At the Producers Guild of America "Produced By" event held at Walt Disney Studios on June 4th, 2011, pioneering director and publicity-generating-machine, Kevin Smith, talked about paying back his investors via a distribution strategy that exploited a Sundance premiere with an immediate 15 city tour around the US for his new film, "Red State." Key parts of Smith's money-making strategy included 1) getting his film in front of core fans while the publicity from his festival premiere was still fresh and 2) offering his core fans something more than a traditional theatrical film experience, i.e., appearing in person after each screening for a distinctive Q&A session.
According to Kevin Smith, as of June 2011 "Red State" has recouped negative costs - and paid back his investors 100% of their investment - based on tickets and merchandising from the 15 US events (netting "close to a million bucks") and strong domestic VOD deals (worth roughly $3 million) and foreign sales (worth around $1.8 million, sewed up at the Berlin Film Festival in February). In short, Kevin Smith has already paid back his investors with significant revenue streams (e.g., another domestic theatrical tour with live Q&A in other smaller cities) yet to come.
Of course there are only a few filmmakers today who might reliably match or exceed Kevin Smith's ability to turn out big crowds for a personal appearance (for example, if Scorsese, Coppola, or Malick were coming to town with a new film, these names would almost certainly sell out the biggest theater for a one-night-only event). But film festivals also reliably sell hundreds of seats to a single screening, even with an unknown filmmaker, simply because the film appeals to an audience that can be targeted and/or the filmmaker has agreed to appear and answer questions. So you don't need to be famous, as long as you can identify a core audience and then reach them (via email, social media and targeted publicity in local media outlets) promising a "special one-night-only event."
Making money like Kevin Smith has from a single screening - one that includes a Q&A (even if that Q&A is conducted onscreen via Skype) - is something that all microbudget filmmakers (even first time filmmakers) can consider. Making your screening a "special event" - i.e., marketing to a core audience in a city for a one-night-only event that provides something special that cannot be replicated at home on DVD or VOD - has emerged as a viable strategy for paying back your investors. The trick (and there is a trick) is to have an email list or other database that accurately targets a committed core audience before you head out to a new town. If you can identify your niche and harness social media or existing organizations to reach those core fans, offering your potential audience something that they can't get anywhere else, it's a great way of recouping your budget. This strategy works especially well if your budget is small: As Kevin Smith says "Lower Your Expectations, the Way My Wife Did."