As appeared in Australian Financial Review
Story by Yolanda Redrup
Australian cinema is set to receive a boost from a new crowdfunding site which allows users to buy tickets to niche films and have them screened in local cinemas such as Hoyts and Village.
Tugg was founded in 2012 by Americans Nicolas Gonda and Pablo Gonzalez and was launched in Australia in February after 12 months of beta testing.
The site allows users to buy tickets to local and overseas films which haven't been picked up by the cinemas, often thanks to small marketing budgets. The film is only screened if enough tickets are sold to cover the costs of the screening, which is usually between 60 and 90 tickets depending on the film.
In the United States the site has more than 500,000 users and there have been 4500 film screenings.
Of the people who visit the US site, 13.3 per cent buy a ticket to a film. In Australia this number is even higher, with a 17 per cent conversion rate.
David Doepel, managing director of Leap Frog Films and one of the people behind Tugg in Australia, said the site's high conversion rate was driven by its utilisation of word of mouth on social media to attract people to the page.
"Filmmakers spend a lot of money creating awareness about a film and spend money on a call to action to get people out on week one to see it, and then they hope word of mouth kicks in," he said.
"We've turned that on its head and started it with word of mouth. You have a trusted friend, family member or work colleague ... who sends out an email or Facebook message saying they're going to a film and that unless enough tickets sell it won't be screened."
Mr Doepel said cinema on demand is a "win/win" for cinema owners, movie producers, the public and movie distributors.
"This won't cannibalise patronage from Hollywood blockbusters; it will actually grow the market by attracting new movie goers to quieter times of the week and different kinds of films," he said.
"The strongest value proposition for a cinema is that we focus on the low-inventory times. Cinemas are just like planes: you can't sell the seats once it's gone. "
Cinemas profit from the rental costs of the movie theatres, while Tugg makes money from the ticket sales, as do the event promoters and film producers.
The average number of people at each screening in Australia is 146 and there is at least one movie screening in each state every week.
Check out TUGG screenings for Frackman in your area - http://ow.ly/MM6N8