06 Distribution

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Film Distribution

Consider these two competing views of who holds the most power in terms of influencingwhat films get made and seen:

If you break it down and look at it as a business then the audience has the greatest power. It's

the audience that tells you what they like. So if the audience likes a particular superstar, then

Hollywood is forced to use the superstar and that star then becomes extremely powerful. (Tony

Angellotti)

In a world where money spent on the budget of a film often sees 50 % going on promotion as

opposed to what you actually see on screen, the idea that we have a world where the consumer

can exercise authority is absurd. This industry is like any other. Of course it has to sell things,

but it doesn't rely on waiting, listening, responding to what audiences want and then delivering

that to them. It relies on knowing which parts of the world and the media need its products and

will pay for them. (Toby Miller)

They can't both be right and youtherefore need to come to an informedjudgement on this dynamic. In the caseof film marketing, it is a complexissue.

Q. Did millions of people go to seePirates of the Caribbean 2 in the firstweek of release because it is such agreat film, or because it is so well

marketed? Or both? It took$135,634,554 in its opening weekendin the US alone, 32% of its final totalgross.

Definition of a distributor

A distributor is the link between the film-makers and the public, and allows a film to reach thepublic via the cinemas, DVD/video and on television. There are a number of distributioncompanies in the UK, all with different styles, funding structures, aims and marketing plans, alltrying to sell their films in an incredibly competitive environment.

Each distribution company takes on a certain number of titles each year and creates anindividual release-plan for those films. Their responsibilities include:

o deciding on a release date;o deciding how many prints to produce and in which cinemas to screen them;

o advertising campaigns;o designing art work for adverts, posters, flyers and billboards;

o organising premieres and talker screenings;o booking talent (i.e. the stars or director) for press interviews and personalappearances.

Distributors are also responsible for negotiating deals regarding the film's release on videoand DVD, and showings on television, cable and satellite channels.

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A film could come to the distributor in a range of ways films produced by the mainAmerican studios will be distributed through their own companies, so Warner Bros. willdistribute their own films as will 20th Century Fox and Buena Vista International will distributeDisney films as it is the Disney distribution 'arm'.

Some films are seen at film festivals and are picked up through complicated negotiations withsales agents and producers so deals can be struck in different territories (i.e. North America,Europe, Asia, Australasia).

Some Background Facts and Statistics

Worldwide spend on films is around $65 billion a year, of which the distributors' share isabout $35 billion. Total revenues are split almost equally between the North Americanmarket and the Rest of the World. The industry has doubled in size in the last since 2000 - anannual growth rate of almost 10%. Few, if any, major businesses can boast such continuedgrowth over this period. DVD has contributed significantly to the growth levels. DVD sales

have seen a tenfold rise in the last 3 years.

The average cost for an American studio film is now more than $50m with a further $30mspent on marketing (up from $8m and $3m respectively in 1980).

Theatrical (i.e. cinema) revenues only account for about 25% of the total profit, with DVDtaking about 40%; television screening accounting for 28% and ancillary revenues the final7%.

The main revenue streams for filmed entertainment are:1. Theatrical (cinema) exhibition

2. DVD/Blu-ray rental3. DVD/Blu-ray retail (or sell-through)4. Pay per View Television5. Subscription or Pay Television6. Free to air Television

The industry maximises revenues at each stage ofthe value chain and avoids any clashes in themarketplace. Release windows are starting toclose up as the non-theatrical streams start toeclipse the original release in terms of revenuegeneration (although the cinematic shop windowstill remains the main driver of revenuesthroughout the chain in most cases) but areroughly as indicated below:

Theatrical: 0 - 6 MonthsDVD/Blu-ray: 6 - 15 MonthsPay Per View: 15 - 18 MonthsPay TV: 18 - 30 MonthsFree TV: 30 + Months

The spectacular success of the home DVD markethas led to increased pressure on the DVD rentalwindow with some of the major distributors keen

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to put their product into the retail market place as soon as possible. In the immediate futuremore films will be released simultaneously into the rental and sell-through DVD/videowindows. The rental window, which currently lasts for about six months before titles go intoretail outlets, may be closed altogether before too long. This may also lead to the Pay perView window moving forwards with titles reaching television screens within 9 to 12 months

of their theatrical release.

Theatrical Distribution Deals

The share of Box Office paid over to distributors varies between territories. The typicalexhibitor's share in the US is 45 to 55% and in the Rest of the World 55 to 65%. The UK hassome of the highest retentions by the exhibitor, averaging around 65 to 70%.

Types of UK distributors

In the UK, distributors are divided into the majors and the independents.

The Majors

The majors are those affiliated to the biggest Hollywood companies and are: Warner Bros.; 20th Century Fox; Columbia Tri-Star;

Buena Vista International (BVI, owned by the Disney Corporation); United International Pictures (UIP, who release films from Universal and MGMstudios).

The films released by the majors tend to be mainstream - Hollywood blockbusters as well asUK/USA co productions such as Bridget Jones's Diary, Love Actually and CalendarGirls. Some companies have an 'indie' arm such as Fox Searchlight or Focus Features(Universal) that will take risks on films that are not such commercial blockbusters.

The Independents

These are companies who release a much wider range of films, and include Artificial Eye,Pattie, Metro Tartan, Metrodome, Momentum and Contemporary. Titles will include foreignlanguage films, documentaries, re-releases and non-mainstream Hollywood/UK titlespicked up at film festivals across the world. Entertainment Distribution is an unusual case inthat it is a UK independent that has a long standing relationship with US studio New LineCinema (a unit of the Time Warner Corporation). Entertainment release their titles in the UK,therefore getting such films as Lord Of the Rings as well as small UK tides such as Sex Lives ofthe Potato Men and Charlie (2004). (The vast majority of Entertainment's 14.5 % market sharein the table opposite will have come from the second and third films in The Lord of the Ringstrilogy, both on release in 2003).

Acquiring a film

A distributor can acquire the rights to release a film in the UK in a number of differentways: directly from their parent studio (i.e. Universal through UIP);

through a deal a distributor may have with a production company or studio; a distributor may be approached by a third party sales agent; a distributor may attend a film festival and approach a sales agent after watching a

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film at a screening.A distribution deal is different for every film, and will include theatrical rights (i.e. thescreening of the film in cinemas), and possibly the release of the film on DVD as well as TVand satellite rights.

Releasing a film

Hollywood distributors will consider their release strategies from (at least) four perspectives:Global: where will the film work?Regional: how will we make it work in (say) Europe?National: how should we release it in each country?Local: are there any particular local conditions that need to be taken into account withineach country?

Many things have to be taken into consideration when distributors choose a release date for amovie. School holidays in Easter, half term, summer and Christmas tend to be the time when big

family movies are set for release. Big national sporting events, particularly when England aretaking part, such as the European Championships and the World Cup can affect audiences, socare is taken about releasing male-orientated, action-type movies at that time.

It is also crucial to know the landscape with regard to film and media related eventshappening nationally and most importantly, what else is being released at the time. The lastthing you want is your film being released on the weekend The Lord of the Rings: TheReturn of the King (2003) or Indiana Jones and the Kingdom of the Crystal Skull (2008), arereleased, both of which will swamp the media and the national consciousness (unless, that is,you are consciously positioning the marketing strategy in opposition to these blockbusters).

Box office - A film's performance in the cinema is judged on the box-office figures. Box-officefigures are based on the number of people who purchase a ticket to see a particular film and

what they pay: it is the accumulated cost of tickets which equals the box-office figure. The US

box-office figures will give a rough indication of how successful a film might be in the UK.

For most films, almost 40% of total Box Office will be taken in the first week, with themajority of that arriving in the first weekend. Takings tend to fall to about 5% of the total bythe sixth week of release (if the film has lasted that long). Oscar winning films have tendedrecently to gross more internationally than at the US Box Office, partly because the releasepattern means that their Academy Award success can be used in the International marketingcampaigns. Films like The English Patient (1997) and Slumdog Millionaire (2008) are good

examples of this.

Case Study United International Pictures (UIP)

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Whenever you visit the cinema, there's a strong chance that the film you are watching is onehandled by United International Pictures (UIP).

UIP is jointly owned by two of Hollywood biggeststudios, Paramount and Universal. They channel the

films they produce through UIP, which is responsiblefor distributing them to cinemas in the internationalmarketplace outside North America. UIP also handlesfilms from their non-mainstream divisions,Paramount Classics and Universal Focus.

Stephen Spielberg's studio Dreamworks alsodistributes its films around the world through UIP.Furthermore, UIP will acquire and distribute filmsmade by independent producers in local and

international markets.

Since its launch in 1981, UIP reckons it has distributed over 1,000 films internationally -including Shrek, Love Actually, Jurassic Park, Collateral, Mission Impossible, and BridgetJones: The Edge Of Reason.

It is a huge and complex operation, with offices in 35 countries stretching from Russia toNew Zealand and South Africa to Singapore. It also has representatives or agents working inanother 23 countries. Its takings from the global box office in 2003 stood at nearly $2 billion.

An important focus for UIP at the moment is expanding into what it regards as growthmarkets, in particular countries with huge potential like China and Russia.

UIPs global operation, which employs 700 people around the world, is co-ordinated from asmall tower block office in Hammersmith, West London, with 150 staff. Key departmentsinclude the marketing and distribution teams, which liaise with the US studio parentcompanies and UIP offices around the world to agree release dates as well as marketing andpress strategies for films.

However, UIP chairman and chief executive officer StewartTill (pictured right), says: "We try to let the territories be asautonomous as possible and empower them as much as we

can." The Hammersmith HQ also includes departments such ashuman resources, business affairs and finance.

Also in London is UIP's separate UK distribution office, basedin Golden Square in London's Soho. Run by Chris Hedges andemploying 35 staff, the operation consists of a sales anddistribution team responsible for booking UIP films intotheatres throughout the UK, as well as a PR and marketing unitcharged with generating press coverage and reviews of filmsand for running marketing campaigns.

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