Will buyers jumpstart dismal year?
It’s impossible to look at the box office numbers without concluding the following: The worst thing that ever happened to indie film was that the studios thought it was a good business.
As the indie world gears up for the Toronto Film Festival, the specialty box office is down dramatically compared to other years, while the rest of the B.O. prospers. Studio specialty arms are battening down the hatches and releasing fewer titles, in dramatic contrast to last year’s deluge.
Ticket sales for 2008 releases from the studio specialty arms, as well as the Weinstein Co., are roughly $161 million year-to-date, compared to $330 million last year and $418 million in 2006, according to Rentrak. (Figures for all three years include some New Line titles, but don’t include MGM figures, although MGM’s revenue is down too.)
The indie/niche world has two cornerstones: acquisitions and original productions. But with prices too high and too many mediocre films — indie filmmakers seem to be going through a creative slump — acquisitions at recent markets have been modest, at best.
And productions are perilous. A $10 million production budget may be peanuts to the parent company, but it is a big investment for a specialty arm, and the declining dollar has created a huge increase in the cost of overseas filming.
Even with all this, specialty arms are doing more of their own productions. As one indie exec says, it’s how they will carve a niche for themselves. But that too is filled with risk. The falling dollar means that shooting a film overseas — once the saving grace of indies — now costs 40% more than it did a few years ago, due to the exchange rate.
Further dampening the indie market is the fact that two of the six studio specialty divisions, Paramount Vantage and Warner Independent Pictures, have been absorbed into their respective studios. (When dismantling Warner Independent, big Warners simultaneously shut down Bob Berney’s Picturehouse.)
With great fanfare, the majors jumped into the indie film game by launching specialty units — but the entire biz is still feeling the ripple effect.
Some imposed a Big Studio mentality on a business that demands careful nurturing. Production budgets got bigger for little films, while marketing budgets ballooned on such pics as “Babel,” “No Country for Old Men” and “There Will be Blood.” This made it tough for smaller indie companies to compete for box office attention or awards. A gross of $5 million to $10 million used to be great for an indie film, but not anymore.
“I think the model is broken. The line between what is specialty and what is studio blurred,” says one film exec.
Another studio specialty vet says, “Companies are going under because of hair and makeup. They don’t do anything within a logical budget for this business.”
Studios are by nature risk-adverse, but indie film was never simply about commercial success or big box office; it was about the filmmaker, and it was about giving the moviegoer an alternative. But as the competition heated up on the specialty scene, this point often got lost in the all-consuming race for awards and B.O. perf.
In the past few years, some studios used their specialty arms as awards magnets. There is a certain irony that this year could bring a reversal of fortunes: More awards contenders could be big studio pics, while there could be fewer specialty titles in the top categories.
The demise of Vantage and Warner Independent as standalone specialty units shouldn’t be taken as a reflection of the health of Focus Features, Miramax, Fox Searchlight and Sony Pictures Classics. Warner Independent and Vantage never enjoyed sustained success of the other four, which has helped them create their carefully laid-out business plans.
Focus and Miramax are experts at using international grosses to boost their bottom lines. Both, along with Fox Searchlight, are savvy about which projects they go after. That doesn’t mean there aren’t missteps, but execs at all three know they have to stay in the black if they want to stay in business. Sony Classics spends far less on marketing and acquisitions and maximizes its ancillary income.
But even those four have been prudently keeping a lower profile in these tough times, acquiring or starting up fewer films, resisting any urge to fill their pipeline with pics they don’t love.
The summer has been slow for small films, with no monster breakouts in the vein of “March of the Penguins,” “Little Miss Sunshine” or “Waitress.”
The niche-indie world has a series of challenges. Unlike past summers, “serious” audiences are migrating to films put out by the majors, with indie voices like Christopher Nolan, Jon Favreau and Guillermo del Toro doing mainstream — and intelligent — films.
The way in which “indie films” are seen also is changing. Audiences can see little “serious” and “smart” films on the Sundance Channel, IFC or via Netflix, so they don’t need to go to the arthouse any more.
And as many newspapers eliminate critics, it’s more common for film reviewers to be syndicated, meaning fewer voices who know their local market and who can get newspaper space to champion smaller films.
The mood in Toronto is likely to be muted this year as studio specialty units assess the reconfigured landscape and the slump in the market.
Aside from the WB and Par casualties, the indie world has seen its victims: ThinkFilm, the biggest buyer at last year’s Toronto fest, has been paralyzed by financial woes and Tartan USA completely vanished. Sundance Channel, a source of significant income for sellers, was swallowed up by Cablevision, which also owns IFC and AMC.
In general, the specialty release calendar is significantly less crowded this year, and will remain that way through the fall. Many see this as a positive development after last year’s crush, when two, or even three, high-profile specialty releases opened on the same weekend, week after week.
It was miserable timing given the credit crunch and the big squeeze on lenders and financiers, whose flood of liquidity had enabled the rush of product in the first place. Looking at the meager return on investment, a lot of backers have thrown in the towel or altered their strategies.
Major studios, buttressed by solid summer B.O. and synergies with growth sectors like consumer products and cable TV, have withstood the economic malaise. But the far smaller specialty players are more vulnerable to the combined effect of declining grosses, stagnation in DVD and the rise of local product in many foreign territories.
“The marketplace simply could not withstand that overcrowding, and many strong films suffered as a result. This year, I think things have contracted a bit and there are less of these films, and they’re being positioned differently,” says David Nugent, director of programming at the Hamptons Film Fest, who doesn’t subscribe to the theory that the lack of product is due to the writers strike.
The bottom line is that it’s a changing world — and it might be something cyclical, or things may have changed permanently. The matrix of different ancillaries — which has expanded radically from the early video days to include VOD, Web downloads, airlines, music and merchandise — puts a new spin on the still-crucial theatrical window.
“There used to be two approaches: releasing something limited and adding markets or releasing it wide,” says SPC co-chief Michael Barker. “Today there are scores of different models in which to distribute films. The theatrical model still works on some pictures but it works less and you have to be more selective.”
Given the industry convulsions of late, all of Indieville will be watching carefully how Paramount and Warners do when releasing leftover specialty projects from Vantage and Warner Independent. One WIP pic, Danny Boyle’s “Slumdog Millionaire,” has enlisted Fox Searchlight as a co-distributor.
When announcing that Warner Indie and Picturehouse were being folded into the major, Alan Horn raised eyebrows when he said ‘Marketing is marketin
g,’ contending that the same people who market big films can market smaller films.”
That’s debatable. Indie filmmakers with projects going through a big studio worry that a big studio won’t invest the same amount of love and energy into a film that grosses $12 million, versus a film that grosses $200 million or more.
Some remind that there have been downturns before.
“You’ve got to look at the historical big picture,” notes Sidney Kimmel’s Bingham Ray, reeling off oft-forgotten names of shuttered studio wings of the 1980s like Fox Classics, Columbia Classics and UA Classics. And that was a period when dozens and dozens of indie film companies, including high-profile ones like Island Alive, Goldcrest and Cinecom, began to collapse.
In that period a generation ago, the Toronto Film Festival was an informal gathering of film lovers. Skies were blue, people ate well.
This September, Toronto is a high-stakes litmus test. In 2008, perhaps more than ever, everyone will look at every strategic move — each buy, non-buy or glitzy premiere — and fret about what it means about the Big Picture and the evolving landscape.
(Anthony Kaufman contributed to this report.)