Two years ago, I embarked on a journey to re-educate myself in the film distribution business, aiming to find a solution to the profitability challenges faced by independent filmmakers. Along the way, I questioned existing assumptions and disregarded Hollywood business models. In this blog post, I will shed light on the issue of filmmakers not getting paid and the flaws within the VOD (video-on-demand) platforms' business models.
Why Do Filmmakers Struggle to Get Paid?
To gain insights, I conducted interviews with independent filmmakers who had films on various VOD platforms. One particular filmmaker, Janet, shared her story, which revealed a recurring theme. In the first month of her film's release, Janet notified her fans about the launch and received a substantial commission payment as they watched her film. However, by the following month, her fans had moved on to other new independent film releases on the VOD platform, resulting in a significant decline in Janet's income.
The VOD platform Janet used tracked her film's performance and paid her commissions based on the viewing duration. Unfortunately, after the initial surge in viewership, little to no activity was associated with her film, leading to diminishing commissions. Despite Janet's efforts to attract her fans to subscribe to the VOD platform, she received no additional financial benefit from their continued participation as subscribers. Janet's commission check experienced a sharp decline of 99% each subsequent month.
The Shortcomings of VOD Platforms for Filmmakers: The information I gathered from interviews with independent filmmakers and VOD platforms (including our competitors at OPPRIME.tv) revealed surprising insights and a shared fatal flaw:
Identical Business Models: Every VOD platform operating in the independent film streaming industry, including our early version, had a virtually identical business model.
Inadequate Revenue Generation: Each company suffered from the same flaw, preventing profitability and hindering independent filmmakers from earning substantial revenue.
Understanding the VOD Economics:
The VOD business model revolves around the population of fans who subscribe to the platform based on filmmakers' referrals. However, VODs fail to compensate filmmakers for their referrals. Instead, commissions are determined solely based on a film's performance, measured by its viewing time on the platform. This disconnect within the incentive structure of all VOD platforms becomes financially disastrous.
The Pitfall of Existing VOD Business Models: The fatal flaw lies in the standard point-of-sale (POS) payment product used by VOD platforms, commonly known as the "buy button." When a filmmaker's fan visits the website to sign up, there is no financial connection established between the paying subscriber and the filmmaker at the point of sale. These POS systems are not designed to identify these relationships; they merely process credit card payments.
As a result, VOD platforms remain oblivious to the filmmaker who referred the fan, rendering them unable to financially reward the filmmaker for their fans' subscription. Without the ability to incentivize filmmakers to refer their fans, VOD platforms fail to provide sufficient income for filmmakers to continue their artistic pursuits. Consequently, the POS systems create no incentive for filmmakers to refer their fans, leading to a decrease in income for both the filmmaker and the VOD platform itself.
The struggle for independent filmmakers to earn a viable income from their films persists due to the flawed business models of VOD platforms. The lack of financial connections between paying subscribers and filmmakers, along with the absence of incentives for filmmakers to refer their fans, significantly hampers revenue generation. It is crucial for the industry to address these shortcomings and explore alternative models that empower filmmakers and create a sustainable ecosystem for independent film distribution. By doing so, we can foster an environment where filmmakers can thrive, and audiences can discover remarkable independent films.
Distribution is a pivotal factor in the success of independent filmmakers, and OPPRIME.tv offers a valuable opportunity for these filmmakers to showcase their work to a global audience. By partnering with OPPRIME.tv, independent filmmakers gain access to a dedicated distribution platform that prioritizes the promotion and exposure of their films. This partnership allows them to effectively reach a wider audience, generate significant revenue, establish crucial industry connections, build a strong reputation, and contribute to social and cultural discourse. OPPRIME.tv empowers independent filmmakers by providing them with the means to share their unique stories, initiate meaningful conversations, and leave a lasting impact on the world of filmmaking. With OPPRIME.tv as their distribution partner, independent filmmakers can navigate the challenges of distribution and seize opportunities for growth and success in the industry.
Visit our filmmaker resource page at www.opprimetv.co.
By Sal Framondi, CEO/Founder, OPPRIME.tv
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