Film distribution and cinema management are two businesses that have been in operation for over 100 years. So you’d guess by this stage they’d have pretty much established a slick procedure for new product launches and marketing.
In a way, you’d be right. There are definitely some takeaways that could be applied to other businesses.
But there are provisos to applying these for tenants of innovation which moviemakers regularly use.
In this post I’ve focused on some of the key tenets of film distribution and production which you might see as being useful in other businesses.
4 Ways the Film Distributors and Cinema Managers Try to Make the Biggest Profits
1. Product releases are carefully scheduled
Large film companies regularly communicate with each other to ensure they don’t release the same type of movie at the same time. This ensures that they are not eating into each other’s potential customer base.
All films are competing for play dates as well as editorial space in the media. The more cluttered it is with similar product, the greater the danger of everybody losing out.
Application: As a business with a portfolio of products at different stages of production you have to begin to understand your own product life cycles and start nurturing new products as older products are passing maturity (and set to go into decline).
Your products will only be innovative for a short period of time until your competition catches up anyway. By which stage, you should already have the next innovative product offering in the pipeline ready for promotion.
2. Make best use of your resources and capabilities
Even small cinema owners with maybe only 3 to 5 screens realize that to make the most profits they need to fill the cinemas at all times and every day of the week. This becomes slightly more complex with larger distributors.
To do all of this effectively they will often screen popular movies for longer periods of time and rapidly drop movies (sometimes after the first week) if they realize the crowds are just not turning up. This is why the first weekends returns are so critical to building momentum behind the marketing and promotion of the film and determining if cinema owners and distributors will continue to show the film.
Even mildly popular movies are dropped after a short few weeks if the latest blockbuster comes out and the owners know it can easily fill two or three screens full of happy customers.
Application: Be acutely aware of which of your products and services are the real winners. Every business is restricted by the amount of resources you have (employees, sales teams, marketing opportunities, etc.) so you have to make the most of their time.
Drop the duds and put your weight behind your successes. In early innovation phases, such as ideation & initial product brainstorming, it is an absolute necessity to come up with a huge range of ideas but rapidly filter out those concepts which are simply pipe-dreams.
3. Spread your risk with a broad portfolio, but always include some interesting niche products
The film companies themselves try to spread their risk by not working on similar movies at the one time (in much the same way investment fund managers do). They will often have a variety of different movie types (comedies, adventure, highbrow, historic, classic-based, etc.) all on the go at the one time. These movies also have a range of budget bands for further reducing the risk.
Even the larger film distributors and filmmakers look to make small independent niche movies (often within partnerships – see the next point) as a way of discovering possible niche markets. It only takes one small independent movie such as Gandhi or The Shawshank Redemption to become a hit through good word-of-mouth in order for filmmakers to make substantial profits.
Application: No matter what business you’re in, spreading out your portfolio of products or services is always worth considering. Always be researching bleeding edge technologies and developing prototypes and concepts to broaden your portfolio of products in new and existing markets/customer segments.
The innovative way of doing this is to create many product variations of a base product. For example, Sony made a multitude of variations of their original Walkman (waterproof/slimline/standard/etc.) all based around the same platform – but customized to different customer segments.
4. Partnerships help you spread your risk
Nearly every film you see will show you, right before the opening titles, some statement highlighting this is a production of the Joe Bloggs film Co. and Big Name Productions. It’s always two or three different companies working together. All films are made using a variety of financers, investors, production companies and distribution organizations.
With several parties involved no one single company is exposed to the full risk of the film bombing. Moreover, the mix of companies involved is often complementary in the sense that one organization may be controlling the production and direction whereas another plays a bigger part in the film distribution.
And they all share in the profits based on how much they are putting in.
Application: Partner up with other companies to expand your capabilities, supply chain and distribution channels.
The classic example of partnerships is the recent love of outsourcing. Nowadays everything from software development to customer support and salary management can be outsourced. Forward thinking companies such as Toyota do however also look to small manufacturers and design groups four creating prototypes of modular components (e.g. gearboxes).
And this is how companies of any size should be looking to innovation in their supply chain and production methods. Outsource those capabilities where you are happy to let go of some of the intellectual property in order to make performance or quality gains in your overall product.
This all seems obvious right? So could the model be applied elsewhere?
So here’s the thing. What makes film production and distribution different from regular products (e.g. software, watches, etc.) is the unique once-off nature of their product.
Filmmakers invest millions into creating one single product. They may go on to try selling this via many different channels (local cinemas, international distributors, movie channels, rental sales, DVD sales, pay-per-view, etc.) but ultimately if that one product is terrible then it is a huge financial loss.
There is no prototype. Test screenings are only ever guide to how cinema goers are ultimately going to react.
Simply put, the risks are so much higher than regular product manufacturers when you only have one product which you don’t truly know will be successful on till it’s put before an audience. Even industry savvy filmmakers have made complete dogs. For example, Kevin Costner’s Waterworld followed a string of huge successes and everyone involved believed in the project due to Costner’s track record in delivering product the cinema-goers want.
By contrast, you could create an iPhone application, turn it around a couple of weeks and have it on sale for relatively low cost. Production can be so cheap that you may not even do market research – putting it in front of the customer actually becomes the research itself.
So in a sense the four tenets of film production and distribution could conceivably be applied to many other forms business. But you have to factor in (a) your costs involved, (b) your attitude towards risk and (c) the level of collaboration you need to involve yourself with in production & distribution.