How a minimum guarantee works
Suppose a service licenses a film with a $10,000 minimum guarantee and a 50% revenue share. If the film earns $14,000, the rights holder's share is $7,000, which is below the guarantee, so they keep the $10,000 and nothing more is due. If it earns $30,000, their share is $15,000, and the service pays a further $5,000, known as overage.
Common deal structures
- Flat fee: a fixed price for the license, with no revenue share
- Revenue share only: no advance; the rights holder is paid a percentage of what the title earns
- Minimum guarantee plus share: an advance, then overage once it is recouped
- Per-subscriber fee: an amount per subscriber per month, sometimes with a minimum number of subscribers
The risk on each side
The guarantee moves risk to the service: it pays even if nobody watches. Rights holders ask for one when they doubt a service's reach or reporting. A new service can often negotiate a lower guarantee in exchange for a higher share.
Any deal with a share needs reporting the rights holder can trust: plays, sales and revenue per title, per territory and per period.
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