Prices are lower but so are budgets
The headlines at Toronto were dominated by a resurgent market for U.S. acquisitions, plus impressive pre-sales for IM Global’s “Judge Dredd.” No one is kidding themselves that the boom times are back, but at least the indie film business is heading for Santa Monica with a spring in its step.
“Last year Toronto felt quite desperate; this year coming out of Toronto felt a lot better,” says Andrew Orr of London-based sales outfit Independent. “International is paying less than it was, and the U.S. is paying less, but at least the Americans are buying again.”
“We’re not suddenly going to see a huge surge and the business dramatically picking up and paying prices we were seeing 2 1/2 years ago, but we can be reasonably confident about the medium-term future,” says Focus Intl. prexy Alison Thompson.
Glen Basner of New York-based FilmNation strikes a note of caution even though his pic “The King’s Speech” was the big hit of Toronto.
“I don’t really see this as ‘coming back to life’ in as positive a way as the press is reporting,” he says. “The U.S. market is positive in terms of activity, but not so positive in terms of dollars being committed to it. In the foreign pre-sale business, the target of what buyers are looking for is smaller than it was. But if you have a project to hit that target, a movie that distributors in most territories can communicate to a theatrical audience, you’ll do well.”
The international market never contracted as much as domestic, but the sales map is still patchy. Japan, Spain and Italy remain tough, but business is competitive and prices healthy in the U.K., Germany and mid-size territories such as Scandinavia, Australasia, Benelux, Greece and the Mideast.
“From Russia to Romania to Vietnam, there are burgeoning markets that make you feel like there’s a light at the end of the tunnel,” says Summit’s David Garrett. “Some markets are stable, some are going down, so it’s swings and roundabouts really.”
“What we do hear, from Cannes onwards, is that prices are firming, and pre-sales are becoming the norm again,” says AFM topper Jonathan Wolf. But the production paradigm has shifted. “People used to say you couldn’t make a film for $5 million-$10 million, because it was too expensive for straight to video, but not enough for a worthy theatrical release. We’ve seen that no man’s land continue to widen. Some say it’s now $2 million-$20 million.”
“AFM is probably going to be relatively quiet on the new film front, which reflects the fact that we’re all being more cautious about what we produce and seriously having a look at our budgets,” Thompson says.
“We have all got to rethink how we make our films, where we make them and at what budget level,” agrees Mike Runagall of Pathe Intl. “Pre-sales aren’t back to where they were, but for the right material, you can do it. Action films with a star like Jason Statham, material that has a global brand, or low-budget, high-concept genre films.”
IM Global’s Stuart Ford attacked Toronto like a regular market, with two new scripts and four films playing in the festival. “For us, Toronto was the start of a two-month AFM,” he says.
Ford reportedly racked up $30 million in pre-sales on the $45 million “Judge Dredd” and also did business on his other new script, the more modestly priced “The Bay.”
IM Global’s strategy, backed by its deep-pocked Indian investor Reliance Pictures, is to strike a balance of budgets and genres across a slate much larger than those of most rivals.
“At Toronto we had a happy mix of a significant commercial film and a smaller genre piece,” he says. “If you’re going to bring multiple projects to the marketplace, you can’t overload the budgets and pricing. There’s a limit to the number of big films you can bring. The upper budget level that the foreign market will support is lower than it was. We’re not seeing those $70 million-$80 million projects any more; sub-$50 million is the sweet spot.”
Everyone agrees that it’s a theatrical market now. If a project won’t work in cinemas, it won’t sell. And the cheaper that theatrical value can be delivered, the better. That means a strong downward pressure on above-the-line costs and the sort of inventive talent deals that allowed Affinity Intl. to offer the Nicole Kidman movie “Rabbit Hole” to foreign distribs for what CEO Brian O’Shea calls “a reasonable price.” “I wasn’t asking $5 million for Germany, but it wasn’t priced for TV either,” he says.
O’Shea, who reps projects from equity players Odd Lot (which produced “Rabbit Hole”) and Bold Films, says smart filmmakers are increasingly attempting to “create films conceptually to lend themselves to lower budgets but deliver a theatrical experience” — citing “Paranormal Activity,” “Buried” and “The Last Exorcism” as examples.
“We’ve seen no shortage of appetite from buyers if you’ve got the titles they want,” says Protagonist Pictures CEO Ben Roberts.
All sellers testify that buyers have become much more specific about what they want, and detailed in their scrutiny. “The buyers have become very, very selective,” says Avi Lerner of Nu Image. “Today they read script, look at the director, the production level, they discuss what happens to the character at the end. They have become very professional, talking about the detail of the movie.”
“It’s about trying to work out how the marketplace is working in the territory you’re in,” says Nigel Green of the U.K.’s top indie distrib Entertainment, which pre-bought “Judge Dredd.” In other words, indie film has become an audience-driven business. That may not sound like a radical shift, but it is.