Traditional Film Distribution

When a film is first created, a studio or independent investor purchases the rights of the film. After people are brought together to complete the film, the finished film is sent to the studio.

The typical film distribution process involves the film studio making a license agreement with a distribution company. Some studios have their own distribution companies, and there are also independent distributors that find films made outside of major studios. Some studios hire sales agents to find a distributor. The typical process for filmmakers to find a film distributor is through film festivals. At film markets, which can be found within film festivals, negotiations take place between producers and distributors.

Once a distributor is interested in a film, the two parties arrive at a distribution agreement based on a leasing or profit-sharing financial model. In the leasing model, the distributor agrees to pay a fixed amount for the rights to distribute the film. If the distributor and the studio adopt the profit-sharing financial model, the distributor gets a percentage of the total profits made from the film. Once the distributor has rights to the film, they also obtain ancillary rights to distribute the movie both through theaters, disc-based platforms, television, and to distribute merchandise. The distribution company will also  determines how many copies or prints of the film to produce and develop a strategy for the film opening. The distribution company shows the movie through a screening to potential buyers representing theaters and cinemas. The buyers negotiate with the distributor on which movies they wish to lease and discuss the terms of the lease agreement. The majority of agreements between distribution companies and buyers is a negotiation of the percentage of box office ticket sales. They also set the length of the engagement, which is the amount of time the film is shown.The prints of the film are sent to the cinemas a few days before the opening day. When the engagement is finished, the theater sends the prints back to the distributor and makes payment on the lease agreement, providing their negotiated portion of ticket sales earnings. Usually, most of the ticket profits from the cinema are taken by the studio and distribution companies, as the cinemas make the majority of their profits from refreshments and advertisements.