Podcast – Distribution 101

17 March 2020 By Caris Bizzaca

An introduction to understanding the world of distribution.

2040, Anthony Grundy, I Am Woman

Find this episode of the Screen Australia Podcast on iTunes, Spotify, Stitcher or Pocket Casts

What does a distributor do? What is an exhibitor? What is P&A and why is it important?

All these questions and more are covered on this episode of the Screen Australia podcast with Distribution Manager Anthony Grundy, who provides an introduction into distribution in Australia and how it works.

During the podcast Grundy reveals his thoughts on the challenges in the distribution landscape and dispels his advice for Australian filmmakers, as well as talking through the roles of distributors (e.g. Roadshow Films, Sony Pictures) and exhibitors (e.g. Hoyts, Event, Dendy, Palace). He also talks to the self-distribution model, which includes methods such as renting cinema screens to play their film or community-organised Cinema on Demand screenings (Cinema on Demand isn’t talked about specifically in this episode, however it is also a platform used by films that have a traditional distributor e.g. That Sugar Film).

To learn more about some of the terms discussed in the podcast and the process of financing and then releasing a feature film, visit the Recoupment vs Profit Guide here

Have any feedback? Email [email protected]

AUDIO TRANSCRIPT

[00:00:05] Caris Bizzaca Welcome to the Screen Australia podcast. I'm Caris Bizzaca, a journalist with Screen Australia is online publication Screen News. On this episode, I'm joined by one of my colleagues at Screen Australia Distribution Manager Ant Grundy, who's going to be talking to us all about, believe it or not, distribution. Before coming to Screen Australia, Ant's experience covered public relations, strategy development, domestic marketing and of course, film distribution, working at companies including Animal Logic and Universal Pictures. On this episode Ant covers topics like what a distributor does, what an exhibitor is, how the two work together, what P&A means, his advice for anyone wanting to self distribute and his thoughts on the challenges in the distribution landscape at the moment. Remember to subscribe to the fortnightly Screen Australia newsletter as well as to this podcast. And if you have any feedback, feel free to email [email protected] - now, here's Screen Australia's Distribution Manager Ant Grundy.

[00:01:10] Caris Bizzaca Welcome, Anthony.

[00:01:11] Ant Grundy Hello.

[00:01:12] Caris Bizzaca It's weird to call you Anthony. Ant.

[00:01:13] Ant Grundy Call me Ant. (laughs).

[00:01:14] Caris Bizzaca So Ant, first of all, what do you do at Screen Australia?

[00:01:20] Ant Grundy My role basically is to manage the end of the production process as films move out of production and into release. We have some funding programs that support distributors that are going to give our films the best possible chance of success theatrically. And we also have some programs that can support films as they move through the ancillary cycles and to make sure that they maximise their revenue potential.

[00:01:43] Caris Bizzaca Fantastic. Just quickly, ancillary means...?

[00:01:47] Ant Grundy Ancillary means the downstream revenue that you can earn after theatrical. So it could include home entertainment or an airline sale or a TV sale.

[00:01:57] Caris Bizzaca Fantastic. And so what is a distributor?

[00:02:01] Ant Grundy So a distributor is someone who will acquire the rights to your project for an agreed fee, which is known as a minimum guarantee and for an agreed term. So they will take your rights for a certain amount of time. And then during that time they will monetise those rights across various channels, which usually start with a theatrical release and then follow through to a home ent and what is known as an ancillary release.

[00:02:26] Caris Bizzaca Could you give an example of that? Using a Ride Like a Girl, for example, so Transmission would have...?

[00:02:33] Ant Grundy Yes. So the ANZ distributor, which stands for Australia and New Zealand distributor, is Transmission Films. So they have acquired the rights to the film. They pay the production an MG, that goes into making the film.

[00:02:45] Caris Bizzaca The MG is the minimum guarantee that you were talking about?

[00:02:47] Ant Grundy The minimum guarantee. And then they do the marketing campaign. They sell the film into cinemas. It has its theatrical moment. It then lasts 90 days before the home entertainment kicks in. And Transmission's job will be to see it through the full lifecycle of the film. So they'll be working the home ent release and monetising that. They'll also be responsible for selling it to any television stations or pay TV. They'll sell it to airlines. They'll sell it to anyone. They'll sell it to anyone where they can monetise that content. And then internationally, the film will have an international sales agent and then their role is to be selling the film to individual territories around the world, who then do what Transmission does. And then they put a marketing campaign together for consumers. It goes into cinemas, hopefully, and then away it goes from there.

[00:03:36] Caris Bizzaca So basically there is an ANZ or Australia New Zealand distributor and then there is a sales agent that represents ROW or Rest of World.

[00:03:45] Ant Grundy That's right.

[00:03:46] Caris Bizzaca And they sell it on to other distributors in other territories.

[00:03:50] Ant Grundy Correct.

[00:03:50] Caris Bizzaca Okay. And so then what do distributors do for the cinema release?

[00:03:56] Ant Grundy Usually a distribution company will have a sales team and they'll be responsible for the bookings, the sessions and the terms, dealing with cinemas. And they'll also have a marketing team and their job is to create awareness with the audience leading into the theatrical release.

[00:04:10] Caris Bizzaca And so are all distributors the big distributors that handle the larger Australian films or do they come in different sizes?

[00:04:19] Ant Grundy They come in different sizes. Obviously, big American studios have offices in Australia like Disney and Paramount and Sony, and they do acquire Australian films. So on occasion, they'll definitely pick up Aussie films. And I think they do really well with them. We also have kind of significant independent distributors like Transmission, for example, and then we had smaller boutique distributors that they take usually kind of smaller titles that need more of a bespoke grassroots approach, but they can do really well across theatrical and across the ancillary rights for a film.

[00:04:53] Caris Bizzaca And so if someone talks about a print, what does that mean?

[00:04:57] Ant Grundy The term print comes from, I guess, the pre digital era when distributors would physically ship 35mm prints. They'd duplicate them and they'd ship them to cinemas. And then in the last, you know, kind of five years, most cinemas in Australia have transitioned to digital projectors. So we still use the word print, although it means a hard drive and a digital file.

[00:05:20] Caris Bizzaca And so the reason I ask what is a print is also because one of the funds that you manage is called a P&A fund. So, you know, what is P&A?

[00:05:33] Ant Grundy P&A, it stands for print and advertising. And it's basically what the distributor spends releasing the film. The biggest proportion of their expenses is going to be the theatrical release. Basically, they're taking something that has no awareness with audiences and they need to create that awareness from scratch. So they'll spend - a minimum P&A might be, you know, just for a fairly limited release, you might be spending $250,000 and you could spend up to over two million dollars marketing the film. And that includes things like print costs, it'll cover the drives, shipping, advertising, classification, PR expenses. So, yeah, basically everything the distributor spends releasing the film.

[00:06:16] Caris Bizzaca Okay. So when you say they pay for the print costs, the distributor does, so every time a film is screened in a cinema, have they paid for that print?

[00:06:26] Ant Grundy When it was 35mm prints? Yes. So they would pay for the print and sometimes prints would be damaged and then the distributor would need to pay to replace the print. With digital files it's a lot less than it used to be with 35mm prints, but there are still costs associated with getting the physical hard drives and shipping them out to every location across the country. So yeah, that's the distributor's responsibility to pay for that.

[00:06:50] Caris Bizzaca Okay. And do you have distributors for television as well as film? We've been talking about film a lot, but are there ones for television?

[00:06:57] Ant Grundy Yeah film and television works in a similar way where you'll have a local distributor for film and a network for television, and their job is to create the awareness within the audience to then tune in or buy a ticket. But then internationally there'll be a sales agent or an international distributor. That's more of a business to business entity that will then sell your film or television to individual territories around the world. So TV is being sold to networks around the world and film is being sold to distributors around the world.

[00:07:27] Caris Bizzaca Okay. And then it's those distributors or networks within those other territories like say in North America, that then it's that prerogative to connect that with the audiences in their own country.

[00:07:39] Ant Grundy Yeah, that's right.

[00:07:40] Caris Bizzaca So we've talked about distributors. The other big player in the distribution field is exhibitors. What is an exhibitor?

[00:07:50] Ant Grundy An exhibitor is a cinema owner, and they come in all shapes and sizes. There's obviously the major circuits and there's a couple of those in Australia. That's obviously Event Cinemas, Village Cinemas, Hoyts Cinemas. And they have multiple locations. A lot of the locations in the major chains are kind of suburban. They're in shopping centres. And they do really well with big American films. They play everything basically because they've got capacity. They've got a lot of screens. And then on the other side, we have independent cinemas. They might have less screens in their locations and they may be down to just, you know, a one screen or a two screen in a regional setting. It's owned and operated by a family business that's been operating for generation after generation. So, yeah, they come in all different shapes and sizes and they deal with the distributor, they program the film and they'll choose for their audience what the right content is that's going to connect with their community. They do a lot of grassroots marketing, so they have great direct marketing initiatives via email and loyalty programs with their consumers in their communities. And they've a lot of hard costs. So it's expensive to run cinemas these days with obviously the building cost, the technical upkeep. The transition to digital is actually a really interesting example of the ongoing expense for cinema owners. And they have a lot of labour costs because they need people in cinemas. So that's where they fit in.

[00:09:19] Caris Bizzaca And how do distributors work with exhibitors?

[00:09:23] Ant Grundy The distributor and exhibitor relationship is quite interesting. They work on a revenue share model. So it's in everyone's best interest for the film to play as long and as successfully as possible. And it starts with, the distributor will pitch their slate to a cinema owner. They might hold roadshow where they bring a lot of cinema owners in. There's an annual event that happens usually on the Gold Coast called The Movie Convention, which is the opportunity for distributors to spruik their films for the next 12 months. And cinema owners from across the country attend that event to see what's coming. And then, yeah, the relationship is distribute pitch to cinemas. The cinema will agree to take the film, they'll negotiate the terms and they'll negotiate the session times and even the release date. There could be, you know, distributors obviously within their marketing plans have an idea of when they want to release a film. But a cinema, particularly the major chains might say, 'oh we're a bit cluttered for a family film in that particular school holiday period'. So there's a bit of negotiation there to get the date locked in and they'll also, the distributor will have an idea of how wide they want to take the film, because if you take the film out too wide in the opening weekend and you've got half-filled cinemas, then the cinema may pull the sessions back for the next week. So the relationship and the balance of getting the screens right is really important. And then the distributor's job is to create the awareness and they spend the money on the P&A. The cinema's job is to, I guess, facilitate the transactional part of it where they obviously sell the tickets and they run candy bars and sell screen advertising as well. And then after a film opens, then the negotiation really begins where the cinema and the distributor, well the distributor will obviously be fighting to keep the film on as many sessions as possible.

[00:11:11] Caris Bizzaca Mm hmm. A lot of strategy there, I imagine.

[00:11:13] Ant Grundy Yes.

[00:11:14] Caris Bizzaca And for anyone that's listening, some of these terms and things, if they're feeling a bit foreign to you, there's a podcast on Finance Plans where another colleague here at Screen Australia explains some of the terms. But you can also read a Profit vs Recoupment guide that I'll put in the show notes, which kind of breaks it down, particularly this part with revenue sharing models between exhibitors and distributors. But when you said revenue sharing model, just to be clear, so basically when someone goes and buys a ticket from a cinema. The amount of box office that happens at the end of, let's say a week, across the country, then the revenue sharing model is that the exhibitor gets a percentage and the distributor gets a percentage of that box office. Is that correct?

[00:12:02] Ant Grundy That's right. The traditional way terms are negotiated between distributors and exhibitors are a percentage that shifts from week one to week two, to week three, to week four. And it usually moves to the benefit of the exhibitor to encourage cinemas to keep films on for longer. So it might be the first week we're going to share 50/50, which means of all the money the cinema takes, they give half back to the distributor. And then in the second week it might be 60/40. And then in the third and fourth week, it might be 65/35. Do those numbers add up? Yes. So yeah, that's how they will negotiate those terms. They'll also negotiate the session policy where they'll say, 'okay, I really want my film to have one day and one evening session or one day and two evening sessions' and then everyone will agree on that for the first weekend. And then after the first weekend, depending on the performance of the film, they'll then adjust that accordingly. And the distributor will fight to keep the best sessions for the upcoming weeks.

[00:13:06] Caris Bizzaca And in terms of advice. What advice would you have for filmmakers who are working with distributors?

[00:13:14] Ant Grundy I think the most important thing for filmmakers to remember when dealing with distributors is that when they first signed on board, they saw the potential in the project. And maintaining that interest and excitement is the number one thing that filmmakers can do. And I think that should, there should be a strategy that you work on all through production and into release, because the more excited you can keep your distributor about the project, the more love they're going to give you when they release the film. That includes collaborating with them on the marketing materials. They have a huge amount of experience and they're really great at understanding what the positioning of a film would be, which means the way that it's going to be presented to consumers that makes them want to go and buy a ticket for $20, you know, leave the house and see the film on the big screen. And sometimes there can be some tension between filmmakers and distributors if the filmmaker thinks the distributor is not doing the right thing. I would avoid conflict. That's my advice. I think the more harmonious the relationship can be, the better. You're obviously going to get to the point and this is a rough rule of thumb would be, I'd say three months out from a release where as a filmmaker, I would be taking a big interest in what the release plan is going to be and what the P&A spend is going to be. And I just think the more open and honest conversations you can have at that time, it's going to lead to the best outcome for the film. And also getting the P&A spend level is a balancing act. You can not spend enough and not create enough interest, which then is going to be, if a film doesn't open in the first weekend, then it's sunk. These days, films come off screens so quickly that if it didn't open with a bang, then you've got a big problem. But then also you can spend, I hear a lot of complaints of filmmakers who think distributors spend too much and then they need to recoup all that money before the filmmaker is going to see any money. So it's a delicate balance. And the more I think producers can engage with distributors to understand how that balance works is the most important thing.

[00:15:08] Caris Bizzaca And then, you know, in terms of the industry at the moment, what do you think are three big challenges in the distribution landscape?

[00:15:17] Ant Grundy I think the number one thing would be lack of awareness for our films. I think it's of the two things, getting your film on screen and knowing that it's on, they're kind of two different things. I think it's, you know, it's still difficult to get your film programmed by cinemas, but that's half the battle. The bigger question is, does anyone know about it? And if it doesn't work, as I said on that opening weekend, then you've got a big problem. And the reason that that part of the equation is challenging is because there's just so much fragmentation in the media landscape and in the way consumers engage with content with all the streaming services, we're so distracted by, you know, busy lives. And actually getting that cut through is really difficult today. So you would say 'distributor, you need to spend more money to counterbalance the fact that we're all distracted and consuming media in different ways than we were five or 10 years ago'. But at the same time, the downstream ancillary sales of home ent like obviously physical disc, the market doesn't exist the way it did five to 10 years ago. And some of the other ancillary sales are less than they used to be. So from a business point of view, the model is challenged for distributors to spend more in the awareness theatrical stage to then drive the ancillary stage. So that's probably the biggest problem. But also the other major issue that I think that we have is that people are falling out of the habit of going to the movies. So the idea of cinema going as a first choice, leisure activity is slipping down the list of things to do.

[00:16:49] Caris Bizzaca The priority list for a lot of people.

[00:16:50] Ant Grundy Particularly for some demographics.

[00:16:53] Caris Bizzaca And something that you mentioned there as well, was that in terms of people wanting distributor spend to be higher, that filmmakers should also be aware that in terms of the recoupment waterfall, that if there is a higher spend on P&A, that they do need to recoup that back before the revenue can trickle down to people like the producer.

[00:17:17] Ant Grundy That's right. So the distributor is entitled to - and every deal is different - but traditionally they will, of the money that comes in to the distributor, which is called film rental, they will be able to take their commission, which is their fee. Then they'll be able to take the P&A expenses and then they're able to take the MG. And then after that, the money then moves to the producers and the investors. So those expenses, the film pays for those essentially. So you need to get that P&A balance right.

[00:17:51] Caris Bizzaca Can you think of anything off the top of your head that maybe people don't realise are involved in terms of the role of distributors? You know, whether it's things like thinking about the title of the film or thinking about that, yes, Mother's Day would be the best time to launch this. But also on Mother's Day, this other huge film is releasing, so maybe it's better to move it to a weekend here. Like, are there certain things that you think people don't realise distributors are involved in?

[00:18:22] Ant Grundy There are lots. And I think the challenge for filmmakers [is] - it's that classic tension between art and business. So the filmmaker needs to be true to what they're making to have their voice be distinctive and to make the best film that they can make. And an example might be, and there are a couple of Aussie films that fall into this category, where there might just be one swearword. And if it's going to be a really good one, then that can effect the classification of the film. And from a distributors point of view, that can be really problematic. For example, an MA rated film, the trailer for that can only be trailered with other films that are MA in the marketplace. So suddenly there are limitations on where you can get that trailer out.

[00:19:05] Caris Bizzaca And it could effect that cut-through that you were talking about to find an audience.

[00:19:08] Ant Grundy Exactly. Just less people are seeing your trailer. Therefore, it's harder to - and we've got data and stats that show that the heavier the classification does usually have an impact on the box office. And you know that's why there's fewer R rated films in mainstream cinema. So it is a delicate balance. And I don't think that there's any right answers and what we do is alchemy, so it's hard to go, 'well, if you did this, you'll definitely get that improved box-office outcome'. But I think distributors do have great experience at saying, 'well, I've done this 10 times and the last nine times we did this, it wasn't great'. So the things that I think that if I was making a film, tapping into the knowledge distributors have around comp titles.

[00:19:53] Caris Bizzaca Comp titles?

[00:19:53] Ant Grundy Like other similar films, similar titles.

[00:20:00] Caris Bizzaca Distributors are terrific at doing that. They're kind of saying, well, because I guess the difference between making a film and selling a film is the film-making process is so incredibly detailed and you live in this world in such an intense way. Then you make the film, you hand it to a distributor and then they do the complete opposite where they boil down all of that detail into the three shiny things that are going to make someone take notice and buy a ticket to the film. So understanding that is a really important process to go through and tapping into what knowledge and experience the distributor has.

[00:20:33] Caris Bizzaca And so if you're a filmmaker, do you need to have a distributor or can you self distribute? Can you, you know, pay a cinema to screen your film?

[00:20:42] Ant Grundy You can. That's called four-walling where you just directly - you basically venue hire the cinema and then you put it on and you take all the money. And there's plenty of films that have had really successful releases doing it that way. The thing I would say with self distribution is unlike production, which ramps up and is really intense for a short period of time, distribution - it's a bit like a kitten. It's more than just Christmas. It lives on. You have to you know, you are working these rights for years, and I think that sometimes is the challenge with self-distributing produces is that they want to move on to the next film. But then the job of distributing actually lasts years. So that's the first thing. The other thing is make sure you can do these three things if you want to self distribute. Distributors are really good at - they have experience, they have knowledge, they do it a lot, it's their business, they do it day-in-day-out. They have contacts. So as long as you know the head programmer at Event Cinemas really well and you can ask for a favour or you can say 'keep it on another week'. I think that's something that people underestimate what a distributor can bring. And the third one is money. So they'll invest millions of dollars in the marketing of your film and you need a lot of money. You're starting a brand from zero and you're taking it to the consumers and you're telling them, 'hey, you need to leave the house for $20 to come and see my film'. So I think it's wise to have a distributor on board. Although there's examples of plenty of films that have done it themselves and do really terrific jobs.

[00:22:08] Caris Bizzaca It's kind of up to the individual then, what their approach is. Fantastic. Well, we'll leave it there. Thank you so much for joining us on the podcast today, Ant. It was great to have you.

[00:22:18] Ant Grundy Thank you.

[00:22:20] Caris Bizzaca That was Screen Australia's Distribution Manager Ant Grundy. And to hear from others from the Australian industry, just subscribe to the Screen Australia podcast on iTunes or wherever you listen to podcasts. Or you can subscribe to our newsletter and we'll send you all the latest podcasts, industry news, articles and videos every fortnight. Thanks for listening.