Netflix: Can You Make Money On It?


According to an April 4th, 2011 report from CNET, many small distributors, consultants and filmmakers are questioning if Netflix is friend or foe.

"You can't make money on it," Tracy Balsz, who consults indie filmmakers on distribution, told CNET. "I tell clients to work through all the channels first and when you reach saturation then go to Netflix."

According to Tracy Balsz, here's how a typical deal for a small film on Netflix might work: When Netflix becomes interested in your film (usually through an aggregator) Netflix will buy a small order of DVDs for the company's home-delivery service as the first step toward a streaming deal. In these cases, Netflix managers might just buy 30 DVDs of your film. The company will buy more if enough customers begin placing the title into their queues. If that film performs well on DVD, the company will stream and for this will pay a flat fee. (Note: Netflix does not currently pay indie filmmakers each time a film is streamed. Instead, payments to filmmakers are negotiated up-front based on demand. And, at Netflix, judging demand starts with customer queues, the area where subscribers list the movies they wish to see. Netflix has also paid more for movies that have generated attention at film festivals or among critics.)

Of the movies that go this "30 DVD to Streaming" route, Balsz said the most she's seen anybody earn from streaming is $20,000. "If you have $2 million in your film, you're not going to pay it off this way," she told CNET.

If $20,000 is an accurate figure - Netflix is clearly not paying enough to pay back most production budgets.

But Netflix is just one outlet. Isn't exposure a good thing that can improve a film's visibility and increase returns on other platforms? Isn't a sale to Netflix a positive development - especially if you consider a Netflix deal just a part of an overall distribution strategy? That's what Gravitas Ventures (a company that has licensed 300 movies to Netflix) founder Nolan Gallagher told CNET: "I would say Netflix is a friend to the indie filmmaker, but you can't think of just Netflix. Along with them, you have to work with other important outlets, such as Comcast, iTunes and Time Warner Cable."

So, in the welter of choices, where should a Netflix deal fit in? Is it OK to sell to Netflix and then approach other platforms? The CNET article quotes Orly Ravid, the founder of The Film Collaborative, who warns her clients that some distribution outlets might try to use your Netflix deal against you - arguing that the revenue they could have made from your title has been diminished by it's simultaneous availability on Netflix. According to Orly, some big video-on-demand services are asking filmmakers to delay their Netflix distribution. "They're worried about Netflix cannibalizing their windows."

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