Ruth Vitale, Film Collective rethink strategy

It’s clear to many in the film biz that the indie sector is shaking down. And some think it’s going to get worse.

“One entertainment industry banker I know believes another 10 independent film financiers will exit the business in the next year,” said Film Department CEO Mark Gill in his L.A. Film Fest keynote speech, Yes, the Sky Really Is Falling, in June. “I think he’s low.”

However, to others, there are signs of hope.

“The sector hasn’t gone away,” says outgoing Picturehouse prexy Bob Berney, who is talking to investors about launching a new indie firm. “There are companies and investors who do believe in the market. There’s opportunity when things are upside down. Certain models and business plans aren’t working. Or there are bad films that cost too much. That doesn’t mean audiences and films are not connecting.”

Specialty distribution vet Ruth Vitale is raising money for a new no-frills distribution company called the Film Collective, modeled on the old United Artists and Orion. “We’ve got to have the same goal, sailing for the same island,” says Vitale, who rarely spent more than $500,000 to open a film — like “Paris, je t’aime,” which eventually grossed $4.8 million in the U.S. “We’re talking about a more realistic acquisition, production and distribution marketplace.”

Gill’s speech wrapped up all the current indie woes in a neat bundle: New Line and Paramount Vantage drastically cut back, Picturehouse and WIP shuttered, ThinkFilm on the financial ropes, and more companies on the eve of destruction. But, “The strongest of the strong will survive and in fact prosper,” Gill hastened to add.

Of course the studios have tried to co-opt what real indies like the original Miramax were doing; the companies that lost money were ones that didn’t understand the necessary economies of sale. Throwing greenbacks at the specialty sector is obviously counterproductive.

The studios have foolishly neglected the older audience, especially baby boomers, who were in the habit of going to movies in theaters. With few films targeted at them, these auds were systematically driven back into their living rooms, only to be lured out again by an event like a blockbuster, or a must-see Oscar movie like “No Country for Old Men.”

Even a die-hard indie-lover like Gary Meyer, who runs San Francisco’s Balboa Theater (and is co-director of the Telluride Film Festival), is hard-pressed to book indie films; he has to lure fans with smart Hollywood pics like “Sex and the City” and “Iron Man.”

The crazy product glut — which has seen the rise from 750 to 3,600 submissions to the Sundance Film Fest in the last six years — isn’t just a market blip. This fractured, saturated universe is here to stay. The glut hurt companies like Picturehouse and WIP, along with the rising marketing costs that go with the films lucky enough to get released at all.

The indie crisis is real, but Gill and much of the indie sector are still working with an outmoded business model. A lot of smart industry people are peering into the future of indie film to figure out how a new distribution paradigm might work. Berney, whose two Picturehouse summer releases “Mongol” and “Kit Kittredge: American Girl” are showing surprising B.O. strength, is talking to many different folks about raising private equity for “the right building blocks” of a new indie distribution company.

Some film professionals believe we’re in the midst of a market correction, a shakeout in the inevitable bust-and-boom Hollywood cycle, which will cure a specialty sector that has survived the German fund bust, the video boom and worse. “The audience can expand,” Berney says. “Just like the summer blockbusters keep expanding. If the films do deliver, there’s no ceiling. If MSNBC is starting a film company, it means new models are growing. We need more models parallel to traditional models.”

The tendency across the board, especially at the studios, is for filmmakers to demand millions to make their movies better. (Did Charlie Kaufman really need more than $20 million of Sidney Kimmel’s money to make “Synecdoche, New York”?) Vitale is signing up producers like Mr. Mudd (“Juno”) and Bonafide (“Little Children”) to share the risks with the distributor, be invested in keeping costs down, and share in the rewards, too. Keep costs down, says Vitale, and band together to intelligently produce and market quality films, and you can make it.

Another promising distribution model is IFC Films, which is working with cable partners like Comcast and retailers like Blockbuster (which is trying to change its image as a mass market-only retailer). Blockbuster is pushing the rental and downloading of IFC pics for 60 days, as well as pushing specialty film DVDs in special sections of some 1,500 stores in markets that are considered indie-friendly. Moreover, it is trying to repackage the DVDs without the usual fusty arthouse look. Blockbuster is planning eventually to supply store kiosks so that consumers can download movies for a three-day window onto portable drives.

IFC is mushing the theatrical and VOD window together, so that movies open in a few theaters and premiere on cable video-on-demand at the same time. Exhibitors have been resisting this, arguing that patrons do not show up for movies in theaters in cities where VOD of the film is available. IFC insists VOD showings have no impact on theater attendance. And they point out that more theaters have become available to them, growing from five to 300.

The IFC model seems to be working, as critically hailed films like the Cannes Palme d’Or winners “The Wind that Shakes the Barley” and “4 Months, 3 Weeks, 2 Days” are getting revenue checks on their movies. IFC signed several at Cannes. Would any other distribs have snapped up tough but arty films like “Gomorrah” or “Hunger”?

Many indies think distribs should move toward simultaneous theatrical and in-home releases. Indie companies that aren’t hampered by pay-TV windows could move their theatrical, VOD and DVD windows closer together. Marketing dollars would go further, faster. And audiences could pick and choose the way they want to see movies.

Ask Lance Weiler, the innovative guru of the open-source DIY indie film movement. He’s doing radical experiments in cross-platform global discovery and distribution fests, like this summer’s upcoming “From Here to Awesome,” which melds social networking, browser-based gaming and viral Web marketing.

Weiler’s film fest deploys volunteer experts (no sponsors) and showcases tiny features selected via a complex online hazing process. The films are being distributed in many different ways, including hand-held devices, Amazon Unbox, Netflix, Hulu and VUDU. All revenues will go to the filmmaker.

In a long-tail universe much like the music industry, where many artists — amateur and professional — throw their stuff up on the Internet, how will the work be found?

Weiler plans to shoot the sequel to his thriller “Hope Is Missing” as a series of five webisodes marketed with interactive viral games.

“We’re seeing a shift away from traditional media sources; people are looking for social environments,” Weiler says. “We’re discussing social portals and syndicating content through new distribution outlets. A lot of people are focused on the aggregation of content. Good stuff wells up from the ground.”

Read more of Anne Thompson’s blog here

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