In this tutorial we examine the usual and customary for U.S. theatrical distribution deals

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The Breakdown:

Advances:
- If the film is acquired at a major film festival (i.e. Sundance, Cannes, Toronto), advances can range anywhere from $50K to several million dollars.
- If the film was NOT acquired at a major film festival, these days it is, unfortunately, not usual and customary to receive an advance. You are probably looking at a royalties only deal. However, if you are offered an advance

P&A Expenses:
- Usually range from $50K - $250K or higher (for a theatrical release, depending on the size and markets)
- Distributors will agree to invest the money to pay for P&A. However, they will want to recoup those costs before paying out (the agreed upon percentage) to filmmakers from ticket sales.

Don't forget about exhibitors
Exhibitors will generally collect 50% of gross ticket sales

How this breaks down for the filmmaker
- The exhibitor usually takes 50% of GROSS ticket sales revenues
- Then they send the other 50% to the distributor
- The distributor first uses that money to recoup their expenses
- Then whatever is left (if any) they split with the filmmaker according to the negotiated percentages - Typical distributor commissions are usually between 20% to 35% (maybe even 40%) for theatrical

What you need to know:
- Theatrical releases are a loss leader! It is very hard (almost impossible) to recoup the costs of a theatrical release, especially to get people into the seats of the theaters. Simply put, P&A costs are out of control, and this not the distributors fault, it's just the reality. Most distributors and filmmakers will use a theatrical release not to make money, but to gain exposure for the film, and raise the profile and perceived value of the film, in order to garner ancillary sales (i.e. sell DVDs) and foreign sales.
- Even for studios, theatrical is a loss leader
- It is usual & customary to NOT make any money on a theatrical release
- Foreign distributors like to see that a film has had a U.S. theatrical release (it makes the film more worthy and valuable in their eyes)
- It is normal to never see a cent from the theatrical release...the hope is that the exposure of the theatrical release translates to ancillary sales where you DO see profits.