One of the best lessons I ever learned about knowing my international territories came in Budapest, Hungary at DISCOP; a Film and TV content market “for growing world regions.”  I was at dinner with Edward Stencel, (a dear friend who helps run my company) and some new clients. We were at a hip restaurant on a boat called “Spoon,” when the conversation shifted to the emergence of Benelux. Benelux, I thought. What the hell is Benelux? It sounded like a virus, or a new military coup. As dinner wore on, I started to wonder why I’d never heard of it. Flashbacks of seventh grade suddenly arrested my thoughts as I remembered getting a “C” instead of a “B” on a world geography test because I failed to list the countries in North America (I listed the USA and Canada, but missed Mexico). So, before desert was upon us, I asked Edward where Benelux was.  He just gave me a look and said “Benelux isn’t a country. It stands for Belgium, Netherlands and Luxemburg.” I was surprised, but relieved.

The thing about film sales territories is you have to know where and what they are and how they work – before they can work for your film. Currently there’s about forty territories worldwide, but less than ten that will be financially significant to your film. I’m not saying that most film territories are insignificant, since all of them provide a vital platform for getting your film out. Nor am I saying your film will only sell to ten territories (although you should do cartwheels if it does sell to ten territories). What I am saying is don’t be surprised if some of the smaller territories offer you such little money for your film that you’re too offended to say yes.  At my company, we’re used to having small territories offer us a few hundred dollars for the rights to indie films. But, we never accept those lowball deals.  My rule of thumb is simple: If the offer is a) less than the cost of my Fed EX and related shipping costs to complete the deal, or b) if I know our client will surely go into cardiac arrest after hearing the offer, then I can’t accept it. But filmmaker-be-warned: there are more than a few distributors out there who will accept lowball deals. Those deals are too small to ever help you, and you’ll never see any money from them because they’ll be eaten up in your distributor’s fees.

Since there are many more “territorial insights” that you need to know, here are some key ones to consider.

How Territory Sales Work
Don’t worry. It’s simpler than it seems. Basically, buyers will offer to pay your distributor a “flat fee” for the right to distribute your film in their country. You get paid and they get your film. It’s that simple. They’ll pay for all language dubs and they’ll duplicate and market your DVD in their country. In rare cases, you can also get a back-end bonus on your DVD sales put into your contract. But, it’s almost impossible to get a distributor in another country to pay those bonuses. I’m sure it has happened before, but such a magical occurrence happens about as often as people prove the existence of Santa Claus.

The Hollywood Reporter publishes an annual listing of how much territories will pay for films called “The Going Rate.” This very important listing used to be the Bible of film sales rates, as it set guidelines for how much companies would ask for their films. But, after worldwide financial meltdown of 2009, “The Going Rate” no longer publishes rates – they publish percentages. Meaning, instead of listing a dollar amount for what your film should sell for in Germany, they now list that a sale to Germany should pay you 7%-10% of your film’s budget. One thing to be aware of is that all of the rates are based on films costing $5-$15 million to produce. Thus, these rates are generally adjusted downward for indie films.

The Most Significant Territories
The two biggest territories are Germany and Japan. Getting healthy sales there will significantly increase the value of your sales in smaller territories. But, the opposite is also true. A weak sale to Germany or Japan equals almost no sales in smaller territories.

Insights on Selling to Germany
Bigger is always better in Deutschland. Big stars, big budgets, and stories with big scopes are what sell. High-end documentaries and some nature content also sell.

Insights on Selling To Japan
Sci-fi, Sci-Fi, Sci-Fi. Did I mention Sci-Fi? It seems as though Japanese buyers can’t get enough of good Sci-Fi. But, before you start writing the next “Star Wars,” you should know that a sale to Japan takes a lot more than a good film. It takes commitment from your distributor. For example, my company attends TIFFCOM every October (TIFFCOM is Tokyo’s sales market that coincides with the Tokyo Film Festival).  We also spend a hell of a lot of time while we’re there attending the Tokyo Project Gathering  – an area where we hear pitches on Japanese developed projects. Showing the Japanese buyers how committed we are to providing their territory with quality films and keeping our doors open to their product, is an important reason why we enjoy healthy sales to Japan.

Unlike other territories, Japan is not a place where a distributor can swoop in and make a quick buck. But, if nurtured correctly with honor, a relationship with Japan can provide decades of healthy sales.

Listing Of Percentages From Territories
As stated earlier, these are general guidelines on what percentage of your budget you should get from sales to the following territories. They are based on budgets between $5-$15 million, so smaller films will skew a bit lower. These rates, for example, are quoted from The Hollywood Reporter’s “The Going Rate” listing published on October 30, 2009:

Key Notes About Some Territories
Germany usually also includes German-speaking Switzerland.

France is very hard to sell to, because their government limits how much American product can be distributed.

Pakistan is often times thrown in for free when your distributor sells to India.

What’s In A Name?
Your film’s title will probably change overseas.

What’s In A Look?
You film’s artwork will also definitely change in other countries. But don’t fear, they’re just trying to position your film in its best light to capture healthy sales. Actually, you should request posters of your film from the various countries your film sells to. That fun exercise will do two things: 1) Create a great conversation piece for your friends, future investors and lovers when they see how many different countries your film played in, and 2) You’ll get a sense on how your work is being marketed to other countries.

What’s In A Final Cut?
Some territories will re-edit your film in order to get it approved by their censor boards, or to make it more acceptable to their viewing audiences. I know this cuts into the hearts of many filmmakers, but think about it this way: is cutting out sixty-eight seconds from your film worth getting a $25,000 sale? Or, worse yet, is keeping your sixty-eight seconds worth losing a $25,000 sale? But you shouldn’t stress, because it’s doubtful you’ll ever be in Cambodia to see how they altered your film. Then again, maybe you should stress, because Cambodia would never pay $25,000 for your film – or any film for that matter. They’d alter your baby after paying no more than $500-$1,000 for the right to do so.

Financing Your Film From Territory Sales
This is getting more and more popular due to the world financial crisis, but because of the crisis, utilizing territory sales as a way to get financed is growing harder and harder. The main problem is territories won’t pay your distributor until after your film is completed. The ones that will agree to cutting a check before you start shooting will only do so inpre-sales.

Pre-Sales
Pre-sales are when a territory buys your film before you finish it, or sometimes even before you make it. But, these deals are generally reserved for star-driven films, which are made in bionic genres (action, thriller, sci-fi).

There’s a ton of things to know about the various territories, as their cultures, tastes, and business practices vary so much.  All of those elements factor into what kinds of films each territory will buy and how much they’ll pay for them. So, how do you learn more about this stuff? You could travel 100,000 miles per year to all of these sales markets worldwide like Edward Stencel and I do, or you could read as much as you can find on the topic. If you don’t have the frequent-flier miles ready to burn, or if reading doesn’t quite do it, you could also contact Edward’s new websitewww.FilmmakerAdvisor.com. Not only is Edward an international film sales professional, but he’s also a producer, as well as an advisory board member and programmer to various film festivals. In addition, Edward was also the first Filmmaker Advisor for I.F.P.L.A. (which has since changed its name to FIND – Film Independent). So, I’m sure he can help your film’s impending strategy.

In closing, I know the thought of understanding the various needs and wants of each territory can be daunting, but how is that different from understanding the needs and wants of your significant other who is wondering why you’re reading this article instead of spending “quality time” with them? In both cases, do the best you can, and let the Universe figure out the rest.

I thank you again for lending me your eyes, and I look forward to hopefully borrowing them again next Tuesday.