The Ins and Outs of Hollywood Film Distribution
Securing film distribution might be the most challenging part of the entire filmmaking process. Here’s what it takes to get your project in front of an audience.
Top image via KRVS
The process of film distribution is incredibly interesting and somewhat complex. Fear not — we’re going to break it down in very simple steps and terms. The foundation for the following information comes from The Business of Media Distribution by Jeffery C. Ulin.
Please note that the distribution process we’ll be covering is the standard “Studio” process.
Step 1: Selling Film Rights
Image via Deadline
The very first step in the distribution process is selling the rights to your film. You should have a deal in place with a producer before rolling on a single camera. With big movie productions, the film rights are secured by a major studio before production even begins. In some cases, even before pre-production.
Intellectual Property (Ulin, pg. 56)
It is vitally important to note that the majority of filmmakers establish their own production company, usually an LLC. This production company holds the copyright to the intellectual property, thus allowing the creator some control over how the property gets made. At this point the filmmaker would sell the rights to a producer, who would give the filmmaker an option fee. There is no standard option fee.
Video via Howcast
Director Steven Spielberg created his own production company — Amblin Entertainment — in 1981. It was through this company that he handled all intellectual property copyrights for films like E.T. the Extra-Terrestrial, Gremlins, The Goonies, and Back to the Future. He and his company would then work out agreements for the film rights of these properties with one of the “Big Six,” who would provide a monetary budget for film production. For reference, here’s the Big Six: 20th Century Fox, Warner Bros., Paramount, Columbia, Universal, and Walt Disney Studios.
Percentage and Expiration of Rights (Ulin, pg. 68-69)
When an intellectual property is optioned, the producer gives the copyright owner the option fee, and the film begins moving toward becoming “greenlit.” Understand that the option fee is a small number meant to help the producer reduce their losses in the event the project never makes it to production. When the project is eventually greenlit, the option is a “legally binding guarantee to purchase the film rights.”
It’s important to note that film options have specific time frames attached to them; if a producer can’t secure full funding to greenlight the project, then the option will expire and the copyright holder can explore new avenues for production (or renew with the same producer).
Once a project is greenlit and the film rights are secured, it’s time go into production and start securing a distributor.
Step 2: Licensing Agreement
Image via Flix.org.uk
The next step in the distribution process is securing a licensing agreement with a distributor who will work toward getting the film into theaters all over the world. Each of the Big Six has its own distribution division. For example, The Walt Disney Company distributes all film content Walt Disney Studios Motion Pictures, while Sony Pictures distributes through Sony Picture Releasing. Even mini-majors like The Weinstein Company and Lionsgate will develop the distribution for their own films.
Within these distribution subsidiaries are people who secure national distribution and others who secure global distribution. These people are known as the Producer Rep and Sales Agent. Here’s what these jobs entail.
A producer rep works with a film booker in the United States and secures leasing agreements to those chains. They are solely responsible for domestic distribution.
Film Sales Agent
The sales agent works on a much larger scale. They work to secure international theatrical distribution, which means they collaborate with different groups in each country and/or region.
Distribution Splits (Ulin, pg. 160)
There are distribution splits where a companies will share the burden of distribution with other companies. For example, Bridge of Spies was distributed in the United States by Walt Disney Studios Motion Pictures and distributed internationally by 20th Century Fox. Here’s what Elliot Grove of Raindance wrote about split rights:
Commonplace are split rights deals, where distributors cherry pick territories and then decide which national rights they want. It could be they are interested only in TV, or DVD for example, leaving the other pieces of the distribution window to the producer to try to max out money-wise.
Once the licensing agreements are in place, the distributors begin negotiating with a film booker.
Step 3. Negotiating With a Film Booker
Image via Flix.org.uk
A booking agent, film buyer, or film booker negotiates the lease terms for films from the Big Six and beyond. These film bookers work on behalf of theater chains like AMC, Regal, and Cinemark. There are also splits between the distributor and exhibitor (theater). The standard split was called the 90/10 split, though that has been replaced with agreements like House Nut, Firm Terms, and Four-Wall Structure. (Ulin, pg. 163-166)
For a major Hollywood release, it’s common for the studio to take as much as 70, 80 or even 90 percent of the first week’s box office sales. In a typical exhibition contract, the studio’s percentage goes down every week that the film remains in the theaters. – How Stuff Works
During the celluloid era, distributors would send film prints, like the ones in the image above, to theater chains. However, in today’s digital age, distributors usually ship DCP (Digital Cinema Package) copies to theaters across the country and globally. Once these copies are in place and at the theaters, the film with make its theatrical run. While films used to stay in theaters for a year or more, the average release window now lasts roughly two to three months. The reason this time is so short: Ancillary rights.
Step 4. Ancillary Revenue
Image via AMC Theaters
When a film reaches the end of its theatrical run, the DCP copies are returned to the distributor and the leasing agreement is paid out. This is not the end of the distribution process; now the film moves on to ancillary revenue. This revenue is all part of the agreement between filmmaker and studio/distributor. It’s incredibly difficult to retain all of the ancillary rights in today’s industry.
Video via Danny Lacey
While these ancillary rights cover a variety of things, let’s focus on the film content side of things.
Psychical Media (Ulin, pg. 223)
When it comes to physical media, there really are only two options available: DVD and Blu-ray. While this part of the home entertainment industry is still a worthy option (earning $6.1 billion dollars in 2015), it’s not the juggernaut it once was. However, there is still revenue to be earned. 4K Blu-ray players are emerging more consistently — but so is 4K digital distribution.
Digital Media (Ulin, pg. 230)
With each passing year, digital distribution is positioning itself to surpass disc-based media as the top home-entertainment revenue. Studios and distributors are including digital copies with psychical copies. They’re even beginning to release digital versions of films to online retailers like iTunes, Amazon, and Google Play before the disc-based option is released.
Streaming & Television Rights (Ulin, pg. 234)
This brings us streaming and television rights. Streaming is big business in today’s industry. In fact, Fortune stated in June of 2015 that streaming was closing in on DVD sales for the first time ever, thanks to the success of streaming giants like Netflix, Amazon, and Hulu. But don’t forget about television. Broadcast rights are something to be taken seriously, as documentary filmmaker Scott Thurman told us last year.
Hopefully this gives you some insight into how film distribution works and where the industry stands in terms of distribution to theaters and home entertainment. Again, this breakdown is meant to expose how film distribution works within the studio structure. Distribution for independent film is a completely different process.
Got any opinions on how the big studios handle film distribution? Let us know in the comments below.