Part 1: Executive Summary
Hi! We are Australian independent filmmakers Jeremy Beasley (Director) and Chris Kamen (Producer).
This micro-budget documentary case study explains how we successfully produced and self-distributed our micro-budget documentary Small is Beautiful. After partially crowdfunding the budget of AUD$60k, the film was shot throughout 2014 in Portland, Oregon USA. It was self-released worldwide online in April 2015 and in the first six months the film has grossed AUD$108k.
In devising our self-distribution strategy, we mimicked the methods of other successful self-released films, as well as borrowed ideas from business startup culture. Crucial to our success was matching the budget to a realistic estimate of niche audience size, and then building that audience from scratch from day one of pre-production. We used growth hacking techniques, social media, our email newsletter, PR, and special event screenings to build the film’s profile ahead of a global VOD release to a captive audience of over 3000 fans on various platforms including VHX.tv, iTunes, Google, Amazon and Vimeo.
We’re being completely open with all our financial results. We do so in support of the Sundance Transparency Project, which encourages filmmakers and distributors to be more open in the interests of giving the independent sector better access to actual data about what is working; rather than relying on hype and hope.
Whilst our numbers might be small (compared to larger films), the long tail of internet distribution has given us a chance to become profitable — a rare phenomenon in the film business. More broadly, we believe the ideas we deployed on this project could bring independent filmmakers one step closer to unearthing a sustainable business model for other micro-budget niche oriented films.
Jeremy and Chris
Part 2: An Idea That Snowballed
Spotting the idea
Jeremy explains: I came across the Tiny House Movement online, intrigued by the concept for myself and wanting to build my own tiny house – I discovered a massive amount of interest online and I thought it could make a compelling story. Everything that was out there was very amateur youtube style videos with millions of views.
With a quick run of some numbers I thought I could make the entire film for $10,000-15,000 and generate $30,000-60,000 in sales online.”
Testing the idea before starting
After filming some research interviews and short films on tiny houses in Amsterdam, Jeremy put together a crowdfunding campaign, with the help of Kelly Nardo, to fund the next stage of production and to test the idea. Would anyone actually be interested in this? And would they pay money to see it?
Starting out with a modest goal of $5,000, we ended up with $7,370 to go towards the production budget, and receiving over 3600 shares via Facebook, we realised there was an audience hungry for the content. We jumped straight into production.
–> Our crowdfunding page on Pozible. http://www.pozible.com/project/34575
How things snowballed
At the beginning of the film journey, Jeremy built a rough website and shared some of his short films about tiny living. Thinking not much of it, he continued to work day by day on the website and the film.
Until the 31st of August 2013;
“I woke up early, checked my emails and noticed a Google alert: Small is Beautiful featured on The Huffington Post. I completely freaked out. All the questions and fears hit me like a truck: How did they even find the video?! The website isn’t finished! We don’t have any way to capture this audience! Ahhhh! Still half asleep and not having internet at home at the time, I raced to the closest cafe with wi-fi, ordered a strong black coffee and frantically smashed out Mailchimp integration to the website. Then modified the video to end with a link to the website. This resulted in the first 300 email subscribers.”
The next thing I knew Florence (Editor) and Chris (Producer) were on the team half way through production, and all of a sudden, the film I wanted to make in a couple of months, became a behemoth engulfing my life savings.
“I had all my chips in and had no other option but to find a way to make it work.”
Part 3: Matching the Budget to a Niche Audience
How would we ensure our film reached a large enough audience to recoup the budget and make a profit? Our solution: create a quality film targeted for a niche audience, recruit that audience from the very beginning and release the film with a big bang online.
A micro budget was extremely important for our niche audience strategy. We needed to make the film for less than the amount that we could reasonably assume we could recoup.
We had three main questions: 1) How many people is that? 2) How much revenue will that equate to? And 3) will we recoup our budget from that?
Budget & Costs
The production ended up costing $60,000 (a lot more than Jeremy had originally hoped…). It comprised mostly of travel, equipment, and post production costs. Director and Producer fees were 100% deferred, to be recouped from revenue, and Jeremy already owned a Canon 5D Mark III to begin production.
- Production Budget: $60,000 ($53,000 self financed + $7,000 crowdfunding)
- plus Director + Producer deferred fees: $40,000 = $100k budget overall
Building an audience from scratch
Our goal was to have a modest mailing list of 3000 people by the time we launched. This would achieve two things:
- Ensure we could get into the top 10 charts on iTunes
- Generate enough sales on our website to start recouping
Borrowing from startup culture
We borrowed as much as we could from the world of startups, which have a strong culture of small, dedicated teams like ours, to grow their projects into something big. Accordingly, we spent a huge amount of time and effort using social media to talk directly with our audience, optimising our website, improving our UX and SEO, using open source software, rapid prototyping, asking for feedback, and adjusting our approach based on feedback that we received.
Things we did
- Set up a Facebook page and Mailchimp account.
- We created a simple landing page which comprised of an early teaser video of the film, along with a call-to-action to join the mailing list.
- We spent time developing relationships with leaders of the tiny house movement via email, blogs and social media and shared new content with them.
- We blogged regularly and explained what was happening with the project.
- We released “sneak-peek” scenes from the film, as well as footage that we knew wouldn’t make the film.
- In Mailchimp we sorted our audience according to their varying levels of engagement and moderated the number of emails we’d send them according to their level of interest (and location). This was important to ensure we didn’t fatigue our audience.
- In conjunction with our PR team, we spent a lot of time trying to get coverage on tiny house blogs as well as traditional media, which delivered great results. The best coverage came from bloggers and journalists with whom we had spent time developing a relationship.
- We released a sequence of launch videos on Facebook & Youtube in the lead up to the release of the film, which explained loads to our audience here.
On launch day (April 30, 2015) we had 3209 email subscribers and 1200 Twitter followers. This punched the film into the top 10 charts in various categories on iTunes in Australia, the USA and Canada.
Our tips: How to grow an audience without a big ad spend
Part 4: Self-Distribution – Creating a Big Bang to Launch the Film
Turning down a distribution offer
We initially sought an offer from Bond 360, a NYC based distributor whom we really admire. They’ve done some great work on films such as Particle Fever, Mistaken for Strangers, Advanced Style, and Deep Web. We were intially excited to receive their offer, but after sleeping on it we began to wonder whether it was the best option for us. The way we looked at it, they would help us promote the film, but were proposing to take a seriously large chunk of revenues (30% to 50%, depending on sale platform) for doing so. It make us wonder what we could achieve by ourselves? We concluded that, even if an experienced distributor could generate more sales than what we could achieve by ourselves, we’d still be financially better off by releasing it ourselves because we’d keep 100% of the revenue, as well as control over how the film was promoted. In other words, we figured that having the whole, albeit smaller, pie to ourselves was better than sharing a slightly larger pie with others…
It’s important to note that the choice to self-distribute was made in the context of already having grown our own (small but engaged) audience. We had been growing our audience from day one, so we were not helpless when it came to releasing the film. Sure, if a distributor loved our film and was willing to pay us a fat juicy advance for the rights to distribute it, we’d have jumped at the chance to recoup the budget and move on. But that didn’t happen.
The point here is that we had worked hard to build up our own audience, and were accordingly empowered to release the film ourselves. Even though we were exhausted from making the film, it was time to roll up our sleeves, again.
Our Self-Release Strategy
We always knew that the film’s main life would be online because that’s where our audience was. The interest in tiny houses is huge online: as evidenced by Google trends, countless facebook groups and blogs.
A Helping Hand from Screen Australia
Once we made the decision to self-distribute, we set about building momentum for a big launch. Thankfully Screen Australia got behind us and they gave us $20k in P&A Plus support. To get this funding we had to prove that we were building our audience; and we did this by explaining how we could promote the film to thousands of people across Australia through special interests groups such as our partnership with the Alternative Technology Association. They took a fair bit of convincing, but once we had other supporters to sponsor our launch screening events, they jumped on board too. Things have a funny habit of snowballing?
No film festivals
Therefore, in breaking with tradition, we avoided wasting precious time (and money) on a film festival launch. Film festivals continue to be a great way to launch and sell certain types of films, but we didn’t think Small is Beautiful was one of them. Besides, building a film’s profile on the festival circuit can be a tricky prospect: it’s a challenge to get accepted into a prestigious festival, but another thing entirely to get noticed amongst the pack once you’re there. More importantly, we didn’t want to turn our backs on the audience that we had worked so hard to cultivate so we decided to launch to our fans first.
The Long Tail: A Big Bang Means a Bright Afterglow
By choosing to self-distribute on the internet, we wanted to take advantage of long tail economics. Put simply, the unlimited shelf space on the internet allows niche projects like ours to earn small amounts of revenue over an extended period of time helping to make a sustainable career in independent filmmaking that little bit more viable!
People told us that the best way to increase revenue under the long tail is to start off with the biggest bang possible. The thinking is; since the long tail curve generally follows a similar shape after a product is launched, the best way to increase the overall volume under the curve is to start the curve as high as possible.
So the mission was to launch big. Without a big advertising budget we had to think laterally.
Building Critical Mass
Our launch was all about building critical mass ahead of the VOD release. To do this we needed to leverage maximum anticipation through an exclusive world premiere that would attract publicity, along with a theatrical tour, to be followed by a VOD release. Despite all our idealistic views on day-and-date releasing, we considered indulging in release windows. We were torn! We really wanted to release the film to our global online fan base as quickly as possible. Some had patiently been on the journey with us for two years, and not only that, Jeremy was also understandably itching to put the film on sale and start recouping his life savings.
The pressure was on to build buzz and critical mass quickly. After much deliberation, we eventually decided on a release window of one month between our theatrical launch and our VOD launch. Here’s how it went…
The Release Process
Our Release schedule:
- March 26th 2015: World Premiere in Melbourne, Australia
- April 20th 2015: Tugg cinema-on-demand screening tour begins in Australia and the USA
- April 30th 2015: Online Launch: our website, iTunes, Google Play, Amazon and Vimeo
- May 7th 2015: Jeremy flies to launch the film in Portland where the movie was filmed
Step 1: A World Premiere in Melbourne, Australia
We built our very own pop up cinema to premiere the film. The premiere was in Melbourne because we’re Melbourne based and the web stats showed we were building quite a decent local audience. We threw a four-day launch party; complete with a bar, DJs, a tiny house on display and food trucks – the whole shebang. Four of the six screenings sold out, leaving us with high hopes. It was hard work to put on such a big event, but we were blown away by the response and were thrilled to be able to finally share the film to a real audience.
The premiere succeeded in building some solid buzz. Thanks to our brilliant PR team at Soda Communications, we received mass media coverage from SBS’s The Feed, Triple R radio, Melbourne’s MX, Broadsheet, and Fairfax’s Domain website.
The premiere, along with all the associated publicity, helped grow the audience quickly ahead of the all-important online launch. The publicity generated lots of traffic to our website, which itself was designed to encourage people to sign up to our mailing list. And by collecting the email addresses of every ticket purchaser that went to the premiere itself, we were able to grow our list from about 2000 to over 3000 in the space of a few weeks. We were on our way…
Step 2: Theatrical Tour
After our launch event, we embarked on a Tugg ‘cinema-on-demand’ tour. We chose Tugg because it allowed us to organise screenings in both the USA and Australia simultaneously: the world’s first international cinema-on-demand tour with Tugg.
However, we found two big challenges with cinema on demand:
1 – Activating fans to host screenings is hard! We had lots of really supportive fans who loved what we were doing, however for many the idea of taking on the responsibility of hosting a screening was just too much to ask.
2 – Getting people to buy tickets weeks in advance is also hard. Most people are in the habit of buying tickets at the cinema, so the idea of having to get organised and buy tickets weeks in advance doesn’t work for many.
To help organise screenings, we hired Impact Producer Amanda Deluya to be our Community Manager:
Motivating fans was not an easy task; it was a full-time job. When comparing our successful screenings to our unsuccessful screenings the key difference was the 1 or 2 crucial people championing the film on our behalf. They were the ones who knew which of the local Meet-Up groups, Tiny House blogs and the local newspapers/bulletins we needed to approach.
We had super nice and supportive fans out there but at the end of the day it was the ones who put in the man-hours to promote and get the word out about the screening in their local area. We couldn’t have been more grateful for their help. Luckily the process of hosting your own screening was well set up by Tugg. The main job was getting the hosts to promote it and get the screening over the line!?
All in all, we attempted 25 screenings and succeeded with 13. Not bad, but the huge amount of work it takes to co-ordinate these screenings does not seem to stack up relative’to the financial return; especially after the cinemas and Tugg have taken their cut of ticket sales. Having said that there’s no mistaking that it helped grow our audience and raise the profile of the film ahead of our VOD release. Again, just like at our premiere, we were able to add the email addresses of ticket purchasers to our mailing list ahead of our online launch.
Step 3: The Online Launch
Things were abuzz as we hurtled towards our VOD release date. Here’s a summary of our final audience building efforts ahead of the big day:
- We partnered with the wonderful folks at SODA communications in Australia, and later on Brink in the USA, to supercharge our PR campaign;
- We partnered with like minded organisations to tap into their membership base: the Alternative Technology Association and Assemble Papers helped us spread the word to their thousands strong subscriber bases;
- We coordinated with our friends, and dozens of tiny house bloggers, to announce the launch of the film on their Facebook + blogs;
- We released a number of Youtube videos to prime our audience in the final days; and
- We upgraded our website server ahead of the online launch to handle what we hoped would be a big spike in traffic.
The scene was set: After one final sleepless night—and with Jeremy getting the anxiety sweats—the big day had finally arrived!
We flicked the switch and made lots of noise on social media and an email blast to our subscribers. Soda, our PR team, had lined Jeremy up for a string of Australian media appearances including ABC Local Radio in Melbourne, ABC News 24, and the Today Show. But the single biggest source of website traffic was from Yahoo Finance, who agreed to wait until launch day before they published their article about tiny house living; this article alone generated 10,000 visitors in just 24 hours.
We kept track of the number of clicks from our website through to our various VOD. You can explore the results clicking the links below:
- iTunes (traffic generated by the Yahoo article) http://bit.ly/tinyhousemovie+
- iTunes (USA store only) http://bit.ly/SmallisBeautifulUSA+
- Amazon http://bit.ly/SmallisBeautifulInstant+
- Google Play http://bitly.com/SmallBeautifulMovieonGoogle+
- Vimeo http://bit.ly/SmallOnVimeo+
Hacking the Front Page of iTunes
We hypothesised that if we could somehow launch onto the front page of iTunes then many people would discover and buy the film, which in turn would keep the film ranking high in the top 10, thereby creating a brilliant feedback loop which would keep our film highly visible on iTunes for longer. Thus, we emailed our 3200 strong database of fans and encouraged them to purchase the film on iTunes. It seemed to work! During the first few weeks of our release we were in the top 10 of “Documentary” category on iTunes Canada, Australia and USA (well, #13 in USA). Consequently, iTunes became the number one platform for how people accessed the film.
Now that we were launched, our website was ticking along with lots of visitors, we could breath a sigh of relief and take stock. The initial results were very exciting. After enjoying the best sleep we’d had in months, we began to think about how to optimise the whole VOD sales process. We were now graduating from being independent filmmakers to e-commerce entrepreneurs.
Things We Learnt Launching the Film
- People love an exclusive event. Launching the film was a big lesson in human psychology. After selling out our premiere screening in less than 24 hours, we were soon being bombarded with angry calls and emails from friends and strangers alike who had missed out on tickets. This was a big lesson in how powerful the desire is for people to be first, and it helped drive buzz around our launch: both online and off.
- Go niche (but not too niche). Our best media coverage came from ‘big-niche’ media; that is, websites that are destinations for a certain type of content but who still command a fairly big audience. Websites like Fairfax’s Domain, who have a lot of readers interested in real estate, Yahoo Finance, which has readers interested in the cost of living, or Broadsheet, which has the best what’s on guide for Melbourne.
- The meta-story around the film is important. We were lucky here because the concept of tiny houses has a strong hook for a media needing a new take on the popular topics of housing affordability, cost of living or alternative lifestyles.
Screen shots from the online launch
Part 5: Pulling back the VOD curtain
After launch there was little time to rest, distribution was just getting started…
Things we did
- We chose VHX for direct downloads. VHX.tv were winners for us because they have a really powerful and feature packed backend, with fantastic analytics. VHX offer a lot of features, plus the people are very approachable, and gave us some great advice along the way.
- Packages: We created three video packages with prices ranging from $10 to $50. In our case, 82% of sales were for the basic video. Bonus content made up 18% of sales but generated 45% of total revenue. This is the key to direct distribution for smaller films, increasing your average order value (AOV).
- We boosted our conversion rate by offering the first two minutes of film for free if a person signed up to our mailing list. It also lead to these customers more likely to purchase the deluxe version.
Releasing our film on other platforms: Vimeo, iTunes, Google, Amazon
VOD platforms don’t require exclusivity. This allowed us to make the film available in multiple places so that our audience could decide which was the most convenient way for them to watch the film.
We paid an aggregator – Juice Worldwide – to upload the film for us. It was quite a straightforward process: signing a contract and paying a flat fee of about $800, and sending them our deliverables (the film, subtitles, key artwork, classification certificates, etc). Once launched, Juice take a 10% cut from the revenues they receive from each of the platforms, and pay it out to us each month. Juice charges about $150 for every additional platform.
There are a bunch of compliance costs to be mindful of, such as needing to supply closed captions for USA iTunes, and a classification certificate in the UK, Australia and New Zealand. Accordingly, we limited ourselves to releasing the film only the big platforms in the territories we knew we had an audience.
Show me the money!
The new generation VOD platforms like VHX and Vimeo pay out automatically every month, directly into our PayPal or bank account. Unfortunately, payments take a bit longer to come from aggregators like Juice; we’ve experienced about a three month delay from when a sale happens to when we actually see the money.
Increasing Sales with Targeted Social Media Advertising
Using retargeting tracking pixels has proven to be successful and will definitely be a big part of audience building advertising on our next films.
A recent exercise in retargeting ads on Facebook involved us spending $109 which generated $105 in direct sales through our website. (The revenue may in fact be higher if they’ve chosen to buy on iTunes, or elsewhere but we’re unable to track this directly).
We’ve managed to roughly break even with each ad campaign (every dollar we spend on facebook ads generates around one dollar in VHX sales). We’re still working on optimising this stuff in the hope that one day we can get a better return.
Things We Learnt Selling Our Film Online
- Higher priced packages can really boost revenue, so plan ahead to make sure you have good bonus content to offer from day one of the release.
- iTunes and Direct (through VHX) were by far the best platforms. If on a limited budget, these should be the main digital platforms to use.
- Our mailing list was hugely beneficial for sales and release. Opening a Mailchimp account is definitely one of the first things to do when starting a project.
- Conversion rates have a huge impact on revenue and should be the single focus of website design. For example, to generate $100,000 in sales, we’d need 325,000 visitors on our website, of which 7767 would be converted into customers, each spending an average of $13. Have a play with numbers here to see how the factors of website traffic, conversion rates and revenue per sale all affect your bottom line: https://john-dugan.com/ecommerce-calculators/
- Concentrate on one or two platforms for launch and really focus on them. Getting featured on the front page of iTunes is incredibly powerful and should not be overlooked. You’re responsible to be sending the traffic to the platforms to make the most use of them. Putting your film on a platform and hoping for the best, doesn’t equal results.
- A soft sell results in a higher conversion rate. People who visit our site are interested and want to watch the film, so as excited as we are, we try not to shout at them to buy the film. Instead, we try to give them a hug with our design, images and language. We tested this idea with various website designs, language changes and compared the conversion results.
Part 6 – The Financial Results
Let’s be honest. This is the reason you’ve come here and read this far. So here they are, gross and net figures laid bare.
VIEW THE RESULTS HERE (updated with latest results frequently): https://docs.google.com/spreadsheets/d/1ayZW01DP7c3bNMx0Lvty6OgBBwuVNcwflOqHHs8iVno/edit?usp=sharing
Where our revenue came from:
Key things we learnt
- For this type of film to be profitable, the budget must be micro
- Theatrical tours are expensive and require a lot of work
- Direct distribution is the most profitable (i.e. VHX)
- DVDs are prohibitively expensive for a global niche audience (postage + exchange rate issues)
- You can only launch once, so do everything you can to make a big bang that will set the film up for success far into the long tail.
Part 7: The Journey Continues…
Thanks for reading!
We’ve tried to share the ups and downs of self-distributing our film in the hope that you too can benefit from what we learned. Please leave your comments or get in touch so we can share our stories and benefit together.
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