Selling your DVDsEven though DVD sales are currently falling worldwide, the profit from sales of home videos is still definitely worth having.   There’s also merchandising to consider.  People like to put stuff on their walls, like posters ;or on their bodies, like T-shirts –  stuff that they think reflect their choice of film or life style.  However, whether your film is on DVD or BluRay, the film itself is still the most profitable thing for the producer of films or TV programmes to sell, so you need to decide the best route to maximum sales.

Advantages of signing with a distributor

Selling through a distributor is likely to bring in more sales than selling from your own website.  Fortunately there are many distributors who will sell and distribute your DVD without taking any further rights.

One successful deal was for Bomb it with distributor Docurama/New Video , with sales reaching 9000 units through their retail distribution channel.  Only 800 were sold from the film-maker’s own website.  Maybe the film maker would have sold more if they had not signed the distribution deal with New Video, but that doesn’t mean they would have sold as many as 10,000 just through their website.  This is because:

  • Distributors have relationships with retailers, film makers don’t; and they don’t have time to develop retail relationships because they are occupied with making films.
  • The distributor’s job depends on making sales to the retailers, and they spend a long time explaining the product( when it’s going to be released, and its potential to make money for the retailer).  This increases sales.
  • Distributors know that goods on shelves sell, so they often actually pay large retailers or chains for the best display space for the products they handle.
  • The individual film maker may be able to get onto the bigger online stores like Amazon and Barnes and Noble, but there are many others.  Only a dedicated distributor has time to forge relationships with them.
  • Even in online stores, the distributor knows how to make their product come up first in a page of search results, sometimes by paying for it.

Advantages of bricks and mortar stores

  • People go to stores to buy things.  So they are already inclined to buy something.   On the internet, they may buy or they may not.  The distributor B-Side Entertainment sold 80,000 units of Super High Me from retail shelves, but only 600 from their online store.
  • Physical packaging advertises the product to the purchaser in a real store.  They can touch it, read the back, and take it home there and then.  Online, a thumbnail photo of the product is not so effective at selling – unless the buyer has already decided which film they want to buy.
  •  We all prefer to buy from somewhere we are used to or have bought from before, whether it be a physical store or an online store.  But getting people to firstly discover and then buy from your (unfamiliar) website would take some effort on your part.

Doing a deal with a DVD distributor

Always check with other film makers and a lawyer before signing with a particular distributor.   Look for a company with a track record in pushing sales and paying on time.  You may have to hand over your video master, so it’s important that you trust the company.  Here are some other points to consider:

  • Try to get a hybrid agreement, so that you can sell your DVD from your own website as well as it being sold through the distributor’s channels.  Try to coordinate your own marketing with the distributor’s marketing.  For example, the film maker could coordinate the theatrical release of the DVD with the DVD’s street date (organized by the distributor).
  • Advance vs. better terms – you can get an advance, but you have to weigh this up against other, possibly longer-term or more advantageous terms.    For example, on the Bomb it deal the film maker was offered a $10,000 advance against a 50/50 profit share (after all expenses, which were capped at a certain amount).  In the end, they settled on no advance, but to take all the revenue, after expenses, in return for a straight 25% distribution commission on gross sales  – with no cap on expenses.  The distributor should provide you with all the financial details so that you can decide which way to go.  In this case, a spreadsheet showed that if the distributor sold more than 10,000 DVDs, the film maker would make more money if they took the second deal – and in fact that’s what happened.
  • Right to sell your own DVDs from your website – keep the right to sell from your own web store.  Usually the distributor will want you to buy DVDs from their production run – to make sure you don’t produce a  competing version of the DVD (too messy!).
  • Buying copies of the DVD from the distributor should be at little more than cost, certainly no more than $5.  Distributors may be reluctant to agree to selling you DVDs at cost price, but don’t forget the unit cost will be around $1 per DVD.
  • Right to sell DVDs at public appearances – theaters where you appear to do a Q&A after the showing of the film are great places to sell your DVD.  If the theatre objects for some reason, try to talk them around.  In fact, why not ask them to staff a table or desk in the lobby to sell your DVDs?  Then you can concentrate on your Q&A.
  • Retain access to DVD authoring materials – this will save you time and money if and when you come to create your own multi-language, region-free NTSC DVD.  You have actually created and paid for these materials, but the distributor may think they have the right to keep the authoring materials, unless you have a ‘costs off the top’ deal.  Then they are more likely to agree.
  • Ask your distributor to create a regionfree DVD – if you do this, you should be able to avoid re-authoring your film for the international market.  Try to make your domestic DVDs compatible with foreign systems to save time and money.

In the old days, producers might have been afraid that foreign sales companies might be upset if the U.S. product is region-free, but these days most DVD players can play region-encoded DVDs, so specific region coding has become obsolete.  It’s more effective to control sales in foreign markets through the distribution agreement with your fulfilment company.  Region encoding doesn’t benefit the distribution company; it only benefits the foreign territories.

  • Digital rights – be very careful which digital rights you release to a distributor (or anyone else!).   Some just want to scoop up all the digital rights along with the distribution rights.   Only ever license non-exclusive rights.    Negotiate for 15-25% commission for the distributor on digital rights (when 25-50% would be more normal for physical distribution of DVDs). Some companies act as aggregators of content for iTunes; if so, limit their licence to just that download-to-own right through iTunes.
  • Retain the right to sell download-to-own and streams from your own website.  That way you can get a bit of money for it on YouTube or BitTorrent – and offer a better-quality image.

Getting paid

Remember it may take a while to get paid – be prepared for that.  This is because:

  • Accounting period – there is usually a 60-day lag while the accounting side is sorted out.  After that, ongoing payments are only made 90 days after the close of the relevant quarter.
  • Returns or ‘holdback’ – the distributor keeps back money to cover unsold DVDs that may be returned by the retailer.  Negotiate a low percentage allowance for DVDs returned unsold.
  • What is a sale? – the distributor may have invoiced the retailer for a certain number of DVDs, and this amount will be called a ‘sale’, but until the retailer pays, the distributor will not pay you your share of the proceeds.

Netflix

The importance of Netflix produces a ‘halo effect’, which can increase DVD sales.  When a film is popular on the Netflix Watch Now program, DVD sales go up.  People sometimes try to influence this by adding a film to their queue, even if Netflix has not purchased the film – and maybe never will.  Free streaming is sometimes used that way as well, the idea being that people see it streaming and then want to buy it on DVD.  Sometimes this works, sometimes it doesn’t.