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How Does Film Distribution Work?

First things first — let’s make sure you understand what a film distributor actually is and what they do.

The film distributor’s job is to make movies available for an audience. This can be through theatrical exhibition, cable VOD (Comcast Xfinity, etc), video on demand streaming (Netflix, Hulu, iTunes, etc), DVD sales or even the internet.

You can distribute your movie using all of the above methods or which ever you want.

They will control the bulk of your marketing on the movie you agree to work with them on and in most cases they will handle the global rights and/or territorial rights.

Your distribution contract will have a certain term length and this will determine how long the distributor will control the rights to your film. Normally this is 10-15 years.

How Do Film Distributors Make Money?

Most distributors ask for a percentage of your movie. For this reason, the assumption is that they will then have a vested interest in your movie being a big hit.

So what’s their percentage versus what you take home in revenue when it’s all said and done? Like most things in any business — it’s negotiable based on who has the most leverage. Typically that’s not the average filmmaker.

When it comes to Hollywood movies that are released in theaters anywhere from $10 million to $100 million and up, there are several ways studios can make a return on their profit.

Hollywood producers, advertisers, and marketing teams are experts at squeezing every penny out of a movie. They use all sorts of gimmicks to make audiences pay for the movie multiple times. You’d be surprised at how much you contribute to Hollywood as an audience. Let’s dive into all the ways audiences help movies make their money back.

Movie Tickets During Theatrical Releases

When a movie gets released in theaters, the profit it makes from ticket sales is known as gross income. After the studios pay taxes on that sum, it is considered net income. They then split the net income profit with the theaters or sub-distributors of that movie. This split could be anywhere from 50/50 to a 25/75 split, depending on their arrangement.

In the past, it used to be a rule that each week, the ticket sales split agreement between the studios and theaters works on a sliding scale. So on week 1, it would start as high as 90/10 in the studio’s favor; in week 2 it would drop 60/40, and in week 3 it could be an even lower split.

As of the early 2000’s, though, theater chains just get a basic cut of the whole revenue and it doesn’t matter which weekend it is. Now you can understand why there is so much effort to get audiences to go see a movie in theaters the very first week it is released.

If a studio made a movie that cost them $100 million to make and by the end of its theatrical run it made $300 million, then that is a good sign the movie is doing well and by the time it hits the remaining window releases (streaming, dvd releases, television networks, etc) things should be uphill for the most part.

However, you can also see how if a studio spent $100 million on a movie and it either broke even or made less than that during its theatrical run — it’s most likely considered a flop and will have a harder time making a return on the investment (if it can at all).

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Jay Carver

Jay Carver is a screenwriter, director and producer. Through his production company J-Style Films, he has done work for companies such as Turner Broadcasting. In the past, he has worked with Hollywood actor Omari Hardwick and won several film festivals including "Best Director".