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How Factory 25 Founder Matt Grady Survived a Near-Death Experience and Started Distributing Films

How Factory 25 Founder Matt Grady Survived a Near-Death Experience and Started Distributing Films

Factory 25 Matt Grady

Movie News

(Editor’s Note: Factory 25 is a Brooklyn-based independent film distributor that has released films including Frownland, Ham on Rye and Being Frank: The Chris Sievey Story. In the piece belowfounder Matt Grady takes us through the history of his influential distribution house).

I was pretty excited when MovieMaker asked me to write about the current state of distribution and how small distributors like mine, Factory 25, have been able to make it work through the years releasing small indie films. That initial excitement, however, turned to soul searching when I realized that I was writing this during the 10th anniversary week of Factory 25’s first release. Yes, I started writing this exactly 10 years ago to the day, September 29, 2009, that Factory 25 released Ronald Bronstein’s Frownland, a polarizing film that many thought was unreleasable. (Not me.) It was the film that made me want to branch out on my own and start my own, one-person distribution company. And that’s exactly what I did.

CRASHING THE GATE

My first involvement in film was co-hosting a film night at my dorm at the University of New Hampshire, where I was studying economics. The programming, when my co-host picked the film of the week, was mainly mainstream action: Raiders of the Lost Ark, a Batman film, or whatever the latest James Cameron film was. He always had a good turnout. Those films bored me and I would pick films by Peter Greenaway, David Lynch or Alex Cox. The crowds were smaller but more passionate.

Back then, I never even considered any type of career in film, thinking I would use my economics degree and at some point take over my dad’s baseball card and sporting goods shop 40 miles west of the university in Manchester. As I spent more time at the college radio station and booking bands and events for the university, I lost interest in my pre-determined management role selling baseball cards, though it did seem like the path of least resistance to a comfortable life. Then, during the summer of prior to my senior year, I had a car accident and ended up in the hospital for a month recuperating from my injuries, listening to everyone say how lucky I was to survive the crash and re-learning how to walk after weeks of not doing so.

All I did during that month in the hospital was watch films. The hospital had a VHS set-up and my mom would rent at least six films a day for me to watch. I had an epiphany as one often does after a near-death experience. Mine wasn’t “I survived and now I’m going to climb Mount Everest or bike across America.” Mine was “I survived and I’m going to figure out how to make films.”

After wrapping up school and working as an assistant editor at The Daily Planet, a commercial post house, I ended up in sales at a post/duplication house in Boston called Video Transfer, Inc. (VTI). I somehow convinced VTI to let me start and manage a DVD wing of the company, as I believed that new disc technology was going to blow up. At the time there were less than a thousand DVDs in the marketplace and within a year I was managing a staff of 14. At one point early on in the life of DVDs, I was proud to be able to say that I produced 1 percent of commercial films on DVD, which included the whole Dolemite series. This was my first experience dealing with studios and distributors and I studied them closely, realizing I wanted to move in that direction, and I released my first DVD as part of VTI of Beat Girl. I was also dealing with all aspects of DVD production, from design to printing to manufacturing. In the beginning of 2002, I was made aware of Plexi film, a new distribution company starting up in NYC looking for someone to head up the production side.

THE PLEXIFILM YEARS

I moved to Brooklyn in 2002 to join Gary Hustwit’s startup distribution company. It was a pretty big risk giving up the gig in Boston, but Plexifilm seemed to have the scrappy DIY ethos I was looking for. Even though Plexifilm hadn’t released a film yet and was based in Gary’s apartment, he had already acquired some films that I loved, including Benjamin Smoke, Style Wars, Ciao! Manhattan, and Apichatpong Weerasethakul’s Mysterious Object at Noon. They were also producing I Am Trying to Break Your Heart: A Film About Wilco. The initial line-up of films landed Plexifilm a physical distribution deal with Ryko Distribution, a music distribution company that wanted to get in the ever-growing DVD market place. This deal enabled Plexifilm to expand and move to Soho, taking over the Beggars Banquet/4AD lease of their old offices.

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In 2005, there was still a huge demand for DVDs and Plexifilm left Ryko to become Caroline Distribution’s first DVD label. At this point, all that mattered were DVD sales and the biggest part of that was becoming Netflix. I was getting pretty good at guessing how many discs Netflix would take, and that became the yardstick by which to judge what kind of advance a film would receive. Netflix was buying hundreds of spindled unpackaged discs for 50 percent of retail, which was huge for their bottom line, as packaging of the discs often cost up to five times of what the DVD disc cost. Even though Netflix didn’t pay per rental—an issue many moviemakers had with them at the time—it was still the best deal going, combined with big-box retailers like Best Buy, Circuit City, Borders, and Barnes and Noble dedicating such large amounts of real estate to DVDs. They would take most of Plexifilm’s small indies.

Over time, the Plexifilm staff varied from six to eight employees, but around 2006, DVD sales were dropping and digital wasn’t picking up the slack. After the success of his first film, Helvetica, Gary wanted to focus on directing, and who could blame him? He’d made a pretty great film. I wanted to bring film distribution to another level and there were a bunch of films that Plexifilm would never put out that I wanted to release myself. So, Gary and I went our separate ways in 2009 and I started Factory 25.

Factory 25 Matt Grady

Matt Grady found a niche market by creating limited edition packages for his releases like Frownland. Image courtesy of Matt Grady / Factory 25

THE FACTORY 25 YEARS

The first thing I needed was a name. Twenty-five was the actual number of the Virginia factory where the Honus Wagner T206 tobacco baseball card—one of the most valuable, fetishized, and obsessed-over pieces of ephemera of the 20th century—was printed. The first thing I did after coming up with the name was cross-reference the amazing defunct Factory Records, and I found that their catalog number 25 was the album Closer by Joy Division—one of my favorite records of all time. Factory 25 was born.

I reached out to moviemakers I had worked with in the past, or on films that Plexi film passed on that I was really into. The first group of films I picked up were Frownland (SXSW), Damon and Naomi’s 1001 Days, Ben Wolfinsohn’s High School Record (Sundance), You Weren’t There: A History of Chicago Punk, and Matt Boyd’s All the Way From Michigan Not Mars. All fit into the punk attitude of moviemaking I cared about and wanted to get out into the world. In the beginning, I questioned if I could run a distribution company on my own without a support staff, but realized quickly that you can make your own rules and only release films you love if there’s no one else around to convince you otherwise. After having the films lined up, I approached my connections at Warner to see if they would take me on as a label with these titles and some new ideas. Having experienced the market change dramatically and seeing DVD sales bottom out during my last few years at Plexifilm, I realized changes had to be made to the model. I would do as much as I could do myself and hire freelancers when needed: I already had good connections. I’d always respected how indie music labels went with a 50/50 net split model and decided to make that a hard rule so that moviemakers felt that I’d treat their film the same as all the other films in the catalog. All movies and moviemakers get the same deal. Factory 25 has continued to do that, even though some sales agents don’t appreciate that model when I refuse to negotiate with them.

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I also knew that I wanted to create physical fetish items that people would want as much, or even more, than they wanted just the DVD. So, I set about building the world of the films in a physical form and release a series of DVDs combined with vinyl records. (No one that had tried that approach before.) Frownland, the first limited edition vinyl release, was packed with goodies including a 16mm strip cut from a print, a comic drawn by the lead actress in character, an on-set drawing by the lead actor, and a two-sided newsprint poster.

Warner came on board to distribute Factory 25 films digitally and physically and gave a modest advance to get the company rolling. I prepped the September releases and sent press lists and over 160 physical DVDs of each title to press. (These are things that just don’t exist anymore: Most critics now only want links.) I also came up with unique packaging and released DVD-only editions of the films. Netflix’s last major Factory 25 physical purchase, before the DVD rental site shifted its focus to becoming the streaming site it is today, was of Frownland—a purchase of over 1,000 copies that ended up covering all of the production of the limited edition packaging. The other titles had mixed success, but the Chicago punk film soundtrack limited edition had a niche and did well.

The next round of films was more of a challenge but included Until the Light Takes Us, my most successful physical title on DVD and Blu-ray, along with a handful of other titles. This round, I was so inspired by the idea of cool editions of each film that I released three versions of each… a huge mistake, and an even bigger learning experience. One of my favorite films on the catalog ended up losing $40,000, which could have sunk the company, but through stubbornness and perseverance Factory 25 survived. These films could have worked if only one version of each had been released, but the shrinking physical media marketplace had no need for a DVD, a Blu-ray, and a limited edition vinyl/DVD.

This, combined with the digital/VOD not reaching a point to offset slow DVD sales, led to Warner re-evaluating the relationship. They stopped funding Factory 25 titles in 2012 after 14 releases. At this time, transactional digital sales were starting to increase but Warner had bigger titles to focus on, so I ended up pulling my films digitally from Warner, going direct to many of the platforms, and partnering with Oscilloscope to aggregate the films to other platforms.

During 2012, Factory 25 began to focus on week-long theatrical releases of 18 films in NYC. Small theatrical runs aren’t huge moneymakers, but they do give films a higher profile and significantly more press than a physical release, and that gave us the critical momentum needed to acquire more films from major festivals and receive digital interest in those films. At the time, new theaters were popping up in NYC, including the reRun theater and The 92nd Street Y in Tribeca, which, combined with The IFC Center, BAM, Anthology Film Archives, and Film Forum made it a great time for bold programming of low-budget indies. Demand was growing for American indies and I quickly became friends with many of the programmers and never had to four-wall (rent the cinema for the run). Throughout this time, I was able to keep Factory 25 rolling by maintaining a company size of one (just me and some interns, whenever possible) and moving from my Greenpoint office to a home office. Through the post-Warner period, Factory 25 was selling enough physical releases direct to consumers (while I directed music videos and produced DVDs for other companies and record labels) to pay the bills and keep my new vision of a film label rolling.

Factory 25 Matt Grady
Factory 25 released moviemaker Tim Sutton’s debut feature, Pavillon, theatrically in 2013 before issuing a limited run Pink Vinyl LP/DVD release for fans and collectors

In 2013, theatrical distribution continued to thrive for Factory 25 and there were new digital avenues opening up—like Fandor, a great source of revenue for years and one of the best-curated streaming sites, interested in the type of personal films that Factory 25 was releasing. Physical media was continuing to die, but that aspect of film was still important to me, so I went outside the normal distribution model to get co-sponsorships and grants from Sundance Artist Services, Bittorrent, Media Arts Assistance Fund, and Fandor to create books and ended up releasing a series of limited 7″x7″ books with DVDs that Factory 25 could essentially print on demand and assemble. By keeping costs down and not over-manufacturing physical releases, I was able to continue to create unique artifacts for collectors and make a profit with some books selling hundreds of copies, instead of having to sell thousands to break even.

In 2014, while continuing to acquire and distribute around 10 films per year, I started producing films using the Factory 25 productions moniker, and have produced eight micro-budget features and two episodic series over the past five years. By producing the films in-house on a low budget scale, I’ve been able to release those films either by distributing myself through Factory 25 or via other partnerships.

Over the past four years Factory 25 has had ups and downs as streaming platforms come and go. Still, sales to the news outlets, both domestic and international, have overshadowed the loss from transactional sales (renting or buying a digital copy of a single film) dying as quickly as DVDs did previously. Factory 25 has also built its catalog by acquiring American indies made over the past decade that I was able to acquire when their original distribution deals expired.

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I’m proud and passionate about every film in the Factory 25 catalog, which includes early work by such ascendant independents as Alex Ross Perry, Amy Seimetz, Benny and Josh Safdie, David and Nathan Zellner, Joe Swanberg, Andrew Bujalski, Sophia Takal, Joel Potrykus, and many more.

I’ve only survived the wild west of the last 10 years of film distribution by being passionate about every acquisition, keeping overhead as low as possible, trying new physical forms of distribution (like releasing a novelization of Uncle Kent 2 with a download card), learning how to do any aspect of production/distribution I can, and rolling with every change in the industry as it happens. During my 20 years as a small distributor, I’ve seen revenue rely upon a variety of models, and observed the ways in which theatrical distribution consistently brings invaluable exposure to a film.

No one would have guessed the current distribution paradigm 10 years ago and no one really knows where distribution is headed over the next 10 years, but I plan on adapting to any direction it takes. If you hope, like I do, to look back on another 10 years of success in 2029, you just have to stay on your toes. MM

Matt Grady is the founder of Brooklyn-based indie distribution company Factory 25, an indie film distribution company launched in 2009 with the mission of “keeping physical media alive.”

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