The Reality of DVD/Digital Revenues Today: 90-10

I took just a few notes while I was moderating yesterday's SXSW Film Fest panel on 'The Future of DVDs and Digital Distribution.' It was populated with execs from New Video (one of the biggest funnels that gets indie films onto iTunes), Cinetic Rights Management, and SnagFilms, but the folks who really made the panel, I thought, were filmmakers Gary Hustwit and Morgan Spurlock. Unlike most of these panels, where people talk in generalities, this time we got some specifics about where we are today.

Hustwit and Spurlock and the other panelists seemed to agree that even if you can get your film placed on a few of the big digital marketplaces, such as iTunes, Hulu, Snag, and Netflix's streaming service, you'll do well today to earn about one-tenth the revenue that you earn from DVD. They seemed to agree that there's about a 90/10 breakdown today, in terms of the ratio of DVD revenues to digital.

Hustwit said that 'Helvetica' has earned about $60K in digital revenues so far... and it's among the top ten documentary rentals and downloads on iTunes.

Spurlock's film 'Super Size Me' is among the most popular films on SnagFilms, the site that sells advertising around documentaries and shares a slice of the money with filmmakers. Yet he said that 'Super Size Me' and 19 other films he'd supplied to the site earned just $1,200 from Snag over a two-month period. 'Super Size Me' alone sold almost 70,000 DVDs in the last quarter of 2008, he said.

"If you’re looking to pay your rent [with digital distribution], not so much," Spurlock said. "But if you’re looking to pay your phone bill, you have a great chance."

Steve Savage from New Video and Matt Dentler from Cinetic Rights Management also shared a bit about the fees they charge filmmakers when they assist with digital distribution on various platforms. After the platform takes its cut (iTunes takes 30 percent of revenues, for instance), New Video takes about 15 percent more... and Cinetic takes a 25 percent fee.

Hustwit was quite vocal about urging filmmakers to take the DIY approach whenever possible." Why are we building other people’s businesses when we could be building our own," he asked. But even he relies on New Video to get films onto iTunes.

I asked Savage what the #2 digital marketplace is, after iTunes. He said it's Microsoft's Xbox gaming platform.

I asked Rick Allen, CEO of SnagFilms, whether he could share with us the percentage of people who watch streaming films on Snag and later go on to buy the DVD. He said there isn't a good average, but that less-well-known films tend to have a higher "conversion rate" for DVD sales than some of the bigger name docs on the site.

Here's some coverage of the panel from Web TV Wire... IndieWire (owned by SnagFilms, incidentally)... Scott Macaulay at Filmmaker Magazine.

The Numbers I'd Like to See from SnagFilms

One of the big questions on the mind of filmmakers at the IFP Filmmaker Conference this week was, is Internet distribution working for anybody? How much money is there to be made?

Yes, it's still the early days for all things digital -- but given that the traditional distribution marketplace is in such disarray, people are eager to understand their alternatives.

One of the featured speakers, on Wednesday, was Rick Allen, CEO of SnagFilms (which I wrote about here, back in June).

Allen shared some of the numbers from SnagFilms' first two months of operation.

They now have 440 films in the library...and viewers have consumed two million minutes of content online. About 10,000 people have installed the SnagFilms widget, which lets them select movies to "embed" or integrate into their own site. Allen said that by the end of the year, the process of submitting a film will be much easier for individual filmmakers.

There are two numbers that filmmakers probably would like to see from Snag...

1. How much are the most successful filmmakers earning from advertising? (Snag shows short ads during the streaming of movies, and splits revenues 50/50 with filmmakers.) Allen was asked this during his session, but he said they didn't have enough data yet.

Online, video advertisers pay about $25 for every thousand times their ad is shown, or .025 cents a viewing. If people press "Play" on your film 10,000 times on Snag, that's at least $125 for you. (One ad is shown before the movie, and there are other commercial breaks. If someone stops watching before the first commercial break arrives, you at least get credit for that first ad.)

2. ...Which means that the real way filmmakers will make money through Snag is by selling DVDs. I asked Allen after his session whether he could share any stats about the percentage of viewers who decide to buy the DVD. (There, Snag takes an 8.5 percent cut of the transaction, but lets the filmmaker keep the rest.) He said it was too early to tell, but that anecdotally, filmmakers he has spoken to have seen an uptick.

Allen will be on a panel I'm moderating next month, so I'll ask again then...

Coming Soon: SnagFilms, a New Approach to Generating Revenue for Indie Filmmakers

[ This was an early news post from June about SnagFilms...updated news about the launch is here. ]

SnagFilms, a new service that aims to help generate new online revenues for filmmakers, had intended to launch this week at Silverdocs, but the launch has now been delayed until mid-July. I'd hope to talk to some of the SnagFilms team while I was here in Silver Spring, but that didn't happen (the one SnagFilms person I started to chat up at a cocktail party Friday evening literally scampered away when I started asking questions about it.)

I'm eager to find out more about it, but here's what I've been hearing about Snag through the grapevine, from filmmakers, producers, and other industry types.

- Snag's founders are Ted Leonsis, vice chairman emeritus of AOL and producer of the recent doc 'Kicking It,' and media exec Rick Allen. Stephanie Sharis, formerly head of AOL True Stories, is also involved.

- It'll be linked/partnered with the AOL True Stories site, which these days seems to mostly promote docs with which Leonsis has been involved ('Nanking' and 'Kicking It' are prominently featured.)

- Snag isn't going to try to create a destination site for film fans, but is building a video "widget" that can be placed on other sites: a filmmaker's site, a blog run by an advocacy group, a Facebook profile, anywhere. The widget will deliver streaming film clips, trailers, shorts, and in some cases entire features, peppered with advertisements.

- I'm told that Snag will split revenue from these ads with the filmmaker or distributor, 50/50. Snag (or one of its partners) will sell the ads. Video ads can run anywhere from $20 to $50 per thousand impressions. Basically, that means that if your short film is shown 1000 times via the Snag widget, even at the high end of that range, you'd earn $25.

- Snag may also try to "upsell" DVDs to viewers, offering a link to the place where a viewer can purchase the disc. Snag will take about eight percent of that transaction, I'm told. (Update: 8.5 percent) Snag may also partner with digital download sites, too. Eager to hear more about that -- especially if Snag does a deal with iTunes, the main online marketplace for video content today.

- Snag isn't going to require that filmmakers give them exclusive rights for digital distribution/video-on-demand. But one issue that could prevent some more established filmmakers from working with them is that often broadcast/cable/home video deals require that filmmakers grant them exclusive rights to VOD.

- I'm not yet aware of any filmmakers who intend to work with Snag, but if you are, perhaps you'll post a comment. Also not sure if Snag is purely focused on documentaries, or will work with narrative features too.