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?

Digital Self Distribution: How To Sell Your Movie Online

Having spent the last few years working in film distribution, I can tell you the landscape is changing. Instead of crossing fingers for an awesome distribution deal, entrepreneurial filmmakers now have options for taking ownership over their products and reaching audiences directly.

In response, smart distributors are keen to work with filmmakers who, aside from having a great movie, can also demonstrate an ironclad digital self distribution plan. In other-words, film distributors seek projects that don’t actually need a distributor. Many distributors pay for this privilege.

Distributors have always worked to acquire projects that offered the lowest risk with the highest potential for reward. In the past, a low risk project was one that had a name actor with a ton of international value. And these days, because film distribution is increasingly online, a low risk project is one with a famed YouTuber.

A distributor naturally assumes the YouTuber will promote the movie to his or her audience. And by having a famed YouTuber, a distributor does not have to pay marketing money to build word of mouth. Less money spent for marketing, equals a lower risk for the distributor. And this means a lot more reward for you.

digital-self-distribution

Photo © olly / Dollar Photo Club

Digital Self Distribution: How To Sell Your Movie Online

But what if your movie doesn’t have a famed YouTuber or a movie star? After months and months of hustle, the reality of how you’ll garner ROI (return on investment) might be slightly different than the idealized imaginings of the three-picture studio deal you once had.

The reason for this is simple. Your project is too risky.

So your first order of business is to lower the risk and increase the potential for reward. And that starts by creating your digital self distribution plan. Here are five tips to help:

1. Find your USP: In the world of marketing, USP is short for Unique Selling Proposition. And if you can’t market your move based on celebrity, the next step is to leverage whatever makes your movie unique, interesting and memorable. Do you have a cutting edge horror movie? Ninja movie? Girl with a horse movie? Or a food documentary on why you should quit meat for a plant based diet? Great!

2. Focus on Controversy: What aspect of your story provokes an emotional response? Think of how politicians market during a political campaign. Most folks either hate the message or they love it. Does your movie make a polarizing statement? Is there anything about your movie that makes some people totally dislike it, while other people LOVE it? Great. Use controversy to spark word of mouth.

3. Create a Marketing Plan: Creating a marketing plan is less complex than you think. Just answer these questions: Who is your target audience? How will you reach your target audience? Based on your budget, how many unit sales will it take you to break even? How will you make this happen without losing money?

4. Update Your Marketing: When I evaluate movies for distribution, the ones that grab my attention look professional. I instantly know what the movie is about and where it fits in terms of genre. Branding is the marketing equivalent of matching your belt with your shoes. Look at other movies in a similar genre. Make sure you present your movie like a “real” movie. Hire a graphic designer.

5. Digital Self Distribution Platforms: Even if you are seeking a traditional deal, you should simultaneously plan your release strategy as if you do not have a deal. This means getting to know some DIY platforms. You might do film festivals or use Tugg for your theatrical release. You might then consider some transactional video on demand platforms. This way, if you don’t actually land a favorable distribution deal, you’ll still enter the market.

No longer can you make a movie on spec, cross your fingers and hope a deal finds you. You have to find your own deal. But unlike years past, you are no longer limited. You can leverage technology to market your movie directly to a global audience. And that’s what digital self distribution is all about.

Want to plan your distribution strategy? Check out my digital self distribution system.

Download This Sell Your Movie Checklist

Film distribution is changing fast. What worked in the old days, doesn’t work anymore. And if you’re looking for information on how to sell your movie, you’ve come to the right place!

Since you’re reading this article, I’m guessing you are one of two types of filmmakers. Either you made a movie or you are working towards your next movie. In both instances, learning about film distribution – specifically coming up with a strategy to get your movie seen and selling is essential.

I don’t need to tell you that making a feature film is a feat that many find impossible.

In order to make a feature film, you have to put together a cast and crew, refine your script, find some funding and in the process, you have to figure out how to ignore all “advice” that your friends and family share with you… About how it can’t be done.

But behind all the excitement, you and I both know there is one nagging question on your mind. And it is the same question asked by every independent feature filmmaker.

Sell Your Movie

Photo © Nebojsa Bobic / Dollar Photo Club

You’re wondering: “How am I going to sell my movie!”

That is a good question. And if you’re crossing your fingers to hopefully sell your movie for a huge paycheck and a three-picture Hollywood deal, what I’m about to share with you may be a bit different than what you’re hoping for. Ready?

While there are a lot of distributors out there who would like to tell you otherwise, most films DO NOT make money in a traditional distribution deal! (I’m serious here.)

Getting your movie seen and selling is really up to YOU!

Whenever I say something like this in my talks, invariably someone shouts across the room:

“Making a movie is hard enough. How do you expect me to become my own distributor?”

This is a fair question. And after making a movie, then doing the festivals and not receiving a deal, you can get pretty tired. I totally understand that. This is why a lot of filmmakers give up on their movies or take a crappy deal. But I want to help you avoid this.

>>Give me the “Sell Your Movie” checklist!<<

How To Sell Your Movie

Here’s the thing. There are a lot of crappy movies getting made each year. Thanks to technology, any person with a thousand dollars can grab an HD camera and create a backyard indie. And while this does not guarantee quality, it does create a market flooded with cheaply produced movies.

Add the fact that DVD is almost dead, and your odds of finding a traditional distribution deal (that actually pays you good money) are dramatically decreased. For most filmmakers, this revelation comes as a shock.

Where is my million dollar check?

Look. I can’t promise your movie will make money. Some movies make a lot of money. Some movies make about zero dollars. But I can tell you advances in VOD distribution and internet marketing offers hope. . .

There is hope if YOU are willing to DO the work.

Most filmmakers are NOT willing to do the work. In fact, most filmmakers would rather give up on their movie. . . Hopefully we’re not talking about you. You owe it to yourself and your investors to explore all options and come up with a solid marketing and distribution plan.

If you want to sell your movie, you need to create a distribution strategy that YOU control. This is a new way to think. In the old days, the mere mention of self-distribution was a crazy notion.

DIY? Isn’t Do It Yourself for losers?

That is how I used to view the world. If it wasn’t for the internet, I would probably have a whole different perspective on how to sell your movie. I’d probably tell you to take ANY distribution deal. But times have changed. Like you, our first feature was met with empty distribution promises and crappy deals.

So by necessity, we started to sell our title on Amazon as both a physical DVD and a video on demand download. At first, none of the producers liked that idea. I mean, even if a traditional deal sucks, at least there is still validation of seeing your title on the shelves at the local video store.

But then we made our first sale. . . We thought it was an anomaly. How could we possibly make money with our movie? We had no movie stars. We had no formal, traditional distribution deal. (We had offers, but nothing that actually paid money.)

Adding to this, most people on earth had never heard of our movie (including you.) But then we made another sale. . . And then a third. . . And then a dozen. . .

That was back in 2006. Since that time, our first feature has sold in ways we never imagined. And while the money we made on the movie wasn’t enough to pay for early retirement, I can’t complain.

The truth is, we were onto something before most other filmmakers. And this experience forever changed the way I view movie distribution. Prior to making my first feature, my “sell your movie” strategy always revolved around one BIG payday.

But I am now of the opinion that making money as an indie filmmaker is more about making a bunch of small movies and getting each one to pay you a little each month. These days filmmakers need to create good work, find their target audience and focus on sell movies consistently over time.

For many filmmakers, this sort of sell your movie talk might seem crazy. Think about it. In years past, filmmakers only self distributed their movies when they had to. It wasn’t a choice! But these days, taking time to learn how to sell your movie makes sense. And that’s why I put together this checklist.

These days you can choose to sell your movie, because nine times out of ten, making your title available on Amazon and iTunes and other popular VOD marketplaces can potentially pay more than a traditional deal.

Remember, a deal that pays zero is not a deal.

(Of course I’m expressing my opinion.)

The sell your movie checklist should be considered a good start.

Can I ask you a favor?

If you like this checklist, can you kindly tell your filmmaking friends to check it out? Moving forward, let’s set some expectations. The purpose of this guide is for you to grab at least one useful film distribution or movie marketing tip. If you do this, then we can both be happy.

That’s it. Easy, right? As always, if you have questions about anything in this guide, please feel free to contact me. I love it when I find out how these tips have helped you get closer to your filmmaking goals! Like I said, if you take time to study this guide, you might get a tactic to help you sell your movie.

>>Give me the “Sell Your Movie” checklist!<<

I hope you enjoy this brief guide to getting your movie seen and selling. And if you really like this information on how to sell your movie, please share it with every filmmaker you know. They will thank you for it!

No-Budget Filmmaking: Rise of The Backyard Indie

Like it or lump it, there are a lot of backyard indies being made each year. Thanks to inexpensive production technology, no-budget filmmaking is not only possible, but has become the norm for many first time feature filmmakers, web series producers, YouTube artists and short filmmakers.

These days any filmmaker with passion and a story can make a movie. And unlike years past, backyard indie filmmakers are not prohibited by cash or creativity.

Yet despite the no-budget filmmaking movement, many of my high profile “professional” friends in Los Angeles, have made a conscious effort to ignore the rise of backyard indies. Why?

Because no-budget filmmaking isn’t real! (At least, that’s what some of the old school pros would tell you.) When it comes to no-budget filmmaking, some common questions asked by these Hollywood hot-shots are:

  1. Who signed the SAG agreements?
  2. Who contacted the Unions?
  3. Who notified the MPAA?
  4. Where is your theatrical distribution deal?
  5. Who do you think you are?

Good questions. Why don’t you go back in time and ask Roger Corman!

But the thing is, if you create a good movie – Your audience doesn’t care if the movie was an official union indie or a backyard indie made for pocket change.

no budget filmmaking

Photo © Jacek Krol / Dollar Photo Club

No Budget Filmmaking: Rise of The Backyard Indie

The demise of traditional DVD distribution coupled with the growing market domination of iTunes, Amazon and Netflix had leveled the playing field. The big difference between a $10,000 backyard indie and a $2,000,000 dollar indie isn’t the budget – The difference revolves around the film that gets the most eyeballs (and sales).

Think about it. Hitting breakeven on a 2M feature is going to require a lot of sales.

As a rough example, to recoup 2M dollars, the filmmaker will need to to sell (roughly) 200,000 video on demand downloads at $10 a pop. These first sales will cover the 40% cost allocated to VOD providers (the real winners here), after which, the filmmaker will still need to sell an additional 200,000 downloads to repay the investors.

400,000 VOD downloads x $10 = $4,000,000 minus $2,000,000 in VOD fees = the initial $2,000,000

Meanwhile, through no-budget filmmaking, a backyard indie only has to sell 2000 VOD downloads to recover the initial 10K costs.

While nobody wants to make movies for pocket change, many filmmakers still believe we can somehow continually produce unprofitable (movie) products and expect the money and the subsequent jobs to keep rolling in.

And unlike years past, filmmakers can no longer approach investors with the cliche pitch: “Filmmaking is a risky investment – if we are lucky, we might win Sundance and get a deal.”

Now, with transparent distribution options available to all filmmakers, that line of give-me-money reasoning is reckless, no longer applicable, and in my opinion, unethical. And for these reasons, no-budget filmmaking makes a lot of sense.

Aside from the initial challenge of sales and marketing, the ripple effect reveals an even greater conundrum:

How will you raise enough money to pay your cast and crew AND still pay back your investors?

I mean, what’s the new sweet spot?

How can we once again make independent filmmaking profitable?

“I CAN’T AFFORD TO PAY MY CAST AND CREW. WHAT DO I DO?”

Here is the modern moviemaking model on how to save the movie industry.

(And you thought this was going to be your typical no-budget filmmaking article.)

To survive in this ever changing world of indie filmmaking, we have to change our strategy.

Instead of focusing on making that one big awesome indie, we now need to focus on building a genre specific movie library and spend all of our downtime building a ginormously targeted email list.

Step 1: Find your top-ten closest filmmaking collaborators. Form a company.

Step 2: Write a business plan, but instead of putting all of your focus on making one movie, concentrate on making 3-5 feature films.

Step 3: Make sure that you include a sales and marketing plan for each movie. To do this, take your proposed budget for all movies and work backwards. Start asking yourself, “How many units do we need to sell to recoup our investment?”

Step 4: In this model, instead of paying freelance day rates, you’ll have to hire long term employees and provide each with a salary and back end points (sort of like stock options) on each title.

Step 5: When the title wins, you all win. Over the years, your titles will add up. And the real compensation will come back in the form of residual movie income.

While this is not a fully refined model, it’s a start.

In my opinion, creating a sustainable business model is better than ignoring no-budget filmmaking and pretending backyard indies are not real movies.

We are experiencing a time of change.

This is the indie movie distribution equivalent of the automobile replacing the horse drawn wagon.

You can choose to ignore this movement, and you can probably succeed for a few more years. But there will come a day when all entertainment will be on-demand and cheap to produce and cheap to consume.

The question is, will you ignore the no-budget filmmaking movement and continue to play your distribution lottery ticket in hopes of winning the dream deal, or will you  join the movement and help us filmmakers figure out a way to make indie movies profitable?

If you liked this article, you’d probably benefit from these professional filmmaking tools.

3 Tips How To Make Money In Filmmaking

The other night I puked a little in my mouth.

It was just a little puke.

It was the sort that burnt a bit, resulting in bad breath I couldn’t quite brush out…

And the whole mess came after I read some BS article from a “filmmaking guru” (who will remain unnamed here) talking about some old fuddy duddy way to make money in filmmaking.

The information was outdated, impractical and further perpetuated the myth that I’ve heard many times… That all you gotta do is make a great movie, work with a distributor and let them handle the business stuff.

I blame Field of Dreams. “If you build it, they will come.”

That sort of crap is responsible for creating a horrible epidemic among indie filmmakers.

The epidemic is this: Most filmmakers never take time to learn how to make money in filmmaking!

“I’m an artist. Money is dirty.”

Make Money In Filmmaking

 

How To Make Money In Filmmaking

You may have thought about making money in filmmaking. You may have hoped (or you may be “hoping”) that all you gotta do is  make a movie and the world will discover your talents.

And let’s face it, it is okay to think this way. The truth is, you and I both know your stuff is better than 90% of the crap that comes out every summer. But the problem is, there are a TON of poorly produced backyard indies flooding the market each year.

This makes it hard to find your movie.

And this means you can no longer simply make a movie and wait.

I have awesome news for you!

After helping hundreds of filmmakers get their movies to market, I have seen quite a few successful filmmakers grow really successful movie businesses.

Do you want to know how successful filmmakers make money in filmmaking?

Distilled down, successful filmmakers create and then execute a marketing plan.

Successful filmmakers do not wait around for a distributor to do all that business stuff.

Conversely, I would say the number one reason filmmakers fail is because most filmmakers NEVER plan to make money in the first place. I am going to be blunt here.

Most filmmakers lack a plan for how to make money in filmmaking.

Case in point, I have heard the following line dozens of times:

“I just want to get my movie on Netflix or iTunes or Amazon or Cable VOD. I don’t care if my my movie makes money. I just want people to see it.”

See what I mean?

Whenever I hear that (and I hear that sort of thing a lot) I get another grey hair.

Because you’re killing me softly.

Even if you don’t care if your movie makes money, I can assure you that every platform, distributor and sales agent in existence is in the business of making money. And if you don’t care about how to make money in filmmaking, nobody else will either.

And your movie will suffer.

And your career will suffer.

Let me be clear, making money as a filmmaker is not easy. I can think of a gazillion other businesses that work much more smoothly than trying to produce projects, source an audience and get a return on your investment.

Yet despite these odds, serious filmmakers push on.

Assuming you are serious – And assuming you want to make money in filmmaking – here are 3 simple tips that most filmmakers never consider:

  1. Do not make a movie unless you know your niche audience.
  2. Do not make a movie unless you know how to reach your audience.
  3. Do not make a movie unless you have enough money to market your movie.

I know you secretly hold onto the myth that “if I make my movie, Hollywood will buy it for a gazillion dollars.”

But here’s the thing. The reason why successful movies get a golden ticket is because someone can answer those three questions.

And the good news? If you take time to answer these questions, you will be ahead of the majority of filmmakers who do not care to make money in filmmaking.

sell your movieIf you’d like to find out how to build an audience and sell your movie, then you might enjoy my upcoming “Sell Your Movie” system. In it, I provide my seven-step, modern system for getting your movie seen and selling. Click here.