V. PROMOTIONAL AND DISTRIBUTION STRATEGY
5.1 Promotional Strategy
The Company has promoted other film projects through a variety of media and celebrity events. We will seek additional outlets and use our network of industry contacts to promote the Film and create advance “buzz” and generate public awareness. The following are some examples of the types of promotion and marketing activities that the Company plans to utilize.
Television and Radio Appearances
Producers intend to exploit talent on television talk shows and radio shows to generate publicity and interest in the film.
Newspaper and Magazine Interviews
Our Director and Producers have a history and positive relationship with dozens of entertainment industry and motion picture genre websites, and plan to utilize their following to exploit the film. Internet / Website Tie-ins. The company intends to use every social media venue available to drive traffic to The Seer website.
If timing is appropriate producers intend to generate interest in the film by submitting the completed film to film festivals.
5.2 Distribution Strategy
Motion Picture Industry
The motion picture industry is highly competitive, with much of a film’s success being directly related to the skills of the distributor’s marketing strategy. The Company has a positive relationship with multiple sales companies to oversee foreign sales and intends to negotiate with a distributor. To maximize the Company’s bargaining power, and the producers’ and investors’ potential profit, the distribution negotiation will begin just prior to or immediately following completion of principal photography. Distribution companies generally choose to view a film before they decide whether or not they will choose to invest their energies and resources in the film.
This creates an opportunity for a truly exceptional film to be the source of a bidding war among distributors. The Company’s goal is to make a quality motion picture that people will enjoy and that distributors will be interested in picking up, thereby increasing the chances of the film’s success. Distributors license the film to both domestic and foreign exhibitors, for a percentage of the box office gross. The best possible initial release for a feature film produced domestically is released in theaters. Not all films earn the prestige that a theatrical release will garner. However, a theatrical release drives the price upward for the rest of the media releases, such as home video, pay TV, etc. For a picture in initial release, the exhibitor will pay a percentage of the revenues from ticket purchases to the distributor (the “film rentals”).
Film rentals customarily diminish over the length of a film’s theatrical run. Depending on the distribution agreement, the producers and investors are entitled to a percentage of film rentals, after the distributor recoups its distribution fee, P&A expenses and distribution expenses. Other media releases for the film are calculated in a similar fashion. For instance, a home video company pays an amount to the distributor for the right to stock its video stores with the title. From these fees, the distributor will deduct its distribution fee, advertising costs and other distribution expenses in order to recoup its costs. The producers and investors then receive their agreed-upon revenues as set out in the distribution agreement. The same goes for television and ancillary rights. The sum total of the money received by the distributor from the exploitation of all rights that it is entitled to exploit under the agreement are called the “distributor’s gross”. Every distribution agreement is different, however, there are similarities common to all.
The distributor receives a distribution fee, which is the percentage of the profits that the distributor will receive from the gross. The distributor is then entitled to recoup its marketing costs and distribution expenses. The remaining sum is payable to the producers and investors, and is generally called the “producer’s gross” or the net sum. Independent producers and production companies that have insight into distribution companies are at an advantage when negotiating for a film’s distribution agreement. It is in the Company’s and the investors’ best interest for the Company to seek a distribution advance against revenues, or to seek a negative pick-up, from a distribution company. An advance against revenues means that in exchange for the rights to the Film, the distributor would pay the Company a sum of money upfront. Portions of this advance can then be used to recoup those amounts expended in the production process. While many distributors do not pay advances on features, it is an important strategy for a producer to know and utilize when negotiating with distributors. A negative pick-up means that a distributor pays the actual costs of creating the negative of the film. This cost factors in development, pre-production, production and post-production.
Depending on the distribution agreement, the relationship can end there with the distributor buying the producer out, or the producer can then share in net proceeds from the film after the distributor has recouped its distribution fee, negative pick-up costs, marketing and distribution expenses. There is an active market for completed motion pictures, with virtually all studios and independent companies seeking to acquire completed films. These acquisitions are influenced by the film’s elements, such as quality of screenplay, cast, production values and the number of other films in the same genre or theme currently being distributed by the distributor. Studio distribution models have extensive resources with which to finance a number of prints and have guaranteed exhibition of their product. This means that a film can be seen by large numbers of people at any given time. A film’s success at the box office can directly affect its success in online sales, rentals and all other venues. Another advantage to the studio distribution system is that, as the studios merge with larger corporate conglomerates, they often add arms of television stations and cable systems. Each system, whether studio or independent, offers advantages and disadvantages with respect to the distribution strategy. Whether or not the Company will negotiate with an independent distributor, or a studio depends on which distributor offers the Film the strongest release pattern, platform or wide, with as many people as possible seeing the film. This must be balanced with the film’s potential profitability, thereby ensuring the producers and investors a return on their investment.
VI. TEN YEAR INVESTMENT OPPORTUNITY
The investment opportunity for $255,768.00 to finance the Film is, 100% recoupment of initial investment plus 20% premium payable as “first monies returned” from the exploitation of the film. Once full investment plus interest is recouped, investors will receive 40% net receipts for up to 10 years.
A seasoned producer with a solid, good quality script and an interesting story has a much better chance of attracting name talent to the film project. Not every role in a script is played by actors who are well known to the public. But it does help an independent film’s chance of success if one or two actors in the picture are instantly recognizable to the viewing public. Another way an independent producer can increase a film’s chance of success is to ensure that the production values are high. In essence, the concept of production value is based on the principal that it takes money to make money. An independent producer who spends his budget wisely to ensure that the film’s final look is one of quality has done his job well.
The producers have a partially packaged and strategically proposed cast project. The film project will be supported by an interactive website and other marketing materials to attract the attention of fans worldwide. This package will all include a proposed $255,768.00 budget. The Company is seeking $255,768.00 in capital to fund the production of the Film over a period of 9 months. The Company proposes to secure all of its funds from venture capitalists and private investors. The Seer budgeted at $255,768.00 need only gross $639,420.00 to recoup its costs.