film art future

Sundance Bound

Well, it’s been just over six months since I’ve written a blog post. Been too busy with client work, and I’ve also not had anything interesting to say, I guess. But the annual trek to Sundance brings me back to some thoughts on what’s exciting me about the fest this year, and a little on the state of the industry.

1. It’s a damn good time to watch indie film
I can barely make it through the Sundance catalogue, trying to make my schedule. It will be another impossible year, with so many great films to see. I know of at least ten awesome movies that weren’t taken, and there’s likely thousands more I didn’t see. 2016 was a great year for indie film, and 2017 continues the tradition. While there are many brilliant docs and narratives (and VR, and…) I am most looking forward to seeing David Yow in I Don’t Feel at Home in this World Anymore. Yes, David Yow of the Jesus Lizard, one of the best bands of the late 80s/90s. I saw them at least ten times live, and he’s got more energy than anyone this side of Shannon Selberg. Hope he does an impromptu show in Park City.

2. It’s a damn good time to sell a film

Buyers galore. Just like last year, you’ve got some deep pockets with Amazon Studios and Netflix on the scene, not to mention the usual suspects, plus you now have Neon, NatGeo upping it’s doc game (competing with Discovery), Bleecker Street, The Orchard, Cohen Media, etc, etc. I could name ten or more hot new-ish companies competing at the ‘Dance. And I hear we’ll hear some exciting news about Amazon Video Direct, and I bet Vimeo as well. BTW, it’s also a damn good time to raise money for films – plenty of film funds in place and launching, and (For some) an expanding economy, plus more people competing to get original content.

3. The Women’s March

The talk of 2017 is going to be all about how filmmakers react to the Trumpocalypse (in fact, the talk started the day after). I’ll likely opine on that later this year, but I’m glad to see a whole gang of bad-asses has put together the Park City Women’s March on Main (FB link). I’ll be there to lend my support, and wonder whether anyone will be in the theaters that morning? All P&I screenings should get a second screening to be safe.

4. Climate Change 

It’s on the agenda in a big way. With a new and much-reported section called The New Climate, Sundance programs 14+ films, shorts and VR experiences tackling climate change. I’ve helped make and distribute 10+ climate change related films in the past year or two (mainly with my client, Patagonia), so I can’t wait to see what everyone else is doing. I’ve also been pretty depressed post election about the possibilities of film changing the conversation at all, so I am hoping to get fired up and energized by these projects.

5. Will DIY die in 2017 (did it in 2016)?

Up until a couple years ago, everyone was speaking about the DIY distribution revolution. Now? Crickets. Sure, I know many filmmakers who hire bookers and do it themselves still, but that’s increasingly when they don’t get many other offers of any significance. It’s much rarer now to see the film that comes into Sundance already announcing they’ll be doing hybrid/DIY distribution. There’s also many fewer aggregator portals to work with (they all seem to want to grow into distributors now, and one’s for sale). I look forward to getting the latest reports from the field at Sundance, but also expect this conversation to continue through 2017.

6. FAANG rules

In the financial world, they refer to the FANG companies – Facebook, Amazon, Netflix and Google. I add an initial and say Facebook, Apple, Amazon and Google. They rule the media world and are gobbling everything in their path. I don’t see how anyone can compete with any of them anytime soon. With Apple announcing they’re moving into original content, and Facebook rumored to be doing the same, you’d have to raise over 300MM to even begin to compete with them on a platform or film service, or as a content maker. In theory that means it’s a good time to be a filmmaker or content maker – and maybe even a distributor. They need films and content. But look at what they’re making. Aside from Ted Hope at Amazon (who for now is mainly making 15M+ films w/ established auteurs), most are concentrating on TV and original series. Talk in the distributor world is that Netflix is buying anywhere from 50-80% less docs than they used to, as well as indie films, and that confirms what it looks like from the consumer stand-point (I can’t find most of the films I want to watch).  I imagine distributors will see deep pockets ready for their better films, but there’s very few of them who understand marketing, especially in an algorithm world, so I could see them being bypassed pretty soon. It’s going to get interesting.

7. Diversity not so much, but it’s got to change

I haven’t had time to run the diversity ratios on the Sundance line-up, but I don’t blame them for the lack of diversity in the indie film world – they do a lot to try to help in this regard. While this year’s indie film landscape was pretty diverse – with filmmakers like Barry Jenkins and Ava DuVernay leading a list of great talent – the overall state of things for diversity, and women in film, remains pretty dismal. As Anthony Kaufman reported in July, 2016 in IndieWire: “This year’s first ever Comprehensive Annenberg Report on Diversity, for example, stated that ethnic minorities constituted only 12% of film directors and only 9% of broadcast TV directors, while over half of all films and TV shows failed to include a single non-white character.”

This must change. The indie film world can’t continue to look like me (white male), and we continue to need more diverse voices in front of and especially behind the camera. Nearly every film organization has a program to address this issue, something Kaufman explores in his very good article above. But the situation isn’t changing, which probably means we need to hold these initiatives for indie film programmers, buyers, execs and theater bookers instead of for filmmakers. I’m willing to bet the diversity ratios for decision makers in this business is even lower than the statistics above, and that influences what gets programmed. For example, there’s been no room for a black female mumble-core (not that they’d want to make that), because these up & coming filmmakers often don’t feel they can even submit to these fests, programmers wouldn’t be inclined to like them nor distributors to find their audience. Tyler Perry made a fortune making films for the underserved Black Christian audience. Well, there’s many more of these underserved niches just waiting for their films, and many mainstream audiences getting tired of only a few Moonlight‘s per year.

8. Subtitle purgatory

Sundance, and most film festivals, have a great selection of international, foreign language cinema each year. And a few big (Sony Classics) and small (Lorber, Grasshopper) distributors take the bigger ones out each year. But there’s a wealth of great foreign films, especially documentaries, that never make it to US audiences in any meaningful manner. I was once a doc buyer for a TV broadcaster, and was told to just avoid most subtitled films. That might be because 14% of US adults can’t read, 29% read at a basic, 5th grade level, and only 13% read at a proficient level (!). Or because subtitles don’t show up well on your iPhone, where 33% of consumers watch streaming services. Or it could be because so few Americans seem to care about foreign countries (64% of American citizens don’t have a passport). But the arthouse audience already skews towards an audience that does read and does travel, I’d bet, but if we watched these films, Netflix and their competitors would be buying more of them. It’s also not a lack of good content – attend any international film fest, and the American fare is often much weaker. Methinks this means there’s another underserved niche to be served. I know EuropaCinemas has an initiative to bring more undistributed films to the US this year (I consult with them a bit), but we need some more initiatives here too.

9. M&A City

Sundance 2017 promises to be M&A city – but meaning not mergers and acquisitions (ok, that applies as well), but mergers and announcements. Everyone launches new products, ventures and endeavors at Sundance, and this year, announcements should be plenty. I expect some new SVOD services, new original content, expansions of existing players, new film funds (I know of at least 4 in development), new slates, new divisions, new films of course, and mergers. We’ve recently seen the acquisition/merger of Gunpowder & Sky and FilmBuff, and earlier last year was Vimeo and VHX. Gravitas has announced it’s looking for a buyer. And that’s just what’s public info. I suspect we’ll see a lot more of this in 2017 while money is flowing, and we might see many announcements in Park City.

10. Virtual Reality and new Media test year

Sundance has what looks to be an amazing line-up of new media – VR, AR, art and panels. I’ve been attending the New Frontier (I think) since it first started, and the past few years it’s been the most exciting and most trafficked part of the festival. I heard a rumor that more people went through New Frontier last year than any other venue (would love to know if this is true). People are genuinely excited about the possibilities when you attend. And of course, billions of dollars have been spent in the sector, with a lot of activity going on. Amazon is moving into the space in a big way in 2017 too. I believe in VR’s long-term importance, but I’ve been unimpressed with nearly every experience I’ve had in VR (but some interesting ones in AR and art), and overall consumers aren’t flocking to it as expected. I think we’ll learn a lot about what’s working at Sundance this year, and 2017 will be a big year for figuring out whether this version of VR will take off or if we need another 5-10+ years of experimentation before virtual becomes reality.

Them’s my quick thoughts heading into Park City 2017. If you are attending, I hope to see you there.

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Stephen Follows on Windows and how Hollywood makes money

I’ve been following Stephen Follow’s writings on film data for the past couple of years, and he’s doing a stellar job. He recently published this excellent long-read on How Hollywood makes money (or whether if they do) on Blockbusters. It’s a fascinating read, and he breaks down everything you could possibly want to know, from budgeting to production, marketing to windows, and everything else. He promises to write one soon about other types of films, indies, etc. but while a lot of this is particular to Hollywood Blockbusters a lot of it is useful for indie filmmakers as well.

In particular, I think no one has done a better job at defining release windows for films. Here’s a nifty chart Stephen made:

Windowing via Stephen Follows

Over at the article, he breaks down how each of these work, and how the revenue comes back to the studios. It’s pretty much true for indies, albeit with smaller numbers.

He also debunks a myth I’ve often believed about marketing costs. Here’s the graph and relevant points:

Via Stephen Follows

It is often claimed that marketing a Hollywood movie can cost up to twice of the cost of the film’s budget, however from the numbers above we can see that this is untrue. Across my dataset of $100m+ movies, the average budget was $150.6 million and the average combined marketing spend was $121.1 million (i.e. 81% of the budget).  

When expressed as a percentage of the total costs involved with making and selling a movie, marketing accounts for an average of 29% of costs.  Across my dataset, the largest proportion of total costs going towards marketing was 40% and the lowest was 24%.

With both P&A and Marketing all together, it remains close to  the same as the production budget. This is something indie filmmakers need to realize as well  – you need to spend almost as much on marketing and you do on making your film.

There’s a great need for more transparency around the numbers in film. I’ve helped Sundance on this with the Transparency Project a bit, but more work needs to be done, and Stephen is doing a great job. Read the whole article here.

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Predictions for 2016

Every year I send out my predictions for the New Year, and I have to be honest, I don’t have the best track-record. Sure, I was correct last year that it was an important year for Net Neutrality, but no, Chris Dodd wasn’t forced out of the MPAA, and Facebook didn’t launch original content (not to the extent I meant). But I do think I predicted some trends, so I guess I’d take this list more as some predictions for the future, but they might not happen in 2016. Gotta be ahead of the game!

  1. This will be a boom year for indie films, especially for documentaries, but…it will also presage a major crash. Gotta take the good with the bad. First, the good. With Amazon, Netflix, the Orchard, CNN, AJA, Broad Green, Gravitas… and my Grandmother … all funding original content and buying up indie films like crazy, it’s a great time to have an indie film for sale. We might see another year where almost every Sundance film gets distribution, and regardless, I bet Sundance sales will be gangbusters. This is great, and I hope it works for everyone. So what’s the bad? I don’t think it’s sustainable. We have more distributors and platforms than ever. And sure we have more content for all of them,but it’s a crowded market-place and they can’t all make a return on their investment. Amazon and Netflix can wait it out and keep building their base, but a lot of others can’t. So while I think we’re safe for 2016, I am willing to bet that by 2017, we’ll start to see some major flame-outs among distributors. Until then, Party On!
  2. Virtual Reality will also boom and bust. I’m not the only one saying this, but we’ll see more VR companies and products launch, and people will snap them up like crazy. But when the nausea sets in, and customers get bored with most of the actual experiences (yes, once you get over the hype, most are pretty yawn inducing), we’ll see a major back-lash. Probably not enough to kill it, as so much has been invested already, but there will definitely be a dampening. This will lead to a few people/companies going back to the drawing board and coming up with some amazing shit, so it’s a good thing. Plus, it also means there’s never been a better time to build a VR company, get funding and/or sell it and make a fortune. That’s what I’d do if I could.
  3. There will be an ongoing explosion of branded content. I am biased here, as I work almost exclusively in this arena now, but it’s booming and it won’t stop anytime soon. Every day another company launches a new division to make films, or a major initiative. Here’s just a sampling: Levi’s, Patagonia, Starbucks, Marriott, The North Face, Red Bull Media House, GoPro, Timberland, Pepsi, Nike, Chevy, GE, Yeti are all doing some serious films now. Many are actually quite good. This doesn’t even count all of the branded content being made by places like T Brand Studio (the NYT), Conde Nast, etc. Or the Foundations and major nonprofits making content. It’s now a major competitor to other films and TV for at least our attention, and this will only grow as more people come into the space. And brands know marketing, so they know how to build an audience. I suspect we’ll see even more of it in 2016, if not a major push by someone into fiction films as well.
  4. Theatrical will gain in importance. There’s been way too much hype about the death of cinema. Force Awakens proved people will still go to the theater. But more importantly, everyone is realizing that save for a few instances you simply can’t get the buzz and attention you need unless you have a theatrical. This is partly because of the way critics and the press work – they still pay undue attention to theatrical releases over online – but it’s also because it reaches the core audience who then spreads the word to those of us who might not go to the theater and will wait for the digital release. Yes, windows should usually keep shortening, but theatrical remains a crucial part of the pie. Plus, I am coming around to believing that as people begin to find the cacophony of online overwhelming and too much more of the same, they’ll keep seeking out more genuine experiences. I expect we’ll begin to see a small uptick in younger audiences over the next few years as more of them seek something more rewarding than their cell screen or VR goggles. Luckily, here in NYC we have a few new theaters opening, like the Metrograph, so perhaps this prediction will come true, at least here.
  5. The end of aggregation options for filmmakers or The Death of Aggregators or The Death of DIY Distribution. Ok, this one has really already happened. Just two years ago, I could steer filmmakers to half a dozen or more aggregators who could help them get their films onto iTunes, Netflix and other platforms. But now, most of those places have become distributors, and they are increasingly turning down a lot of indie films. True, a couple still exist, but options are thinning. On top of that, most of them now demand to take your direct-to-fan sales through Vimeo or VHX as well. Why? They claim it’s competition with them, which it utter bullshit – if someone finds your film on your site, it’s because of your work and they wouldn’t have found it from The Orchard’s work (or anyone else), so why give them a cut? Because they need it? From my perspective, it’s never been a worse time to be a self-distributing indie, unless you already have a massive fan base. The partners you used to have are disappearing, becoming distributors or becoming much less friendly. That said, if you need someone good, try Quiver.
  6. Facebook buys Vimeo. Ok, this one is a stretch as supposedly Vimeo isn’t for sale. But Barry Diller has thought about it before, and while Facebook can clearly build the system themselves, they would gain an easy path into owning their own set of channels, with a very loyal customer base. They’d gain a mass of quality content that comes cheaper than Youtube or Yahoo, and with much better brand value than the latter. They could turn the VimeoPro features into Consumer-Pro features and have a subscriber base, and they’d automatically have a home for quality video. Facebook will become a network – they are one – so something like this is coming, and it may be the best possible exit for Vimeo anyway.
  7. Video Start-ups die or are acquired. There’s a lot of tiny video sell-through, rental and SVOD sites out there. They’ve been plugging away for years, but none of them have come close to the user base they need to survive in today’s VC investment environment. I think many will run out of cash, and a few will be acquired. I have some thoughts on who these might be, but I’ll keep that to myself for now, but I do think this is their year of reckoning. That said, we’re long overdue for a well-funded Netflix competitor, so perhaps someone will launch one this year as well?
  8. HBO is spun off from Time Warner. Everyone else is predicting this as well, so perhaps it won’t happen just because everyone thinks it should. But HBO would arguably be much more valuable that way, and hey, I need at least one of these predictions to come true.

That’s it. I’ve only got 8 predictions for 2016, but I’d love to hear some predictions from others. Send them my way.

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