How the Distribution Process works and the Money Flow
However, low budget independent films can get' limited releases' of screens in a few cities that increases the value for other sales by gaining reviews and by playing a few Festivals (there are 1,200 Festivals) that may garner some nominations or awards and thus creating a value for other markets.
With or without domestic distribution the Film Production Company retains International rights - where the major share of profits are for BOTH major Studio pictures and Independent films.
The rest of the world is eager to buy American movie products. The movie is sold at major film markets, e.g., Cannes Film Market ('Marche' - not the Festival - 'Marche' is where the real business is done), the American Film Market (AFM) and the European Festival Market (EFM) in Berlin. There are 35 nations ready to buy the film for distribution in their countries for theatre and television releases. The total could be anywhere from a bottom of $300,000 to $3,000,000 to tens of millions of dollars. And all that money accrues to the Film Production Company - minus the costs of Foreign Distribution.
There are two ways to sell to the Foreign Market:
1) Sell the film without a Distributor by setting up a booth or a suite at the major markets - this costs time and money (air fares, hotels, etc., as well as a $10,000 registration for each market at Cannes, AFM, EFM, MIFED, etc. Or ...
The contract used by most foreign sales agent is the IFTA - Independent Film and Television Alliance. Sales agents account on a quarterly basis for the first two years, semi-annually thereafter. Statements and payments are no later than 60 days after the calendar close. The Producer has the right to audit. All copies of contract are to be aligned with the statements. Foreign sales agent agree that if there is an under report of 5% or more the sales agent will be responsible for the cost of the audit.
The full contract can be purchased at the IFTA website: http://www.ifta-online.org/ A qualified Production Attorney can guide one through the labyrinth of this contract.
Prominent Foreign Sales representatives are usually members of IFTA (10850 Wilshire Blvd., LA, CA - 310-446-1000). A good article prepared by the firm of Blake and Wang, P.A. explains how to protect against possible unscrupulous foreign distribution practices: http://www.optimalegal.com/sys-tmpl/internationalfilmdistribution/
Can a film without a U.S. Domestic Theatrical release make money? Yes, many movies are very profitable for straight to International release, DVD, etc.
But there's now a bigger elephant in the room other than DVD distribution - NETFLIX.