At their core, film studios are distribution mechanisms. When you hear people talk about “production, financing, distribution,” the most important component of that equation is the distribution element.
In the current paradigm of Hollywood, there exist numerous financing entities that do not have distribution capabilities, from vehicles set up by high net worth individuals to pooled groups of capital created by former fund managers who are now penetrating the Hollywood ecosystem.
But the key takeaway when you think of the “majors” (Disney, Fox, Universal, WB, Paramount, Sony, & perhaps we even include Lionsgate now as the “7th major”) is that they are distribution apparatuses.
I’ve trafficked with people ranging from senior execs in production departments to talent representatives, who literally fail to understand the most crucial component of the matrix that defines either (1) the companies they are working for ; (2) the companies that handle their or their clients’ work.
Indeed, wikipedia defines “film distribution” as “the process of making a movie available for viewing by an audience” …This is about as clear as mud. As my lawyer friends would say, that sentence is filled with “loaded terms” — ‘what process’ ; ‘making a movie available’ etc.
So what exactly is “distribution?” Here’s how I suggest thinking about it:
- The actual architecture (whether physical or digital) through which studios show (“exhibit”) their intellectual property to consumers, who then part with their $ for the ability to experience said films
- Drilling deeper, it involves maximizing revenue through a series of exploitation channels (see a movie at a theatre, watch it on DVD, etc.)
- These channels have historically occurred in a set “order of operations” which are specifically designed around…
- Time & Exclusivity (theatrical release comes before the DVD release for example & later on in the lifeline for example, HBO is the “exclusive” home of a specific franchise film for a certain # of showings)
- Because of differentials in time, there are different pricing structures (pay for a ticket at the theatre, or wait later & see it “free” on TV)
- Ultimately, distribution aims to maximize sales by creating a matrix of opportunities for consumers to actually consume
In summary, film studios are essentially venture capitalists who make a limited number of investments per year (‘n’ # of films) & then seek to maximize value through what has historically been a pretty set ecosystem in regard to the extraction of said value.
This science-meets-art of extracting maximum value from content is the ultimate goal of distribution. And it’s what the studios have historically had an iron-clad grip on, which separates them from say an independent financing entity or a production house that just produces.
The interesting thing about all of this is that with the rise of the internet, that aforementioned ecosystem is becoming less “set” as technology infringes upon every aspect of the film landscape. And the conversation revolving around the changing technological landscape is by far the most fascinating in regard to the distribution ecosystem. But that is a conversation to be continued another time…