Taking The Temp On Distributor Funding Models
+ should sales companies consolidate to stay alive
Following on from my New Year Headlines & Themes post one of the things I alluded to is innovative funding models for feature films. But what does that mean exactly?
For starters I’m talking about incorporating strategies like distributor funding - which can either come in the form of a minimum guarantee (MG) based on worldwide sales estimates and what they think they can achieve sales-wise overall, or like we’re seeing more recently actual equity participation towards a production budget by tapping lines of credit. There’s a few companies in my network doing this and once employing this methodology, become actual Producers on projects. However it’s a risky game for them cashflow-wise and with interest rates through the roof right now, I’m seeing some sales companies back burner those ambitions, and revert to lower risk co-productions for the time being.
Then there’s the consolidation issue - distribution is an expensive business and many of the smaller more boutique companies that thrived in previous ‘golden age of content’ years are finding themselves in a position where they need to merge resources with another company, or face going out of business. I actually think fewer, more resourced players, is better overall for our ecosystem.
Distributors are also keenly aware that a more ‘ad-supported distribution’ future is upon us and quickly uprooting the standard upfront license fee model. In the process, their company’s revenue is becoming based more on a long tail vs. up front commissions. So it really changes the fundamentals of the business for them - how to replace the short term cash-flow in a longer horizon recoupment world?
As producers I look forward to when the data on ad-supported models (AVOD and FAST) show enough revenue to collateralize in the form of equity or debt. For example, if you can show an equity investor what the long tail ad-supported prospects look like, they might be more amendable to rolling the dice with you in exchange for a return on a 2-5 year timeline.
What Happens Next?
If the outcome you want to achieve this year is getting one or more of your projects funded, then you need to follow a playbook that’s in alignment with the current distribution landscape.
My Funding Strategies Playbook course starts next week, and every week for eight weeks you’ll be one step closer to getting funded - assuming you do the work of course!
I’ve personally used this playbook successfully for a half dozen projects over the last few years and it’s one I keep adapting and tweaking with the times so not to get too complacent around old models.
While I can’t promise your projects will be financed by the end of this course, you’ll at least have a successful framework, short cut even, to apply to all the projects on your slate and a set of action-oriented steps to work towards getting funded faster than you would otherwise.
As a bonus you’re going to get worksheets and action steps for each lesson, and since it’ll be hosted right here on Substack, you can interact with me and ask questions right on the platform.
Here’s the link to register and save 15% before Friday January 12:
Click here to register
What questions do you have? Hit me up in the comments below or email me at stacey@filmspecific.com.
Have a lovely day everyone and speak to you again soon!
Stacey
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Great read! Looking forward to your thoughts on the recent layoffs at Amazon Prime/MGM. I was on the show floor for Netflix and their first foray into CES. Hmm. It was flacid. 3 Body Problem definitely looks like Benioff's work and has prompted me to read the book first. Where do you think the wiggle room is in the layoffs for independents to gain ground?