Distribution money moves in a set order. The audience pays first, through tickets, rentals, purchases, subscriptions, or advertising. The platform or distributor that collected the money takes its share. A sales agent, if one sold the deal, takes a commission. What's left flows back to the production, where a written waterfall decides who gets paid next: investors recoup first, ahead of any producer back-end, and only once investors are made whole does the remaining money split between the investor pool and the producer pool.
Distribution is decided before the film is shot
In the American Film Association's 6 Week Accelerator, Austin Spicer teaches distribution as a development decision:
"Distribution is not something that happens to your film or after you make your film. It's something that you make before you shoot."
The reason is practical. Budget, cast, and genre decide which channels are realistically open to a film, and all three are locked before production. A plan built at the start names a specific audience, a first window, the sequence of later windows, and a revenue expectation for each.
The channels, in the order money usually flows
Theatrical
Wide theatrical means thousands of screens and a major marketing spend, and Spicer teaches that it's an unrealistic entry point for a contained independent film. The accessible versions are a limited release on far fewer screens, or a service deal, where the filmmaker pays the booking costs and keeps control and more of the revenue. A service deal only works if a built-in audience actually shows up.
Streaming acquisition and SVOD
A subscription platform can acquire or license a film for its service. In a license, the platform pays for the right to show the film for a set period, which Spicer teaches filmmakers to keep to one or two years where they can.
TVOD
Transactional video on demand is the rental and purchase window, where a viewer pays per film on a digital storefront.
AVOD
Advertising-based video on demand is the free-to-watch window. The viewer watches ads, and the platform shares the ad revenue. AVOD comes last in the sequence.
International sales
International sales run alongside the domestic windows, territory by territory. A buyer in each territory commits a minimum guarantee: a guaranteed payment against future revenue from that territory, paid on delivery.
Windowing: the sequence only runs one way
Windowing is the order and timing of those channels, and it's the part of an offer filmmakers misread most often. Spicer's rule is short:
You can't go back upstream after you've gone downstream.
A viewer who can watch a film free with ads has little reason to rent it, and a subscription platform pays for exclusivity it loses once the film is widely available for free. The sequence protects the value of each earlier window.
The example timeline taught in the Accelerator runs like this:
- Month one: theatrical opens, with an exclusive window that usually lasts 30 to 90 days.
- Month three: TVOD.
- Month four: subscription licensing begins, targeting a close by month seven.
- Month twelve: AVOD.
The exact months vary by film, but the order holds.
Festivals fit in as marketing. A premiere can generate coverage that supports every later window, but a festival pays nothing into the waterfall.
The players and what each one takes
Three roles get confused often, and the confusion costs money.
A sales agent sells
A sales agent negotiates deals for a film, territory by territory, at markets and through buyer relationships built over years. In the teaching ranges used in the Accelerator, the agent takes a commission of 15% to 25% of the deals they close. If they close nothing, they earn nothing.
An aggregator places
An aggregator delivers a finished film to digital storefronts for a flat fee or a revenue share. In Spicer's words, "an aggregator does not sell your film." Placement makes a film available, but it creates no buyer and no license fee. Many projects need both a sales agent and an aggregator, at different points in the sequence.
A distributor acquires and releases
A distributor takes rights in a film and releases it through the channels above, taking its share under the deal before money flows back to the production.
Across all three roles, the lesson is the same: find every deduction that sits ahead of the production, in order, before you judge the headline number.
Self-distribution
Self-distribution is a fourth route, and it comes with conditions. It works when the filmmaker already has a built-in audience that will show up, a real marketing budget, and the discipline to run the release like a product launch. Without those three, it usually amounts to uploading a film and hoping.
What the money can look like (teaching ranges, not guarantees)
The Accelerator teaches revenue expectations as ranges anchored to comparable films. They're education, and they predict nothing for a specific film. Four ranges frame the scale for a contained independent film:
- A domestic U.S. streaming acquisition for a contained indie can run from $300,000 to $1.5 million for U.S. rights, with the high end tied to recognizable cast and a strong festival premiere.
- On TVOD, the filmmaker side receives roughly 70% of each rental or purchase after platform fees.
- Total minimum guarantees across all international territories, for a contained genre film with a Tier B cast, can range from $200,000 to $800,000 in aggregate. That's the sum across all territories, and a film without name cast should expect significantly less.
- A sales agent commission typically runs 15% to 25% of the deals the agent closes.
None of these is an AFA figure, a promise, or a projection for your film. They're classroom ranges for building a defensible revenue model before an investor conversation.
The waterfall, in summary
When distribution revenue reaches the production, the waterfall sets the order of payment:
- Investors recoup first, ahead of producer back-end. In the structure taught, investors recoup up to 120% of their investment before any split begins.
- Shares are pro rata, so each investor is paid in proportion to their share of the pool.
- Everything after that recoupment point is divided between the investor pool and the producer pool, taught as a 50/50 split. The producer pool includes producers and other above-the-line participants who negotiated back-end points.
The sentence Spicer has students learn to say without hesitation states the position plainly: "Our investors recoup from distribution revenue before producer back-end in a defined waterfall on an 18-24 month timeline, per the offering documents."
Two parts of that sentence matter when you read an offer. The timeline is a projection tied to the windowing sequence, with no payment date attached. And the offering documents govern the terms, regardless of what's said in a pitch conversation. The companion piece on who gets paid first covers the full waterfall step by step.
Build the strategy before an offer arrives
The Accelerator's six-step Distribution Strategy Builder also works as a checklist for reading someone else's offer:
The Distribution Strategy Builder
- Define the primary audience precisely enough that an ad manager could build a targeting profile from the description. The audience in the distribution plan and the audience in the pitch deck should be identical.
- Choose the entry point (the first window) based on genre, budget, cast tier, and marketing capability.
- Write the windowing sequence as a literal timeline, with months.
- Set a revenue expectation for each window, anchored to two or three comparable films. Numbers without comps behind them are math dressed up as projections.
- Set the marketing approach and budget for each window, planned before production.
- Assemble the full 24-month revenue model across every window.
If you can't map an offer onto those six steps, window by window and deduction by deduction, you don't understand it well enough to sign it yet.
The American Film Association teaches this material as education for independent filmmakers. AFA doesn't finance films or provide capital, and nothing here is an offer, a prediction, or financial advice.
Frequently asked questions
How does film distribution revenue get divided?
Through a waterfall: each tier is paid in order, and a tier is only paid after the tiers above it are satisfied.
What is a film waterfall?
The contractual order in which distribution revenue flows to the parties in a film, distributors, lenders, investors, and profit participants.
Do distributors pay filmmakers first?
No. Distribution revenue first covers the distributor's own recoupment and fees, then flows down the waterfall in the contract's order.