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?

Film Distribution: New Rules For Selling Your Movie

If you know a filmmaker seeking film distribution, you’re in luck. We are going to share new rules for selling your movie. Before we talk about modern film distribution, a little context…

Do you remember the old days of film distribution?

I mean do you remember how it was just a few short years ago?

Back then film distribution was controlled by a bunch of companies that safeguarded access the marketplace.  As an independent filmmaker, if you were lucky enough to garner a distribution deal, odds were good the deal was less than satisfying.

This was my experience on my first feature. After receiving phone calls from would-be distributors full of empty promises, I started to dislike the predatory nature of traditional film distribution.

But what could you do?

Back then, the only alternative to this old film distribution model was self-distribution. And if you remember, the term itself was synonymous with loser.

If you couldn’t land a REAL distribution deal, then you weren’t a real filmmaker.

film distribution

For this reason alone, many filmmakers signed away their rights for the mere validation of seeing their movie in the video stores. And every few months these same filmmakers would receive financial statements in the mail. The statement would show movie revenue minus marketing expenses.

And the bottom line? Zero monies paid to the filmmaker. And this was the indie film distribution paradigm accepted as a rite of passage.

At least my movie got on a shelf in the video store…

Thankfully, times have changed. As a result of internet film distribution (and the inevitable demise of DVD retail distribution) you can now reach a global marketplace!

New Rules For Film Distribution

When we released our first feature on Amazon and started making sales, it was hard to believe we could do so without a traditional film distribution deal. At first we did not understand the power of modern self-distribution.

But then our phone started ringing.

As it turned out, a few of the distributors who previously rejected us started calling with better offers. It was at this point, I realized the paradigm was shifting in favor of the filmmaker.

Indie filmmakers now had access to the marketplace. That changed everything for me.

Since then, developments in inexpensive production technology coupled with access to the marketplace means that you can now make, market and sell your movie without permission.

But the problem is, you are not the only filmmaker that knows this. Each year thousands of movies enter the market, making it increasingly challenging to get your movie seen.

You now have the ability to release your movie globally without signing away your rights to an unscrupulous distributor. And even though many distributors would like to pretend otherwise, with a little ingenuity and a strong marketing plan, you can control your own independent movie business.

New rules for film distribution:

  1. My audience is my business.
  2. Without an audience I have no business.
  3. I am responsible for sourcing my own audience.

Let’s be honest…

Sourcing your own audience and executing your own marketing, sales and distribution plan is far less sexy than making a movie or filling your closet with filmmaking equipment.

Gear is tangible.

It’s something you can show your nerdy filmmaker friends.

But having gear is useless if you don’t use it.

Most filmmakers spend at least two years or longer working to get a movie made. But very few filmmakers focus on what to do once the movie is in the can. Making movies is pointless if you don’t create a plan for reaching your audience.

Whenever I give talks, I always ask the audience, what is your plan for marketing and distribution?

This is followed by:

Confused looks. Silence. Someone mutters: “I’ll get into Sundance and sell it.”

Why wouldn’t you dream BIG? Every filmmaker wants recognition – even if you refuse to admit it. But with over 5,000 backyard indies being made each year, I have to ask a tough question:

Why Should Someone Watch Your Movie?

Most people decide which movies to watch based on recommendations from trusted friends. Movie studios spend millions to spark word of mouth. But for some reason, most indie filmmakers pretend marketing is not applicable to us.

I mean, we know that marketing is important.

But between procuring an awesome script, raising money and actually making the movie, we often cross our fingers and hope for a miracle.

And the problem is, marketing miracles rarely happen.

Aside from your mom and kid-sister, nobody knows about your movie. And while I am sure you went to many film festivals and traded post cards with other filmmakers (who in return, provided you their post cards), you probably quickly realized two facts:

  1. Film festivals are full of filmmakers.
  2. And other filmmakers are not your target audience.

The people who make up your movie’s target audience are trying to manage a busy life. These people have kids, jobs, worries, sleepless nights, gym memberships and car payments. So when they sit down to watch a movie, time is limited.

So the question you have to answer is why. . .

Why should someone watch YOUR movie?

Only you can answer that question. But my suggestion is to do your homework before you take the next steps. If you want more info on how to sell your movie, check out my film 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!

Film Distribution System

Independent filmmaking is often considered one of the riskiest businesses in the world. This is due, in large part to the inefficient nature of our business. Think about it. Indie film is one of few vocations where people create a product without any idea how they are going to market or sell it.

Despite this reality, most indie filmmakers still make movies, subscribing to the belief that it’s impossible to enter the marketplace without finding some 3rd party movie distributor to “pick up” a movie. But thanks to modern Video On Demand distribution, this belief is eroding.

As an independent filmmaker, you now have options. You can choose to take the conventional route, go it alone or combine a little of both models to create a hybrid distribution strategy.

While these options allow independent filmmakers to enter mainstream marketplaces, this paradigm shift creates new challenges. Namely, if you chose to become your own distributor, you will need to become comfortable with internet marketing tactics, social media and audience list building.

For most indie filmmakers, what I’m describing is a huge learning curve!

 

Film Distribution System

My Film Distribution System

I frequently share marketing and distribution tactics. As a consequence, many filmmakers think of me as the “self-distribution guy.” If you share this opinion, you might assume that I no longer value traditional distribution. But here is the irony.

The reason I am able to share marketing and distribution tactics is because I actually spent the last half-decade working professionally in film distribution. For over a year I was the director of operations at Distribber. And after that, I served as the manager of film acquisitions at Chill.

And recently I was hired by a producer to help sell a movie at the American Film Market.

During the market, we were able to schedule over 20 meetings. The reason we had so much interest from distributors is because we DID NOT actually need a distributor. This is because (aside from having an awesome movie) we also had a plan for marketing and selling our movie, ourselves.

Taking time to do our homework and create our own marketing and distribution plan eliminated all desperation and provided us with confidence. Because we didn’t actually need a distributor, we were able to go into each meeting with the patience to work towards a balanced win-win.

Regardless of the route you choose, the first step of the process is to sit down with a pen and paper and answer the following questions:

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

While this may seem like an overly simple task, taking time to answer these questions is an exercise most filmmakers ignore. And by not having a marketing strategy (that you control) prospective distributors will have no choice but to present you with their standard offer. And because you will have no leveraging power, odds or good you’ll take it.

Creating Film Distribution Leverage

My clients took a different route. The producers did their homework. And as a result, we knew what we had and how we were going to market and self-distribute. By having a plan, we were able to minimize the risk for a prospective distributor and emphasize the potential upside.

In response to our plan, prospective distributors correctly perceived our movie as less risky than most. As a result, we received close to a half-dozen solid offers for the movie. (Some even included a substantial minimum guarantee and advertising spend.)

From there, we narrowed down the selection into final negotiations. While I’m not yet at liberty to talk about the actual deal, I can tell you that things are going well.

If you’re just learning about distribution, here is what the process looks like:

1. You pitch the movie.
2. Distributor expresses interest.
3. Distributor sends proposal / term sheet.
4. You negotiate terms to (hopefully) find a win-win.
5. From there, a long-form agreement is drafted.

It’s Never Too Early To Learn Film Distribution

The truth is, this blog would be a lot more popular if all I wrote about was cameras and gear. That stuff is sexy. Distribution is not. I get that. But here’s the thing… The reason you can’t close your prospective investor or land a dream distribution deal is because your movie project is too RISKY.

You think you’re ready for the pitch, but you’re not.

In fact, you shouldn’t be talking to anybody about your movie project until you have a clear marketing, sales and distribution strategy. This may seem extreme, but knowing this stuff is essential. And I’m not saying you need to become a world class social media marketer.

You need to know a little about a lot.

You need know who to hire and why.

And you need to start planning this TODAY.

If you’re interested in becoming your own distributor (so you can raise money and or sell your movie) you’re in luck. Based on my experience marketing and distributing movies, I have created a system to help you understand the marketing and distribution process.

My system is called The Independent Producer’s Guide To Digital Self-distribution. In it, you will be provided with a step-by-step roadmap to help you get your movies seen and selling in popular marketplaces. I wanted my film distribution system to provide you with a plan you can control. Once you know this stuff, you’ll probably never consider a crappy distribution deal again.

If you would like to find out more about the Independent Producer’s Guide To Digital Self Distribution, check out www.HowToSellYourMovie.com

 

Filmmaking As Your Small Business

When deciding on a business, some people choose filmmaking.

Other people open frozen yogurt shops.

I should know. Thanks to the frozen yogurt shop (near my house), I’ve eaten a TON of frozen yogurt over the last year. And without mentioning the business, it sure seems like the owner of the shop is passionate about Yogurt, just like you and I are passionate about filmmaking.

Since moving to LA and producing several indie movies (and more recently working with hundreds of filmmakers in my various distribution roles), I realize the major ineptitude most filmmakers suffer from is a lack of general business acumen.

Filmmaking As Your Small Business

Photo © Haider Y. Abdulla / Dollar Photo Club

Filmmaking As Your Small Business

Here’s the deal. Most filmmakers know about the movie business. And these filmmakers usually fall into one of two categories. Either they understand the studio business or they understand traditional independent filmmaking.

In my humble opinion, I think both arenas are based on an old paradigm. In the studio system, the business revolves around asking a lot of folks for permission.

  1. “I finished this great screenplay. It’s high concept and awesome!”
  2. “Would you please read my screenplay?”
  3. “Can we have a meeting?”
  4. “Did you read my screenplay?”

All of which results in a lot of this: “We have decided to pass at this time.”

As an independent filmmaker, many of us also suffer from a similar permission based way of doing business.

  1. “Mr. Investor, if we are lucky this movie will get into Sundance.”
  2. “If we are really lucky, we will get a great distribution deal.”
  3. “And if we are really lucky, we might get a distribution deal.”
  4. “And if we are really, really lucky we will get a 3 picture studio deal, and we will live happily ever after.”

And that got me thinking about this talk about modern moviemaking. Can we now consider movie making a small business?

I mean, if you think about it, all you need to start a small business is an idea, some start up cash, raw material, production and a customer base – and a way to sell whatever it is you’re selling.  And unlike years past, non-discriminatory video on demand marketplaces provide that… So what would modern moviemaking as a small business look like:

  1. We have a screenplay with a strong, well defined concept.
  2. We know our target audience and how to reach them.
  3. We will need to sell 5,000 video on demand downloads to recoup our investment.

Why should we over-complicate our filmmaking?

What do you think? Can Modern Moviemaking be your next small business?

Your comments are welcome below…