Foreign Sales 101: What Independents Need to Know About Selling Films Abroad
This article originally appeared in our Summer, 2013 issue.
With substantial revenue (sometimes well above 50 percent) coming from exploitation outside of a film’s home country, it is vital that producers know how to target and then structure deals with foreign sales agents. For those beginning to explore international distribution, here are some very basic ideas and concepts about the business of foreign sales to know going in.
What is an international sales agent?
In simplest terms, an international sales agent is the conduit to your film’s distribution outside of its country of origin. The sales agent will acquire a set of rights from you, pitch and sell these distribution rights to potential distributors around the world, draft distribution agreements, deliver the physical and electronic materials of your film to these distributors and, finally, collect and pay the revenue due to you. An international agent will be your partner for years, helping craft the commercial life of your film on the world stage. A sales agent should help you create marketing materials, as well as plan a festival strategy (if one is needed for your film). Whereas a domestic agent or producer’s rep works with you for a short term, often selling to only one distributor, your international agent should be thought of as a partner who will brand you to the marketplace in all of the countries of the world via all media — theatrical, video, VOD, TV and other ancillary media.
Finding your sales agent.
Begin by looking for a sales agent who believes in your film and whose company is a good fit. Ideally, this company will have a profile that makes sense for — and adds value to — your film. Their catalog of films should be a collection you’re happy to find yourself in. Look for a film’s company info on IMDb, visit sales agents’ websites and peruse the special market editions of the industry trades to familiarize yourself with various sales agents’ specific brand identities.
If you are fortunate enough to have been touched by the magic wand of one the “A” list festivals, you should be getting queries from sales agents directly. But if you will be premiering at a lower-tier festival, you will need to hustle to find a strong partner to represent your film. Do a market study (which, ideally, you should have done during financing) to find similar or “comparable” titles in the marketplace, and then learn which sales agents sold those films. If a film doesn’t seem like a good fit for a particular company, it is likely that it won’t be. Use this information to filter the companies you approach.
The sales agency agreement.
In order for a sales agent to license the rights to your film, you will need to complete a sales agency agreement with that agent. This agreement will outline all of the material terms of your relationship and specify the rights granted to them. These rights will dictate how they can sell your film in the marketplace and to whom. There are many standard areas to these agreements, but some key ones to pay attention to are the sales fee, the term (number of years) of the deal, the territory (The world? The world excluding North America? Non-English speaking territories only?) and an expense cap. Everything is negotiable, but a good agent will have a set of parameters they will stick to that work for their business model.
An agent may offer an advance, which will be deducted from your film’s revenues. But if an agent asks you to pay them to represent your film, it is unlikely that they believe in your film enough to invest their own money in the film’s marketing and presentation, and you should be wary of doing business with them.
The higher the sales agent’s fee — customarily a percentage of revenue — the less you get. The lower the fee, the less they get and, therefore, the less motivated they may be. A good balance is usually struck here. The more business the agent expects to do, the lower the acceptable fee for them may be. Most reputable international sales companies will take somewhere between 15 to 25 percent. This number will be dependent on the commercial possibilities they feel your film has in the marketplace.
The term is the length of time the agent has to license your film to third parties. Are they going to just one or two markets and then will dump your film, or do they have a long-term strategy that incorporates licensing the film in multiple windows over time? The ideal sales window for many independent features may look like this: Theatrical will be licensed through the end of the first year and into year two. Major pay TV (HBO, etc.) from the end of year two, into year three. Third year, digital platform licensing. Years four and five tend to be free TV package deals, as well as more digital and VOD deals. If you choose to push for a shorter term, make sure you have a way to monetize your film directly following the expiration of your deal with the international sales agent. If you believe in the company you are partnering with, it is worth giving them time to continue licensing your film.
You need to spend money to make money and so does your sales agent. Producers often negotiate “expense caps” — limits to the expenses a sales agent can deduct from incoming revenue. At and in the lead up to a festival, these expenses include market screenings, trade ads, posters and other printed materials, general booth expenses and travel. Outside of a market, the agent may incur materials costs, postage and other miscellaneous expenses. There is no standard here, but if you are asked by a sales agent for a marketing cap of $80,000 on a $100,000 movie that will do $60,000 of sales, it is probably a bad ratio. Marketing costs vary according to a film’s reception in the international marketplace. At the lowest end, an agent can bring your film to one or two markets, pay for a few market screenings and do some basic promotion for under $20,000. If you are selected at an A-list festival and the film is supported in any significant way, the costs can quickly rise to between $40,000 to $70,000. In your deal with your agent, there should be no incentive for a sales agent to spend money unnecessarily.
Are there countries you need to exclude from a sales agent’s agreement because of prior deals? Did you pre-sell a territory to finance your film? Will the agent also help you sell North America or just Canada? Make sure that there are no conflicts with agreements you already have in place.
When approaching an international sales agent, don’t assume the agent will pay for your costs of delivering the film to them. These costs need to be built into your post-production budget. Most likely you will need to make two sets of elements, one for your North American distributor and one for your international sales agent. In the long-form agreement you receive from a sales agent, there should be an amendment, or “schedule,” listing all of their required elements. Read this document carefully and question whether nonstandard elements are truly needed. It is acceptable to negotiate the materials that you will deliver, but be aware that a good sales agent will need a minimum amount of materials to deliver the film to their partners. If an agent doesn’t make you pre-deliver materials, it is unlikely that they feel very strongly about the future sales of the film. Elements that you may not have budgeted for include PAL conversions for your Digibetas, an M&E for international dubbing and retimed audio files. All of these can quickly add up in cost but are necessary for your international sales agent.
When to get an agent.
It is never too early to begin a conversation with your target companies. While it may be best to approach a company with a fully packaged film, if you have some strong “sellable” elements and lack financing or a full cast, it is still okay to reach out. Just remember that many agents will only look at a project once, so if you feel like you will have a better package later in the film’s life, it might be best to wait. If you haven’t attached an agent before you shoot, post-production or rough-cut stage are the next best times to do so, as the agent can help you with the final cut of your film and give specific guidance about market reaction. Additionally, many agents will also be instrumental in pitching your film to the “A” festivals and will want to be involved in that conversation.
If your film is finished and screening in a major festival, do whatever you can to have an agent on board before you premiere. Do not think that it is a good idea to figure out domestic distribution first and then focus on international. If you are worried about losing some fantastic worldwide deal with a major, structure an “out” clause in your deal with the agent, but be aware that there is so much content in the marketplace that a film feels old weeks after its premiere, and foreign buyers quickly lose interest.
If you are fortunate enough to have a strong script, bankable cast/director and/or a marketable genre, you may be able to pre-sell your film to offset the risk of investment in your film. Your agent will send the script along with relevant attachments to their distribution partners who may be looking to acquire the film at a discount — given that the end product will be unclear before production.
A sales agent should be able to provide you with some sense of the estimated value of the film before they bring it to the marketplace. This is usually a spreadsheet of listed ask/take prices (best- and worst-case scenario) for each country or territory and can be particularly relevant in a pre-sales situation.
If you have a festival-driven film, it is likely that your agent can monetize this window for you. Most good specialty film sales agents now have one or two employees focused exclusively on programming your film around the world at film festivals. This is a great source of revenue on a film that may not sell every territory in the world. These additional screenings can help you reach a wide audience. Generally, A-list festivals will not pay fees for your film, but most B+ festivals and below understand that they charge an admission fee to an audience to view your film and that you should see some of this money as well.
How an agent sells your film.
Think of international sales markets as one giant trade show. The major festivals also have a market attached or function as a de facto marketplace. Additionally there are a few markets that exist only to license content. The key sales markets include the European Film Market (Berlin), MIPTV, the Marché du Film (Cannes), MIPCOM, Toronto and AFM, with additional business being done at regional markets as well, such as Ventana Sur and specialty markets such as Hot Docs and IDFA. Your agent should go to the major markets and is likely to take a booth at all or some of them. In their booth, like at any trade show, they will exhibit their “wares,” in this case your film. They will put posters on the wall, show your trailer and screen the film for buyers in formal market screenings. They should also send links/screeners during the year between markets. If the agent is selling your film before it’s completed, they may show preliminary market materials or an edited showreel of scenes. If the film is finished, the complete film will be shown. Ideally, deals are closed during a market, although deals can also take time and be closed in the weeks and months following the initial sales market.
If you are lucky enough to have multiple offers in a country, your agent will be able to work with you to understand the benefits of each offer. Some of the factors to be weighed are the MG (the “minimum guarantee,” or advance), the term of the deal, split of revenue and rights granted. If you have only one offer, the question should be, “Is there a better offer in the future?” If you don’t feel like another offer will come soon, it may be wise for your sales agent to negotiate the best deal possible with that potential partner. Remember that a foreign distributor will see other films during a market, and these may take away their attention from your film. And with regards to your domestic distributor, these days, unless a studio or mini-major such as Sony Pictures Classics, Focus Features, Fox Searchlight, etc., is releasing your film in North America, international partners won’t have as much concern about who your domestic partner is.
Third-party sales agreements.
Your sales agent’s job is to license your film to companies — individual distributors — in each territory. But there are a myriad of such deals that can be made. A distributor could take “all rights” within a territory, in which case they’d have theatrical, broadcast, home video and even digital. Or more than one distributor may take a more limited set of rights. Generally, you should not expect to see overages or royalties on all-rights deals, so make sure that the minimum guarantee and the terms make you feel happy about licensing your film to that territory. Carving up rights between distributors within territories outside of North America becomes more difficult but can be done by an agent with a wide network of partners.
Different agents handle contract execution in various ways, but it is customary for the agent to act on your behalf and execute agreements involving your film. Deal structures outside North America tend to look different than many U.S. deals, and the agent will have templates to work from in each country. It is a good idea to remember that most agents will have your interests in mind (financially at least) as they make money when you make money. If you are worried about getting paid, and you should be, insist that your international sales agent use a collection account that all revenue on the film is paid into. This allows you access to the money together with the agent so that if they go bankrupt or have a hard time paying their filmmakers, you can access your money without waiting for their internal finance department.
To understand the business of foreign sales, remember that 90 percent of international sales are based on relationships that have been cultivated by sales agents for years. The film industry is small, and the international circuit is even smaller and more tightly knit. Buyers and sellers see each other every few months, year after year. They sit down for formal meetings and also socialize together. These relationships lead to a seller having the sophisticated knowledge of who to pitch a film to and when. Sales agents will understand market dynamics in the various territories, who is coming off a hit, who is coming off a failure and who might have the best marketing expertise for a particular picture.
Doing it yourself.
DIY international sales will be more costly and will require more time and effort than setting up a basic domestic self-distribution plan. It is possible to sell your own foreign rights, but it will be time intensive and may be frustrating. Remember that any time spent selling or distributing your film is time taken away from making your next one!
While the outlook on international sales is better than it has been in years, the industry is still in crisis in many areas of the world, and any sale in some of these countries should be seen as a good sale, no matter what the price.
Temper your optimism.
It is a good idea to be optimistic in your assessment of the prospects of your film. But if you receive a set of estimates out of line with estimates from other companies, or if the numbers seem too good to be true, they probably are. A good agent will help you understand the real value of your film and be able to execute a marketing and distribution strategy based on their expectations.
Do your homework.
Before signing with a foreign sales agent, contact other filmmakers who have worked with the company and ask their opinion. Social media makes these contacts very easy to find, and most good agents should give you their other clients’ contact info directly.
Look for the personal touch.
No one cares as much about your film as you do, but try and find someone who cares more than others and will help you find a global audience for the film you have spent years making.
Ryan Kampe is the President of Visit Films. Prior to founding Visit Films, Ryan spent a number of years in International Distribution at Focus Features. With Visit Films, he has been responsible for the worldwide sales and development of a number of important American independent and international films that have premiered in festivals such as Cannes, Sundance, Berlin, and Toronto from filmmakers as diverse as Harmonie Korine, Werner Herzog, the Duplass Brothers, Valérie Donzelli, Joe Swanberg and David Robert Mitchell.
Ryan speaks on numerous panels each year and has served on a number of film festival juries while logging over 200,000 air miles flown annually. He is as an avid soccer enthusiast and graduated from Macalester College in St. Paul, MN.