Matt Dentler from Cinetic, at DCTV January 11th, 2010

We were 70 local directors, producers, and enthusiasts curious about one thing: digital distribution. The independent film industry is shifting quickly and drastically and finding new knowledge and approaches to distribution need to be part of the way we keep up. Packed inside the DCTV firehouse, we grilled Matt Dentler, head of marketing and programming at Cinetic Rights Management and newly formed FilmBuff. Ingrid Kopp, U.S. head at Shooting People, moderated the discussion.

As Matt explains it, there are three types of rights:

  1. Transactional: one time/pay-per-view/VOD purchase, such at iTunes
  2. Streaming: free streaming, such as Hulu
  3. Subscription: paid streaming, such as Netflix

Films earn revenue through each of these rights, but in very different ways. For example, with a transactional deal, the film receives a percentage of what the consumer pays. In streaming, the film makes a percentage based on ad revenue (which in turn, is based on CPM – clicks per million). Subscription on Netflix, on the other hand, is based on what Netflix believes the film will make and payment is made on that prediction. Again, this is generally what happens, but all sorts of adjustments and special arrangements can be made. Reassuringly, these deals are number based and seem very clear. The film receives a concrete percentage based on the number of views or downloads. Revenue is based on consumer demand, rather than a projection from a traditional distribution company that determines how much your film is worth (and many times, takes much of the rights to the film).

Since each film has its own strengths and niche audiences, this allows for a unique strategy to be built. Crafting a distribution strategy that fits the film’s characteristics along with a “proactive, careful, and strategic” rollout are essential.

Matt referred us to MacHEADS as an example to demonstrate the possibilities.

Taken from Hulu: “MacHEADS is a feature length documentary which explores the loyalty of Apple Fanatics and their obsession. The film takes an in-depth examination of just what makes the Mac, the iPod, the iPhone, and Apple’s other products seem like cultural phenomena rather than just consumer electronics”.

So, the obvious audience for this film includes Apple product consumers. When Cinetic began working with the MacHEADS filmmakers, they sat down to develop a strategy that worked with the film’s potential impact in the market and the filmmaker’s expectations. They decided to release on iTunes and Amazon VOD first, which are both for-pay sites. 6 months later, they moved the film to Hulu, but did not take it off of the pay sites. Now, the film is moving onto Netflix.

What is interesting about the model for this film is the fact that the film is still making money on iTunes and VOD, even though it is available for free on Hulu. Furthermore, because of the film’s popularity, even CNBC paid a licensing fee for the film even thought it was available on Hulu. Matt mentioned that consumers seem to become loyal to one type of service and releasing a film for free does no necessarily mean sales with plummet. In fact, it is possible for the free service to enhance all sales.

One audience member asked about “success” rates. Since this format for digital distribution is relatively new, and since reporting from the companies Cinetic works with happens quarterly, it is difficult to say. However, Matt mentioned these numbers:

  1. Cable VOD (television): For an indie art house film, accessible across all cable networks in 45 million households, $1 million over one year is deemed successful.
  2. Broadband VOD (internet): $100K over one year is deemed successful.
  3. Free Streaming: film receives a percentage of around $30/1000 advertisements that are seen. You do the math.

Note: the film would receive a percentage of these sales, as some goes to the host company, and some to Cinetic.

So what does this all mean for us filmmakers? Well, there are a lot of possibilities and work to be done. The promising part of all this, is that there are a growing number of avenues to get our films out into the world and we can do all of this with or without traditional distribution strategies.

What do you think? We would love to hear your questions and comments.