Digital revenues: Bigger piece of pie

Execs talk monetizing digital distribution

As Hollywood meets with the most important tech and hardware players at CES in Las Vegas, execs have one thing in mind: how to monetize digital distribution.

Clear Scope Partners provided the numbers in the chart, which represent a portion of a total film “ultimate.” That total number is then compared to a film’s total expenses to determine a projected profit.

With each new platform that rolls out, those digital dollars keep growing and could play a more important role in determining which projects get produced.

Filmmakers often rely on full film ultimates to make a movie at a reasonable price and secure bank financing.

“The ultimate is used by studios and independents to manage their own cash flow and projected capital needs,” said Clark Hallren, managing partner at Clear Scope, an entertainment advisory and capital raising firm. “(It’s) also used by banks as a basis for lending to production and distribution companies.”

About eight week’s after a film’s release, distributors and outside firms can estimate the ultimate amount of money it will earn during its first cycle (about 10 years). For digital, that means including estimates for pay-per-view, VOD, electronic sell-thru and rentals.

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