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Having DVD produced is just 50% of the job. Some say, it is only 10% of the job. These are the people who make 2 million+ a year just talking or eating lunches with other people who likes to talk. So we don't have to listen to them.
The bottom line
First let me put this straight. Our goal is to eventually release all other seasons of Cowboy Who? on DVDs and prepare ground for other ultra-low-budget project we have in mind and currently in making (one is a fully interactive story on DVD).
There is no way that publishing thousands copies will make somebody rich. In fact most of people will have problem to return a direct investment for making the DVD's.
Trail of the Royal Money
You may wonder if a new producer can return his investment by creating a straight-to-DVD movie. The answer is simply no unless it doesn't cost anything to make the movie. With a niche market the low volume sales will consume most of the income by itself.
Here is a bottom-line calculation :
First I will perform a financial hat trick - I will say that at this moment there are no liabilities, nor any assets regarding the production. The show was made for local TV station and the station equipment was used to capture and edit the show. The show paid for itself by airing it on the local TV, there was no loss, but also no financial gain.
Production Cost: $0
I do this hat trick in order to set a bare base from which the expenses can go only up.
Direct material expenses for DVD production:
I will break it down so we may have better idea of the cost. (The cost may vary depending on replicator but it will be very close to this table)
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What:
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Unit price:
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Per 1000 units
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DVD-5
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$1.20
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$1200
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DVD-9
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$1.30
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$1300
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Double DVD case
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$0.60
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$600
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Shrink Wrap
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$0.08
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$80
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Manual assembly
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$0.04
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$40
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DVD trap sheet
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$0.30
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$300
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File Check
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$60
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$60
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Setup fee
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$60
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$60
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Label film
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$70
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$70
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Trap-sheet film
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$150
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$150
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Total
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$3860
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So the total cost per unit is $3.90
Now if you set the retail price $25, that would give us.. click..click...click a $21 revenue for each disk, right? Hold your horses little fellow, it isn't that simple!
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Average Retail price
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$25
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This is what user will pay
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Average Wholesale price
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$10
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This is what we get from retailers
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Average Shipping Cost
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$3
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postage + packaging + gas, yes these things went up!
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No retailer would take a box full of low-budget DVD's so you will ship to retailers 2-3 units at a time!
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Average Income from one disc
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$7
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Not what one would expect
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Break Even point:
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$3860/$7
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550 units
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Our Revenue if all 1000 units are sold
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$3140
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7*1000-3860
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Retailers NET revenue on 1000 units
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$15000
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Wow, we are in the wrong business! We should sell things, not make them!
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Important factor in calculation is the break-even point when the number discs sold just covers all the production cost.
Here is the answer: we need to sell 550 units in order to cover just the direct material expenses for making it to DVD!
Then we have 450 units more to sell, which after all the retailer discount and shipping gives us just about $3100 of pure revenue. But of course we will have to give some units free as a promo and have returns, so the actual income will be less. In meantime retailers make $15000, save some of their expenses, let's be generous and say they make $10k.
So you see even if we didn't include any production cost (we expected in the calculation all equipment was browed or found in the basement and all our family was used instead of real actors), we are pulling by the very short straw here.
Now you see why creators and makers are dying breed and retailers are booming. Soon there will be only retailers and box movers and nobody will be making or creating anything on this side of Atlantic (or Pacific). Hollywood already started to occupy East European cities and I guess soon they will move even further to East....
Financing it all
But now, let's include a very modes $50k production cost - that is considered ultra-low budget. If we speaking about a low budget then that is today from $300k to 2 million. So let's speak of an ultra-low budget instead!
Expenses for ultra-low-budget: $53860
$53860/$7 = 7700 units.
An ultra-low budget straight-to-DVD filmmaker will have to sell about 7000-8000 units of DVD to get even with the production and material cost.
How likely it is that a totally unknown ultra-low budget filmmaker will sell 7000 of his ultra-low-budget DVD?
Now you say, what if he doesn't use retailers and try to sell it all by himself. Yes, that would help the calculation since he will take only about 8%-10% for all the processing and expenses ($2-$3). But then he will be no longer filmmaker but a packing and shipping specialist and still he has no customer base to sell.
Bottom line. What this leads into:
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Do not borrow money to cover production cost with the hope you will repay it later. You will NOT. You either get the money or you don't (as an exchange for ad exposure, airing rights, distribution rights, sponsorship, your kidney or promise to marry their daughter) But do not promise to pay back the lender the money or even part of it later - it is 100% chance you will be never able to do it unless you are as good as Robert Rodriguez or lucky like everybody else in Hollywood. |
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Do not dismiss local TV or cable stations, even the little ones - they could be actually your best friends to minimize production expenses. They can lend you part of their equipment and people. Their hope is to get back some original programming so they can look in to the public eye and say they support local community. A cable companies have often available programs where they offer studio, people and equipment to local community. Some people in TV stations are often creative people in the closet who just got stuck at boring job rewinding tapes.
If you are good you can also later generate part of the revenue from airing fees of other cable companies and stations. It won't be much, but the goal is to pay for the production cost - everything counts. |
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Do not aim too high. Big TV or Big Movie will never talk to you. Just like you don't talk to rocks and garbage bags (Or do you?). A local TV or production facility is your best hope. In worst case marry a daughter or son (or both) of somebody who owns a large station. |
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Look for a local artist and movie-makers within your community. Try to setup a way to share resources. You may meet somebody who is trying to do a similar project or who already married the daughter of the station manager |
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Be honest. Making films is about the fun you have, not about becoming a fake celebrity. |
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If you like movies because of the money and glitter, then watch some TV instead. It is safer and less expensive. |
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