Prior to 1990, they could get over 50 percent of their movie financed based on the value of the domestic market. Even though the value fell as distributors’ cut their commitments in the 1990s, the domestic market could provide a producer with 20-30 percent of his budget as late as 2007. And with that keystone in place, a producer could get the balance from foreign pre-sales and government subsidies.
This formula was not perfect, but it allowed indie producers to make such award winning films as "The English Patient," "Traffic" or "Babel." In 2008, however, the value of the American market virtually disappeared for the purpose of financing a movie. As one top producer told me in late 2010, ”It is now zero.”
Imagine if you signed an agreement for your film with one of this distributors that shut down? Where would that leave your film? Just sayin...What caused this sudden decline was the closing of most of the studio-backed specialty distributors. Within the space of a few months, New Line Cinema, Miramax, Fine Line Features, Picturehouse, Warner Independent Films, Fox Atomic and Paramount Vantage shut down. Most of the remaining ones sharply cutback on making advance commitments. The causes of this cratering ranged from faltering DVD sales in large retail chains to the ending of output deals by HBO and other Pay-TV channels.
It's worth a read...To get back this money, and make a profit, he must gamble that the unsold American rights will be sold after the movie is completed. But not all indie films ever get distributed in theaters of America. Every year tens of thousands of movies are submitted to film festivals, only a few dozen get meaningful distribution in theaters. And without such distribution, a movie has little chance of being licensed for TV or getting shelf space in major retailers for its DVDs.