Australian films are criticised regularly for their failure to engage local audiences and for their lack of commercial success. Academic and industry analysis of these shortcomings has tended to focus on problems in production and financing, but has given inadequate attention to the role of distribution and exhibition. This article examines how the commercial and cultural situation of Australian films is fundamentally shaped by the manner in which they are circulated and screened. It highlights the complex interrelations between the production, distribution and exhibition sectors, and addresses the implications of these issues for contemporary film policy and practice in Australia.