Arthouse distribs face tough time

Euro companies aquire more genre pics

Arthouse distribs in Europe have been having a tough time of late, with some going under and others drifting into the mainstream, acquiring more genre pics and fewer festival films.

Several factors are contributing to this shake-up: The DVD ship is foundering, the free-TV lifeboat is sailing away, and the survivors are left clinging to a flimsy video-on-demand life raft.

While the growth of VOD is a positive sign, many wonder whether that will be enough to carry these distribs to safety. That question was front and center at the recent conference in Estoril, Portugal, of Europa Distribution, a body that reps 80 European indie distribs, where attendees paid close attention to a presentation by Efe Cakarel, founder of a VOD movie service that appears to provide the indie sector with a viable biz model for distribution on new media.

That service — arthouse site Mubi — has a million registered members and is adding new ones at a rate of 10 a minute, says Cakarel. It launched on the Sony PlayStation 3 gaming console last fall in 16 European countries, as well as Australia and New Zealand.

Mubi also has a deal in place with Boxee in the U.S. to enable access to its Internet site on TV sets via a set-top box. Otherwise access is through the website, where pics are streamed. PCs also can deliver Mubi content to TV sets via a PC-to-TV cable, as the resolution on the website is able to support TV viewing.

Cakarel comes across as an amiable eccentric, but beneath the charming exterior lies the shrewd mind of an MIT and Stanford alum and a former investment banker at Goldman Sachs.

Turkish-born Cakarel says he came up with the idea for the site along with arthouse sales and finance company Celluloid Dreams and classic movie rights-holder the Criterion Collection. He relaunched it as Mubi at Cannes last year with the backing of Sony as well as a partnership with the World Cinema Foundation, a film restoration body headed by Martin Scorsese.

Cakarel is convinced his concept of the future will click. Dismissing the skepticism of unbelievers, he tells indie distribs that the revenue-generating potential of VOD is substantial and will soon be realized.

“Ten years ago we, overestimated the short-term impact of VOD, and right now we are underestimating the long-term impact,” he says. “This is going to come out of nowhere, and it is going to hit (indie distribs) big-time in the next few years.”

Mubi has the right ingredients for an indie VOD site, says John Dick, head of film distribution at the European Union’s Media Program, a Mubi backer.

The first, and — in Dick’s eyes — the most important asset, is that Mubi can be easily accessed through the TV set. Experience gained with other VOD services the Media Program has backed, such as Gallic site UniversCine, which has deals in place with more than 100 indie producers and distribs and offers 1,450 indie pics, shows that consumers of arthouse movies do not like watching feature films on a computer screen.

“Where we started to see some hope for the project, and where the project started to build, was when it started to have access to the television through IPTV channels,” Dick says.

Although indie distribs remain skeptical about whether PlayStation 3 owners will watch a lot of arthouse movies, Cakarel is convinced that access to the TV set through game consoles and other devices will transform consumer behavior and ignite a boom in VOD revenues for independent fare.

“Like all technological changes it’s going to hit a particular point where it starts to go up significantly and exponentially. And we are getting very close to that point,” Dick says.

Two other important features for an indie film VOD site, says Dick, are that it should have a sharply defined editorial philosophy — which both UniversCine and Mubi have in their adherence to high-quality arthouse product — and a coherent and sizable catalog.

There are some 700 VOD sites in Europe, mostly offering mainstream product. The nearest equivalent to Net-flix is Lovefilm, which offers a wide selection of arthouse pics online but only about a dozen such films are optimized for Web-connected TV’s.

Dick suggests that distribs should stop setting up their own sites and band together in the way that distribs in Spain have done with the formation of the VOD service Filmin, which is backed by such distribs as Wanda, Alta and Golem. “They learned this lesson from the DVD world, where they were doing all the DVD releases for the smaller companies,” Dick says.

Through its relationship with Sony, too, Mubi has a chance to establish a strong brand identity. It prides itself on being very selective. When Cakarel picked up the Webby Award for best movie website in June, his five-word acceptance speech was: “Popular doesn’t always mean good.” (All Webby acceptance speeches are limited to five words.)

Cakarel refuses to do package deals, but instead cherry-picks the catalogs of rights holders. The site is curated as one would a film festival — and it’s no coincidence that Mubi has allied itself with a number of fests this year, such as Mar del Plata and Sao Paolo, to position itself as an online festival of sorts, with the same values and love of arthouse movies.

The focus is on quality rather than quantity, although there are plenty of titles on the service — 1,800 in all. The actual number available to view varies by territory, and the pics are listed based on their popularity among Mubi members rather in alphabetical order.

Another strength of Mubi is the site’s social aspect, allowing subscribers’ friends to see what they’re watching, and for subscribers to interact with each other on Facebook and make recommendations. “It becomes an incredibly viral discovery mechanism,” Cakarel says.

Like Netflix, Mubi is able to collect data concerning its users’ preferences, which helps shape marketing campaigns.

Mubi’s subscription service costs E12.99 (about $17.50) a month for the all-you-can-watch option. This, Cakarel says, circumvents a profound weakness in the pay-per-view model: 75% of potential PPV transactions are terminated at the payment stage.

The final element in Mubi’s favor is that through an online dashboard, distribs can track their earnings, which solves a problem of other sites: lack accounting transparency.

But while arthouse sites such as Mubi do offer hope for indie distribs, Dick says those distributors should still aim to get their pics on as many different sites as possible, particularly the sites of the giants in the field. He says that despite the power of YouTube, iTunes and Amazon, their size leaves room for niches.

So, while independents should not expect VOD to transform the arthouse business overnight, there’s plenty of hope on the horizon.

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