What is a Distribution Deal and What Should You Watch Out For?
A distribution deal gives a company the rights to release your film — but the terms vary enormously. Here's what to look for and what to watch out for before you sign.
A distribution deal is a contract between a filmmaker or producer and a company that will release and market the film to audiences. The distributor handles the logistics of getting the film to theaters, streaming platforms, home video, television, or all of the above — in exchange for a share of the revenue the film generates.
Distribution deals range from simple digital-only agreements with revenue sharing to complex multi-territory theatrical releases with minimum guarantees and marketing commitments. Understanding the key terms before you sign is essential.
The Grant of Rights
The most fundamental clause in any distribution deal is the grant of rights — what rights you're giving the distributor and for how long.
Rights can be exclusive or non-exclusive. They can cover specific territories — North America only, worldwide, excluding certain markets. They can cover specific formats — theatrical only, digital only, all media. And they have a term — a duration after which rights revert to the filmmaker or must be renewed.
Read this section carefully. A worldwide, all-media, exclusive deal with a 25-year term and no reversion clause gives the distributor significant control over your film for decades. A limited territory, limited format deal with a five-year term and clear reversion conditions gives you flexibility.
Gross vs. Net — The Revenue Question
How a distributor calculates what they owe you matters enormously. The difference between gross and net revenue sharing is where filmmakers most commonly get surprised.
Gross revenue deals pay the filmmaker a percentage of the total revenue the film generates before the distributor deducts their expenses. Net revenue deals pay the filmmaker a percentage of what remains after the distributor deducts their costs — marketing, delivery fees, overhead, and sometimes a "distribution fee" that's a percentage of gross revenue taken off the top before net is calculated.
In practice, many films generate significant gross revenue but show little or no net revenue after deductions. This phenomenon — sometimes called "Hollywood accounting" — is well documented and worth understanding before you accept a net revenue deal.
Cross-Collateralization
If a distributor handles multiple films for you, watch for cross-collateralization clauses. These allow the distributor to offset losses from one film against profits from another.
If Film A loses money and Film B makes money, a cross-collateralized deal means Film B's profits can be used to cover Film A's losses before you see any revenue from Film B. This can significantly delay or eliminate the filmmaker's revenue even when individual films perform well.
The Marketing Commitment
A distribution deal that includes no meaningful marketing commitment — no minimum spend, no specific platform commitments, no defined release strategy — can result in your film being acquired and then buried. This happens regularly in independent film.
Push for specific marketing commitments in the deal: a minimum marketing spend, specific platform placements, a defined theatrical run if applicable. A distributor who won't commit to anything specific about how they'll release your film is worth approaching with caution.
