Distribution Matters

I used to enjoy reading box office rankings every week. Movies were ranked by total gross sales that were reported by theatres nationwide to a central organization, which published the data. It was my way of staying in tune with popular culture. It also helped me understand just how massive the movie business is. Yes, I know this is super nerdy, but hey, it worked for me. I haven’t followed these in a few years and hadn’t thought much about why until yesterday.

A sharp founder connected the dots for me. Box office sales are no longer an accurate reflection of consumer movie-viewing habits. This has been the case for the last few years, and the pandemic accelerated this trend and at the same time completely halted the collection of this data. Content creation has historically been dominated by large studios, with movies being distributed through theatres. Box office receipts helped creators understand how their content performed with audiences and estimate its future value. Equally high-quality content is now distributed (and sometimes created) by platforms like Netflix, Hulu, and Amazon Prime Video. As I understand it, these platforms don’t share their viewership data. So how do creators know how their content is performing on a platform or across multiple platforms? They don’t. Without viewership data, it’s difficult for creators to understand the value of their content. This is a big problem that creators are trying to solve. There are companies actively working on it, but I don’t believe anyone has solved it in a way that all stakeholders will readily adopt.

Distribution varies by industry, but at a high level it’s how a product or service reaches customers. Distribution methods have been evolving over the last decade, with the pace of change constantly accelerating. Especially now, with COVID-19 looming over everything. After entrepreneurs achieve product–market fit (i.e., customers readily pay for their solution), they should be thinking about how their product or service will reach their customers.