Why Most Indie Films DON’T Make Money
Well guys, today, I’m going to do an episode that I’ve been wanting to do for quite some time, it is going to be one of my truth bomb episodes, one of these episodes that are going to hit you like a ton of bricks, if you’re not ready for it, it is going to be a cold bucket of water over your head, and it might rock your core beliefs about what making film is how to make money with film, and where we are in the film business currently.
So I need you to prepare yourself because I, you know, I came up with this idea weeks ago, because I’m so frustrated at all the diss the crap that’s going on in our business, and all of this kind of mindsets that are crippling independent filmmakers, in the current marketplace that we’re in, in the marketplace that’s coming down the line. And there’s been so much misinformation, so much kind of dogma that is wrapped around in the mind of a lot of independent filmmakers that and this is the main reason that they don’t make money with their films.
And I wanted to put an episode to explain to independent filmmakers Why you are not making money with your films. And this is from 20 odd years of experience. And also talking to hundreds, if not 1000s, of filmmakers on a daily, weekly, monthly and yearly basis doing indie film hustle. And I want this episode to be kind of a beacon of hope for filmmakers moving forward.
Because knowledge is power. That is the only weapon we have in the fight to get our art. And to make a business out of our art out of our filmmaking knowledge is the only weapon we have to defeat predatory film distributors and people out there who are just waiting in the wings to take advantage of your love for what you do. And I’m tired of these people of these companies taking advantage of you, and taking advantage of filmmakers. And it needs to stop and it is my job to inform you and to give you the knowledge you need to defend yourself and to best position yourself to actually make money with your films today, tomorrow and into the future.
So the main reason that filmmakers do not make money with their independent films is that they do not think of the person they are making the film for. They do not think of the audience that they are making their film for. You see back in the 70s 80s 90s, even the early 2000s. You could be a filmmaker who just came up with a cool idea and like you know what, I’m just going to go make a movie. I’m just going to go make a movie and I’ll find an audience or the audience will find the movie. That’s that was that was just the way things happened in the 90s specifically in the in the golden age of independent film that happened on a daily basis and those mythical stories like mariachi like clerks, like slacker, she’s got to have it.
So many of these films, that and filmmakers that came out in that time. They made these films and really didn’t think too much further about how they were going to sell it, what audience was going to be for and how are they going to make money with it. It wasn’t in their battle plan and the industry at that time really paid for that they they rewarded that kind of filmmaking, those days are over.
I want you to understand what I am saying. We are not in the 90s anymore. We are not in the early 2000s anymore. If you do not understand the person or audience that you’re making a film for. You are dead in the water.
I want that to sink in very, very clearly. If you do not understand the market that you’re making your film for. You won’t make money. I talk to filmmakers all the time, who are taking hundreds of 1000s of dollars and putting them behind a movie that never has a chance to make money. In today’s marketplace, there’s these myths running around that I keep hearing about that I keep seeing and filmmakers keep parroting back to me. Netflix is there’s a lack of content. So Netflix and Hulu are paying a lot more. No, they’re not.
Netflix from what I hear from multiple sources is they’re very, very not buying a lot of independent stuff, for sure. That’s a rarity. But even if they do buy some independent stuff, they’re not even paying until the end of the agreement before you would be able to, to make a two year deal with Netflix. And they would pay you on a quarterly basis during the process of the the agreement. Now I’m hearing that it starts at the end of the agreement. So if you make a deal with Netflix, for two years, you won’t start getting paid to the end of the two years.
How is that a sustainable business for filmmakers? How can you give an exclusive right to your half a million dollar film to someone like Netflix or Hulu? and not get paid for two years? What? What what business runs like that? That’s insanity. So I want to take that myth. And believe me, trust me, if there’s someone at Netflix, listening, please reach out and set me straight.
Tell me that, that that’s not the way you’re doing business right now. Or that Hulu or any of these platforms, please reach out, give me the information so I can give that information to filmmakers to producers out there. So this this lack of information that’s flying around this, this kind of all these myths, and false news or false information out there needs to be squashed.
Okay, so here is a truth that you need to understand if you’re making a film in today’s world. If you started your filmmaking process on the film that you’re currently on, or on the project, you’re currently on, let’s say six to 12 months ago. I hate to tell you, but the markets not the same. And you cannot approach the market in the same way. Okay, yes, I know COVID is out there. Yes, I know that the theaters are closed down, the theatrical component is pretty much gone at the moment of this recording. And eventually, we’ll probably come back in one way shape or form, I do not believe that it will come back as strong or stronger than it was before.
I think it will definitely be weakened, and will be weakened for many decades to come as things will continue to change. But regardless of the COVID pandemic, if you would have made a movie 12 months ago, started making a movie 12 months ago, and now you’re ready for the marketplace today. The marketplace would have changed already. Without COVID. That has been happening year after year after year. As I as I have gone to different film markets. As I’ve talked to different producers.
The marketplace is changing so rapidly, that when you start the process of making a movie, by the time you’re ready to sell it, the game has changed already, the rules have changed already. So this episode, what I’m trying to tell you in this episode, is to hopefully best position yourself to adjust and pivot to an ever changing marketplace. Because filmmakers walk into the filmmaking process, thinking that the rules of the game or the game itself is the same game that’s been played for years, if not decades.
They’re walking in thinking that it’s 1990, that it’s 2000. That is even 2010. And that is not the reality of the world we live in.
So that’s truth number one, that this marketplace is changing now, literally monthly, because of the COVID acceleration of what I’ve been yelling about from the top of the hill for years, that this entire side of the business, the film distribution side of the business is burning, Rome is burning, and it will come crashing down and something hopefully better will grow up out of it.
Now truth number two is that you have to keep your budgets as low as humanly possible when you’re creating an independent film, while maintaining the production value that will allow you to have a fighting chance in the marketplace. If you do not have any Major stars, bankable stars in your project, you cannot go over $100,000 you should not go over $100,000 because the marketplace cannot sustain that. That is the reality of what I am seeing.
And what I’ve been hearing from professionals in the distribution side of the business, as well as my own experience, talking to multiple hundreds of filmmakers on a daily basis, finding out what they’re actually making with their films. In the indie film marketplace. There is too much content out there competing for eyeballs competing for attention. Independent Film is low on the priority list of most consumers. I’m sorry, but it is the truth. When you have television shows that are spending five to $7 million per episode. What do you think the independent film has?
Where do you think they rank in the hierarchy of the wants or needs of consumer to even pay attention to you as an independent filmmaker, or independent film. This is extremely just brutal honesty, guys, because I want you to succeed. I’m not saying that there is no market for independent film, of course there is. But you have to be smart and position your films and your projects in the best way possible to have a fighting chance, not a guarantee a fighting chance to make your money back and profitable. So you can build a Oh my god, career or business out of what you do. Now, for every $10,000 you go up above $100,000 budget, your skill set has to be that much better.
Your project has to be better positioned to generate those extra 10, Grand 20, Grand 30 Grand 50 Grand 100 grand if you have a three to $500,000 movie, in a genre that is let’s say outside of whore action, specific niches, genre, things like that, let’s say it’s a drama, with no stars in it, I hate to tell you. And when I say stars, I’m talking about bankable stars. thing, these these are the kind of actors that mean something to the bottom line, because people will recognize it on their, in their in their feeds, if you will. So if you have a $500,000 budget film, you’ve got to execute so much more perfectly than you would with $100,000 film. Because at a $500,000 film budget, and you have no stars, and really have no social media following no audience, no anything. You’re never going to make your money back. You’re going to have to figure out ways to either execute that plan, whatever that plan is, hopefully you have a plan at that budget range. Or you’re just going to lose money and your investors are going to lose their money, period, Period. End of story. So I hear so many stories of filmmakers who’ve been able to grab or get investors to invest on a $300,000 $500,000 700 house $1,000 movie with no bankable stars, and no audience and no plan of attack. And their only distribution plan is one when Sundance and to sell it to a film distributor.
I hate to tell you another harsh truth. Film distributors no matter what the size are currently not buying or not giving you giant minimum guarantees meaning that if you have a $500,000 movie, they’re generally speaking, are not film distributors out there who will give you $500,000 for the rights of that film. It’s extremely rare and it’s only in the top 1% of 1% of 1%. that that happens to end those films have bankable stars in it. It’s not because they want Sundance and they have no stars in it. Those days are gone pretty much. It’s because they have some sort of bankable star in it. I know Palm Springs sold at Sundance’s last year for I forgot the record number but it’s you know over $10 million easily but they had Adam Sandburg in it, and a couple other stars in it. And it was sold to Hulu, and it’s done extremely well for that company.
If your film doesn’t have those kind of caliber stars in it, chances of you making your money back is very nil. The stories that I hear and I hear a lot of stories from different filmmakers around the world, with budgets that have half a million dollars or above $300,000 and above, that are making their money back that do not have bankable stars, or do not have a major plan of attack, meaning an audience of film trip earner business model where they can generate revenue outside of their money out of their movie is miniscule. I’m telling you, from what I my experience, and what I end seeing and hearing for the past five years, does it happen once in a blue moon.
But when it does happen, it has one of a few elements. bankable stars, hit some sort of Zeitgeist in the marketplace, meaning it was extremely timely. Or they had huge audiences that could drive traffic to sales. If you don’t have any of those three elements, and you make a movie that’s over $100,000, the chances of you making your money back is the same chances you have at winning at a slot machine. in Vegas.
I don’t mean to get you upset. I don’t mean to break your spirit, I want you to understand the truth of what the marketplace is going through right now. This conversation would be different in 1997, it would be different in 2007. Hell, it would be different in 2017. I sold my movie to Hulu, my first movie this is made to Hulu in 2017. There is no chance in hell that today, three years and change later that my film would be licensed by Hulu. Because the game has changed again. And the rules have changed again. I want you guys to be prepared, I want you to be armed with this information that this not this knowledge. So you have a better chance of actually making money with your film. And anybody out there right now listening going,
Oh, but I’m an artist, thinking about money is such a god, I don’t want to think about money. I’m a film director, I’m a filmmaker, I just want to tell my story. Great, fantastic. If you make your film for five or $10,000, do whatever the hell you want. But if you’re taking investors on, it’s your responsibility to recoup your money and to make a profit. If you’re spending 50 100 200 $300,000 of money that you don’t have, it is your responsibility to make that money back. If not, you won’t make more art. You won’t make more movies. Are you understanding what I’m saying?
I want you to build a career doing what you love. But if you keep with this mindset, that things have not changed, or I don’t care about money, or you know, thinking about money is the icky, you won’t make it I see the carcasses of broken filmmaking dreams, in in Hollywood on a daily basis. And it’s my job to try to stop the carnage as much as humanly possible. Now, here is another truth about the film distribution marketplace right now.
T VOD is dead. transactional video on demand is dead for independent filmmakers. Unless you can drive traffic to the transactional portals or platforms, or if you have major, bankable stars, and even with major bankable stars, and I’m talking major at that point, but even bankable stars, you’re going to not make as much money as the studios are making or that you could make elsewhere in the ecosystem of video on demand.
I want the myth of putting your movie up on iTunes and Google Play and Amazon transactional and all of those those great transactions which basically those are the three transactions that make any money at all those days are gone. I’ve had guests on my show that made millions of dollars and transactional. But one of two things happen. It was either in ninth in 2011, when it was launched, and they had a big star with a big following. In it, or two, they had a huge audience that they could tap into to generate those sales.
In today’s marketplace transactional video on demand is dead, do not spend money, paying a film aggregator to put your movie up on iTunes, because of vanity, because of your ego to say that your movies up on iTunes, unless you can drive traffic to the transactional video on demand platform, you will not make money, we’re talking about $15 $20 $50, which is good per movie, on an iTunes.
I’m talking to distributors, I’m talking to people in the business, I understand and know the numbers the reality of these numbers that are not being made public. So I’m trying to make it public transactional video on demand is dead for independent filmmakers, unless you have a bankable star, or you can drive traffic to the rental or purchase of your film.
And even then, that is not an endless stream of money. That might be good for 30 days, 60 days, 90 days, but then it’s going to wean off. Okay, so please stop wasting money with aggregators, putting your movie up on these platforms unless you have a plan to generate money because it costs 1000 bucks to put your movie up on iTunes. And it puts cost like 5000 bucks to put them up on all the transactional platforms, which means nothing. Having your movie up on Fandango means nothing. Having a movie up on PlayStation, or Xbox means nothing.
Unless you can drive traffic back to a traffic of an audience that is willing to pay for your film, that they are emotionally attached to your film. I have another very rough truth coming. Prepare yourself, wherever you’re sitting down, prepare yourself because this one’s going to be a gut punch. Amazon does not want your independent film. Amazon is actively trying to purge independent film from their platform. And if you don’t believe me, they’re paying a penny per hour streamed. They’re not actively trying to gain your business or to gain your content.
They don’t want mediocre content, low quality content. So they’re quietly passive, aggressively even purging and keeping you out of their platform. Why? Because when Amazon opened up amazon video direct and allowed anybody they’re the only platform that does this allows anybody to upload their films onto their marketplace, guess what, their marketplace got full of a lot of crap. And customers are complaining because in order to scale, in order to get to the one good movie, they got a scan through 20 other thumbnails of just absolute garbage. So Amazon started saying, okay, we don’t need this much content anymore, because we got a lot of great content.
So not only are they just really not paying a lot anymore, and I’m going to talk a little bit about why they’re not paying it. But they’re actually even just throwing things away. They’re just throwing films away, meaning they’ll deleting it if it doesn’t meet their criteria. And their criteria generally is that you have to have some sort of engagement with their customers, there’s certain criterias that you have to hit in order to to get a higher rate. So let’s say you have a 50% you might get four or five cents, you in order to get the the magical 11 to 12 cents, you’ve got to be at the like studio level engagement to get 12 cents 12 cents for our viewing, so you’re essentially being paid 18 cents for someone to watch your movie, at the best case scenario if you’re doing a 90 minute movie. And that’s the best case scenario. Do you understand how the stack that the chips are stacked against us?
Don’t Do you understand that you really need to and you really need to get what I’m saying to you guys right now. So a lot of people are like oh, I’ll just put it up on Amazon. So now you know Amazon doesn’t care about you. They don’t want you unless you have stars, bankable stars, high high quality product that is engaging with their audience. Because you have you can have an A fantastic film, beautifully produced. That cost you a million dollars if the audience is not engaging with it. If you don’t understand how to drive traffic to your Amazon page, you will get purged.
Or you will make nothing on that platform. And now my last piece of raw truth in this episode, and this is my favorite topic, as many of you guys know, predatory film distributors. In the age of COVID, they are getting more and more desperate, their deals are becoming more and more predatory. I actually saw a deal on the table, where this filmmaker was going to give I think, 40% away of their of the rights to their film, have like, I don’t know, like $150,000 marketing cap in the agreement. And you know, what the length of term was, in perpetuity means forever means that that company would own this movie, not for 510 25 years, like other predatory film distributed. No, no, no, no, no, we’re going to the next level, we’re just gonna say Screw it, we own it forever. These are the deals that are happening right now. What’s going on right now, in the film business.
And guess what? I hate to tell you another truth. But we ain’t seen nothing yet. The economy has not hit bottom yet. Our business has not hit bottom yet. I’m estimating and I was talking to another distributor the other day about this. We feel that 50% or more of distributors that are currently doing business right now will go out of business probably within the next 12 to 24 months, either go out of business, or get eaten up by other companies, because their business models cannot sustain what they’re doing. And they’re going to become more and more predatory, they’re going to become more difficult to get ahold of, they’re going to get more difficult for you to actually get a check from them. And I hate to tell you, when a film distributor goes down, the films that they represent, unless you’ve got good agreements, and clauses, your films go down with them. I’m not trying to create a panic, I’m not trying to say that all distributors that you’re working with are going to have this that’s not true. I’m not saying that.
I’m saying, which is a fact that if a film distributor goes bankrupt, which has happened many times, don’t even get me started on the stripper goes under the filmmakers attached are represented by that company goes under with them all the money that is owed to them goes with them. Generally the way any bankruptcy works with any sort of company. So you need to understand that in the next couple years, we’re going to be going through a very interesting and potentially dangerous time to be filmmakers, unless you position yourselves in an intelligent way.
Okay, I hope that this episode has woken you up a bit. I hope that this episode has made you start thinking about what you want to do. Because I want this episode to empower you. I want this episode to give you the strength and the courage to go out and make the film or series or project you want to make. But I want you to be able to make money with it. I want you to be able to create a sustainable career doing it. And if you are not informed about what is going on in our industry, and what is going on in the film distribution side specifically, of our business, you won’t make it and I’m tired of seeing filmmakers get eaten up and spit out by film distributed by the predatory film distributors by our industry in general, because they’re fed this fake myth of everything I’ve talked about in this episode, all these myths, all this fake news, if you will fake information, false information. Because you know why? Because it’s in the best interest for predatory film distributors to perpetuate these myths.
Why? Because if you’re a desperate filmmaker with a half a million dollar budget film with no stars, there’s value in that project. there is value to a predatory film distributor or a film distributor in general. By no fault of theirs. You are desperate and they’ll take advantage of you Not all some will? I argue a lot of them will. Because they’ll be able to make some money with that film. Will you ever see any of that money? I don’t know, maybe all depends on the deal. All depends on the agreement. So I hope that this episode wakes you up. I hope this episode empowers you to go out and make your film, but to think differently about what projects you’re going to make, how you’re going to make him, Who am I making this film.
What audience Am I making this film for? Because if you don’t have that answer, you are dead in the water, you will not make it. And if you can’t make it, that means your voice as a filmmaker is silenced. And I don’t want that. I want as many voices regardless of what they’re saying, to have the opportunity to say it in the marketplace in the world. I want filmmakers to be able to have that. But the system the way it’s set up, it’s not built for that. It’s built on the theory that there’s an endless and never ending ending endless stream of films, and filmmakers and projects coming in. And I hope that this episode finds as many filmmakers out there as possible.
So you can better prepare yourself for the indie filmmaking market place to be able to make money with your film, and to build a career around what you love to do. I hope this episode was helpful to you guys. I really do if you want to get or listen to other episodes in regards to a lot of the stuff I’ve talked about in here with interviews with some other perfect film distribution professionals, ex distributors, current distributors, consultants, as well as filmmakers who have experienced dealing in this world. Head over to the show notes at indie film, hustle, calm, forward slash 410 anything else com forward slash forward slash 410. And I will have links to old episodes there where hopefully you can continue your education in this space in what we are trying to do at indie film hustle at bulletproof screenwriting at some entrepreneur.
I want you to be empowered to make more movies. I want you to be empowered to build a career in our business. But you need to be informed with knowledge. Knowledge is key. It is the only weapon and it’s the most important weapon in your fight. To get your voice heard your movie out there and money in your pocket. Thank you for listening guys. I hope this episode was of value to you.
As always, keep that hustle going.
Keep that dream alive. Stay safe out there. And I’ll talk to you soon.