Understanding Revenue Waterfalls In Film Contracts

From investors and producers to distributors and talent, the making of motion pictures ("Films") involves the investment of time and money by several parties who hope to recoup it and even turn a profit. As such, contracts in the industry generally provide for a breakdown of the revenue generated by the Films to which its contributors are entitled to, referred to as a "recoupment schedule" or a "waterfall." Understanding how waterfalls work in the film industry is useful for parties involved to ensure their right to a share of the revenue is safeguarded.

Distribution agreements

Film producers usually enter into agreements with distributors for their Films in order for them to find their way into theatres, television channels and streaming networks across jurisdictions. When these exhibitors purchase the rights to show the Films to the public, they pay the distributor. As the first entity collecting the revenues, the distributor will generally allocate a portion