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IFH 446: How Netflix’s Algorithm Impacts Indie Films


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This episode might give you a better understanding of How To Sell A Movie To Netflix?

In this age of streaming platforms, knowing your distribution route and audience’s comfortable viewing habits as filmmakers is crucial. Today on the show returning champion and film industry data analyst ninja, Stephen Follows, breakdowns the build-up process and goal of his newly-launched data analysis platform, VOD Clickstream

The first phase of Stephen’s VOD Clickstream is an independent research of Netflix streaming history between 2016-2019 of two-third billion data points that reveal what folks have been watching on Netflix. The research provides insights into the streaming sector by anonymizing browsers and users’ history through a plugin to analyze clickstream data from Netflix. 

Being an entrepreneur himself, he explores, through this project, the future of VOD Clickstream’s impact on independent filmmaking and creating a feedback loop with the audience to gauge films and television shows performances.

Stephen and I discuss the interlink between the upswing of film and television content and the growth of streaming platforms and the challenges this situation poses for indie films to succeed on these platforms.

Enjoy my conversation with Stephen Follows.

Alex Ferrari 2:18
Now guys, today we have returning champion, Steven follows. Many of you might remember Stephen as the data man, the man who crunches the film data like nobody else in the world. And he has been on the show multiple times. And my favorite episode, of course, is when we finally proved for once and for all that diehard is the greatest Christmas movie all time and we looked at the numbers to prove it. Now Stephens back on the show because he has launched a new website called VOD clickstream. And what he's done is remarkable. He's been able to go inside of Netflix, to see what is actually going on in all of their data. He's been able to come up with answers for questions like, does Netflix have a long tail? How do romantic comedies perform on Netflix? How do sci-fi films or perform on Netflix? Did the American audience stream international TV shows? How did the office truly perform on the platform? Which TV genres are the most popular on Netflix and so, so many more? When I heard about this, I called up Steven I said, Steven, you got to come back on the show, we need to get this information out to the tribe, because it's just again, a snapshot of what Netflix was doing during the time of 2016 to end the middle of 2019. But it is better than nothing. When before all that information had been hidden behind the walls of Netflix, but we have been able to get inside of that. Now. I do have to have a disclaimer for this episode. All this information is a wholly independent research and is not affiliated with Netflix or any other streaming platform or studio. Just wanted to make that very clear. So without any further ado, please enjoy my eye-opening conversation with Steven follows. I like to welcome back to the show returning champion Steven follows How are you doing Steven?

Stephen Follows 4:25
I'm doing very well. You say that every time and I'm starting to believe you.

Alex Ferrari 4:28
Well, that's what I'm trying to do. Little by little I'm building I'm building you up, sir. I'm building you up.

Stephen Follows 4:34
I'm delighted to be back and your audience are always awesome as well. Every time I'm on the podcast, people reach out to me and say, Hey, I heard you. I'm part of the tribe. I heard your analysis podcast. Hey, I've got every single one so far has been like really polite, but also with a really interesting question or perspective. And yeah, you've got a great tribe. So I'm always happy to come back.

Alex Ferrari 4:53
Thank you, man. I appreciate that. And last time, we were on the show. We we Did that diehard episode, which was fairly controversial, sir?

Stephen Follows 5:04
Oh, was it? Did you get pushback?

Alex Ferrari 5:08
No. Well, a couple people couple people I got a couple of tribe members like really Alex an entire episode about diehard and I'm like, Yes, it is. But you know funny enough is that when I am when I talk to people now about diehard because now I'm you know i'm i'm an evangelist I go you know, you know Diehard's a Christmas movie and they'll push back up but no, no, no, no, no, I have data. I have proof that Diehard it so I appreciate you doing the hard work on that. And so now at parties, or at least zoom meetings nowadays. I get to, I get to say no, no, I have to get data. Here's the link and I send them to our interview and people just like amazing and I just

Stephen Follows 6:00
that's always the thing you want to hear at a party when you're having a conversation with someone when they go No, no, I have the data.

Alex Ferrari 6:05
Exactly. It's just your life of the party. You are the life of the party without without question, and then I just released a list of the Top 12 screenplays of unconventional Christmas movies and of course Diehards on the top of that list but I had to leave them weapon on there. What else did we have on there? Lethal weapon? Gremlins, Gremlins two

Stephen Follows 6:29
good night.

Alex Ferrari 6:30
Which one?

Stephen Follows 6:31
Is it? What's the one with 497 with

Alex Ferrari 6:34
oh oh no luck is good night. Yes long kiss goodnight. Long kiss goodnight is on there as well. A bunch of a bunch of Shane Black a bunch of Shane a bunch of Shane Black episode whatchu ma call it screenplays because he's he just loves absolutely loves writing. I mean I could argue Iron Man three but I prefer not.

Stephen Follows 6:57
You know Disney do to do list that and on Disney plus under Christmas movies?

Alex Ferrari 7:01
Oh, yeah.

Stephen Follows 7:03
I genuinely don't know if they're doing it to try and stir up controversy or they genuinely believe it.

Alex Ferrari 7:09
And before we start on our current interview, I have to I'm gonna list off the list of Christmas. Christmas. unconventional Christmas movies. Diehard, Lethal Weapon, Kiss Kiss Bang Bang. Gremlins Gremlins to Batman Returns.

Stephen Follows 7:25
Oh yeah,

Alex Ferrari 7:26
Eyes Wide Shut.

Stephen Follows 7:30
You really went there?

Alex Ferrari 7:31
I went there. So yes. Edward Scissorhands.

Stephen Follows 7:34
Mm.

Alex Ferrari 7:35
Long kiss Good night. Bad Santa. Black Christmas. And Krampus. Yes, yes.

Stephen Follows 7:44
That is quite a list.

Alex Ferrari 7:45
That is that that was it took me a minute to put it together. But I had to. I had to I had to. I had to, I had to give them love. So Stephen, man, I mean, I'm always so impressed with everything you do. I love you just an insane, insane human being in the way and the same way you call me insane for what I do. I it's a mutual admiration because I can never do what you did. In 20 lifetimes. I don't think I'll be able to ever do what you do. But I was. I was I don't know where I saw it. Because you kept you kept it to yourself. I have to I have to keep this after I have to give you props for this. You told me that you were working on something big. And I'm like, What is it? He's like, I can't man I gotta keep it. I gotta keep it quiet. I'm like, Alright, fine. I do the same thing. That's fine. And then I think I saw a pop up somewhere, like a few weeks later. And this thing called VOD clickstream showed up on like, what and I clicked on on like, what is this? And I? And I didn't, honestly, I didn't connect that it was yours for a second to like, because I literally had no idea what this was. And then I went to the about the team. And I'm like, oh, some of this is this is Stevenson. I emailed you right away. I'm like, What is this? What's going on? So can you tell you TF but yeah, so I did actually, I think it's like What the f? So can you tell the audience what VOD clickstream is?

Stephen Follows 9:16
Yeah. Definitely, I'll give you the simple pitch. And then I'll make it more complicated and nuanced, because it's got some weird sort of qualities to it. But the simple pitch is that I've got access to a huge data set, which reveals what people have been watching on Netflix, over a three and a half year period. So this is Yeah, I know. It's something I've been chasing for a while and we can talk, you know, in a minute about the history of the whole thing, but it's been something I've been chasing for a while. And it's it feels it's like almost more of a mission for me than than just a stats project. Because I don't like that. We don't know what's going on on this.

Alex Ferrari 9:54
And I think it matters,

Unknown Speaker 9:55
I think and I think it matters, you know for your audience and my audience was very similar, like studios must have a better idea than the average filmmaker. And we don't have the kind of openness and transparency that we have from theatrical or in other areas. And crucially, everyone's experience of s5 is so different. My wife and I share a Netflix account, but we have our own profiles. But there's so different. And we accidentally log on with hers. And we go, omg it's all pink, white, Sandra Bullock and everything. Like, why is everything so sad and exploding. And what that means is that even to people who, like live together, still can't get a sense from their own experience. Whereas when you go to the theater, and you see if it's full, you see lions, you know, you hear about it, and we have the same shared experience. So because of that, because of the essar is so highly personalized. You can't get any clues how things are doing. And they started to release a little bit more data in the last few, like months and stuff. But compared to what we're used to getting on the box, isn't even that's not enough, like how filmmakers supposed to know what to do what people want to watch, like, what is this new realm that is dominating, so much of the value chain is only going to dominate more of it? And obviously, COVID? And I just don't know how else we're supposed to know do this. So this is an answer to that. I guess it's not perfect, but it's, it's pretty unusual. And I think really powerful. And we've only just begun really, this isn't a project where I've launched a finished thing. Here's a report, go read it. It's like, okay, the work begins there.

Alex Ferrari 11:25
So this is essentially the Holy Grail. This is this, this is Eldorado for you, as far as data is, as far as data is concerned. No. Neither is the holy grail Eldorado. Neither is the holy grail or El Dorado for that matter.

Stephen Follows 11:41
I get the Wi Fi is terrible.

Alex Ferrari 11:43
It's horrible. It really is. I've been there. It's not it's not pleasant.

Stephen Follows 11:46
Is that why you left?

Alex Ferrari 11:48
Yeah I just left. I mean, I grabbed a couple things along the way.

Stephen Follows 11:50
But. But yeah, so it's like, it's been really exciting. And the volume of data and the complexity of the data is, it's an order of magnitude, much bigger than I'm used to dealing with. So it's not just me, I've had some help from some amazing data scientists, and most of them, I mean, two of them have PhDs in theoretical physics, you know, they, they deal with things like dark matter, and, and whether the standard model of the universe as we understand it is correct or not. And then I start talking to them about like, what we know about Netflix, and wow, we know more about dark matter. We know more about the origins of the universe that we know about what a film performed on Netflix. And I was like, aha, do you want to like, join the team? Let's figure something out.

Alex Ferrari 12:38
You're Indian. You're Indiana Jones, and you put it together a team?

Stephen Follows 12:44
Almost all physicists like we're the team is more I think it has more theoretical physicists than people who are not a theoretical physicists. And by the way, I'm one of them not. And so it's been kind of bonkers, because not only are they very talented data scientists, but also they're used to dealing with abstract ideas and abstract numbers. And actually, you need to deal with that. I mean, we'll talk about this later on, I'm sure some of the ideas in how you analyze this get quite abstracted quite quickly. Because it's not as simple as like, you know, box office, you say, How much money did it make? Even that's a bit flat, because you don't know if it was lots of kids or a few adults or peak time or off the web. But generally, it's comparative, you account for inflation, you can sort of sort out with this data, it's so much more complicated than that to try and get straightforward, simple answers. And so that's why they were so they just had all the right training for it. And it was just a joy to work with those just incredibly smart, talented people. And sort of see what we can do something interesting for the film, community.

Alex Ferrari 13:44
I have a I have a theory, see, but I feel that the reason why people take you seriously, it's not only because of your work ethic and your talent, but I truly believe it's your it's your it's your accent, because everything you say, I mean, you I mean, it's, it sounds so legit. Like if you if you would like Listen, my friend, I have some land to sell you some swamp land to sell you in Florida, I'd be continue.

Stephen Follows 14:09
But you know, you have a voice for excitement. Let me tell you something exciting. I'll be like.

Alex Ferrari 14:15
So if we joined forces, Steven, we could roll the war

Stephen Follows 14:18
Or we could ruin each other.

Alex Ferrari 14:20
This is very true. Very true, sir. Very, very true. Okay, so how, okay, so you're essentially going inside? The algorithm of Netflix is exactly like that.

Stephen Follows 14:33
Not quite that. So this, it doesn't come from Netflix themselves. There's no data breach. We haven't scraped there. We haven't taken it from them in any sense. What's happened is it utilizes this sort of type of data called clickstream data. And what clickstream data is, is that people have volunteered they've signed up have opted in to install plugins and services and things like that in their browser and other things like that. The the these, let's say plugins are really useful, you know, they've maybe they're a really good translator tool or they just do a certain thing really well. And they're free for users. And the deal is that in return for that, they the users agree that their anonymized history, they clickstream, all the clicks they made essentially, can be sent to a server and put into a big bucket. And that sort of firehose of millions and millions of people are there. anonymized history allows us to see what the journey they made around the web. And so the actual raw clickstream, which I don't have, which is the full, like epic amounts of data, you can imagine millions of people clicking constantly around the world, that is so valuable to so many people in so many different ways, you know, you could get a sense of how popular something is, before the the quarterly reports come out, you could see how people are buying things on Amazon, all that, what I wanted with a tiny slice of it, and I just wanted, I actually wanted all the streamers. But Netflix was, for various reasons, the best one to go for. And I've been chasing these guys for a while. And I was like, because I've known about this for a few years, and I've said, Look, just give me access to the Netflix slice netflix.com because it can be really instructive and very useful for filmmakers. And because of the nature of the clickstream industry, it's a small industry that makes highly expensive content data. And so they were quoting massive figures, like five figures a month, a massive high end, and it was just impossible. And then so I've been talking to them every six months or so I catch up and go, hey, you've you've suddenly sort of decided that your data is worth far less than it was. And they'd like no. And, and then around the summer 2019, there was a sort of big shift in the clickstream data world where there was a there was a sort of a perfect storm of a few different things. Like some of the browser browser, the big browsers changed some of their rules about what their plugins and extensions could do and what data they could share. Generally, people were getting tighter and privacy and so things that they were happy to share in the past, they were less happy to share now. And just all these sort of things came together. And so the clickstream industry transformed and sort of what a lot of their business models, they had imploded and some of the companies are still around doing other things. But basically, it kind of that version of it kind of ended in the summer of 2019. And so towards the end of last year and the beginning of this year. So beginning of 2020, I went back to them and said, Look, you've got this now static data set, and I can't offer you money. I can't there's no, I don't know if the values in that. And I can't do much with it. But I I know that it's fascinating and for filmmakers, and could be very instructive. Please, can you basically give me the the Netflix data, so I worked out a deal with them, which didn't, which was possible to do. And then, so then they gave me about two thirds of a billion data points. So first of all, it was it's just the volume is like, it's just and you know, they get a give me a sample, you can only have a million rows in Excel, before it crashes. And before it didn't work load any more rows. And they gave me a sample of the data. And it was like day one, hour one. And Excel was like it wasn't ours day one. And but an Excel went can't look at anymore. And so that volume is amazing, because it's really granular. And so what I ended up with was, these are anonymize users. So each user has a randomly generated ID, which resets over a certain period. And I know what country they're in. And I know what URL they clicked on exactly the time and the day. And that's pretty much it, there's a bit of metadata. And that's pretty much it. And so, in of itself, a click isn't doesn't mean anything. But when you add them together, you can infer meaning. So you could say, this person clicked on the Netflix link, that is the watch page for a bit of content and the content 22 minutes long, they waited 20 minutes, and then they clicked on the next one, well, that you can reasonably assume that they viewed it right. And you also can see what people have searched for and things like that. So so we have all this data, it has sort of three big limitations. The first is historical. So our data starts in the beginning of 2016 and ends in the summer of 2019. So it's like three and a half years. It's a shame, it's not live, but everyone asks me, can it be live? And the answer is always, sadly not. But if it were live, I wouldn't be able to get access to it. So it's kind of it's this or nothing. And secondly, it's only desktop and laptop users, which netflix they are about 25% of their audience. And so we didn't know if that would have a skew or not like whether people watch fundamentally different content on their desktop and laptop than they do on other TV or tablets, whatever. So the first thing we did was that we went about recreating the stats that Netflix had announced during that period. So when they said birdbox got X number of views or was the number one film within the first Two weeks or whatever, whatever it was, like any data point that they said in a press release, we would go back to our data and try and recreate it. You know, we've performed the same analysis and time and time again, we were getting the same answers they were getting. So because of that analysis, I'm, I'm very, very confident that the big picture we have is a very, very good model of what they have. They've always been cases where it's slightly different or whatever. But fundamentally, considering we started with nothing, I think we were very happy with that.

Alex Ferrari 20:30
So then you don't know how many people actually watch Cobra Kai or Tiger case? No, exactly.

Stephen Follows 20:35
That's what's so interesting is, so what we have is we do have a number for how many people within these panel abusers watched it. But we don't know exactly how that scales up. So what we've had to do is, if we had every single click on netflix.com, then you'd have your viewing figures, right, you'd have a wrong number. But because we we have a fluctuating panel. And and we've had to account for like different factors, like First of all, over the course of these three and a half years, the size of Netflix's subscriber base has changed. It's basically grown and sponsored in different countries, that the number of people using these plugins and services has changed, gone up and down, and maybe they break into a new country or a tool gets taken off. And so that's changed. And, and then also how you compare a piece of content that, let's say, was only available for one year in 2016. How do you compare the performance of that film with another film that was out in 2019? or something? Or 2018? or whatever? How do you compare them because they weren't available at the same time. And so what we have to do is basically, normalize all of these views per day, per country per type. What that basically means is for every single country, we've said, on this particular day, he was the most watched film, and then comparing all the other films to that film. So like film number two, the second most popular film got 70% of the views, the first one did and the third one got 60% or whatever. And then that then gives us comparable things, because you can say within all the films that are available, how did each of them perform. And then that allows us to then create scores overall, over these three and a half year period. So this is where the scientists were really useful because they, you know, compare this content across time and space and different panel sizes the d

Alex Ferrari 22:18
And the dark matter and the ends of the universe. And so I got I got I got it. Okay, so alright, so

Stephen Follows 22:25
last lesson, the last limitation is that we don't have demographic information. We don't have IP addresses. We don't know age, gender, like we know what country they're in. But that's it. So okay, invitation.

Alex Ferrari 22:34
All right. So all right, so let's, um, let's, let's ask some some tough questions and see what you can do to help us because the reason why filmmakers are listening is like, we find this very fascinating how you're getting this data. But how does this help me? So, does Netflix have a longtail? Is that something that that you were able to come up against?

Stephen Follows 22:55
Yeah. That's exactly something we're able to have a look at. So, the longtail idea was was made sort of most famous by an article in wired in 2004. And it was this prediction based on the idea of growing digital platforms like Amazon, selling books and DVDs at the time. But the idea being that, previously, when you have a physical shop, you make most of your money from the top titles, top 10, top 100, whatever the ones you can have in the front of the store, right. And that's where you make your money. The concept of the long tail is that the way that Amazon, the future will make their money is actually through all of the other inventory, the other 100,000 titles, some of which they only sell one or two, every, every every year or whatever, but there's enough of them on total. And so it becomes about the misses, not the hits. And so this was an idea that was put out there and some people supported some people don't. and how it relates to us is that we already know that the box office doesn't really have a long tail, we know that three quarters of all of the money made in the box office goes to the top 50 Films each year. Like it's heavily heavily skewed towards these top movies. So the other however many, you know, seven 800 movies released that year are competing for the final quarter. And that is not great. Because it makes it very hard for us to to to compete because we if you're not big, you're nothing, right. So one of the first things we wanted to test was okay, well, we know that the movie industry is already top heavy already. Massive disproportionately supports the big films. But if we took on this long tail idea, maybe Netflix would be a place where lots of smaller movies would do well, everyone which is something different, but it doesn't matter overall because Netflix are happy. And maybe that's our Savior, you know, maybe it's a fairer space for us all to compete in and loads of tiny movies can equally survive. So that was a big thing for me to look at. And I gotta say it's disappointing, but not surprising news. So basically, net though the viewing patterns on Netflix are slightly more skewed towards big films than the box office. Which means that most people on Netflix are watching a small amount of massive bits of content, which was mostly in the US. It was mostly Disney films, like Disney, they had to deal with net.

Alex Ferrari 22:55
Yeah

Stephen Follows 22:57
Just now finished. But that accounted for a huge proportion of Netflix's views. And it really was a problem for Netflix when Disney ended that deal. I don't know the ins and outs of the the deals. But what I can tell you is that they lost their best performing content in a number of different grounds.

Alex Ferrari 25:43
Yeah in the office in the office as well got lost because it went over to isn't it on HBO, Max or somewhere else that it got?

Stephen Follows 25:50
So, yeah. Well, presumably, peacock? Because it's right. Right. Right. Yeah. And And so yeah, the office is, the office is a great example. Because the office allows us, we've got all the stats on the episodes of The Office. And because the off all episodes of The Office were available across our entire time period, it's actually really easy for us to compare the performance of different episodes, we actually don't have to worry about accounting for time and availability and stuff. And so we've actually used that as a good example to look at how might the nature of S-VOD viewing change the way we think about filmed content. What I mean is, right, so in TV, we're used to having seasons, you know, because of the way that they're funded and broadcast and just the way that it's evolved, we are used to having a piece of content. So having having a series that is got a beginning, middle and end, maybe it's got an arc across the season, and the beginning of the end of the season is significant. And then we wait and whatever. But that doesn't, there isn't time is less of a factor with things like Netflix, like, it's not irrelevant, but it's far less of it doesn't matter whether it's summer or winter, you just watch them, Benjamin. So when we looked at all the viewing figures of all the episodes of the office, we noticed a couple of really fascinating things. Which is, first of all, the most popular season was season four, not seasons One, two, which is kind of interesting. And I think it's about that was where it really hits stride and where people start watching it or maybe where they rewatch it as well. But we couldn't see, if you have a look at the chart of viewing figures across, you know, you're on the left hand side, you've got season one, episode one on the right hand one, you've got the last one in season eight or nine, whatever the last one was, and you have all the viewing figures as a line, sort of a line going up and down across across those two points. You can't see where the seasons begin and end. You know, they may make them as seasons, but people don't watch them as seasons. So it's much more like a podcast than a radio series. Right? So you might think a radio series has got a season and certainly in the UK, the BBC have, like, Okay, this will be six or maybe 10 episodes of a radio series, then there'll be a hiatus and then they'll come back. Whereas podcasts you just think are always going to continue right, you just it's a it's a long stream of content. It's like a soap opera rather than a miniseries. And that's how people watch the content. And so I don't know how long it will be. But it seems inevitable. based on the data we have, that when people start making more content for Netflix, they're going to move more and more to this sort of soap world where they're always making them like a churn. Like even the most expensive ones it from the way people watch them, it makes sense to just drop a new episode every two weeks, forever, than it does to quickly go and make 10 of them. I mean, the economics, the production costs might be different, you might want to throw more in one location, but the production costs are not a big concern, if you get a Netflix hit. So maybe we're gonna start seeing seasons of indefinite length, and maybe break breaking down like how long episodes are like, I've just been watching them. There's some brilliant comedians called Auntie Donna, Australian comedians who've got a Netflix series that's just come out, which is incredible. But they some of their episodes are like 17 minutes long. And it's great because every second is great, but they don't have to stretch it to 20 to 30 minutes, whatever it would have to be for TV. So

Alex Ferrari 29:19
you know so so with with all this information are you seeing because I've been reading a lot that Netflix, you know, is infamous for just canceling shows. Some of the people's favorite shows just get cancelled and they're like, you know what, screw you We don't care, because we're gonna get we're gonna put out 20 new shows this month. And, and they generally don't go past three, four seasons. You know, I mean, I think Frank Grace and Frankie is one of the longest running shows on on Netflix. Orange is the new black got cancelled, ended eventually and, and they don't seem to care about letting things go on and on and on and on. Because they just rather just start playing thing from scratch. And I think it's because mostly because of the talent costs and

Stephen Follows 30:04
and that's gonna say I don't, I have no inside track on to to Netflix and I the data doesn't give me all of what I'm saying here. So some of this is filling in the gaps or my opinion. Sure. But I, I would say that the cancellation for most of these things comes down to exactly what you'd expect, which is number one cost. And number two talent, which is related to cost because they are they asking for more money each season and crucially do they want to still want to do. And obviously Netflix are going to cancel shows that they don't think of performing. But they, they could do with more content, almost always. And if you think about it, what they actually really want it, they obviously want content that everybody watches, that's amazing, that'd be great. But one of the other things that's actually really important for their business model is content that's important to some people like really important. So let's say that hypothetically, you and I both have a Netflix account. And let's say that you watch loads of different TV shows every every month, you watch 30 different shows, if I watched just two shows every month, but both of us pay the same fee. Those two shows that I watch are more valuable to Netflix, because if they cancelled those two, or maybe even just one of them, maybe I would leave. But if they canceled 10 of the 30 to you watch now you probably watch the other 20 and maybe some other ones. So the model that they're having to use here is not just not just the number of people watching you, but it's how valuable they are to that particular sort of audience. Yeah, yeah, exactly. So that's what I mean, it's a whole different business model where it's on television, you're saying how many people are watching it? And what demographic are they in? Like that's, that's what's driving content on television. And what's driving content on Netflix is different.

Alex Ferrari 31:54
completely different. In so what I'm have to ask the question, what does the lowly independent filmmaker, how does their stats work? I mean, obviously, you said that they're mostly skewed towards the big movies or big stars. I mean, I saw an interview or an article discussing why Adam Sandler, is one of the biggest stars on Netflix. And that's in like people like Why does he keep making these movies? Why? Why does Netflix keep giving him money? Why I mean, like, I personally a fan of Adam, so I love his stuff. Not everything but most of his stuff. And the thing that they said was in the article was was really interesting. And it made a whole lot of sense was the reason why Adam Sandler is given this these kind of movies and these kind of deals is because when you're scanning through an S VOD platform, there's so much content that when you see something familiar, when you see an Adam Sandler movie, you know what you're going to get? Like there's there's no mystery about like, I think you just run this Halloween, they just released the holly something or other how Halloween Holly Halloween or something like that, which was a huge, huge hit. They're going to do a sequel to it, because so many people watched it. And it's the same. You know, it's the same stuff Adam Sandler has been doing since Billy Madison, and Happy Gilmore. But because of people's comfortability with, they know what they're going to get people watch and watch and watch.

Stephen Follows 33:36
We see a lot of that. I mean, there's a lot of brands that do very well in a brand, Adam Sandler being a brand here that does very well on Netflix, and I think that some of it is down to is absolutely what you're saying. I think with him, there's also not that much competition, you know, there, there aren't many substitutes. What's the Adam Sandler substitute? Well, Kevin James is in most of Adam Sanders films.

Alex Ferrari 33:57
So it says David Spade.

Stephen Follows 34:00
There isn't a lot of competition. And I think that there's something you touched on there, which is incredibly important, which is that the way that people invest in the time they're spending watching stuff on our squad is a lot more about relaxed time and not making a decision and some of that, and I think that speaks to why Adam Sandler is popular, but also why that's the same films people are watching. And they're watching the same TV shows again, and again, rather than watching new ones. And I think that actually doesn't help independent filmmakers, because we're making stuff that doesn't have famous people doesn't have existing brands. And more often than not, is trying to challenge something I'm not suggesting we're all trying to pass on a message or communicating but it's not the same. It's not the kind of Sacher and stuff you might get from Transformers or a Disney movie or Adam Sandler where you're like, Okay, I'm just gonna go with the flow. Most independent filmmakers are making something a bit spiky than that. And I think that doesn't suit most of the way people watch Netflix. And so I think when you your question about what is a story mean that Netflix is what we've learned so far from Netflix, it applies to the other platforms and continues broadly. In the future, I'd say that it's not great for selling independent content. Because first of all, what these platforms like Netflix one is the MCU, they want the Marvel Cinematic Universe, because they people will watch it, they also can do one deal and get loads of it. And that'll get most of their views. They don't do individual deals, the audience aren't watching that content, the other company or the independent content. So there's not much of a drive for that. And so I think that's not great. However, what I would say is, in the same way, right now, I wouldn't invest in any of the companies that own theaters, I would still invest in the concept of theater going, because I think people go on dates, they see their mates, it's a cheap, for it's the most the cheapest, most social form of going out with the lowest effort. And I think that what's happening right now, I mean, I just happened, I was really a few days ago that Netflix have spent 2 billion pounds in the UK alone on content this year on production. So independent filmmakers might have many more routes to being employed than they would have had previously as if their previous routes were big movies or TV shows, they've now have a whole new realm they could compete in I don't know how well I don't know how fair that system is, I don't know. But certainly, there's got to be more and more entry level people, because there's just more concurrent more content being made.

Alex Ferrari 36:26
Oh, yeah, here in Mexico here in New Mexico, they're, they're expanding, Netflix just got approval from the state to expand their studios, they they're building out a massive studio complex. In New Mexico to hire

Stephen Follows 36:39
people, it's going to create, of course, below the line. And so as filmmakers like that, and also there are some interesting things Netflix is, it's very easy to think of them as a studio. And they're actually fundamentally not, they are a technology company. And they bring a lot of different values into what they're doing. I mean, I would argue that they are one of the the most forefront of HR, in the film industry, human resources, like they actually are able, normally when you if you work on, if you're below the line crew member, and you work on six different independent productions in a year, you can expect to have six different relationships, and no concurrent, no sort of handover really beyond a mild relationship in the sense that if something bad happens, you just try your luck again on the next one. Whereas here, because there's a continuity of people being the higher end, you know, Netflix care whether there's a complaint about somebody, and this is great for things like sexual harassment or unfair treatment or discrimination. I'm not saying they're going to solve everything, but there is a continuity there. I mean, some of the studios have tried that Warner have been doing that for a bit and Disney to some degree, but no one to the extent net and Netflix are doing this. So they are doing some things very differently. And as individuals, it might be a good thing, as people buying and selling content the way we used to doing it. I just can't see it being better than it was. Because it's also an oligopoly. You know, I don't I'm not suggesting they're acting in any way, duplicitous. But when you have five or six, possible, maybe even, let's say, three or four, as you know, hold them. So Apple aren't buying existing content. So let's say that it's Amazon and Netflix, let's say that they're the only two that could you could sell your content to in any big way. That's not going to engender, you know, fair prices. And you're doing a single deal in perpetuity for the world. Maybe, maybe. And so that's, that's a simple ad sale. If you get a good price, then that's, that's amazing. But will you get a good price? And I also think there's some worrying practices. I don't think any of them are illegal, but I don't like that as well, I can say. So for example, I was talking to a lawyer recently, who, who's sort of looked over a lot of deals to one of the big streamers. I won't say which one. And this lawyer said, Look, one of the problems is that part of the terms and conditions of the deal between the distributor and the platform, is that the distributor is not allowed to tell the filmmakers how their film is performing. There has to be some sense of aggregation of the numbers and you know, yeah, so it's horrible. That not only is that horrible in a human sense, but it's also terrible for that deal. And it also it stifles long term growth, like how can you have a sustainable career unless you get feedback, and your feedback can't be we did a deal, but I can't tell you anymore. And that brings us full circle back to the VOD clickstream because that's what we're trying to get a little sliver of light in a dark room. Like it's not like we can illuminate everything. But we're trying to understand these things that filmmakers need this feedback loop that needs to happen with the audience.

Alex Ferrari 39:42
Now do you know our American audiences, streaming a lot of international shows because I personally, I've watched a bunch of international shows recently because they've been popping up on my on my, my, my feed, so I'm like, Oh, that looks interesting. Oh, that looks interesting. And sometimes they'll they'll pitch me Something I'm like, Yeah, no, no, thank you. I need, you know. And it just depends like, you know, I'll watch subtitled movies, but not normally, because I want to relax when I'm watching movies, unless I'm watching it for cinematic purposes. But I'm just chilling, I don't want to read. I just want to say you

Stephen Follows 40:20
You don't want to be challenged. Like there are some movies that I would, in a heartbeat recommend to other people that I've only ever seen once and might see again once in the future, but only to introduce it to someone else or because you know, some bizarre circumstances yet there are bad movies that I will acknowledge that a bad thing I've seen the Meg twice,

Alex Ferrari 40:39
right? It's no.

Stephen Follows 40:42
That's the wrong ratio.

Alex Ferrari 40:43
It is it is the right ratio. And you know, what the Meg I, you know, I, I watched the mag as well. And it's just a, it's a popcorn movie. It's, you know, it's there. It's there. That's the reason why just the reason why my wife and I just sat down and watched all four Lethal weapons in a row. Because we watched the first one because I hadn't seen the first one forever. And I'm like, Oh, my God, that's so brilliant. Well, we have to watch two, we have to watch three, well, let's just let's just go, let's make it the fall four. And in four days, we watched for all four of them. And we're like, what's next? Let's watch Tango and cash. You know, like, like, I haven't seen that in 20 years. So it's like I'm going but it actually says exactly what you've been saying is, I'm doing that because I know that I'm comfortable. Those are comfortable viewing habits. And I'm like, oh, let me go revisit that again. Because I haven't seen that in forever. I remember here and there, but I haven't seen it. So

Stephen Follows 41:38
that is a response to being overwhelmed with content. Because you know that there are so many movies been out there. And if you had to create a list, how would you find brilliant movies you hadn't seen? It would take you seconds? IMDb score, meta score, sure one Best Screenplay. And there's loads of movies that you'd be like, wow, that's sure heard. That's amazing. I've not seen it. But that all takes a lot more effort and commitment than most people are willing to give. And this is something that I think filmmakers really independent, because really need to either embrace or realize you're not going to embrace it and then find other routes. Both are valid, like I'm not actually saying make popcorn movies, I'm just saying you can't make challenging movies, and expect them to then survive in a mainstream environment world world, because that's not how people watch that content. Right? It's just fundamentally and I think that the growth of content, or sorry, the evolution of content, and the growth of platforms, are massively interlinked. And the best example I can give you is outside of the film world, but it's kind of makes a lot of sense, which is the rise of Kindle, the Kindle e-reader was a massive part of the success of 50 Shades of Grey, and 50 Shades of Grey was a massive part of success of the Kindle, because you could be on the train reading something, reading basically soft porn, and no one would know. And both of those two things sort of coincide with the same sort of time. And it's not that everyone reading stuff on the Kindle was porn, but it did mean that you could read private things. And the same with the rise of sort of portable devices, and podcasting, you know, these things are interlinked, right. And so what we're seeing, what we're starting to understand with this was, is that people don't watch content in a curated way, the way that they might when they go to a certain type of theater, or they go to like, you know, they could draft house or they or they watch when they buy a blu ray or the Criterion Collection, or, you know, the considered in a centerfire way. That's not what people largely doing on these big platforms. They're sitting down watching stuff that is comfortable. But it's easy to understand that one challenge that they can pause when there's someone at the door, or they want a cup of coffee or something that is out and sat through and through.

Alex Ferrari 43:45
No, there's no, there's no question. I mean, and the other thing is, like you're saying movies that challenge you, you should also you can make movies that challenge you, but you got to do it on a budget. If you you know, if you if you have any hopes of recouping that money, like you can't make a two or $3 million, you know, indie film that five people want to watch. She's just irresponsible.

Stephen Follows 44:05
So there's more, you know, the more it just makes sense, the more you spend, the more you got to recoup. But I and I totally agree with that. I think the other thing that I know you've been screaming at people for since way before Netflix, but it's even more the case now, which is you have to know your distribution route before you make it. I'm not saying do the deal, because I appreciate that it's very hard to walk into a room and say I haven't met you don't know me, you don't know my movie and I haven't made it but can I do appreciate those kind of pre sales can happen. But you can't hope that you're just going to throw it in with the straight with the with the sort of stream of content and including the streamers and it will get swept up and it will rise to the surface. It just from the data I've had I've seen here. That just doesn't happen. That's just not the case. You can't write a book and expect it to be on the front page of Amazon or in the in the front of the book shops, right we know. And yet filmmakers still think if it's good enough, it'll break through and I do worry somewhat that the way the S VOD platforms are working now through no fault of theirs, they're just chasing them, you know, subscribers. And the bottom line is that it isn't. It doesn't reward films The way that the previous system would, to some degree, you know, maybe we'll see fewer breakouts, maybe it will be that the where you really break out is on a much smaller platform like for example, film festivals, whether they're physical or online. Or maybe it's niche sites like shudder or something like that. I don't know, I don't have a site. But that is nowhere near the volume that Netflix does or Netflix competiting appears. So there is, we all know that there's huge amounts up in the air partly it was happening anyway. And then COVID accelerated things. Now, it hasn't landed yet. But we don't yet know what this model will be for independent filmmakers. I am absolutely confident independent film will exist? Because it's not it's never been supply and demand. It's always been supply. Right? Where can I find the demand. And that's been part of the joy of like, movies, they're not been made. Some of the best movies have been made, because they want to be made rather than because they I know, I know, everybody have a deal in place. But things are gonna get tougher until we figure out what they are. But if I have, it's never been easy. And you look at some, you know, the crash of cinema tickets in the 1950s, you look at the crash of DVD, and you look at the uncertainty of aswad. And all this stuff, they will find a way, but just don't know what that is yet. And it's not the one it's not the easy one. It's in front of us. You know. And so you were asking earlier on about TV, because we have we have data for movies for tv and for comedy specials. And for TV. It's it's a, it's the same pattern in a different format. So what we saw in movies is that the most watched movies by a huge degree are the big famous ones. And when it comes to television, what we tend to find is that it is the big shows, but also it's the more familiar shows. So if you go on if you're in the US and you go on Netflix, there's content from many different countries you could choose to watch. But what do people watch? They watch it from their own country, you know, and And

Alex Ferrari 47:14
Generally speaking

Stephen Follows 47:16
yeah, yeah, exactly. And, and certainly, if you look at the, like, the top shows, like the top 50 shows are almost all produced in the US. And you have to even the top 500 most watched shows, not episodes shows, on Netflix over this period, almost three quarters of them were us produced. The UK does very well. But that's largely down to the Great British baking show and things like things. I'm David Adams,

Alex Ferrari 47:42
I would have to say I've seen both. But

Stephen Follows 47:46
what I think is so interesting is that first of all, I was as proud as I create these, these Brits are surviving and competing against that as I owe notes to shows. Like, what this means it's though there's an interesting, like thought process that goes on here, if you're being rational, you would say it would make more sense. Rather than trying to make three films or trying to make one film that competes in three areas. It's quite good, it's quite scary, it's got some effects, it makes more sense based on this data alone to compress all of your resources and that includes time and money and passion and whatever into one thing you know do one thing incredibly well and because of the power law and sub nature that if you go from being the second most the third most popular to the second most popular will mean so much more for you than going from fourth to fifth from from fifth to fourth and that it would argue that it's better to make something that's extremely one thing and you see this I mean we're in we're recording this before Christmas and and in look at how many Hallmark Christmas shows there are

Alex Ferrari 48:53
OMG

Stephen Follows 48:54
good well made or enjoyable I'm gonna show one or two but what they are is feel good Christmas like they are absolutely that

Alex Ferrari 49:02
are there there's a formula and again the comfortability factor for a specific demographic of people. That's why those films generally have a Mario Lopez or, or a Deem Cane or a face that people feel comfortable with because they remember them from you know, they're just comfortable they've watched their films or watched a TV shows over the years. And the watch it because it's like, Oh, you know what, I want to feel good. I want to feel good, Christmassy. And, oh, great. This is a new movie. And there you go. And all of us like I knew that no, that Mario Lopez Christmas movie exploded on Hallmark apparently. Because people love Mario Lopez because you know, it's later but

Stephen Follows 49:46
and he's his this thing is this thought that we I haven't heard expressed very much. I'm sure it's not a brand new thought. But in the last 10 years of being an independent filmmaker and working with independent filmmakers and chatting to them. I've heard people talk about oh my god, we have to hire People actors who've got a bigger social media following or whatever people, people have often complained to, they have to weigh up talent and appropriateness for the role and the wonder, and the fame on the other. What I haven't heard many people talk about, but I would argue is perhaps the battle that we're going for in the next five years, is in familiarity, not fame, but How comfortable are people with that person? So it's like, you know, one of the reasons that George Bush got in over Al Gore was that people were happy to have a drink with George Bush. It wasn't about politics to some for some people. And I noticed because I know, some people that voted for him who actually, I think their politics was slightly strange. And they were like, Yeah, I just don't like the word. I'd have a drink with bush. And so when you think about actors, it's not so much their fame, although obviously that's not a bad thing. And it's not so much their talent, although

Alex Ferrari 50:50
Do you feel comfortable?

Stephen Follows 50:52
Do you think your audience would go Yeah, okay. Without thinking about it. You know, and that's why you look at actors like I mean, almost every one of Adam Sanders movies as a comedy to the point to which people have been watching on uncut gems and been appalled. Whereas there are other actors who you just don't know what their movie is going to be because they play such a wide spectrum of carrier

Alex Ferrari 51:15
Tom. Hey, Tom Hanks is Tom Hanks like you he'll play everything and he's definitely not Adams. Yeah, it's his brand but that's fine and but you also feel comfortable within Tom Hanks or with Meryl Streep. Meryl Streep plays everything. She's going to be in a musical this month on on Netflix. But yet, you know, she she also was on HBO, Max doing another film with Steven Soderbergh. And you know, she she does everything, but that's her brand and you feel comfortable. And

Stephen Follows 51:40
I started this a while ago, I started on my blog, like how broad the act the the roles that actors have played across genres. And I found Adam Sandler was the most siloed. He did, most of his films have been in one genre. And the the actor, I only looked at sort of a couple of 100 really big actors. But the actor I saw that had the broadest as in like, had the least siloed in one genre was Ron Perlman. Yeah. Any you take, there's no one genre that accounts for more than a third of the roles he's done. So he's done some comedy, but he hasn't done mostly comedy. He's done some kids stuff. He's done some horror, easterns fantasy. And so Ron Perlman is an example here, who I think is a terrific actor. Yeah, like a good bloke. He is a perhaps you metric slightly less attractive to hire because he doesn't have that whatever we're going to call it comfortability effect. Whereas someone like Adam Sandler, who I would I'd rather see Ron Perlman take on Ron Perlman take on some certain drama roles at random center. But Adam Sandler would be more comfortable watch for more people. So I don't know what we'll do with answers.

Alex Ferrari 52:43
It's, it's very interesting the way this whole, this whole thing is, but I'm really I'm really happy that you've doing what you've done with the with VOD clickstream. And I'm, I'm just impressed. Like I always am with everything you do, man, you're insane for what you do. And I know that you're going to be digging through that data and continuing to grow, and you just started to go through that. And that's a good it's, it's not exactly what's going on. But man, it's, it's more than we had before. And it's definitely a direction to aim at, it might not be pinpoint. But man, it's better than, you know, like, Hey, I'm gonna go throw a football into a stadium, I have no idea where it's gonna go. Now at least you'll get it on the field. And maybe you can even get it within a few yards. You know, maybe that's the goal.

Stephen Follows 53:33
And also, you know, filmmakers should use all of these data points, and all of these things they hear and then they know themselves and they talk, they hear on your podcast, interviews. All of these are things you need to weigh up yourself and weigh them against everything else. No one person or one system can tell you what to do. And I'm just glad that we have at least one set of signals about SVOD, that doesn't come from the PR department.

Alex Ferrari 53:56
Yeah. Well, and I appreciate you fighting the good fight, sir. And getting this information out to the filmmakers. Where can where can people go and get this info.

Stephen Follows 54:04
So it's VOD clickstream.com. It's entirely free you, if you want to read more than the beginning of the articles, you can just sign up, but it's free. But that's the reason we put that barrier in is that we have got forums that anyone can join. And we wanted to make sure that there was a there was some effort you had to put in and that effort is signing up and accepting your email address. And what that means is that we have forums where people can post suggestions because we're still working out what to do with all of this data. You know, some of it, we have plenty of ideas, and we're churning away at them. But then there's some deeper things that we don't know what to look at. Yeah. And might the best suggestions for the research I've done over the years have come from audiences, I guess, if I was to think of the sort of most exciting things I've studied there, almost all of them come from audience suggestions. So that's what we're looking to have is like, what have you always wanted to know by S-VOD? I can't give you an immediate answer, and I might not be able to answer it at all, but probably I'm the best shot Most people have. And I'd be delighted to follow those threads and suggestions that we've had from people.

Alex Ferrari 55:05
What man, I appreciate everything you do. Steven, thank you so much. We have to we have to come back on the show and talk about our 12 unconventional Christmas movies and do another episode next year. But I appreciate everything you do, brother thanks again for coming on and, and sharing very valuable knowledge with with the tribe. So thanks again.

Stephen Follows 55:27
Thanks for inviting me. It's always a pleasure to be here.

Alex Ferrari 55:31
I want to thank Stephen for coming on this show and dropping the knowledge data bombs on the tribe today. Thank you so much, Steven. If you want to get links to anything we spoke about in this episode, including how to check out the free service VOD click stream, head over to the show notes at indie film hustle comm forward slash 446. And if you haven't checked out Stephens amazing crowdfunding masterclass. On IFH Academy, you are missing out if you have or thinking of creating a crowdfunding campaign for your film, or project you need to watch this he has studied 1000s upon 1000s of successful film, crowdfunding campaigns, and has laid out everything you need to have a successful one. If you want to check that out. Head over to IFH academy.com thank you so much for listening, guys. As always, keep that also going keep that dream alive. Stay safe out there,

and I'll talk to you soon.

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IFH 129: 5 Rules to Make Money Selling Indie Films

Right-click here to download the MP3

I feel that one of the reasons I was put on this earth was to help filmmakers and artists make money selling their films and art. There’s no reason why filmmakers shouldn’t be able to make a steady income from their films. You can here my inspiration rant on this topic here: Why Filmmakers are Always So Damn Broke & What They Can Do to Change It

So I came up with these 5 rules on how to make money selling indie films. I outline what I discuss in the podcast below. If you are going to listen to an episode of the IFH Podcast then this one and #88 (Why Filmmakers are Always So Damn Brokeare two episodes you should listen too. Check out the outline below and then listen to the episode. I also go into other areas and core concepts that are not in the list below.

1. Understand the initial cost of creating the factory that will build your product

2. Understand the cost of creating your product vs the return 

  • Keep the budget low enough where you feel you can make a healthy return on investment
  • Joe Swanberg (watch his SXSW talk here)

3. Understand your customer and how to engage with them 

  • Provide Value to your customer
  • Social Media
  • Email List
  • Where does your customer hang out, go there and engage with them

4. Understand how you will be getting your product to the customer

5. Understand revenue streams

  • DVD/Blu-Ray
  • TVOD
  • SVOD
  • Workshops
  • Merch

Now get to listening and make your film!

Alex Ferrari 1:50
Now one of the biggest questions I always get asked, wherever I go, or through social media, or emails or anything like that is how do I make money? Selling movies? How do I make money making movies, and considering the horrible statistics that I think is 90 or 95% of all independent films, do not make money or break even, which is a scary proposition, why anybody would want to get into this business is beyond me, but as a businessman, but when you get bitten by that bug, it's real hard to let go, I got bitten by it almost 20, over 20 years ago, and I still can't get the vaccine for it. So it's, it's something that's in your soul, it's in your heart, and you got to do it. So I'm here to try to help you guys make money with your movies. I've done it in the past, I'm hopefully going to continue to do it in the future. And try to figure out what that secret sauce is? What is the theory? What is the actual practical things that you can do to make a movie and make money with that movie, and then repeat, rinse and repeat, rinse and repeat. So you become a filmmaker, a full time filmmaker, a full time artists making money off of your art? And really that's the dream, isn't it? Wouldn't it be amazing just to be able to just do what you love to do every day and get paid to do it in one way, shape, or form? Absolutely. Now, if you've been listening to the podcast for a long time, for a long time, you guys know that I had a moment of weakness. And I actually left the business a few years ago, to open up a gourmet shop here in Los Angeles. And during that hellish time, I learned a lot. I learned a lot about business, and specifically how to run a business, how to create a product, how to make a profit, and repeat and rinse and repeat. So I wanted to talk today a little bit about the blueprint that I'm laying out for, for making money in the film business making money with movies. So I'm going to just go over it and really look at it from a business perspective. I'm not going to look at it as an artist, I'm going to look at it as a business because as I've said before, I'm quoting Suzanne Lyons here, a good friend of mine, she says that the word there's a word show and there's a word business and the bit in the word business has twice as many letters as the word show. And that is a there's a specific reason for that, guys, you have to understand your business. So very first thing you have to understand is understand the initial cost of creating the factory that will build your product. Well what does that mean? The factory is your infrastructure, what you're going to use the tool so buying gear, building a team, post production infrastructures, how you're going to get your deliverables, how you're going to create and create this factory, this movie making factory of yours and now in today's world. It is So affordable. So, so, so affordable to be able to do it on your own, you can start with an iPhone, you can start with some free software like you can get DaVinci Resolve for free, you can edit on it, you can color grade on it and get your stuff out there it for free, you just have to get a computer. So computers fairly inexpensive today comparatively to the olden days. So you can get a nice powerful computer inexpensively, or rent one or buy one or, or borrow one, whatever it takes, do it. But understand, you have to start building this factory. So you have to start creating an infrastructure, what camera you're going to buy, if you're going to need lights are going to borrow lights are going to rent lights, whatever it is, I'm looking at it as a business person. So I want to own my factory, I don't want to rent my factory as much, I want to be able to have the power to go and do what I want when I want. A lot of people out there don't have that option. But if you can, you could do it at a smaller level DSLR I mean for under two grand, you can get a complete filmmaking package, you know, including post, for under two grand buying a buying a Dell, getting a bunch of gear, I won't go into the details of it. But that's your job to figure out, you've got to help yourself, create that factory, go out there and get information about buying gear, and then start putting a good team around you get good collaborators to help you build your product, and your film is your product. So the next thing you have to understand is the cost of creating your product versus the return that you will get from selling your product. This alone is the most infuriating thing I run into in the film business with dealing with independent filmmakers. A lot of times, not a lot of times I want to say 99.9% of the time. filmmakers producers do not think about this simple business core idea. It's a simple idea. How much is your product going to cost? How much can you expect on return. And the reason why a lot of filmmakers don't get into that is because we're artists. And artists don't think about things like that we, we just want to create art. And that's fine. Okay, if you want to go create art, get a pen, pen and paper, write a script, write a book, get some drawing paper and a pencil, draw something, get a get a guitar start singing a song. Unfortunately, for everyone listening to this podcast, our art form is extremely expensive. Probably one of the most expensive art forms next to maybe architecture that exists in the world today, we need a lot of we need a lot of resources to create our art. So with that, because you've chosen this art form, you have a responsibility to yourself to be able to monetize monetize the art that you create. Now, with that said, if you're an artist, and you just want to create videos and create art, and you want to create films for the artistic expression of it, and not worry about making money, fine, more power to you. There is multiple ways you can do that by your camera, by your editing system, and start making your movies and do it. And don't worry about how much you're going to make God bless you all the way. Well, what I'm talking about in this specific podcast is someone who want to make money to sustain themselves as an artist to make a career for themselves, build a career, build a business of them of making their art and selling their art. And that and that means by I say art, I mean your films, your product, your series, your visual content, whatever it might be. So understanding the cost of your product. So understanding the cost of making your film, versus what you feel you can make as a return on your investment. When I made my short film broken all those years ago, I really didn't have a plan. I kinda was lucky enough to do what I did. But once I understood what I did, what I was going to do, I went full force and what I mean by that for again, if you guys have been listening to this podcast for all you know, I did this little short film about a decade ago now called broken. I made the movie for $8,000. And I was able to generate over $90,000 in revenue and continue to make revenue today with it based on understanding these principles that I'm going to lay out for you today. And I'm not I'm not doing something that has not been done before. I mean if you if you studied Joe Swanberg you know he's a very well known director, and he has done probably about 3035 feature films at this point in the game. And now just released the show on Netflix a series on Netflix. He's very legendarily known for shooting six feature films in one year, I'm going to put in the show notes. By the way, the show notes, of course, are at indie film hustle.com, forward slash 129. in the show notes, I'm gonna put a link to his SXSW talk, it's about an hour long about how what the realities of making a living in the business are, he makes art films, he makes small art films with no stars in it, when he was starting out. Now he makes movies with stars in it, of course. But when he was starting out, he did not have stars, he had friends, but he made his movies for $2,000 $3,000. And then he knew that he would be able to sell those movies and make five or 678 $1,000 sometimes. So when he did that, he's like, Okay, I need to make in order to make so much money a year to support my family, I need to sell six of these at $1,000 each, that's going to give me 48 grand minus what it costs to make, that's going to be enough to keep my roof over my head food on the table, and move on as an artist. And that's what he did, he made six movies in one year, because he already had the output deal, he already had a place where he was going to sell it. So he knew exactly what his return was going to be when he started making his product. Now, a lot of us don't know that with Meg, I have really no idea what kind of return I'm going to make on Meg. But I do understand that I will make some money on Mang. And I will be able to get a healthy return on the money that we've invested in making that movie and you guys will get a front row seat. And as I document that process, moving forward, but understand keep the budget of your film low enough where you can feel you can make a healthy return on your investments. Look at the studios. This Do you think of a major one of the major studios is going to spend $200 million, plus another 100 and $50 million dollars in advertising. So a $350 million nut that they've got to cover? Do you think they're going to do that without having a very clear idea of where they feel they're going to make their money back? Sure. There are the bombs, the absolute bombs, like the Alice in Wonderland remake that just came up through the looking glass. That was a complete bomb, Lone Ranger, another huge bomb miscalculation. But as a general statement, or even movies that they don't think they're gonna make that much movie still make enough money to still make a lot Batman versus Superman. They were expecting over a billion they didn't reach that target. But it's still made seven 800 million, something along those lines, that's a lot of money. And they got to return on their investment. plus all the ancillary revenue streams, which we'll talk about in a minute. But keep that in mind. Guys don't, don't go out and make a million dollar first feature, unless you are with a producer who has an understanding of where they're going to make their money back. Because I guarantee you this guy's if you make a movie for a million bucks, that makes no money. The chances of you getting another million dollar movie is very, very rare. Because making a million dollar movie as a first time director or even as a up and coming director is a rarity in itself, let alone try to do it twice. Now you make a movie for 10 grand, and you sell it for 30 make 30 grand on it. Guess what? You're a successful filmmaker. So then a businessman, an investor would go well, if he made a $10,000 movie, and was able to make 30,000. If I gave him 50,000, could he turn that into 150,000? could even double my money? Could he make it into 100,000 I wonder that's the key to growing your, your career in your business, understand the cost of your product versus the return. Now, the next core concept you have to understand is understand your customer and how to engage with them. In other words, marketing, you have to understand who your customer is, when I'm going to use broken again, my when I started to go out selling, selling broken, I knew who my customer was my customer was other independent filmmakers. And I was going to show them how I made my movie back then there was no not many options for this kind of information. Now there's just I can't even explain how much information there is out there. But back then, it was a desert. I was the only one I knew what my market was. And I went after it. And because I went after it without ever spending money on advertising. By the way, I always did this guerilla style, I was able to generate a good return on my investment because I understood who my customer was, because the customer was me. I understood who I was and understood what I wanted. So I translated that to my customer, which were other independent filmmakers. One idea that you guys have to understand is when marketing to Your core audience, once you understand who your audience is, the first thing you have to do is provide value, provide value to that customer. Don't just shout at them, don't just, hey, hey, look at me, look at my movie, read my movie, do my thing, do that you can't do that, guys, there's too much noise in the world, you cannot compete with the studios who have the money to blast that message out into the world in ways that you will never be able to do. So you have to be more strategic about it, you have to be more low cost about it provide value. So what does that mean provide value? It all depends on what kind of movie you have. You can give inspirational quotes, you can do clips of your movie, you can do educational content, you can do funny content that entertains them for free for free, could you give it away a little bit for free first, then if they like it, trust me, if they enjoy the content, and you provide enough value, they will buy the final product. This is the new way of marketing. And you have to understand that this is the olden days of buying an ad in a newspaper, or in a magazine or buying ads somewhere else is not the way to do it short, Facebook and Google are excellent ways. If you are going to spend money to advertise those two ways are excellent. Why? Because they understand their customers so well, that I can pinpoint exactly who I want to see my ad, or my content sent to it is genius. And we'll do a whole other podcast, we have an entire course in the syndicate, about Facebook ads and the power of Facebook ads on how to just strategically target like a scalpel, just strategically target your audience that you want to see your message. So provide value, use social media, build your audience, build an email list, that you can continuously talk to your audience, you know, where does your customer go to hang out, if wherever they go hang out there and engage with them start building that rapport, you need this audience in order to sell your product. Now, you're going to a lot of you out there saying Alex, I don't have an audience. I don't know how to build an audience, you know, like, Well, you know what, make your first product, make your first film. And then start engaging with that, that little audience, whatever that audience is, that you've already identified, start engaging with them. Once you have your product, that'll start building, you're building your brand, building yourself building a future customer based, remind remember guys, you don't need a lot of people to buy a 999 buy on iTunes, or a 399. Rental, you don't need a lot of people to to make a good amount of money, you know, in the grand scope of things 1000 2000 in the grand scope of the world, that's not a lot of people, you can do it, it is possible, but you have to start doing it little by little and that is the other little thing. On a side note here. This is not one of our core principles, though it should be but understand something consistency. In order to be successful, you have to be consistent. You have to show up every day, every day and start building and building. Look what I've been able to do with indie film, hustle, I started it from nothing I had been out of the game. For three years, no one had even heard of me. And I just showed up and started implementing many of the core concepts that I'm telling you right now. It's a lot of work and it takes time, it's not going to happen overnight, it's going to take time. But if you stay with it, and you continue to do it, I guarantee you it will pay off in one way shape or form. By creating that action. By creating work content, something it will pay off in one way shape or form. I guarantee it, I guarantee it will happen. But it will take time. It could be a year, it could be 10 years. But I guarantee you, you show up every day for work. And you start pushing and pushing and pushing and start building that audience and start creating content and start putting it out there. It will work look at the YouTube generation. Look what these guys have been able to do. These vlogs or some of these vloggers show up every day they haven't daily vlog. That means they shoot their show, and edit it all in the same day. And output and output and upload. That's all they do all the time. And I guarantee you when they first started out, they didn't have anything. They didn't have many, many subscribers or audience, but because they kept showing up every day and kept pushing every day that audience built. So at first when you're on YouTube, you're like, Oh, you know, I'm making, you know, $1 a month $2 a month of ad revenue. Sure, at the beginning, that's the way it works out, it worked out like that, for me, when I started uploading these podcast to YouTube, it wasn't a lot of money, you know, it was just a little money. And then now, because I've been all the time kept putting it up, all of a sudden, there's 150 videos. So now I have all those little, those little pieces of content, generating a cent here, a cent there, and all of a sudden starts adding up. We'll be right back after a word from our sponsor. And now back to the show. So imagine in two, three years, you know what will happen if you continue down this path, keep showing up. So you make one movie, let's say you can make two movies in a year, and you put those out there, and then you start selling those movies? Well, while you're making a new movie, that other movies still generating income for you. So you can continue to make new movies, it's what the studio is done, guys, just, it's a blueprint that the studios have put out, since the beginning of the film industry, you make one movie, then you make another movie, then you make another movie, all of a sudden, you have a library, and that library becomes valuable. And that library is generating revenue streams for you. And I'll get to revenue streams in a minute. So the next core concept that you have to understand is, understand how you're going to get your product to your customer. In other words, distribution, understand your distribution outlets, understand how you're going to get it out there. So you're going to get it out there by you know, renting a space somewhere, put a bunch of chairs up, put a bunch of ads out or or put the word out and get charged five bucks ahead at the door. That's one way that's a way to make money. You've got to think about different distribution outlets, you know, look at Tyler Perry, Tyler Perry, who's built this insane Empire. What he did is he just took his plays on the road, before he started making movies, he took his plays on the road, he literally did what I just said, rented a space, put on a show, but the word out and he collected money and every time he would make more money, and he kept going and going and going and going until he now he has the empire that he has, whether you like his movies or not, whether you like him or not, it doesn't matter. It's about what he's been able to do on a business standpoint, he understood his customer. And then he went after that customer and gave them value and gave him something that they weren't, they weren't getting anywhere else. So he was able to build up an empire based on that simple core idea. So understand your distribution options. And I'm gonna talk about revenue streams in a second, but understand your different distribution options, and also the cost of distribution. So a lot of times people don't think about this, especially when they're making their movies. They forget about post production, obviously, because that's where everyone forgets their money. But after the movies done, they like okay, now I need deliverables. Oh, I need to, I need to Alright, so first of all, you need deliverables? Well, deliverables could be very expensive, guys, depending on what deliverables you need, you need a DCP 800 to 1000 bucks, a DCP digital cinema package, that's what's going to be shown in a theater or at any major festival, you're going to need it 800 to 1000 bucks, great. Now you're going to also need an HD cam s r or hdslr. Tape 1080 p Master, that's going to run you for a feature film about 1200 bucks 1200 14 $100 depending on where you go. Okay, so there's that cost. Now all your audio deliverables. There's a ton ton of different costs involved hard drives, just people forget about the cost of hard drives, backing things up archiving your your material where that's all going to go, all these things are cost. So you have to understand your cost of distribution. And then there's other costs of distribution. Like if you're going to self distribute, well, if you're going to go through someone like a distributor, there's going to be a cost involved with inserting your movie into iTunes into Netflix into any of these. There's a cost involved. It's not a huge cost, but it's a cost upfront cost. Okay? So understand those costs and incorporate them in the cost of creating your product. Okay, understand that cost of creating your product, that's all the whole picture. So put that in the math of when you're like well, it's gonna cost me 10,000 bucks to make my movie is it or is it gonna cost you $15,000 including deliverables, you have to think about this stuff. You know, you have to think about all the way through the entire lifecycle, the entire journey of that film creating that product, you have to understand so for me, when I had my olive oil and gourmet shop, I needed to get the cost of of finding the the olive oil, the cost of it. Creating the bottle, the cost of printing the bottle, the cost of the corks, the, the seal that went on top of it, the manpower, that is to create it, the rent to store it, where I'm going to store all of my inventory, all of these things had to be put together in order to get a really clear return on that bottle. So it might my cost to create that bottle was $3.03 5450. Okay, and I sold it for 20. Okay, does that include my rent? That does include my gas? Does it include all the other insurance and taxes and everything else? Or am I deluding myself. So think about those things, when creating your product, understand the cost of distribution, and you understand the multiple different different options you have in distribution, and how you're going to get that product to that customer, you have to also think outside the box, guys, don't go traditional, don't think you're just going to go to a distributor and the distributor is going to handle everything for you. It doesn't work that way. Okay, it doesn't work that way. And I'm gonna teach you I'm going to give you a really quick, really quick little piece of advice here. If you go with a traditional distributor, which I have in the past, and I've dealt with many of them, they're wonderful, there's, there's many there are wonderful. But on a business standpoint, if a distributor picks up your movie, and they feel that they can make so much money with your movie, they'll put energy towards it, they might even put some resources towards it. If that does not start returning money, right away, they will drop it, they will not focus energy on it. Why? Because they're a business, and they have to keep the lights on, keep their overhead going, I understand and sympathize with traditional distributors, they got to do they got their business, they have to run a business. So filmmakers, because they have art, they have their art and their Lego distributor screwed me, they, they felt that they can make some money, they didn't make the money, they're going to move on, they'll just dump it, they'll throw it up on somewhere, not push it or not give anything. But if they feel like they can make some money with it, oh, boy, they're going to put all their resources and energy and money behind it. But they have to feel like they're gonna make money with it. So that's the really scary thing about going with a distributor, you have to trust that they're going to do what they're gonna say they're going to do and not drop bait and run the second, they feel that they're not going to make money with it. That's why I feel so strongly about self distribution. Now, because and again, at a certain point, you know, if you making a movie, that cost a million bucks, self distribution, as your only option and your only distribution strategy, it's gonna be tough unless you have a huge audience. And you really understand a lot of these core concepts that and you've really built it all out, then yeah, you could do it. There's a guy range 15, the movie range 15,

I'll put a link to in the description, they've made over seven figures, doing self distribution completely, but they have a massive audience and understand that audience very well and speak to that audience very well. But they are literally a bunch of nobodies in the film industry. And I am going to try to get the director and producer on the show I'm working hard to get them on because I want them to tell you their story. It's amazing. And they did go through distributor as well. So that's how I learned about them. So the next core idea, the next core concept that you have to understand is understand revenue streams, revenue streams. And that's something that they don't that most filmmakers don't even understand the concept of revenue streams. What's a revenue stream, exactly that a stream of money coming towards you, the filmmaker you the company that created your product, okay, so multiple revenue streams, unlike a single product, like a bottle of olive oil, once I sell that product, that's the end of that revenue stream, I have to look for different distribution outlets for me to get my product sold out there, as opposed to the arts, because the art can be enjoyed by multiple people, not just so one product, meaning a movie can be seen by millions of different I could sell that one product to millions upon millions upon millions of people. Whereas I want to sell a physical product, I only sell one physical product to one person at a time. So that is the main difference. And really the exciting part about being in the film business and creating art that you can actually sell in this manner in the visual arts or in music. So different revenue streams, DVD and blu ray, still very viable, still a good option. Think about how you can do it. There is a cost involved to create it, even though you might go through Amazon and do CreateSpace where they will just you know, print it up as needed. So there'll be no cost to you, but you'll lose a little bit more money on it. But hey, if you don't have the money to do everything you need to do to create blu rays and DVDs that might be an option for you. tvod transactional video On Demand that your iTunes, that's going to be your Xbox, your PlayStation, all of these places where people will buy or rent your movie your Amazon's before it goes into prime or anything like that. These are places where people can buy and rent your movie for a cost. That's the first window that you have transactional video on demand tvod. Next would be s VOD subscription VOD, that's your Netflix, that's your hulu's. That's your Amazon Prime's those kind of places. Those are where you finish off the run of your movie. Those are different revenue streams. Now, what are some other revenue streams, so you've got obviously theatrical, if you want to be able to put on a show, you can do it at a local church, you could do it at an auditorium at a school, or you can actually rent out spaces, you can go through tug. To get out theatrical and actual movie theaters, you can go directly to those movie theaters. And see if you could do a revenue split, there's multiple different ways to get the movie out there. And this is not a distribution talk. But there's going to be multiple of those coming up, and have some big stuff coming up in regards to the self distribution revenue streams that I'm going to be creating for Meg. So you'll get a lot more detail of that in the future. I'm just kind of going over these revenue streams, so you understand the basic concepts. But what are some other things you can do? Well, what did I do on the broken instead of just creating the movie, because the movie wasn't enough, I created a gorilla film school at three and a half hour tutorial, how I was able to make that that's creating another way to sell that movie. So now all of a sudden, the movie became a secondary thing where everybody really wanted was how I did it. So that was, that became a part of my revenue stream strategy. By creating that extra extra content, it became my cot, my product became more valuable. So you have to think of other ways out to create more value from your product than just the product alone. This is the world we live in today, guys. So what is that? So if you're a, let's say, you're a filmmaker, and you make a movie about a vegan chef, I always use the vegan chef, wouldn't it be cool in the DVD or in video, special downloads or something like that, you put out a bunch of different vegan recipes, you have a chef come in, that maybe maybe somebody that helps you on the movie comes in, you film them out, you create content, you start creating that content, whether you give that content away, or you create it as exclusive downloads or something, all of a sudden you're adding more value to your product. Think about how you can add more value to your product. Okay, how about workshops?

How about creating a workshop? You know, Julie and I have been talking about doing maybe a stand up a stand up comedy workshop, for comedians out there who want to learn how to do stand up, or how to do improv. You know, that's our audience for Meg. So maybe we'll do some of those. Here in Los Angeles or around the country. I don't know. It's an idea. I could do workshops about filmmaking, how I was able to do it, and so on nother way of generating revenue for this product. So I'm using the product as an advertising to get people in the door. It's something that can be done, and it's more guerrilla. And it's a little bit more work. But you know what? It's a way of making revenue. And if you want to put the work in, you can make revenue with it. How about merch, merchandise, t shirts, hats, whatever kind of merchandise your audience wants, that spun off look at I mean, Kung Fury is the king of this go? Look, I'll put that in the show notes. Kung Fury, is that short film that this guy made over in Sweden, and they have the most amazing merge for a short film, they were able to do something with that movie that I've never been able, I've never seen another short film do. It's fascinating how they were able to do it. So think about other ways. You can start creating revenue from your product from that one product. There's multiple ways. Again, look at the studios. Look at the studios. What do they do? Look at Disney. That's the best. They're the best example of that. So they just released Star Wars Rogue One A little while ago. And how much money do you think they've made sure they've made about a billion dollars in the theater? Now it's going to go through all the different distributions between tvod s VOD, blu ray, DVD, blu ray, all that kind of stuff. And then let's not mess around with the merge. They're probably going to make another billion dollars or to unmerge alone. They're really maximizing that product. You know, I know for a fact that frozen made over a billion dollars theatrically, not to mention all the millions and billions of dollars they made on DVD, blu ray, all that kind of good stuff VOD ins and so on. They made also and I know this for a fact. They made a billion dollars on the dresses, the Elsa and Anna dresses. Little girls, just off the dress, talk about understanding how to maximize your profits and maximize your different revenue streams per project per product. So, obviously, we would all love to make a billion dollars off addresses. But understand at a smaller scale, this concept is extremely powerful for you, as a filmmaker, understand revenue streams, understand how to think outside the box about your specific product, your specific film, and how you can generate multiple revenue streams from that product. And I'm going to leave you today with the one thing that I've said multiple times on this podcast, but I will say it again, stop with the lottery ticket mentality, I know a lot of you filmmakers out there will go well, I'm just going to make my movie, I'm going to get into Sundance, and I'm going to make millions of dollars, it doesn't work, stop it, stop it, please. What I've just laid out to you is a blueprint on how you can make money with your movie, you make a movie for 1000 bucks, you sell it for 2000, you've doubled your money, that's a good business, you make the next movie you make for 1000 bucks, and maybe all the stuff that you learned off the first movie, you're able to make three to 4000 bucks on your movie, holy crap. Now your ex, you're a super successful business person. Seriously, like most business people would kill for that kind of return. Mine was not large. But on a percentage base. It's amazing. So now on the next movie, you might been able to generate $5,000 to create that product. And off that $5,000 product, you've now learned or had option opportunities that have come to you purely because you're in action and doing things that you were able to generate $15,000 off that $5,000 investment. And all of a sudden, this is starting to get serious. So maybe the next one you take is 10,000 bucks, and you make 30,000. And all of a sudden, you're like holy crap,

I just made 20 grand, you know, if you done everything, right, you might not have to pay anybody else, you might have crowdfunded, you might have to pay anybody, and you just generated a tremendous amount of money. So the next one you might take is 20,000, you can generate 60,000 with that, or more, and so on, it could be taking this, this little idea I just throw down on you could take you three years, four years, but at the end of the two or three, four years, wouldn't it be amazing that you could generate depending on where you live in your in the country or in the world? You know, wouldn't it be amazing to be able to generate a livable wage, a livable income, by making movies by generating your art by creating videos creating content for the world? Wouldn't that be amazing? It's possible, it's doable, but you have to want to do it, you have to be able to put in the time, the effort, the energy, to learn about what I just laid out, go deeper into each of these concepts, and build yourself a career. Because in today's world, you can do it. There's no doubt in my mind, because I'm doing it. I've done it, I did it 10 years ago, when there was no none of the opportunities that there are today. None of them. Okay, I was able to do it 10 years ago, so for God's sakes, you can do it now. Understand your niche, understand your product, and go after it. Okay, you can do it, you have the ability to do it. And if you understand these concepts that I've just laid out for you in this episode, you will be successful. Okay, show up, do the work. And make some movies guys. We want to see them. There's a lot of people out there that want to see good content that will change their lives, or entertain them or take them out of the crazy world that we're in today. You know, maybe escape for an hour and a half. It's your responsibility to do it as Mongo Wilder says it is your responsibility to create your art and get it out there because you have no idea how will affect another human being or how it could change another human beings life. All right. I hope you enjoyed this episode guys. If you want to get any of the things to talk about in this episode, head over to indie film hustle.com forward slash 129. For the show notes, I will have Kung Fury on there. I will have Joe Swanberg on there and and everything else we talked about in this episode. And guys this week, Sundance starts you know, I'm going to be there flying in later this week. So I'll be there for about four to five days. So I'm going to be doing interviews. We're going to be doing a ton of interviews up there. We're going to be doing some live podcasting, not live but you know recorded and get it up in the same day kind of podcasting home Felipe, we're going to be creating a bunch of content for the, for the for the YouTube channel, I got a bunch of surprises for you. And of course, if you want to come and see me speak over at slam dance, I'm doing a workshop for Blackmagic Design discussing my post production process for creating this is Meg, talking about how I edited on DaVinci Resolve how I color graded it, and how I shot it on a Blackmagic Cinema Camera 2.5. And of course, I'll put a link in description on how I built that rig. That crazy rig that I shot. This is Megan, I'll put that also in the show notes as well. So if you want to come to this free workshop that we're going to be giving over a slam dance. It's on Saturday, January 21, from 230 to 430. At the filmmakers lounge in the treasure mountain in at the top of the hill, get ready, it's a hike if you guys gonna be on Main Street, but it's definitely worth it. I'm going to be joined by Andrew mcphillips, who will discuss his latest movie the doll and how he shot with the Ursa Mini. And of course, I'll be talking about everything I just described. And then afterwards, you can join Blackmagic and myself for a little mixer, little happy hour between five and 7pm at the filmmakers lounge, where you can ask questions, demo gear, and it's just gonna be fun. So if any of the tribe members are at slam dance or Sundance on Saturday, come by, say hi,

I love to talk to you guys. It'd be great, I'm going to be there for a little while. So reach out to me. And by the way, if you guys if you guys are at slam dance or at Sundance during the next, you know, basically from Thursday or from Friday until like mid next week sometime, hit me up on iMessage on Facebook, email me. And if I'm around, we'll see if we can get maybe get a little tribe together for some coffee or some drinks or something like that somewhere on Main Street. Be very, very cool. So many exciting things are afoot at this festival this year. So I cannot wait to share all this cool stuff and new content I'm going to be creating for you guys and hopefully give you an inside look at a lot of stuff going on at Sundance and slam dance this year. So guys also, if you like this episode and really like the podcast, but specifically this episode, share it, send it to your friends, get the word out there you know, share it with people that you really think that needs this information because I want this info to get out there to as many filmmakers as possible. It's super powerful stuff. And if you really understand these concepts, you can make a living you can build a career as a filmmaker, and I wish they would teach you this stuff in film school but they don't. And that's a whole other podcast. So guys, as always keep that hustle going keep that dream alive. And I'll talk to you soon.

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IFH 109: Top 10 Film Distribution Rules for Success

When filmmakers go out into the world to try to sell their indie film it can be a bit dangerous. The shark-infested waters that makeup film distribution can be brutal. Since I’m now going down the same dangerous road with my film This is MegI decided to write up a few rules I found useful over the years when it comes to film distribution.

  1. Split Up Your Rights
  2. The Bigger the Deal the Less Control You Have
  3. Cap Your Film Distribution Expenses
  4. The Middle Men – Beware of the Deal
  5. Nothing is Guaranteed
  6. Cost vs Sale or R.O.I.
  7. Film Festivals Help…Sometimes
  8. Beware of Exclusive 5 Year Distribution Contract
  9. Don’t get caught with your pants down in Post Production
  10. E/O Insurance…gotta have it

I go into great detail about the list below in the podcast episode so take a listen. I hope to have the transcript for this episode up by next week. Happy selling.

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Alex Ferrari 11:04
So I wanted to put together this episode because I think a lot of people still don't get what film distribution is really like, and what you really need to know. And there are some basic concepts and things that you need to know if you're going to try to sell your feature film or get your feature film distributed. And these are, this is not all of it. But this is the top 10. And if you have a grasp of these 10 concepts, I think you will be successful. And again, I'm going through all of this now with this is Meg, in the coming months going to be dealing with distributors, I've already been contacted by a couple of distributors who are interested in this as mag, but I'm holding off holding off, and I'm in a great position where I'm not in any hurry, I want to get the best deal, or I want to do it myself, whichever is going to give us the most exposure, and where we can make our most of our money back, that would be great. So here are the 10 basic distribution, things that you need to know about if you want to get your film distributed. Rule number one, forget about selling all of your rights to one big monstrous deal. Those don't happen very often. And it is something that you you really shouldn't be doing anyway, unless you get an insane amount of money upfront. In the olden days are what the what the press loves to promote is these amazing huge deals like Birth of a Nation $17 million, which they didn't do very well on, on that return. But you know, $8 million, or $7 million at Sundance or south by or something like that, that's what they like to, to to sell. And that means that they get all the rights for everything with that money. And by the way, whatever upfront money they got on that deal, they will probably never see another dime ever again. So any money that they made was going to be in that upfront deal. It's in general, I'm generalizing here, but generally speaking, that's what I've heard. And that's my experience with working with so many films over the years. So try to sell different, split up the rights, you don't have to sell a distributor, all your rights, negotiate those. So if your distributor is strong in DVD and blu ray sales, then give them DVD and blu ray sales us or if they have a strong distribution arm over in Europe or overseas, give them those rights. You have somebody else that understands television rights, give those rights to them. If you're going to do streaming yourself, keep the streaming rights yourself, don't give them away because believe it or not, you can go directly now to a lot of these streaming outlets. And I'm gonna have another episode in the coming weeks about how you're able to do that directly without going through an aggregator, but we will get into that a little bit later. But split up your rights. You know, the film that I worked on opposite Lydia, when I had Diane bell on the show, she she thought she had the rights for all for the for you know a movie that won Sundance two awards at Sundance, and she sold the rights, the airplane rights, the rights to play on airplanes, and she made I think she told us like 30 $40,000 off those rights, purely because it had won Sundance won a couple of words at Sundance, and she was super excited. I mean, that's huge, you know, for a small film like that, but she kept those rights and she got all of that money. So as opposed to splitting it up with a middleman or a distributor, she kept those rights. So split up those rights piecemeal it and that's a really important deal. Now mind you, if someone shows up and gives you a million or $2 million drop, and your movie costs less than that, by the way, then take it. That's fine. But it all depends on what your goals are with your movie, but generally speaking, splitting up your rights where it's foreign and domestic. And then beyond just foreign and domestic. Within those cable VOD streaming. s VOD, which is description base of video on demand like Netflix and things like that. All that stuff, split all those rights up. That's one, two. The bigger the deal, the less control you have. So the more money you get up front, the less money You're going to get on anything dealing with your movies. So understand that they'll have control over the artwork, how they cut the trailer, how they distribute it, how they get the word out, if they get the word out, sometimes they'll just throw it on a shelf, there's a million things. So understand, the bigger the deal is, the less control you're going to have over anything dealing with your movie. Now, if they're not giving you a lot of money up front, you should have a you should demand and negotiate more control over any other aspects of those of that movie. So if someone shows up with 10 grand, and your movie cost 100 grand and they give you 10 grand up front with promising on the back end, you should maintain a good amount of control over what you're trying to do with the movie. But again, it's on a case by case basis depends on the movie depends on the distributor at all, it all very relative, but these are general general rules that you have to look into. Number three, cap your film distribution expenses. So when you sign a deal with a distributor, they are going to throw in Oh, well you know, you'll get paid back after our expenses. I'm doing air quotes here expenses. Now those expenses can balloon beyond belief, I did a distribution deal with a group of short films of mine called lipstick and bullets with this horrendous distributor, which we we left after after we broke off the deal. Me and my, my aggregator. It was a horrible deal. These guys were just just raping, raping my aggregator because he had to he was the one that was paying for it. And it was read Dick aeolus how much they were charging for like a poster design. They were like charging five or six grand for a poster design, which was absolute Bs, you know, and then if you throw in a trailer trailers will run your 30 or 40 grand in the eyes of a distributor, which it really doesn't cost that much. You know, because I'm a trailer editor, I know what it costs. So these are things that will happen or if they fly out to Cannes or to a market, they're going to charge you for hotels, and travel, and all that kind of stuff. part as part of their package to go out to cannon and sell your movie. So these things you have to be careful of because it can balloon really quickly. If you don't cap your expenses, you'll never see a dime. You know, chances are, and I hate to say this, when working with certain distributors, again, not all distributors, there are some good distributors out there, a 24 gravatars the orchard there's a ton of good, very transparent distributors who really care about the filmmaker. But there are a lot of unscrupulous ones out there who, generally speaking, you'll never see a dime once you sign a deal with them. And I'm going to talk about deals in a second, but kept those expenses so you go look no more than 40 grand, I don't care what happens, no more than 30 grand, I don't care what happens. And whatever that cap is, I guarantee you will hit that gap, it's not going to be like oh, we only spent 15 grand, so you know no BS, they're gonna charge you the top of the top. So just be careful and cap those distribution expenses. Number four, beware of the middleman of aggregators. Because these guys are sometimes extremely helpful, like a producer's rep who connects you to certain people, certain distribution deals, that's great. Certain aggregators say that they're going to guarantee you this or guarantee you that if you're going to guarantee which will lead into my next, my next rule, but I'll get into that in a second. But they'll say all these kinds of things that they guarantee you to get into this and that just be careful of these middlemen, because some of them are really good. But you've got to be careful of how they structure that deal, how much they're going to take, what percentages they're going to take, and so on. And for whatever you do, whatever, whatever kind of distribution you do, if you are going to sign a deal with an aggregator or a middleman, make sure it's not exclusive. Do not sign an exclusive deal because if you sign an aggregation deal with an aggregator that's going to help you go out and get distribution you're locked up for five years and that then you're basically hang comfy handcuffing yourself, and you can't do anything with the movie that you work so hard to make. Because you've signed that deal away. So you basically have no rights no nothing can do a damn thing with it for five years so always signed a non exclusive deal, like indie rights over Linda Linda Nelson over indie rights. She all her deals are non exclusive, specifically for that matter for that reason, because they come from a filmmaking background and so on. And they don't want to screw the filmmaker. But that was one of those little dirty secrets of distributors like Oh, yeah, yeah, yeah, just sign up by the standard five year deal done, you're screwed. Alright, so sign a non non exclusive deal with any aggregators when you're working with them. The next rule, rule number five, nothing is guaranteed. We'll be right back after a word from our sponsor. And now back to the show. I don't care what anyone tells you, nothing is guaranteed, if you hear someone going, oh, we're gonna get you into Netflix, or we're gonna get you into Amazon or we're going to get you 200,000 screens or something like that. Now again, it all depends on who the distributor is. Now, if it's a big huge monsters distributor, or very reputable distributor, if they're saying, Hey, I'm gonna put you in X amount of theaters, that's possible. But if they say, I can guarantee you that I'll get you into Netflix, I can guarantee you that I'll get you into Hulu. There are no guarantees, there is absolutely no guarantees to that. And you should run away the opposite way. I can guarantee you, you know, 10,000 units sold to Walmart, not guaranteed. Not possible. Unless you're working with a huge Warner Brothers Lionsgate, those kind of size distributors, then maybe they go look, we're gonna we're estimating 10,000 units sold, because we're Lionsgate and we're packaging again with 10 other movies that weren't that Walmart's going to buy. And because we already have an output deal with them, it's a minimum 10,000 units sold. That maybe would be the case that makes sense with with a distributor of that size and magnitude. But another local small distributor, you got to be very wary when they start making promises, they just go Hey, we'll do our best we can to get you into these things. This is our projections of what we think the movie can make. That's something a little bit more on the up and up. So keep an eye out for that there are no guarantees in film distribution. Rule number six, return on investment or ROI. If you can make a movie for a budget, let's say you make a movie for $25,000. And you sell that movie for $50,000. Guess what? You are extremely successful filmmaker, if you can go again and make another movie for $50,000 and then sell that movie for $100,000. Guess what? You are an insanely, incredibly successful filmmaker. And if you can make $100,000 movie and sell it for 250 you're a successful filmmaker. These are things that you need to know about when you're dealing with distributors and also dealing with investors. They want to see that you made money even if it's a small amount of money that you made money so whatever you project that you can sell this movie for keep the budget under it that's why I'm always amazed at movies that I'm you know, pitched or act i have access or asked to do post production on on my Hey, what was the budget on this? And they're like, Oh, it was 5 million I go 5 million, you've got no stars in it. How the hell did you get money to make this movie, that movie will never ever, ever, ever make its money back. It just won't. Even if it's if it went Sundance Cannes and South by Southwest with no act and with no no names in it. Very rarely. I don't remember one movie doing that. That's why I'm saying it so bluntly. But it's almost impossible for that money, that movie to make any of its money back and its investors. Now again, a lot of times investors will invest in movies purely for a tax write off, which it is very possible. Now if you can find rich people who want to get a tax write off to help make you movie, God, man, send me send me an email, let me know where they are. Because I want that I want to know those guys as well. Because the best is an investment investor does not care about getting their money back. And I have a friend of mine who just made a movie that had investors that really did not care if they made their money back. It was a passion project. And then it was a write off after that. So they were like, Hey, I just want to make a movie. It's kind of keeps me interested. And I'll write it off. And that was it. It was a tax write off for them. And they made it it was like a $3 million budget with you know, I think it has one or two stars in it. But there's no way they'll make $3 million back, non festival non anything. So it does happen. But you guys have to understand that if you can, it's a business so you have to create a product at a certain price. If you watch Shark Tank, you'll understand this. What's your what's your margin. So if you make a movie for 10 grand, you sell it for 20 you've doubled your money, awesome. If all your money that you've spent to make that movie and market it and get the deliverables and everything else was 10 grand if you sell it for 20 golden, keep that in mind moving forward with your movies. Rule number seven, film festivals help sometimes. Now film festivals are an insanely good marketing tool for your movie and I get it. They give you an audience. They give you credibility. They give you access to reviews, and all all the wonderful things that come along with festivals and of course I created the film festival hacks course with Chris Holland over from festival secrets talking in nauseum About film festivals and how wonderful they are. But they do help. But not all the time. If you have a genre movie, festivals really don't matter. If you have an action movie, festivals really don't matter. No one cares. If you got a drama or an indie or a comedy, or like drama at like this is Megas. festivals are really important. Those laurels really mean something. And the bigger the festival, the more you can leverage that reputation of that festival. That's why a winning, having a lot, just getting accepted into Sundance is something that you can leverage getting into South by getting into Tribeca or Cannes, or slam dance. Or tell you right or any of these these top tier festivals, you can leverage their reputation to help sell your movie. So festivals are crucial for certain genres. Again, horror movies, it's nice, not a big deal. And action movies nice, not a big deal dramas, really helpful. If absolutely imperative actually, unless you've got a big monster star in it, then we're not talking in the film anymore. But even then, if you have a movie, which likes Little Miss Sunshine, had a great cast, but at one Sundance or was sold at Sundance, I don't think it was announced. But it did play at Sundance. And that helped get it sold. Because that, that that leverage of being at Sundance helped that movie get the release it was and it was amazing little movie as well. So again, there are always exceptions to every rule that we're talking about here. But we're talking about general rules for 99% of the rest of us. Now Rule Number eight is beware of the five year contract. And that's a kind of thing that I've already talked about earlier in the episode. But beware of that five year contract, but you do not want to lock yourself up in five years. And I've seen it with so many filmmakers, who they like come to me like yeah, I can't, I can't, I can't do anything with this movie anymore. I'm like, whereas I'm like, Oh, it's locked up, I can't do anything. And then they're just sitting there waiting. And then during that waiting time, they're not making any other movies and not doing anything else, because they can't leverage what they've done to show other people that show that it got released, that it made any money. It's just a complete cluster F. And it really doesn't, doesn't help anyone. So please stay away from those five year contracts unless there's a big huge payday on the front end. Number rule number nine. Rule number nine, don't get caught in post. It is the biggest place where filmmakers fail. And films fail is in post production. They run out of money, they don't know what they're doing and pose and they cannot finish their movie. And if you can't finish your movie, guess what, guys? You ain't gonna distribute it. So I have no a lot of films that have been picked up for nothing by a distributor because they literally have no more money the film has in the filmmakers have no more money. And they've been sitting on a shelf for I don't know, probably a year sometimes. And they come in to look okay, great. We'll come in, we'll pay for all the delivery and that's it, you're done. You've given your movie away, it's completely gone, you'll never see a dime, the only thing that will be helpful is that you might get a poster and get and you can tell people that your movie was finished and distributed. But you have failed as a filmmaker because you have not finished you did not properly set things up for post production. And I'm not even going to get into your deliverables list because that is something else that filmmakers always forget. Especially when it comes into distribution that they need to have deliverables the HD cams the five one mix poster art all this kind of stuff, which I'll go over in another episode actually I'm going to do a full episode about what deliverables you need for for for a distributor generally speaking. And then another thing that is part of those deliverables is E and O insurance that want to make that rule number 10 you know insurance. If you don't got it, Yang gonna get a distribution deal E and O insurance is errors and omissions, insurance. Basically it's malpractice for filmmakers. So in other words, if you're making a movie, and you shoot, let's say a guy chokes on on Reese's Pieces, and it's a suicide by Reese's Pieces, and he chokes horribly and dies by Reese's Pieces. And Reese's Pieces is everywhere. Well, that kind of puts a negative light on Reese's Pieces. So unless you've got the permission of Reese's Pieces, if that movie gets released, and you don't have no insurance, the distributor will be sued. And Reese's Pieces will take them to the bank because they have all the rights to because they did not get permission to get a to use Reese's Pieces in the movie. So you have to have no insurance for those specific reasons. Let's say you're in the bet you're shooting a street scene, someone walks in the background. They look into the camera, and you don't get a release for that person. If that person Sitting in the movie theater one day, and sees themselves, hey, that's me, I didn't give them permission for that lawsuit. That's how it works, guys, you need to have no insurance. Now, you know, insurance can range anywhere from 2500 bucks all the way to 6000 bucks, but it's something that you need to think about. Prior to releasing the movie, a lot of times a distributor will pick up that cost, but you will pay for it out of whatever your your upfront fee is, or any monies that you're going to come back out of. So you've got to make sure that's taken care of when you're going to do a distribution deal. So rule number 10, E and O insurance. And lastly, network like hell, this is a bonus rule network like crazy. It's a really small business guys. And the more I am in this business, the more I realize how small it is, I meet somebody, or I'll have someone on on the show, and I'll start talking to them. And they're like, Oh, you know, that person, oh, you know, that person. It is an insanely small business as big as it is. The film industry is very, very small. And you really got to network as much as humanly possible, because you never know who you're going to meet. And that's why social media is so powerful. And you just have the network man network as much as you can, when you're at a film festival, be connecting with people getting I mean, I know it sounds cliche, but get coffee with these people get lunches, and so on, you never know you just want to network with these people, because you never know down the line where you can help them or they can help you. And that's the key to it's not a one way street, it's not what they can do for you. You always have to lead with what you can do for them. So it is very, very important to always keep that in mind. What can I do for you? How can I help you make your movie or connect you to somebody that I might know or so on and so forth. So always lead with, what can I do for you in this relationship, to start building that relationship with that person and network with those people. So guys, those are the 10 rules plus a bonus rule for film distribution and understanding the basics of film distribution, if you can handle get the earliest grasp what I just said in these last 10 rules, you'll be much better off when you do a distribution deal for your movie. It's it's a jungle out there, guys, it's really rough, you really have to educate yourself as much as humanly possible. That's why I created the indie film syndicate. That's why I do this podcast. That's why I created any film hustle. I want to educate filmmakers from all walks of life with as much information as I can to help them survive and thrive in the film business. So if you want to check out the show notes for this episode, head over to indie film, hustle, calm forward slash 109. And again, if you guys are interested in taking advantage of that 25% off, which by the way is limited time only. It's only going to be around for this week, head over to indie film hustle.com for slash 25 off the number 25 and the word off and check out all the new courses we've been adding to the indie film syndicate. And this show is also sponsored by free film book calm that's free film book calm and go over there to download your free filmmaking audio book from audible. And guys, if you can please please, please leave me a good review on iTunes, head over to filmmaking podcast calm and leave me a great review, an honest review but hopefully a great review because it really helps us out with the rankings iTunes and again, I want to get this podcast out to as many people as humanly possible. So guys, thanks again for making this podcast so popular. And making any film hustle, grow as fast as as it has, and I've got a lot of stuff lined up over the next few months. And definitely a big 2017 man it's gonna be a really big year, and hopefully a very positive year for everybody for everybody in the tribe. So again, thank you so much guys for all your support.

I love you guys. You're the best. Anyway guys, keep that hustle going keep that dream alive and I'll talk to you soon.

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