Film executives are back home after Cannes, getting back to business as usual. Except things are not “as usual.” The May 14-25 festival and market crystallized what many have suspected for a long time: The business has undergone fundamental changes in the past year.
- The acquisitions biz has shifted drastically. With the downturn in the niche market, studio specialty arms and the bigger indie buyers aren’t buying films like they once did. And projects are becoming more expensive, exemplified at Cannes by Steven Soderbergh’s companion Che Guevara films.
- The funding world is completely different. American sources of financing like hedge funds and Wall Street are being hit hard by the rocky U.S. economy, while new sources are popping up in other regions around the globe, like India and other Asian countries, as well as the Middle East.
- Simultaneous with those shifts is Hollywood’s new attitude toward foreign production. U.S. studios are aggressively looking to produce local-language projects for a particular territory or territories.
The studios may be Hollywood-based, but their conglom parents are thinking globally, which affects every business and creative decision.
In the past, each country’s box office was a mix of Hollywood blockbusters, U.S. midrange and indie pics, and local fare. Recently, the midrange pics have been squeezed out by local titles, such as by French blockbuster “Bienvenue chez les Cht’is.”
And, as the studios enter local-language production, Hollywood finds its monopoly on big-scale epics also being threatened. Cash-rich Asian companies grabbed headlines in Cannes with a string of deals and presentations for ambitious films that reached far beyond their traditional markets.
India’s Reliance Big Entertainment says it will spend $1 billion of its own money for an 18-month film slate. In addition, it has signed to provide development coin to Hollywood production shingles including George Clooney’s Smokehouse, Brad Pitt’s Plan B and several others.
Jordanian film execs are setting up their own more modest fund with coin emanating from ad revenues in the Middle Eastern country.
Italian media conglom Mediaset and Franco-Tunisian investor Tarak Ben Ammar announced they were investing in Tunisian satcaster Nessma, with a view to plugging into North Africa’s 90 million-strong residents and immigrants. That deal was indicative of a seeming trend: that Europe and Asia are offering plenty of business opportunities regardless of any U.S. involvement.
Russian-American shingle Ramco announced it was setting up a $200 million fund, with coin coming largely from private Russian investors, for English-language pics aimed at the international market.
Russian indie Central Partnership announced a pic based on Gogol’s “Taras Bulba,” while Qatar unveiled an English-language “Rumi — The Fire of Love.” Each is budgeted at $25 million — a hefty pricetag for pics in those regions.
But both pale in comparison to “Red Cliff,” the most expensive movie ever filmed in China, an $80 million, four-hour actioner that wowed when footage was screened at Cannes.
“Red Cliff” is significant for another reason. It was directed by John Woo and produced by Terence Chang. Like Paul Verhoeven and others, the helmers are giving a shot of adrenaline to their careers by returning from the U.S. to their native countries, a subtle reminder that Hollywood is not the be-all and end-all for some creative types.
Japan, India and, more recently, Korea have often embraced native films at the expense of American offerings. And in the past few years, titles like France’s “Cht’is” (which has passed $180 million, nearly all of it at the French box office) and “Asterix at the Olympic Games,” the German “Manitou’s Shoes,” Korea’s “The Host” and Britain’s “Hot Fuzz” have made enough money in their home territory that they don’t need to travel.
Other pics, including Focus’ “Lust, Caution,” Lionsgate’s “The Bank Job” and U’s “Mr. Bean’s Holiday” have shown that a film can make enough outside of the U.S., even without U.S. coin.
Hollywood studios in turn are becoming much more aggressive about local-language productions. Warner Bros., Disney and Sony are ahead of the curve, having pioneered the idea of local-language productions in places like China and Germany. In the last six months, Universal and Fox have unveiled ambitious plans, with Paramount and Lionsgate expected to unveil strategies in the next few weeks. Local-language production was a hot topic at Cannes. Twentieth Century Fox co-topper Jim Gianopulos tubthumped the studio’s newly launched Fox Intl. Prods., which will produce and acquire local-language films. The new unit is led by former New Regency exec Sanford Panitch.
For U.S. buyers, Cannes reinforced the notion that the days of festival bidding-wars are fading. That’s not to say there weren’t deals. There were, but they were smaller pickups.There were no bidding wars, and nobody paid big sums for North American rights (as Focus did at Sundance with its $10 million for “Hamlet 2.”)
High-profile titles like Soderbergh’s “Che” duo and Charlie Kaufman’s “Synecdoche, New York” left the fest without North American distribution deals. The Cannes closer, the recut “What Just Happened?” also left the Croisette without a U.S. distrib deal, just as it left Sundance empty-handed.
Also during fest, the financial problems facing David Bergstein’s cash-strapped Capitol/ThinkFilm came into public view, and could be a harbinger of things to come for other U.S. companies. Microdistrib Tartan USA went into foreclosure during the festival, though it may be rescued by an infusion from Palisades Pictures.
In contrast, foreign buyers are getting bolder. Sometimes the payoff is big (“Lord of the Rings”), sometimes not (“Around the World in 80 Days”) and sometimes the results aren’t in yet. Steven Soderbergh’s “Che” was presold in numerous territories, but no American distribs were willing to pony up money until they’d seen the film.
For foreign-language pics, inking a U.S. distribution deal at Cannes used to be one of the key markers of a film’s commercial viability. While the U.S. remains an important market to break international helmers, the volatility of the arthouse market has re-emphasized the importance of selling their projects elsewhere.
Docu “Maradona by Kusturica,” about Argentine soccer hero Diego Maradona, was one of the big sellers at the market for Wild Bunch despite the lack of a U.S. deal.
Similarly, Israeli helmer Ari Folman’s competish entry “Waltz With Bashir,” an animated doc about Israeli’s 1982 invasion of Lebanon, received generally strong critical notices and robust biz, selling to several other territories before being acquired for the U.S. by Sony Classics.
In terms of the film biz, the U.S. used to be the engine that drove every decision. Now, it seems, the U.S. is becoming just one of the key territories in the congloms’ global gameplan as the film biz grows new muscles in other points around the globe.
Patrick Frater, Nick Holdsworth, John Hopewell, Ali Jaafar, Michael Jones, Anne Thompson and Nick Vivarelli contributed to this report.