Traditionally, India has been divided into 11 territories for film distribution. The distribution rights for these territories generate revenue. These days all producers have also started focusing on the overseas market and the sale of its rights. It generates a large percentage of total revenue. The other revenue streams for the producers are music rights and satellite TV rights

The following arrangements between the producers and distributors illustrate how they agree to share the revenue.

Advance : A distributor advances a certain amount to the producer. The amount is covered from the revenue generated by the film. If there is a shortfall, it is reimbursed by the producer. The distribution cost is borne by the distributor. He adds a commission on this.

Minimum Guarantee : It is called royalty MG. A distributor undertakes distribution in a specific territory against a certain sum, which is a certain percentage of the production cost of the film.The producer is not paid full MG to begin with. He receives generally 30-40 per cent in advance and the rest against the first print. The cost of distribution is borne by the distributor — i.e. the cost of prints, publicity. The distribution cost mark up per cent is 10-20 per cent. It is added to the total cost which is recovered from the box office colletions. The overflow after adjusting total cost is split half-way with the producer.

Commission : The distributor releases a film in the assigned territory and collects a 10 per cent commission on the takings. The whole risk is borne by the producer.

Outright : A lump-sum is accepted by the producer from the distributor against rights of exhibition in the assigned territory for a specific period. When it is difficult to compute earnings in a certain territory, this is a suitable method. Previously, overseas rights were sold on an outright basis.