditional straight to video outlets.

Jason Brubaker
I know it happens. But these days, how often do independent films get picked up for theatrical distribution? Is this even worth dreaming about?

Richard Abramowitz
It still happens. IFC Films alone must pick up 50 films a year, many of which get some degree of theatrical exposure, but it ain’t like it used to be. I suppose it’s worth dreaming about but I would caution filmmakers to be aware that the dream can turn out to be a nightmare. It’s important to consider how much you’re willing to give up in return for some of those deals and to consider alternative approaches to getting the film out and returning money to investors.

Jason Brubaker
Every so often I receive questions from documentary filmmakers. Given your background, how should a documentary filmmaker approach potential distributors VS those of us who typically focus on narrative features?

Richard Abramowitz
One of the great advantages of documentaries is that each one usually has an obvious, defined audience. If it’s a dance film, demonstrate how the dance audience can be reached. If it’s an environmental film, define that audience so that the potential distributors understand how it might be reached. And look at what other filmmakers have done, for example the folks who make KING KORN or any number of other films.

Do the research. Hand it to them. No one’s going to hand it to you.

Jason Brubaker
And one last question. To help our new filmmakers avoid some serious pitfalls – What do you know now that you wish you knew then?

Richard Abramowitz
Don’t wait for permission.

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To gain valuable tips for selling your movie, check out our guide at How To Sell Your Movie.