top of page
  • Writer's pictureArmen Dilanchian

The Decline of Movie Distribution Companies: A Crisis in the Film Industry!

Updated: Jul 14

The film industry is undergoing significant changes, with numerous movie distribution companies either going out of business or declaring bankruptcy. This trend has had far-reaching implications for filmmakers, who often find themselves entangled in legal and financial issues, unable to see any returns from their hard work. In this blog post, we will explore the reasons behind the decline of movie distribution companies, the predatory practices that exacerbate the situation, and potential solutions for filmmakers to regain control over their work.

The Collapse of Movie Distribution Companies

Several factors contribute to the financial instability and eventual bankruptcy of movie distribution companies:

  1. Market Saturation and Competition: The rise of digital platforms has led to an oversaturated market, with many distribution companies competing for a limited audience. The fierce competition drives down prices and reduces profit margins, making it difficult for many companies to sustain their operations.

  2. Shift in Consumer Behavior: The advent of streaming services like Netflix, Amazon Prime, and Disney+ has fundamentally changed how audiences consume media. Traditional distribution methods, such as theatrical releases and physical media sales, have seen a decline, putting additional financial strain on distribution companies.

  3. High Costs and Low Returns: Distributing a film involves significant expenses, including marketing, logistics, and legal fees. With the decline in traditional revenue streams and the pressure from digital platforms, many distribution companies struggle to cover their costs, leading to financial insolvency.

  4. Technological Disruption: The rapid advancement of technology has also played a role. Many distribution companies have failed to adapt to new technologies and distribution models, leaving them unable to compete in the modern market.

Predatory Practices in the Industry

The financial struggles of distribution companies have given rise to predatory practices that exploit content creators:

  1. Bankruptcy Manipulation: Some distribution companies accept films, promising lucrative deals, only to declare bankruptcy shortly afterward. This leaves filmmakers with their content tied up in legal proceedings, unable to recoup any financial returns.

  2. Non-Payment of Residuals: Filmmakers often enter into agreements expecting ongoing payments (residuals) based on their film's performance. However, when a distribution company goes bankrupt, these residuals are seldom paid, leaving creators without compensation for their work.

  3. Asset Liquidation: In bankruptcy, a distribution company's assets, including the rights to films, may be liquidated to pay off debts. Filmmakers often lose control of their content, which can be sold to third parties without their consent.

  4. Shifting Costs to Filmmakers: Some distribution companies refuse to take on the costs of marketing and promotion, forcing filmmakers to shoulder these expenses. This can cause budgets to balloon, as the responsibility of driving viewership falls on the content creators themselves.

Solutions for Filmmakers

To protect themselves from the pitfalls of dealing with unstable or predatory distribution companies, filmmakers can take several proactive steps:

  1. Thorough Due Diligence: Before signing any agreement, filmmakers should conduct extensive research on the distribution company’s financial health and track record. Consulting industry professionals and seeking legal advice can help in making informed decisions.

  2. Flexible Distribution Strategies: Embracing a multi-platform distribution approach can mitigate risks. Filmmakers should consider direct-to-consumer models, leveraging digital platforms, and self-distribution to maintain control over their content.

  3. Legal Safeguards: Including protective clauses in contracts, such as reversion rights (which return the film rights to the filmmaker if certain conditions aren't met), can offer a safety net. Escrow agreements for payments can also ensure filmmakers receive their dues even if the distributor faces financial trouble.

  4. Building a Strong Network: Establishing connections with reputable distributors, industry professionals, and other filmmakers can provide valuable insights and support. Networking can also open doors to better distribution opportunities and collaborative ventures.

The landscape of movie distribution is fraught with challenges, from market saturation and changing consumer behavior to predatory practices and technological disruptions. While the decline of traditional distribution companies poses significant risks for filmmakers, there are strategies to navigate these turbulent waters. By conducting thorough research, adopting flexible distribution models, securing robust legal protections, and building a strong industry network, filmmakers can better protect their work and ensure they receive fair compensation for their creative efforts.

This comprehensive approach to understanding the current challenges and solutions in the movie distribution industry not only highlights the issues at hand but also empowers filmmakers with practical advice to safeguard their interests.

28 views0 comments


bottom of page