U.S. sellers specialize to keep footing in market

Exporters ponder 2-event calendar over current model

HOLLYWOOD — U.S.-based sales outfits that cater to foreign appetites for action and thriller pics are heading to Mifed with greater uncertainty than ever. But given that it’s a shaky climate overall, many companies are hoping to keep a foothold in the market by specializing.

At the same time, in an effort to limit travel and expense, film exporters are debating the necessity of Mifed and the London Screenings that lead up to it, with a proposal to limit the film mart calendar to two events — the Cannes Market in late spring and Los Angeles’ American Film Market in the fall.

Among U.S. companies, there is general consensus that two markets are too few and four too many. Most are hoping for a combined London and Mifed, but no one wants to suggest which market should be the odd man out.

A random sampling of eight American production and distribution companies reveals creative strategies for dealing with the current overseas market. Indeed, no two are exactly alike.

Cutting Edge

David Glasser, president of Cutting Edge Entertainment, says today’s Mifed is a far cry from what it was six years ago, when Germans and Italians were in a hurry to find the next hot picture. Now, they’re more conservative, with shopping lists by genre.

“If you’re gonna stay around in this market,” says Glasser, “you have to focus on a certain area and specialize. Now buyers want to know if you’re looking for this kind of thing, this is where you should go.”

Cutting Edge specializes in making action pics for $12 million to $25 million that would normally cost $30 million to $40 million. The key is using A-list producers.

“We’re going to studio producers and getting them to do smaller pictures,” says Glasser. “The buyer is getting more bang for the buck. A lot of competitors are going for bigger and bigger studio-level stuff. We’re going to stay in this budget. That’s our niche.”

Cutting Edge will make eight films this year and is taking them all to Mifed. Although pics are mostly in the action-thriller vein, Glasser does not believe they are in jeopardy with buyers because the violence isn’t hardcore.

“We’re not fans of graphic violence,” he says. “These are more the thinking man’s thriller.”

Menemsha Entertainment

Unlike other genres, art films don’t generally do well enough financially to create more than a small cushion. At Menemsha Entertainment, which acquires 12 to 15 films a year for distribution, six to eight need to do well for the company to stay in fighting shape.

“We don’t make a lot of money on each film,” says Neil Friedman, Menemsha’s president. “We’re like a candy store. We have to sell a lot of gum to succeed.”

Menemsha doesn’t look for genres that work but for auteur-driven films that depend heavily on critical support.

“The films we represent sell by virtue of our showing them,” says Friedman. “We don’t have big stars. You need to love the films you buy from us.”

Without an American distributor, Friedman won’t take a film to the international market. “If they ask about it and you say nobody, they go on to the next film,” he says.

In keeping with its narrower margins, the company is careful about expenses. No fancy hotels, lots of walking and no trade ads–the Internet has to do.

“It’s harder,” admits Friedman. “It takes more energy, more time and more sweat.”

But there’s a higher end to the frugality. “When we represent films, the producer gets 100% of the money as if he has no expenses,” says Friedman. “That’s because we’re in the art business and we like to be clean about how we do things. We’re one of the only companies who do that.”

Keystone Entertainment

Keystone Entertainment made some 25 movies, mostly of the action and thriller variety, before turning out its first “Air Bud” pic in 1997.

“We didn’t think the foreign market could sustain itself, which turned out to be true, and we needed more of a domestic focus,” says CEO Robert Vince.

“The area we turned to was family fare and we turned to it early before others were doing it.”

Not only did Keystone get in early but it is arguably the most successful indie producer of family films. The three “Air Bud” films have grossed over $200 million, with a fourth coming out in the spring, and it just finished the second “MVP” film, a series starring an athletic chimpanzee.

“Films with animals are hard to make well, but ‘Air Bud’ and ‘MVP’ still have better margins than action films and thrillers,” says Vince. “If you stick to action and thrillers, you have to have big names with bigger budgets and that adds risk.”

Unlike the action genre, family films also have strong sell-through revenues and do not have to rely as much on the shrinking video rental market.

“Parents buy family films because kids like to watch them over and over,” explains Vince. “They don’t do that with low-budget action movies.”

Repositioning itself in the family genre cut Keystone’s dependence on foreign sales at a time when those sources, particularly Germany and Japan, have fallen off.

“Indie companies that had primarily a foreign focus are scrambling to find a domestic market for themselves,” adds Vince.

Showcase Entertainment

“This might be the first time in the history of the Earth that worldwide video and TV may want lighter fare,” says David Jackson, CEO of Showcase Entertainment. “During World War II you still had movies portraying us as good guys and (Japanese) and Nazis as bad guys, but my gut reaction is that’s not going to be the case this time.

“Am I going to go with my gut and start doing comedies?” he adds. “Not yet, but I’m looking at it hard.”

Showcase has a lineup of 10 to 15 films a year, including two or three it produces alone with budgets up to $4 million. Relying mostly on the steady demand for action and thriller pics, the company has foreign customers who consistently buy based on its track record.

Using those output arrangements, Showcase is able to get additional financing.

“I’ll probably ask my buyers what their feelings are, but I don’t think they’ll know yet,” says Jackson. “It’s a wait-and-see for them as well.”

If Showcase should decide to reduce the number of action pics in its lineup, they are not likely to be replaced by dramas.

“The only way a drama can succeed in the foreign market is if it has a successful theatrical release in the U.S.,” says Jackson. “A good drama that only plays on TV won’t do great foreign numbers. It’s disappointing for us, and for the producer who brings it to us.”

Amazing Movies

In the 1990s, with videostores saturated, Amazing Movies looked to the overseas TV market for sales, says the company’s president, Douglas Witkins. But when some countries put limits on how much American primetime programming could be imported and reality TV became all the rage, Amazing Movies had to think fast.

“We did a 180-degree spin and went into the arthouse business, acquiring a couple titles in the gay and lesbian genre,” says Witkins.

The films did well enough for the company to start Picture This Entertainment in 1996.

“We set ourselves up as the shop for gay and lesbian arthouse movies that will work in theaters, on video and, if the standards aren’t too rigid, TV,” he says.

To further diversify, Amazing Movies opened an upscale production company, Highland Crest Pictures, to make its own arthouse films. Then, to increase its domestic presence, it formed Picture This Home Video, which makes videocassettes and DVDs focusing on gay and lesbian titles. Now, Amazing Movies, which still exports TV pics, gets 35% of its revenues domestically.

“I diversified because of the world situation,” adds Witkins. “You don’t want to put all your eggs in one basket.”

Regent Intl.

Regent Intl. believes the key to overseas sales is big-name casts.

“Genres are important but films with casts are critical,” says Gene George, company president. “Even on the TV side, the films have to be cast.”

Normally, Regent sells a preponderance of action and thriller pics, but this year two of the three films it’s taking to Mifed are romantic comedies.

“It wasn’t intentional,” he says, “but it looks like the timing is right. People may be looking for more escapist entertainment now.”

Steering clear of pre-sales unless necessary to finish a film, Regent counts on output deals and banking relationships to finance films.

The company began five years ago with TV movies, then shifted into producing its own films and acquiring third-party product. Currently it produces six to eight titles a year and acquires four more. Unlike most production companies, Regent owns two theaters — a single screen in L.A. and a four-plex in Dallas. It’s also negotiating to add others.

“Because of that we’re in a little more advantageous position as far as guaranteeing domestic release,” explains George.

Storm Entertainment

In Hollywood lingo, a locomotive is a big commercial picture buyers can’t resist, so much so that distribs bundle it to sell a package of films.

“In the old days if you had a locomotive you could accompany that with five to seven films,” says Storm Entertainment’s president and CEO Michael Heuser. “Today it’s one, two, a maximum of three films.”

To make an average of six films a year (three at $20 million and three in the $3 million-$6 million range), Storm relies on the bigger-budget projects to help sell the smaller ones.

“There’s no formula for financing movies today,” says Heuser. “You have to replace pre-sales with alternative collateral. Inevitably there’s a gap, but ideally the leverage from higher-profile films will benefit niche market films.”

Storm chooses not to impose any predetermined genre mix on its lineup

“The best rises to the top,” explains Hauser. “Some years we may not have an action or comedy picture.”

Based on this past summer’s collection of one-weekend wonders, studio films that opened strong then fizzled, Hauser foresees a greater demand for auteur-driven titiles in the future.

“People will go back to cinema as opposed to film,” he says. “The appetite will show itself.”

A Plus Entertainment

A Plus Entertainment has focused on the teen market in the last couple years and the niche seems to fit like an old shoe.

“We’re a young company. The average age here is 30,” says A Plus president Emilio Ferrari. “That’s what we’re doing well at. We don’t make arthouse films. We don’t even sell them anymore. We closed down that division.”

With film budgets of $3 million to $6 million, A Plus gets a maximum of 25% from presales and the rest from private funding.

“By staying clear of pre-sales, we have a chance to make some money if a film does well,” says Ferrari, whose company attracts private investors by offering a guarantee on 80% of their investment. A Plus gets an additional revenue stream from a library of 300 titles.

“The library elevates the company and improves its market value,” explains Ferrari. “Investors want to know what you’re worth.”

While Ferrari says he would like big-name casts, they’re not essential. “With teenage films, the genre is the star.

On the other hand, the Swedish Bikini Team, which appears in the upcoming “Never Say Never Mind,” doesn’t hurt either.

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