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Sub-Genre Media Newsletter:
Weekly musings on indie film, media, branded content and related items from Brian Newman.

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Film 101: Service Deals

May 30, 2024

Last week’s newsletter seemed to strike a chord – I got more feedback than usual via email, more shares online, a re-“print” by Indiewire, and a lot of questions. One of my bigger points was number seven on the list – owning and budgeting for your distribution, and I mentioned that among your many options for doing this was via a service deal distributor and/or booker. I realized a lot of people might be confused as to what that even means. Heck, a lot of the terminology we use in film distribution is confusing, thus my Film 101: Acronyms post from two years ago. But based on a few questions and comments – here’s a quick 101 on the service deal.
Most people still think of film distributors in the classic sense – someone who comes along, buys your film (and all or some of its rights) for an MG (again, the acronyms post), takes it off your hands, does all of the work to bring it to audiences and then pays you some profits. As I hinted at last week, that doesn’t happen exactly like that too often anymore. The reality is, however, that for probably as long as film distribution has existed, there’s been a very robust market for what we call service deal distribution. In this scenario, the filmmaker essentially pays a distributor up front to release their film, and keeps ownership of their rights, and then recoups more (if not all) of the profit because they’ve paid for the expenses up front. 
The general public has no idea that this film is being distributed any differently than any other movie – it still shows up the same to the public, all of the “service deal” is behind the scenes. So much so, in fact, that you’ll often read about a film being “acquired” for distribution in the trades, but in reality the filmmakers have paid the distributor to release their film. In fact, it’s kinda how a lot of Hollywood/Studio distribution actually works, too. There are nuances and variations to this, which we’ll get into below, but that’s the general gist of how it works.
You might wonder why anyone would do this, especially if you’re an international (non-US) filmmaker. And the main answer right now is Exhibit A – last week’s post on the current state of the market. But even when the market is much healthier, many filmmakers choose to go this route. Why? For several reasons. You retain more control - over your IP and your destiny; over how much gets spent and where; over where you show up (theaters, not just streaming, for example); how things are marketed; etc. And you are paying for your distribution anyway, even when you get “picked up,” it’s just a matter of whether the money comes out of your pocket directly, or out of the money you’ve earned and might not ever see again. 
Remember, when a distributor buys your film for an MG, every expense comes out of your future profits. From the glass of champagne where your distributor toasted your pick-up, to the marketing costs, the flights to Cannes, the Academy campaign, the DCP’s, etc. Plus, they tack on a distribution fee (often 30% or more), and all of these expenses are deducted before any net revenues are potentially shared with you, the filmmakers. You also generally lose a lot of control. Some distributors are better than others about including the filmmaker’s interests/concerns/ideas, but once they own your film, it’s really their call what they do, and they (usually rightfully) assume they know more about what they’re doing than you. And while this is not a post slamming distributors (I actually like most of them), their interests are not always aligned with yours. There are many examples, but sometimes, they might see more value from any aspect of a given campaign than you – they can charge it back to you, and still get any benefit, for example.
In a service deal, the distributor (technically) works for you. Your interests are more closely aligned, and in theory, you have a lot more transparency into expenses and decisions. I say in theory because nothing is perfect – things can still be hidden or under-reported (sometimes by their partners, not them), but you get the point.  In most service deals, the distributor clearly breaks out their entire budget – their fees are a line-item you see in advance; you see the cost for every aspect of the campaign from A-Z, and you usually get a range of options from low to medium to high, so you can decide what makes sense for your film and your campaign. You usually work together – to the extent you want to do so – on every aspect of the campaign, too. This often means you don’t end up with a poster or trailer you hate, for example (I don’t know why, but this is a common point of contention in distribution). But, you aren’t doing “DIY” or DTC distribution either – you have a trusted partner, who has done this before and has the expertise you need to help distribute your film They either are a booker themselves, or they hire one (or more) to help book theaters. (A booker has a virtual rolodex and relationships with all of the movie theaters). They have relationships with publicists, and digital marketers, and they know all the little things you want a distributor to know, but they tend to be more open to experimentation and work in your best interests. They also can hook you up with an aggregator for your digital rights, if needed, and help manage that aspect (I'm leaving aside discussion of how that works for another post).
When things go as planned, which is never assured in this business, you also end up with some net profit, and usually those either all go back to you because you paid your fees up front, or there might be some profit share with the service deal distributor, because you might incentivize them to do a great job, or they took a lower fee to share in the revenues. What’s important to note is that those net profits are likely, at minimum, the same as what you’d get if you’d had a traditional distribution deal, and in the best case, are often much better for you as you’ve had more transparency, more control and you’re also not paying interest on your MG (yes, that’s also an expense), or getting any weird “Hollywood accounting.” 
There are numerous situations where this can be beneficial. Perhaps you got an SVOD deal, but you were able to keep theatrical rights, but no distributor wants to buy your movie because they wanted the SVOD rights to help offset their losses. Maybe you’re an international filmmaker who needs a US distributor and theatrical release to secure distribution in another territory, but you aren’t getting great offers. Or perhaps you are stuck in a crappy market, like now, where even the best, most honest and filmmaker friendly distributors can’t afford to pay you an MG anywhere near what you need to recoup the costs of your film. Paying for distribution, with a potential for significant upside (emphasis on potential), is a better scenario to present to many investors than taking a five figure MG for a six, seven, or more figure movie. Or maybe you have that movie you should have in today’s market – one made for a key, underserved, but sizable audience (as mentioned in most of my last few posts). You know your audience and how to get to them better than anyone else – so why give up control and let someone else take more of the spoils?
In my world, working with brands, it’s also often the best scenario, because the brand can ensure every aspect of the campaign – many brands are obsessive about branding, timing… they’re control freaks. A service deal makes sure they control the way their film rolls out, and they know what they’re getting – and can afford these costs. But I’ve also done these deals for much smaller films – I’ve even chosen this route for more than one of my own movies – on a few indie films I produced which didn’t get huge offers, but where we could raise the funds to do a service deal and make sure we still received decent distribution, and the potential for upside. 
That said, let’s also be honest – there are many, many situations where taking a traditional distribution offer is a better idea. Especially is you don’t want to work on marketing and distribution, or have an MG offer that exceeds your negative costs for your movie. Or, maybe you didn’t plan in advance, and have no way of raising additional funds to hire someone. I worked once on a film sale where the MG was less than the cost of the movie, but very close to the cost, and it came with a two picture deal for the director, and a promise of a big campaign for one of the stars. It wasn’t hard to convince the investors to take the traditional deal. But this post is mainly intended for those of you who hoped for a deal like this one, and aren’t getting that in this market.
So, who are these service deal folks, you might ask? Technically, almost every distributor will do a service deal.  But there are a few companies that are known for mainly doing service deal distribution in the US (some of these also acquire films as well): Abramorama; Argot Releasing; 8Above; Forston Consulting; Greenwich Entertainment; MTuckman Media; Roadside Attractions, Suncatcher Films – these are just a few. (And, don’t email me for an intro… use Google). I’m also missing many more (sorry, friends, if I forgot you), and there are others specific to different territories. The best way to find a good one is to talk to other producers. Just like most things in this business, a good producer can tell you who they’ve worked with, who they like (and don’t) and all of the other things I’m forgetting in this post.

Note: This is part of a recurring series called Film 101, where I cover some of the fundamentals. Other articles in the series can be found here

Stuff I'm Reading

What's Next for European Film Funding?: Noticed this tidbit from Screen in a post Cannes wrap-up: "Execs are anticipating a shift to the right in many countries, with significant consequences for European-level policies. Several expressed fears that a more right-leaning European Parliament might look to trim culture budgets, and to focus more on technology (such as AI) and innovation rather than championing cultural diversity in film and television. Lobbying starts soon for the next iteration of Creative Europe’s Media programme which runs until 2027. Already, positioning papers are being published amid fears that its budget could be cut and its film-friendly mandate altered from 2028 onwards." I've been writing, and worrying, about this issue for years and it looks like others are paying attention to it now as well. (BN)

Lefsetz on The Movie Business: One of the only newsletters I read consistently is the Lefsetz Letter, and this week, Bob has a great commentary on the Movie Business, which everyone should read. Sure, he gets a few things wrong (he's a quick and prolific writer, so give him some slack), most of what he says is right on. Of course, I'm prone to agree given that the major thrust of his article is how the film biz needs to stop satisfying everyone and start focusing on the niches, or as he says: "in all verticals, it’s about niches. Narrower products appealing greatly to smaller groups. Instead, the film companies are making generic, broad-based films hoping to reach everybody, and when you try to appeal to everybody, you appeal to nobody." He also points out another pet theory of mine, saying: "If you want to break a movie today you should platform it, build excitement as it goes from city to city as opposed to opening in thousands of theatres on Friday and being gone in a matter of weeks. Today everything is here today and gone tomorrow. To succeed film must go a different way. Evanescence is anathema to film." Recommended reading. (BN)

Is A24 Dumping all of Their Documentaries? About a week ago, someone put out some news that A24 was dumping The Sixth in to the market with little support due to political reasons. Texting with some friends in the biz, we all doubted that was the main reason, but before I could think much more about it, Lisa Laman at Culturess has a new article pointing out that A24 is doing this with pretty much all of its documentaries. I haven't had time to ask around, but my hunch is that they've not only moved on to bigger things as a company, but that it's just another sign of the major issues with getting audiences to show up for docs outside of film fests. I'm sure we'll hear more on this soon. (BN)

Going it Alone - Indie Film DIY Distribution Case Studies: Jeremy Foster at TheWrap gives a report from CinemaCon on the self-distribution tours of a few smaller films. There's some great stuff in here on strategy, costs, marketing ideas, and more. And with examples from "Hundreds of Beavers" (and a video of the Q&A), you can't go wrong here. (BN)

“Invisible Nation” Documentary Hits NYC Theaters This Week“Invisible Nation” directed by Vanessa Hope, investigates the election and tenure of Tsai Ing-wen, the first female president of Taiwan, and her living tightrope walk as she balances the hopes and dreams of her nation between the colossal geopolitical forces of the U.S. and China. Described as “strong, effective observational documentary filmmaking… bound to make many viewers deeply concerned about how the next chapters in Taiwan’s story might unfold (Richard Kuipers, Variety),” “Invisible Nation” will be playing in New York’s Quad Cinema followed by Q&As with the filmmakers on the first two evenings. Grab your tickets here! (GSH)

Apply Now: Visionary Fellowship for Disabled Filmmakers: Supported by Netflix’s Fund for Creative Equity, Inevitable Foundation is launching its Visionary Fellowship for disabled filmmakers, a year long program that provides filmmakers with disabilities funding, mentorship, and an experienced crew to make a short film and leverage it into their debut feature film. Applications are open now and close July 31. Learn more by heading to the application or by checking out this article for Variety by Selena Kuznikov. (GSH)

Branded Content
The (Very) Early History of Brands & Film: I thought I knew most things about the history of brands and film, and being a film studies/history guy, I know a little bit about the beginnings of cinema, but I didn't know this one. From The Ankler this past week: "Although product placement in movies feels like a thoroughly modern phenomenon, no less than the Lumière Brothers incorporated Sunlight Soap in an 1896 production, at the behest of the Lever Brothers (the forerunner of Unilever). That’s considered the first-known instance of the stealth advertising technique, so take that, Aston Martin and James Bond."  Wow, you learn something new all the time. (BN)

Amazon MGM Studios Getting a Branded Film & TV Makeover: Amazon Prime Videos pushes into the advertising space and embraces branded film/TV with some structural changes. Amazon announced that it is expanding Lauren Anderson’s role to head of brand and content innovation, where she’ll oversee brand-supported originals across film and TV, and they announced several folks who will help her lead the charge. Read on at Alex Weprin’s piece for The Hollywood Reporter. Vernon Sanders, Co-head of Television at Amazon Studios explains, “In keeping with “Day 1” culture, our org continues to evolve, as we seek to deliver the entertaining content our customers crave. This includes both our global audience and, with the introduction of advertising in Prime Video, our advertisers. It is imperative that we are creating a world class experience for our brand partners and the agencies with whom they work (full memo here).” (GSH) I do not envy their email inboxes now, as everyone in my world hits them up for partnerships. (BN)

Turbo Tax Takes A Stab At Branded Horror Film: Research by Citizen Relations shows that 85% of young Canadians are haunted by anxiety and stress around tax season. That’s why Turbotax asked Group 793 to shoot a short branded horror film spotlighting this anxiety and how the tax software can help alleviate it. Head to this LBB piece to watch the 9 minute film —which by the end unfortunately plays more like a long commercial — and read an interview with Group 793’s executive producer and founder to learn about the pre-production process, and timing/budget constraints (you can tell its low budget and had to be shot quickly, but it's still amusing to see the tax anxiety monster come to life). (GSH)

Passion Point Collective 5 Year Anniversary: My friend Marcus Peterzell founded Passion Point Collective five years ago, and just released this 5th Anniversary Video in celebration.  The field of brand storytellers has grown immensely in that time, but remains small and tight (for the most part). Marcus has been a good friend (along with Amy Slotnick and the entire team), and we've collaborated a bit on some client projects in the past - they're one of the good groups in the space. Check out their video, and if you know Marcus and the team - send them a big congrats! (BN)

TikTok Sues U.S. Government For Violation of 1st Amendment: TikTok sued the U.S. Government, claiming that the 2024 law banning TikTok unless it sells itself violates the Constitution and that it fails to provide evidence of the national security threat posed by the app. Anupam Chander and Gautam Hans in their piece for TechDirt explain that supporters of the bill “describe it [not as a ban but] as a divestiture, a purely economic regulation that they say should insulate it from First Amendment challenge. After the sale, users could happily keep on using TikTok, not caring who owns the company.” But to Chander and Hans, “the law seems to us an attempt to control speech by mandating a change in ownership.” Side note: U.S. Rep. Mike Gallagher is the principal author of the bill who stepped down from office in April to join a venture partly backed by Microsoft. Takeaway: Chander and Hans write, “what seems likely to happen, absent judicial invalidation or legislative repeal of the law, is a world in which TikTok cannot effectively operate in the United States in a year’s time, with mobile app stores unable to push out updates to the software and Oracle Corp. unable to continue hosting the app and its U.S. user data on its servers. TikTok could go dark on Jan. 19, 2025, in the United States. (GSH)

GSH = Articles written by Sub-Genre's Gabriel Schillinger-Hyman, not Brian Newman (BN)
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