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Diary of a Film Startup: Post # 28: Dough Ray Me (Getting Paid)
By Ted Hope
By Roger Jackson
Previously: London Calling
Who Pays What?
At the recent Artist to Entrepreneur (A2E) summit at the SF Film festival, a frequently asked questions from filmmakers was “How much can I expect to make from VoD?” The question was greeted with stony silence, mostly because the data just isn’t out there in a meaningful, predictive way. That is, there aren’t enough proxies. A proxy for your film would be a film in the same genre, similar level of name talent, similar marketing budget — and perhaps comparable subject matter for documentaries. In short, a film with much the same chances in the market. That’s a proxy, and they just don’t exist. Or rather, the data isn’t being made public. Why? It’s not a nefarious conspiracy, it’s simply because no one has an incentive to release this data — and anyway there’s no much of it to begin with. So I thought it would be useful to shed what light I can on how much you might expect to make from various types of VoD outlets — ad supported, subscription, transactional, etc. The BIG caveat here is that KinoNation is just getting started, we’re only delivering films to a handful of “beta test” outlets, and so far films have only been live for a month or so — not nearly enough to make revenue predictions.
Ad Supported Revenue
As a filmmaker it may be mildly irritating to have multiple :30 sec TV spots before, during & after your feature film. But it definitely generates income. Hulu is one of our beta-test partners, and so we already have some good data from the dozen or so KinoNation films that are live on Hulu — and we’re adding more every day now. Likewise with Swiss-based Viewster. So what are the revenue factors here? In simple terms, it’s the number of ads served before/during/after your films, multiplied by the price of the ad. In reality, ads are sold to various agencies at different rates. So you may have a :30 sec spot in your film on Hulu for BMW, at a CPM (cost per thousand) of $23. And also a Tide spot at a CPM of $19. Plus there may be 9 ad “slots” in your film, but insufficient demand at the moment it’s playing to fill those slots, so 2 of the 7 go un-monetized. Hulu suggests an ad slot every 8-12 mins. Which is why in the KinoNation metadata, we have a section for ad breaks where the filmmaker defines — with timecode down to the frame — where the ads are inserted. Much better viewing experience if the ads don’t interrupt a scene. So what does this mean if you have a film on Hulu? Let’s say it gets watched a modest 200 times each day. By “watched” I mean someone starts watching it — they don’t necessarily finish watching it. In fact, the average time watched may be the most critical metric — not just in revenue terms, but in raw “how engaging is my film?” terms. If they bail (on average) after 20 minutes, you have a problem. If they bail on average after 50 minutes you make a LOT more cash. Remember, it’s all about averages — the reality is that some people watch to the end, some bail within the first 5 mins — and most are in between. Anyway, 200 times a day means your film “sells” around 1000 ads. So at a CPM of $20, your film has just made twenty bucks. Which you share 50:50 with the outlet. So you made $10 today. And then KinoNation take 20%. You’re left with $8. Doesn’t seem like much. But that’s $3000 a year from one of many VoD platforms, and my #’s are actually uber-conservative. If you successfully promote your film you can make way more. Meanwhile, with Viewster in Europe we’re seeing a lower CPM — around 5 or 6 Euros. Not surprising — less mature market, less premium outlet. But, every view of your film on every outlet is incremental revenue. That’s why you need to be on dozens of outlets.
Subscription VoD Revenue
There’s a little more dough in SVOD, I think, because you’re not a slave to ad rates and CPMs. SVOD means the user is paying a flat monthly (Netflix & Hulu Plus) or annual (Amazon Prime) fee. Amazon Prime and Hulu Plus are part of our beta test, so I can provide some numbers. Amazon Prime is their $79 a year subscription to get free shipping. But it also gives the subscriber free access to Amazon Prime videos. KinoNation filmmakers can select Amazon Instant and/or Amazon prime. Most select both, which is probably wise. Prime pays 10 cents per movie played. So when a thousand people watch your film on Prime, you make $100, less 20% to KinoNation. Again, it’s not big money, but the math starts to work for you because of the tens of millions of Amazon users, multiplied by month after month. It’s better with Hulu Plus. They pay 18.5 cents per view (defined as a minimum of six minutes.) So a thousand views grosses you $185. Not bad.
Transactional VoD (TVOD) is radically different in psychological terms — the viewers has to pay a flat fee for your film. With most VoD outlets (but not all) you can set the rental price, or at least a price band. It’s typically $3-6 per rental, for 48 hrs. You get 70% via iTunes, or 50% via almost everyone else. More on this in future posts — right now we don’t have any data.
All this leads me to talk briefly about one of KinoNation’s fattest challenges: how to consolidate financial reporting from dozens of VoD outlets — and then credibly report those numbers to filmmakers. Frankly, it’s a total nightmare of disparate data, formats, sources. Some outlets report monthly, most report quarterly. Some send a detailed breakdown in near real-time, some email us a spreadsheet 4 times a year and expect us to figure it out. What we’re building is a system that consolidates, reports as soon as we know, and pays filmmakers as soon as we have the money, probably via PayPal. Big software engineering job, and of course in the short term we’re focused on just getting films transcoded and delivered to outlets. But we’ll get there, and in the meantime we’ll do manual accounting and payments — so don’t worry, you’ll get paid!
Next Up: Post # 29: The Vision Thing
Roger Jackson is a producer and the co-founder of film distribution start-up KinoNation. He was Vice President, Content for digital film pioneer iFilm.com and has produced short films in Los Angeles, documentaries in Darfur, Palestine and Bangladesh, a reality series for VH1 and one rather bad movie for FuelTV. You can reach him at email@example.com.