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PART 1: THE NUMBERS BEHIND LAST CAB TO DARWIN'S CINEMA RELEASE

The Dendy/Icon Group team behind Last Cab to Darwin's success discuss the journey behind the release.

From the distributor

Greg Hughes CEO, Dendy/Icon Group
Nick Hayes, Head of Theatrical Operations
Tracy Whybrew, Head of Marketing

Ningali Lawford-Wolf stars as Polly Ningali Lawford-Wolf stars as Polly

How it happened

GREG HUGHES: “Susan Boehm (head of acquisitions and development, Icon) gave me the script of Last Cab to Darwin in mid-2013. Before joining us she’d worked with the creative team in her capacity as development executive at Screen Australia. She said ‘I love these guys and they need a distributor to close the finance plan’. Time was of the essence. We’re an Australian company but we don’t have a mandate to acquire or distribute Australian film. There’s no quota. We weren’t desperately looking for an Australian film. But we were conscious we hadn’t done one for a couple of years.

“I read it and thought ‘It’s a really great yarn and I love being on the road and spending time with these people’. Sometimes it treads that fine line between authenticity and cliché but I thought of it as culturally resonate Australia storytelling, like Sunday Too Far Away and other films I watched as a kid in Australian film seasons on the BBC. And it moved me. And if I’m moved by the material on the page there’s a good chance the audience will be. I’ve lived here 20 years but I’m a Brit and I passed it around the office to make sure it also resonated with the natives.”

NICK HAYES: “I kept coming back to its quintessential Australian-ness. It had elements of Priscilla (The Adventures of Priscilla: Queen of the Desert). It was set in the regional Australia you drive through on family holidays.”

TRACY WHYBREW: “But it was a contemporary film. And the way the script dealt with euthanasia didn’t feel polarizing; it was life affirming. We’d had a run of ‘disease of the week’ films: Still Alice, Love and Mercy, Infinitely Polar Bear”. (Everyone laughs.)

GREG HUGHES: “There was an analytical process of course but it always comes back to: ‘What is the exit emotion? What is going on in the hearts and minds of the audience as they leave the cinema?’ We didn’t agonize; typically with acquisitions you don’t. We saw clearly that it was a bloody good story. We paid what they asked for: a distribution guarantee (DG) of $200K. We ran the numbers and it made sense. The plan was a small to mid-sized release. The deal gave us Australian and New Zealand rights for 15 years, plus three if the $200K was not recouped.

“From the outset there was a degree of collaboration. Jeremy said he wanted to make a commercial film and wanted feedback. There was lots of healthy debate but also a lot of love in the room. The running time was the subject of many many discussions because it can mean cinemas have to run fewer sessions. We’d all sit at the table and discuss the release date and how to refine the marketing messages around the film. We drove the creative direction of the campaign and cut the TVCs and the trailer.”

Expectations kept growing

GREG HUGHES: “Initially we thought the film would appeal to fans of drama and Australian cinema. We saw the first rough cut in July 2014 and thought, ‘hang on a sec, this has much broader appeal. It’s a movie for the heartland: more suburban and regional than metropolitan. That’s when we started targeting the AIMC as our launch platform. (The Australian International Movie Convention is the annual get-together of exhibitors and distributors, held on the Gold Coast). We showed footage and introduced Jeremy (director/co-writer Jeremy Sims) and Michael (actor Michael Caton). The outpouring of emotion for Michael was overwhelming. People love this guy, love him to death. They also saw that he’d given a proper thespian performance.”

NICK HAYES: “We had been thinking it would be an 80-print release when we watched the rough cut. After trade screenings for exhibitors in Sydney and Melbourne we started to think at least 120 screens, the same number as 12 Years A Slave, which had won an Oscar. After feedback from Event Cinemas and Hoyts it shifted up to 150. Then ICAA proposed premieres for its members. (The Independent Cinema Association of Australia represents independent cinemas across metropolitan and regional Australia.) We did some brainstorming and came up with the idea of filming talent on the red carpet at the Sydney Film Festival and putting together some material for cinemas to show before the film. We gave out promotional tool kits and it was an interesting experiment. There were 58 of those kinds of screenings with a competition to win a trip to Darwin.

“Analysis shows that Australian films perform best in April/May or August/September. It’s outside tentpole season and out of school holidays. We chose August so it could get a Sydney Film Festival premiere. Data was pivotal to release planning; we also knew we needed the film to get an M rating because MA films underperform.”

GREG HUGHES: “So much momentum was building behind the film. We realised we’d have to go wide day and date (opening in all cinemas on the same day) and spend over $1 million. You can’t open on 200 screens and spend $600K: it’s not going to work. It was one of those moments when you have to step up and put your proverbials on the line. It’s about unlocking the film’s potential. The rough equation is you can spend about a third of your box office target on marketing, which means you’ll break even on theatrical. (See later – cinemas generally get two-thirds of gross box office revenue.) It’s about the lifetime of the film not just the theatrical release. If you don’t break even on theatrical you would be very lucky to make any money. The biggest decision you make when releasing a film is how much to spend on theatrical marketing.

“In the end we opened on 225 screens, rising to 350 with the addition of smaller singles screen sites and council-run cinemas. The total spend on P&A was $1.3 million. It was a lot easier to take that risk because we’d only spent $200K on the DG. We had much more modest expectations back when we acquired the film. But a further $100K DG was due to be paid if the film reached a specific box office target.”

Mark Coles Smith as Tilly Mark Coles Smith as Tilly

Cast access a big factor

TRACY WHYBREW: “The potential of a film is not enough to guarantee its success: the film has to be good. Yes, thankyou, they gave us that. But there are many other factors that affect your ability to platform and drive awareness for a movie release. Will we have access to cast and crew for editorial coverage and what media hooks can we use? We couldn’t have guessed that 2015 would be such a big year for Australian film but it was a very welcome help.

“With media buying we brief our agency based on our overall box office goal. For Last Cab To Darwin it was $4 million. Working from an average ticket price of $10 that means we need roughly 400,000 people to see the film. Then it is a case of deciding how many people we need to reach in order to get that many bums on seats. It is a guideline that can vary based on the type of film, type of audience and other factors that may influence awareness: well-known subject matter, high profile cast, awards focus, etc. We focus the bulk of our media activity in the lead-up to and first week of a film’s release. The idea is to drive a strong opening week and then expect the film do the bulk of the heavy lifting from there. For this film, the opening week target was just under 100,000 people. As we expected the SFF launch and the talent tour to provide a very strong awareness platform, we set a conversion target of five percent which translated into a media buying target of about two million sets of eyeballs.”

“I had a media budget of $700K and about $300K of that went on television, especially on Nine and Seven. Seven is number one in a lot of key regional markets. Metropolitan television is incredibly expensive but you’ve got to spend the money where the most fish are biting. Regional television and pay TV gives you better bang for your buck. We spent $110K on press, including press boosting, that is, cooperative activity with cinemas to augment their own session time advertising. We spent $100K on outdoor: trams and buses in Melbourne; buses in Sydney; and on billboards on freeways in Queensland. In the minds of consumers, outdoor positions a film as a major film. Our digital spend was across celebrity and news sites, a lot of it targeting 35+ females. About $50K went on point of sale: standees, posters, flyers.

“The talent tour was big and cost $180K. There were 43 Q&A screenings across 19 cities and towns – in addition to the 58 preview screenings that Nick mentioned earlier. Screen Australia’s P&A loan facility gave us the opportunity to take the film day and date into the regions with the talent. And we knew the face-to-face interviews would give us a lot of media coverage. And then there was the tea towels! They were part of our prize packages at all the Q&As. If someone asked a question they got a tea towel. Jeremy was always saying: ‘That’s not a question, I can’t give you a tea towel’. We spent $23K and got 5,000. We didn’t dream we’d get the level of access we did to the cast and crew. Not everyone had access in their contracts but we had almost unfettered access for three months. We were very fortunate. Michael turned 72 on tour and he and Jeremy worked their butts off. People also wanted to see Jeremy – to thank him for making the movie. At our peak we had Jeremy, Michael, Reg Cribb, Ningali (Lawford-Wolf), Mark (Coles Smith) and (producers) Greg (Duffy) and Lisa (Duff). We also had Emma (Hamilton) for the Sydney Film Festival. We toured 11 people – our team numbered four. The schedule was insane.”

GREG HUGHES: “It’s impossible to calculate what the cast tour added to gross box office but on similar films the proportion of box office sales that comes from independent cinemas, particularly regionals, is 35%. On Last Cab it was 47%. It still would have played in those cinemas but later and with fewer sessions. There is value in thinking about regional cinema as a place where film can be born.”

Last Cab to Darwin

Where the ticket revenue goes

GREG HUGHES: “The distributor might start with, say, a 50% share of box office revenue, then it decays away. By week four or five it could be down to 25%. These terms are negotiated film by film. The general rule is that cinemas retain two-thirds of all ticket revenue, the distributor receives the balance and then receives a fee of 30-35% of that balance. We expect Last Cab to gross $8 million in Australian and New Zealand cinemas. After GST that will be $7.2m. About a third of this net box office will be $2.4 million. Icon will receive a distribution fee of about 35%. This will leave a balance of $1.56 million which becomes the producer’s share. From this Icon will recoup its $200K DG and the $1.3 million P&A. Once the producer’s share exceeds the value of the guarantee and the P&A, Icon will start remitting overages (i.e. the excess amounts) to the producer. (When Hughes says “the producer’s share” he means the money that goes to all the investors. The production industry generally calls this “gross receipts”.)

“Film distribution is a very high risk business and these days films have to break even theatrically or come out with a small deficit. It is a fairly rare occurrence to have overages from theatrical – which is why we’re willing to talk about this film.

“The royalties we get on ancillary sales varies by revenue stream. The royalty payable for each right is different. We work very hard to get favourable terms and this is sensitive, competitive information. The majority of a TV sale would go towards the producer’s share but we get to keep a lot of the proceeds of video sales because there are high unit costs. Gross receipts will wash through the P&L (profit and loss statement) over the life of the film and the producer’s share will accumulate but it’s very difficult to predict the final results. The biggest chunk of revenue does still come from physical video – some films tick over for a long time, some don’t. Perhaps there will be $1.5 million in wholesale revenues from Last Cab but the mantra for the last two or three years has been ‘video won’t save you’. Ten years ago we would have got over $500K in wholesale sales to rental stores alone but not now. Then we have pay TV, digital VOD and SVOD (eg Netflix) which altogether might bring in $1 million over the life of the title. Airlines and hotels might be worth $75K. Everyone gets on airlines with content loaded on their own gadgets so airline sales are no longer as lucrative. I’ve got nothing in the P&L for free to air. There’s no pot of gold at the end of that rainbow but it could be $100K.

“It is difficult to predict what revenue will come back from ancillary markets over a lengthy time period but at the end of 15 years Icon expects to have made a contribution margin of about $1 million. I expect the producers’ share to be a similar figure.

“This industry thrives on schadenfreude but I’ve never known or handled a film personally that has had so much genuine goodwill from everyone. They acknowledged the blood, sweat and tears. They sent personal notes and that’s rare. Once cinemas have confidence in a film it’s infectious. It’s an industry in which everyone is always weighing up risk: on a Monday they’re thinking ‘Will I take this film off?’ ‘Will I put this one on?’ We’ve had a success in an industry that has its challenges. I’m happy to share what were the success factors on this film but I don’t have a formula.”

Key documents

The one-page finance plan details where every part of Last Cab To Darwin’s $3.993 million production budget came from. Icon’s 12-page theatrical release plan includes information about the film’s positioning, a SWOT analysis and the strategy. The recoupment schedule documents how the money will flow from gross receipts once GST, the cinema’s share and Icon’s 35% distribution fee is subtracted.