Declining Distributor Minimum Guarantees Threaten Viability of Independent Films

October 3, 2023 FilmTake Distribution Comments Off on Declining Distributor Minimum Guarantees Threaten Viability of Independent Films

In recent years, the state of independent films has been marked by a troubling trend: the decline of minimum guarantees paid by all-rights distributors.

Since minimum guarantees have traditionally been a necessary lifeline for independent filmmakers, this downward trend has raised concerns about the financial viability of indie filmmaking and the future of these diverse voices in the film industry.

Causes Attributing to Lower Minimum Guarantees

The decline of minimum guarantees in recent years can be attributed to several key factors:

  1. Market Oversaturation: The digital age has democratized filmmaking, leading to an influx of entertainment options. With so much content, distributors are more cautious about which films they invest in, leading to reduced minimum guarantees for most.
  2. Changing Distribution Models: The rise of streaming platforms has disrupted traditional distribution methods. While this has expanded opportunities for indie films to reach wider audiences, it has also altered how films are monetized. Streaming platforms often pay licensing fees rather than providing upfront minimum guarantees, impacting the financial stability of filmmakers.
  3. Risk Aversion: In an era of uncertainty, many distributors are more risk-averse. They prefer to invest in established franchises or films with known star power, leaving smaller, innovative projects with lower minimum guarantees or no guarantees at all.
  4. Socioeconomic Factors: Economic downturns after COVID-19 lockdowns reduced demand and alienated many film-goers, further strained the distributors’ resources, leading to reduced spending and an increased emphasis on cost-cutting.

Netflix’s Global-Only Distribution Policy

Any list addressing the opportunities and challenges facing independent filmmakers wouldn’t be complete without discussing streaming services, particularly Netflix.

Netflix’s implementation of a global-only distribution rights policy had significant consequences for smaller independent films, resulting in the loss of their chance for a theatrical release. The decline in independent and specialty films in theaters was further exacerbated by the lockdowns, which forced many independently run theaters to shut down for good.

In recent years, this situation has been compounded by Netflix and other streaming services reducing their acquisition of independent films, making it increasingly challenging for smaller films to secure distribution.

As a result of these challenges, independent filmmakers are increasingly exploring alternative financing and distribution strategies to navigate this changing landscape.

Notable Distribution Deals (2017-2023)

Filmmakers Adapt to Evolving Distribution Dynamics

The decline of minimum guarantees paid by distributors has presented significant challenges to the independent film industry. While this decline poses significant challenges to independent filmmakers, there are potential solutions to address this issue:

  1. Diversifying Revenue Streams: Filmmakers can explore various revenue streams, such as merchandise sales, sponsorships, and partnerships, to supplement their income and fund their projects.
  2. Collaboration: Co-productions and collaborations with streaming platforms, production companies, and other filmmakers can help secure financing and increase the chances of successful distribution.
  3. Advocacy: Filmmaker associations and industry stakeholders can advocate for fair compensation and support for independent filmmakers, encouraging distributors to invest more in minimum guarantees.
  4. Bifurcating Distribution Rights: discussed below

Worldwide Film & Television Distribution Intelligence

Get unparalleled access to market intelligence reports that draw on financial data and insights from dozens of content distribution deals worldwide between key industry participants, including — Distributors, Producers, Broadcasters, MPVDs, Pay Television Providers, and Streaming Exhibitors.

Film and Series distribution rates and terms deriving from dozens of agreements for rights to transmit films and episodic television via PayTV and SVOD.

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Licensing Terms & Included Programs:

Pay-1 & SVOD Rate Cards for Motion Pictures and Series Exhibited Worldwide in Multiple Availability Windows

  • Motion Pictures: Pay-1, First Run, Second Window Features, Recent Library Features (Tiers AAA,A,B,C), Library Features (Tiers AAA,A,B,C), Current and Premium Made-For-TV Films and Direct-To-Video Films, covering many license periods over the last decade
  • Episodic TV: Current, Premium, Premium Catalog (1HR & 1/2HR), Catalog Series (1HR & 1/2HR), and Catalog Miniseries + Case Studies on Current Mega Hit, Catalog Mega Hit, and Premium Catalog, covering many licensing terms from 2012-2024
  • Because most-favored-nation rates operate in practice, the rates and terms apply to a diverse range of content and distributors worldwide in multiple availability windows.

FilmTake Away: Bifurcating Distribution Rights Into Fixed Windows

While streaming platforms often seek perpetual rights to content, their practical utilization typically lasts at most 18 months because they prioritize new content over building extensive libraries. 

Exploring this dynamic further, it becomes evident that content creators might consider selling films to platforms like Netflix for a fixed 18-month period rather than seeking perpetual agreements. This approach opens up opportunities for post-release markets and profit generation, expanding the viewership base globally by licensing the content to various other platforms and territories.