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There are thousands of film festivals around the world. Some are well known like the Cannes film festival and the Sundance film festival. Most of them, however, remain obscure to the rest of the world. The popular belief is that film festivals are where movies are shown to attract distributors. But with the increasing sophistication and variation of film distribution using different platforms other than the cinema and television, you have to wonder what the purpose of film festivals is.
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This is the most commonly known purpose of film festival events. Films are screened to attract potential buyers and distributors. It's similar to an art gallery where pieces of art are exhibited, ultimately for the purpose of being sold. Independent filmmakers who do not have enough contacts in the big film distribution companies see film festivals as an opportunity for their films to be picked up and distributed in different markets around the world, areas that they don't have the means to reach to display their product.
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The PR Machine
Big studios, film producers and directors use film festivals to promote their big movies that already have distribution deals. Since the audience in the film festivals are movie critics and film buffs, it's a great way to draw attention to their upcoming movies, which are usually big summer blockbusters or movies with big name stars starring in them. They usually do this by sending their movie's stars to the festival to mingle with the crowd and promote their movie. Sometimes, the celebrity power present in a film festival overshadow the featured festival films themselves, which is a shame. There are also instances when big studios or big movie stars pull stunts to get people's attention, usually at the expense of festival movies being screened. Having big celebrities in a film festival can be a good thing for festival hosts because they attract media attention, but it can also be a bad thing for the films being screened themselves.
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The Cultural Showcase
Smaller film festivals tend to stick with the basic purpose of a film festival which is to show and appreciate art in cinema. Most films being screened in film festivals will eventually not be picked up by distributors, but the fact they found an audience, no matter how small, is good enough for the people who made the films. These film festivals that stay away from the glitz and glamour of the bigger and more popular film festivals are in danger of dying financial deaths, but they take pride in exhibiting quality films from independent film makers and enriching the culture of the host area for the film festival.
You might also be interested in reading Tips for First Time Film Festival Submissions.
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Film festivals can sometimes play host to big causes like anti-war campaigns and fund raising purposes. These are not the regular focus of some film festivals, but depending on current events, they can make the films take a backseat to bigger causes than promoting culture and commerce. There are also film festivals that are being used not only to promote the local film industry, but the local tourism as well. Not all film festivals feature the same kinds of movies. Some of them may just focus on one genre of films or one general theme, and this gives film festivals a wide variety of purposes.