Jeff Deverett, Film Producer, Entrepreneur, Writer, Director: And it's like no different
than any other business opening a restaurant, what do you think your customer base is going
to be and how many meals you're going to sell? Building a condominium complex, what's the revenue
going to be? It's just like that, maybe a little less predictable than that because it's a movie.
Film Courage: How do you articulate distribution and sales forecasts to investors?
Jeff: Well articulate them I show them charts and basically I show them what I believe the revenue
generation is going to look like over what period of time which is the cash flow analysis
and then I put it into a nice concise chart so that they can see it in sort of a one page
that's how I articulate it now how do I create it I do my own sales forecast because I have enough
distribution experience to sort of know what to expect what the levels are what people are paying
it changes all the time obviously because as the market develops and as new customers come in or
different technology whatever so you have to constantly keep revisiting that
but you generally do a revenue forecast based on either comparable movies that have
gone in the past not too far in the past that you can compare to based on your own experience based
on what you believe you're going to get from a certain marketplace and you do them at I do what
five different levels like low, semi-low, medium, medium-high, high. I do five levels some people
do ten levels some people do three levels you can't do you could do one level but it's so I
show what sort of the average that we can expect is what the home run is what the disaster is
and but a lot of people pay for that so there's companies that that you can buy revenue forecasts
from that do it for as a service and you pay a lot of money actually I’ve seen lots of those
forecasts I don't think they're so credible but you need something you got to show something to
investors to say that you've done your homework and this is what a credible company that has
compared it to sort of like movies has shown the reason I don't think they're so credible is
several reasons one is they're using movies that have played like 10 years ago they can't they're
talking home video numbers home video doesn't even exist anymore so they're comparing completely
different technologies and release patterns two is they're usually using movies that are bigger
at budgets than what an indie film would be so like they're comparing my movie to home alone
hello I mean they're not even in the same league they're different businesses so but it's family
audience and this and that type of thing so I just I'm so so financially response like I'm not…I’m
responsible but I'm so critical financially I’ve got to make sure that it makes sense
and sometimes the the comps as they call the comparables are not as credible as when you
talk to say a sales rep who is in the market right now who deals with today's audience and
today's platforms and you sit them down and say what do you think and it doesn't matter what 10
movies did 10 years ago what matters is what they think because they're out there interacting with
customers all the time and selling movies to them now I also have relationships with some agents
and distributors around the world so I'm able to call them up and say okay what do you think
and nobody gives definitive answers they give well it could be this it could be that it could be at
least you get a ballpark and it is a ballpark but you say to your your investors here's the ballpark
here's the range it could be a big range and here's what you think the target's going to be
and it's like no different than any other business opening a restaurant what do you
think your customer base is going to be and how many meals are you going to sell
building a condominium complex what's the revenue going to be it's
just like that maybe a little less predictable than that because it's a movie
do you talk to your students at UCSD [University California San Diego] about that I mean do they
want to know how can I create this even if it's just for play and excel yeah they do but it's
so I’d need a whole course on that actually it's so extensive first of all you have to understand
finances a little bit too and and I do get into I said I mentioned cash flow you see so there's
how much revenue you're going to generate but what the time frame it's going to take to generate it
and that speaks to sort of return on investment or internal rate of return so for instance if you
invested say a thousand dollars in in today and next year I gave you back two thousand dollars
you would have gotten 100 return on your or 200 ROI [return on investment] like double your money
right but over a year but if I returned it to you two years later it would have been over two years
so it's a sort of a different financial analysis for an investor because they're looking at their
annual rate of return so the longer it takes to return the money the lower their return on
investment has been or their internal rate of return as we call it this is beyond what film
students want to learn I mean film students don't sign up to learn this is accounting stuff I mean
this is stuff you learn in business school there's finance right so I don't get I talk about it but
I don't get into too much depth but ironically we just finished that unit on distribution and part
of the assignment they have to do an assignment part of the assignment is doing a very very
high level cursory revenue forecast and everybody said how would we know how to do that and I said
just guess and they said what's the point I said you'll understand the point in five years from now
just guess okay and the point of that exercise if my students watch this video
is that they have to go through the motions to look at the different sort of revenue streams
VOD [video on demand] television international so so now they're considering what revenue streams
there are and they're just putting numbers in it doesn't matter what the numbers are it's the
format of what they have to think about the numbers don't matter today because they're
going to change tomorrow and in 10 years or five years when they go to do their films they'll be
a whole different marketplace with maybe some different categories it's just the concept of
going through the motions to understand how to set it up that's what matters and once they turned
in those assignments and you talked about it as a group I'm assuming maybe you did maybe you didn't
what was their impression of the revenue forecast right so they had to create and even they're just
plugging in these numbers and they're just maybe guessing the revenue forecast is a tiny tiny
component the major component of the assignment was marketing was how to create awareness it
was well it was basically deciding who your audience so each everybody picked a film to use
some people pick some of my films some people you they got to they had to choose a feature film
this is what they do then they have to tell me who their audience is and why then they have to tell
me how they're going to create awareness with that audience so which is a whole marketing campaign
like what they're going to do with social media they're going to do paid advertising how much
they want to spend and why they can justify that spend then they're going to tell me what platforms
how they're going to make it accessible to the audience are they going to do a theatrical release
are they going to do video on demand are they going to try to do subscription if so what do
they expect is their return so they have to do all the research on all the platforms and
what to expect will they do television afterwards will they do day and date releases this kind of
stuff that's the core of it now how much they're going to make is literally a separate course
I do that I do two things sort of as add-ons which are worth fewer points everything is point-based
sort of how much what the revenue would be and and the other thing is do a distribution agreement
so I give them a template for a full distribution agreement so they can read it and see it and
then I give them a distribution memo and again they say well how would we know this and I say
you won't just make it up because I don't care what they say as the like the term of the deal
I care that they know here's the items that go into a distribution agreement you have
to know the territory the term the language is it exclusive what the payouts gonna be what it
I just care that they look at the categories it doesn't matter what the numbers are
it's funny to read the numbers because they're all over the place but it doesn't matter it's the
thought process that goes into understanding what goes into one of these documents.
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