During COVID-19 quarantines, Universal got banned from distributing to all AMC Theaters because they released Trolls World Tour digitally, breaking their agreement. Was this a good move by Universal, what does this mean for the future of distribution, and how did that help independent filmmakers?
Join us as we analyze the outliers of film, and discover what made them work when everything tells us we shouldn't.
Brought to you by Topsheet Inc.
Editor: Kevin Bazzle
Host: Caleb Pearson
Research / Guest: Erin Pearson
For more information go to www.topsheet.io
So, you know, let's be honest, this is an interesting year. But I, I don't believe anybody predicted, right? And the same goes for you know, theaters and studios. Nobody predicted that, you know, this, this virus would break out and shelter in place would be a thing and theaters would have to close down. You know, and it brings up this question, this question that's being really kind of, you know, wrestled between the studios and the theaters, is what should they be doing right now? Should they be holding off for their major motion picture releases? Or should they be releasing straight to homes, you know, via streaming networks and video on demand right now, to keep their businesses alive. And whatever the major studios picked to do, might predict what the future of filmmaking looks like. And what the future of theaters looks like? And there's so many questions that follow that up. will this help or hurt the consumers of, you know, feature films? And what does this imply for independent filmmakers? Does it open up doors or make it a little harder to succeed? Hey, and welcome to sunny bits. This is the podcast where we dive into the outliers of film. We look at the films that just shouldn't have made it whether due to lack of budget, lack of student support, or no star names, and we figure out what made these films successful. Cindy biz is brought to you by top shooting through our payroll and production management automation, we focus on making sets run smoother and more efficient, getting your crew paid faster and keeping everybody happier. Our goal is to make sets well, fun again. So a couple of weeks ago, you came to me with this this article.Erine Pearson :
Yeah, I sent you an article about how turtles World Tour made almost 100 million dollars in the first three weeks of its release.Caleb Pearson :
Right. And the theaters really didn't like that. So much so that AMC openly banned them from distributing to their theaters. You see, most studios like Disney with the new live action Milan, Christopher Nolan's tenant, you know, so on and so forth. They all decided to hold off the release of their films until the theaters could open. But universal went a different route universal decided, you know what, when life gives you lemons and make lemonade, and they decided to take trolls to and distribute it through p VOD. So paid video on demand, which is basically you know, like buying a movie off of iTunes or renting one. In this case, what they do As they, they allowed you to rent it on release day via iTunes or Amazon, not amazon prime, you couldn't just have this subscription and watch it, you actually had to pay, you know pay money specifically to watch this film over about 20 to 24 bucks. Now universal doing this made the theaters very angry, like very angry. They release public responses to Universal about this situation.Erine Pearson :
AMC stated effective immediately, AMC will no longer play any universal movies in any of our theaters in the United States, Europe or the Middle East. This policy affects any and all universal movies per se goes into effect today. And as our theaters reopen, and is not some hollow or ill considered threat,Caleb Pearson :
and regal followed up as well and they said today I want to make it clear, again that we will not be showing movies that failed to respect the Windows as it does not make economic sense for us. You know, they claim that, you know, universal basically took advantage of the COVID situation to release their film. Now, I think this is interesting, because there's kind of like two sides to the story, you know, universal followed up with their goal was just to release a film to people who are sheltered in place, you know, due to COVID-19. And, you know, they also wanted to protect the partners involved. I assume they were talking about the investors, and maybe some of the filmmakers themselves, to help it make economic sense for them as well. I will say like the jargon about them, you know, wanting to help out people who are sheltered in place, you know, there's probably some truth to that not not against nothing against universal there, but let's be real, universal, solid chance for them to make money off of a film instead of just continually losing it by letting it sit there. And they took that chance they were they were trying to make the best business decision for them. Yeah, I'm sure there might be some some instances goodwill and there as well. But let's be real, most of it was a business choice. And it's weird for me because I see both sides, I see theaters, needing that, that kind of exclusive right to show new films to their audience in order to stay afloat and, you know, give the audience the best experience possible while watching films. And I also see the flip side of that is where I see studios having to make the right business two choices to, you know, make money off the films that they've already put 10s if not hundreds of millions of dollars into if they have a way to do it. They will. And it's weird because you know, people like Netflix, Amazon and Hulu, have been exclusively releasing to, you know, iPhones and computers and to your smart TVs. It's a weird thought. I understand why the theaters are you know, very upset about this, but I also kind of have to pose this question, are they shooting themselves in the foot by drawing this hard line in the sand and saying we're not going to distribute for universal anymore? I mean, if this turns out to be a better deal for universal, did they just like kind of, you know, signing their own death certificate?Erine Pearson :
I think it could be short sighted. I think that with everything, there is a need for innovation. And I think that theaters have been the same way for so long. That you know, the instead of having the opportunity to, you know, innovate and figure out a new and better way to do things, you know, they got frustrated and just kind of cut people off.Caleb Pearson :
Yeah, they sort of, you know, played the kid who, I'm taking my ball and I'm going home, didn't they? I want to make it clear that this is not the first film that universal? Or Disney or Warner Brothers, any of them has really straight to home entertainment. You know, I mean this, this happens hundreds of times a year I the one that comes to mind is, you know, back in the late 90s Aladdin to the return of Jafar, it was a straight to home video, which VHS at that point. I think everybody expected it to be kind of a smaller film, and it ended up making like $300 million in VHS sales. You know, so this isn't this isn't the first time we've been we've been doing this for decades. The difference being is, I would say expectation and FOMO. Expectation being is, you know, these theaters expected that to come, you know, and be distributed, you know, in their theaters, and the FOMO. The fear of missing out was they didn't want to lose out on that money. They expected this to be a bigger film. Honestly, I think it scared the theaters. It scared them seeing a huge partner, you know, one of the largest studios universal, make a statement saying, Hey, we might do this for the rest of our films, you know, release digitally and theatrically, which, in theory is probably better for the consumer. That's a consumer forward choice. For those who want to go watch it in, in theaters will go to see it in theaters. And for those who want to watch it at home, we'll go see it at home and it kind of creates a competitive market where theaters have to get better. They have to find ways to provide an experience that draws people in. You know, filmmakers may or may not think that depending on what side of the kind of argument you fall on, I see legitimacy in both. And I also think it scared them because how well you know trolls Did I mean reportedly in the first couple weeks, it made over 100 million dollars. Now compared to troels, one, you know, the first installment that was released in theaters, you know, it may not seem like that much because worldwide box office it made like 340 6 million. But that that hundred million dollars in in digital sales is a lot more significant when you understand the economics of film distribution. The average film releasing to a theater so I'm a film and go through a distributor. In order for me to release to a theater, you know, the theater has to make some money off of this. The typical deals for normal film is somewhere between 20 to 35% of ticket sales meaning you know, for for every dollar you'll get 20 to 35 cents. You know, if you're a much larger studio or say you have a a, you know, prime properties a Star Wars or something like that, you can negotiate higher, probably as high as 50%. There may be some rare cases where it goes above that. So best case scenario, you know, for 100 million dollar film, you're walking away with between, you know, 35 to $50 million, even though the box office says 100 million dollars. Now the flip side of that is if you were to distribute through iTunes, you walk away with 60 to 70%, meaning iTunes only takes 30 to 40%. So on 100 million dollar film, on YouTube, on iTunes, you're gonna walk away with 60 to $70 million versus that 35 to $50 million. On top of that, you don't have to have physical deliverables. You don't have to, you know, the posters, the the the, the SSD cards, all these different things like you don't have to have those. So there is an economic decision in the idea that Whoa, I can, you know, distribute my own film. I don't have to go through as many sales agents, I don't have to negotiate. with tons of theaters, I can negotiate with five different companies and distribute worldwide digitally. So you have a lot more leverage there, you have a lot more control there. And you have a lot less cost, not just in the direct cost of what you're losing per ticket, but also in the fringe costs of, you know, having to hire all these people to manage this large of a film.Erine Pearson :
One of the interesting things that this could provide for indie films is to be kind of on the same playing field as Universal Studios, because they're not doing as much in theatrical releases because of AMC and potentially regal. So it's kind of like what you and Stanley were talking about. In the first podcast about the Napoleon Dynamite thing, where you have to find your rap people. So if you mark it well towards your rap people, you could To really be as successful as universal,Caleb Pearson :
right, basically, what you're saying is something that's super interesting. What universal might have done is given production companies whether, you know, big or independent of path to success, and if this AMC ban sticks around, if you're not able to work something out, let's say universal goes, you know, majority digital, you know, they can't go to AMC, they can't go to regal. They're basically on the same playing field as you were I, I mean, at the end of the day, obviously, they have a lot more resources. Don't get me wrong, but I mean, in the sense of there isn't that hold of distribution anymore? They the the avenues have been opened up. Now with that being said, I think it's really interesting to think about, what are the implications of that? You were just talking about, like, finding the right people and some of the things we're talking about in Napoleon Dynamite. Probably some things we'll talk about every podcast specifically on marketing You know, universal for instance, they haven't stopped releasing films digitally. They just released the king of Staten Island. And that looks like it's doing very well. I saw it in the top of the charts on iTunes a couple weeks ago is the Judd Apatow film starring Pete Davidson. This just gets me thinking because that's more of an indie style film. You know, it's it's kind of a niche audience kind of a dark comedy more or less, kind of following, you know, more or less a true story. It's it's fictional, but it's based on some real things and Pete Davidson's life but um, you know, with that being said, Is there kind of laying a blueprint on what a independent studio could do is, let's say I raise, you know, two and a half to $5 million for a feature film. Now, if I do what universal did, I should probably raise the exact same amount, if not more, for Marketing, if the feature film is good and the cool thing is is it what you can do is if you can do a lot of low budget films, let's say even under, you know, two and a half million dollars, whatever you find the diamonds in the rough, you have multiple times kind of what we're talking about to bat. And what you can end up doing with that is, is you find the ones that kind of stand out to you, you you aim it for your market and you use those tools that we talked about you find those people instead of spending, you know 10s of millions of dollars just marketing to everybody. Find your specific audience, find your champions find the sneezers you know, basically the people who are contagious that time to talk about that, I think, but the concept comes down to is you know if you can find those people who are going to talk about your product digitally, and you spend your ad dollars you spend real ad dollars on them using Instagram, Facebook, YouTube, you find influencers who speak to those people and you pay them good money you get on Tick Tock if that's where your audiences but let's be real Many, many of you dads are on Tick Tock right now, especially moms, let's just be real. Maybe the market is a little broader than we think. And point being is this, I believe what they're doing here is, maybe they just opened up a door for independent film to succeed. That means we have to take bigger risks, and we have to, we have to value the business as much as we value the art and independent film, we don't do that. Let's be real a month, you know, I'm saying every single production but for the most part, you know, it's, it's, we value the art and we dispose of the business, the business doesn't matter. We'll figure that out as we go. And that's just not smart. That's not gonna help you create more art. And on the flip side of that, I think studios have done the opposite where they value the business over the art. You know, us as you know, you know, US creators out there, the people who are creating independent films, we need to come to this balance of saying it. Hey, if I'm going to raise $2 million for the film, I'm gonna raise $2 million For the advertising, you know, and I'm going to advertise to the right market. And I'm going to be specific, I'm gonna put the work in and it's not a ton of work, you know, considering for the amount of of draw, you can bring back, I'm gonna put in the work creating good content, so not just the film, but the trailers. The means the, the posters, you know, a content for those creators we're talking about, right? I'm gonna put in the work and create good content that will basically market my film. So basically, what I'm saying here is, I actually think Pete Davidson and Judd Apatow, I'm gonna bring this up actually going back to tick tock they actually created a tic Tock video that they advertise their film with where Pete Davidson was eating bacon talking about the secret you know, date of when they're going to release their film you know, when they quote unquote, it's a tear it obviously was pre planned but leaked quote unquote, their their film, you know, release date. To You know, iTunes and paid via, you know, paid video on demand. So like if we take these concepts and we learn from the students and we apply them to our art, art, artistic, more independent films, I think we have the formula for success. I think what they finally done is opened up our eyes that we are on the same playing field, right? You know, if we can walk away, as, you know, independent producers, independent filmmakers with 60 to 70% of every ticket sale, we are on their playing field, we just have to be confident that we're creating the right content for that, you know, we need to value the art as much as we value the business. And and that's that's kind of the key takeaway for me is, is I want to challenge you filmmakers out there to be as bold and raising funds for your marketing as you do for your filmmaking. If you created a phenomenal film, and you need that two 510 million dollars for it, and you were able to raise money for that there is no reason you shouldn't be able to raise equal amount of money for marketing. Am I right? Yeah. Because if it's a good film, it'll speak for itself. And you show them and say, I need to get this in front of the people. And a businessman will understand that, they will get behind that they will partner with you. So be wise in what you're doing. You know, you know, count the cost beforehand, and make a plan of, of, Hey, this is how much the production cost and this is how much it's gonna need. And here's the steps. We know, we're gonna go to Facebook, we're going to tick tock, we're gonna go to YouTube, we're gonna go to Instagram, or go to LinkedIn if that's where they are, you know, and, and we're gonna market to these people. And obviously, this isn't going to work for every single film, right. But I would say majority of films have a market on one of those platforms and majority of films can get on it. Amazon Video on Demand, they can get on these even even Vimeo. Vimeo has a distribution platform, right? You can get there with very little cost and very little work. So put the work in and believe in your film enough to market it, right? To get it in front of people, not just to create it and sit on a shelf. So basically all this to say is, you know, kind of going back to what you were saying here and is, I believe that that universal may have opened our eyes to seeing, we're not that different. We're not that far away from them. And I'm not necessarily, let's be clear, I'm not saying you're going to go out and make 100 million dollars off your independent film. That's not what I'm saying. What I am saying is, with the strategies with, you know, good content, you can make a profit it's possible to make a profit. And, and that's the key because if you make a profit, you can make more films.Erine Pearson :
So to add on to that One of the things that you could do to really make your money work for you is to hire on a person or a couple people who are really good at search engine optimization. You can, you know, build a website, you can do YouTube videos behind the scenes is a great way to market your film. But using keywords and links back to things and forums, all these other places that you could really get your audience involved in your process. I mean, you can mark it to anybody.Caleb Pearson :
Right? You kind of talk about two different styles of marketing, which I think is brilliant. We have been talking about before this, we haven't talked about kind of push marketing meaning is I'm gonna go out to my audience and find them. When you talk about search engine optimization, your show about pull marketing, I'm gonna, I'm gonna have audiences find me. I think that's great. I think that's especially great for films with very specific topics. There's been tons of films on human trafficking, right? There's tons of films and it doesn't have to just be that. It could be humor to be real, like very specific style of humor.Erine Pearson :
I mean, there are so many people who just who love horror, who love comedy, who love romantic comedies who love, you know, historical dramas, you know, anything, like if you, you know, cornered the market on education in these certain areas. You could bring a bunch of people in,Caleb Pearson :
right, you could, you could create a written content and, you know, video audio content that, you know, basically when people are typing in, you know, keywords, hey, what were fun to watch in Nebraska, you know, or, or want to learn more about Abraham Lincoln, you know, if you could find those keywords and you can use th ings like Uber suggests there's also cognitive SEO, which that one costs.Erine Pearson :
It's a great one I use it all the time for a top sheet blogs, and it's really helped.Caleb Pearson :
It is worth the money. That's a great way to put it and if you use those tools, you'll be able to see you know, In your genre and your specific niche, what are the terms being searched for the most. So when you make a YouTube video or you make a tic tac, or you make a podcast or you make a blog, or you go and talk on somebody else's, you know, video, YouTube, or blog, you can know what the title should be, you know, what the key word should be what what should be brought up in the description, what should be written in the blog, because the more you have those in there, the more likely you are to show up on a Google search or, you know, a Bing search. If anybody's still using that, you know, you're just more likely to show up there. Because basically, what Google is doing is they're looking for relevant content, they want to see, you know, if I type in these words, I want to see these words repeated multiple times. I also want to see people linking to these pages. Because this tells me that this is valuable content. So if you can think like that and reverse engineer it, you can do a really good job of pulling people into your film. And then on the other side of that is, you know, we were just talking about like pushing, you know, the pushing is going to them going on the forums, going to YouTube creating content, you know, speaking to people going to creators on YouTube or podcast and speaking about your film, doing the same thing that major motion pictures do, but more targeted, right major motion pictures, go on press tours, and talk to pertinent news outlets, right. So in the same way you can do that even more targeted, speaking to the specific audience you want to speak to. I always use this because it's, you know, low hanging fruit. If you have a horror film, go on a horror film podcast, go talk to a horror film youtuber that you know, talks about films and what to watch. You know, spend your money in specific markets, try to generate champions, not just people who like your film, you know? 100 people who love your film is way better than 1000 People who like it, because when you love something, you try to find reasons to talk about it. Right? You try to work it into conversations you, you try to get your your friends to like it as well. And we think about that. That is the formula for becoming viral, finding a core audience who loves your film, not a bunch of people who like it. Because we like something it's easy to forget about. And that brings up an interesting question, can you still make people love your film? You know, while they're sheltered at home while they're sitting on their couch? Or are they too easily distracted? I think this brings up you know, a major point is whether or not we love theaters or love being able to watch films wherever we're at. We kind of have to be able to be flexible. We have to be able to meet our market where they're at. Maybe it's saving those epic films until we can get them in theaters and delivering You know, pieces of entertainment that meets them at home and it's kind of what they need at this time, you know, a distraction, an escape, or maybe just some humor. I would love to hear your guys's thoughts on how to, you know, answer this question. Do we wait until feeders open? Or do we deliver content to them now? And if you have a solution, you know, email us at team at top sheet.io. We'd love to hear your thoughts. If you have concerns, ideas, or maybe even ideas for future episodes, please email us there. We'd be glad to talk to you. All right. Until next time, I'd likeUnknown Speaker :
to thank Aaron Pearson who came on and did a ton of research for this podcast,Caleb Pearson :
as well as Kevin Zell who edited this podcastUnknown Speaker :
and the entire team at top cheating for all of your help bringing all these ideas together and getting every podcast episode. Cindy biz is brought to you by top cheating the automated payroll and administration solution for film, television and entertainment productions. Using top sheets, mobile app and web interface, we're helping production state COVID save through this time. To learn more, please go to top sheet.io or email us at team at top sheet dot iCaleb Pearson :
want to thank you again, Stacy, have a great week.Erine Pearson :
Since the recording of this episode, there's been an update and we wanted to share it with you. NBC Universal and AMC theaters have come to an agreement that will allow the studio's films to be made available as a premium video on demand after only 17 days in theaters, including three weekends versus the original 90 days that was standard. Some are happy with the arrangement and some are very put off and confused by it Coronavirus has definitely for some shifts in the film industry. I guess we'll just have to watch and see how it all plays out.