Earthworks Films

Investor’s Brief

Mass media has the potential to reach, inform and influence literally millions of people. Despite the pervasiveness of the media, few independent documentaries address the most challenging social issues.

The recent success of many feature documentaries released theatrically in the U.S. has created an expanded window of opportunity.

Remarkably, there is little existing competition. Historically, funding for documentaries comes from grants and limited broadcast outlets. Small production companies are usually only capable of releasing one documentary every few years for television. Larger companies, operating under contract and constraint to broadcasters, have a small but steady profit margin producing television material on demand (e.g. Discovery or History Channel.) By their nature and design, these documentaries are at best modest in scope and composition.

The genre with the biggest box office R.O.I. was actually documentary, with domestic box office returns averaging 12 times the original production budget, and global returns at nearly 27 times the original budget. Of course, documentaries are generally much cheaper to make than other genres, averaging about $2.6 million in production budget versus $95 million for narrative films. So it makes sense that for the small subset of documentaries that do well (remember, these averages include only those films with domestic grosses above $2 million), the R.O.I. can be enormous.

There are four existing markets and new possibilities to reach media consumers worldwide. Additional markets will increase profits through multiple distribution channels: DVD’s; CD soundtracks; broadcast; educational markets, and outreach programs. The distribution channels are:

1) Movie theatres
2) Home Video (DVD sales and rentals)
3) Pay Per View (Apple TV, Amazon, others)
4) Pay Cable (HBO/Showtime)
5) Web (Netflix/Amazon/Hulu)
6) Educational markets (schools, libraries, museums, coordinated events)
7) Broadcast Television

Feature films domestic gross is between $8 and $10 billion a year. With the success of feature documentaries, it is clear that, when compared to their dramatic counterparts they are inexpensive to make. They do not require huge investments. Broadcast demand for documentaries is also growing. The Discovery Corporation alone shows 600 hours of new programming annually. Higher end subscription outlets like HBO and Showtime air many original feature documentaries. We only need to capture a small percentage of the feature market internationally to become profitable, create a brand, and amass a substantial profit. One quarter of 1% of the domestic feature market would give us $25 million gross profit in our sixth year.

The marketing plan is to release 3-5 feature documentaries in 5 years in all venues – theatrical first. This creates a company library that will continue to generate revenue. Marketing includes finding investors and strategic partners with funding agencies, including foundations. Channelvison, a non-profit organization that evaluates the social change/influence success of media, will do the evaluation research. Initially we will partner with feature film marketing & promotion companies and distributors. Commissioning companies (e.g. HBO and Carlton) will fund specific projects. Alliances with non-profits like ‘Save the Children’ (for a documentary on protecting women and children in war) are already established.

These documentaries will deal with social change, emphasizing policies for peace, conflict resolution, and social entrepreneurship. Taking advantage of theatrical runs, complementary message campaigns in radio, print, web and video with non-profits will greatly increase public knowledge. Documentary filmmakers have done this ad hoc in the U.S., but social marketing programs in developing countries have been successful for women’s health, basic literacy programs, HIV awareness programs, etc. How one measures the efficacy of information campaigns is in knowledge, not dollars.

COPYRIGHTS:

There are no legal barriers to entry. Media project ideas and proposals have previously been copyrighted.

BUSINESS MODEL:

What is new is the commercial success of feature documentaries. Documentaries receive extensive publicity that supports sales and profits in each distribution channel. For a documentary, the cost of publicity is modest compared to dramatic features where the marketing costs often exceed the cost of production. With theatrical releases documentaries can recover the cost of production and marketing in a few months, with sales and licensing fees accrued in the ancillary markets creating handsome profits. Projects will be funded individually with grants and commissions, while investment dollars cover overhead. Customers will be reached by means of all advertising venues – print, television, film trailers, and radio. The channels of distribution do their own advertising: Landmark Theaters, Laemmle Theaters, Mann Theaters, HBO, Discovery, Hulu & Netflix. Our sales plan is to work with distribution partners but provide additional promotional sales via non-profits related to the subject matter of the documentary. We will partner with existing documentary distributors such as Film Transit, Film Rise, Participant, and new distributors emerging for the feature documentary market.

As our company name is branded, it may become more profitable to self-distribute. The sources of revenue are theaters, broadcast, DVD/VHS sales and rentals, the educational market, web-based products and potentially educational computer games.

Earthworks Films, Inc. expenses include: Salaries, cost of production, office, marketing, and establishing strategic alliances. [See table for aggregate expense] Margins vary from 0 to 30%, as there is more than one product and more than one method of distribution.

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