To listen to the hue and cry, one would think the recent merger between France’s Celluloid Dreams and Blighty’s HanWay Films was the end of the world for indie moviemakers. Rather, the merger of two film sales companies was a potent demonstration of how supply and demand are out of balance in the sector.
At the time of the Dreamachine announcement in March, company execs noted the sales sector is becoming a tougher place. Their clients, local distributors, were buying fewer films on the open market.
In reaction, they would create a larger, more stable entity by joining forces; concentrate on fewer, more obviously salable properties; and involve themselves deeper in film production and production finance.
“We can’t anymore carry these small movies,” Celluloid’s CEO Hengameh Panahi said at the time of the announcement. “I’m hurting my distributors by tempting them to go with these festival films for which there is no economy today.”
Admission that her stock-in-trade — director-driven, non-English-language, arthouse films — are no longer economically viable was likely a difficult thing for Panahi. For years she’s been widely admired for championing nonmainstream pictures from around the world and remaining fiercely loyal to auteurs and the distributors that follow them.
But the reality check she finally delivered to the “world cinema” sector, however unpalatable, has been looming for several years.
A number of factors have been at play. Volume of film production has been rising in many parts of the world, notably Eastern and Western Europe, Latin America and wealthier parts of Asia.
At the same time, auds in many of the same places have increasingly favored local movies — U.K., Japan and Germany have all reversed long-term declines in local market share — which has meant distribs have sought to acquire fewer titles from abroad. Despite the efforts of micro-distributors and the specialty arms of some studios, the U.S. theatrical market has remained as impenetrable as ever for the majority of foreign films.
Reaction by several specialist sales agents has been two- pronged: expansion of the slate of movies they carry to markets, and simultaneously dipping a toe into production finance.
Latter has become increasingly important, as sales agents’ traditional tool for securing key titles — minimum guarantee deposits made against foreign licensing revenues — have become increasingly hard to deliver.
The expansion of slates was an attempt to generate economies of scale by spreading across a greater number of properties the cost of attending markets, putting on screenings and entertaining clients. It also allowed sellers to offer one-stop-shopping.
“Some distributors like to be able to keep down the number of meetings they have and the number of markets they attend by coming to a company like ours which can offer a mixture (of films),” says Fortissimo co-chief Wouter Barendrecht.
But this has limited value when the must-have movie of the moment is with another seller.
The forces behind the creation of Dreamachine also are at work in other recent corporate maneuvers. One of Europe’s other top-tier sellers, Capitol Films, sold itself to financier David Bergstein, who has also acquired North American distrib ThinkFilm and homevid behemoth Image.
Cineclick Asia, Korea’s only sales house not attached to a production pipeline, last month took shelter when it sold to Fantom Entertainment, a stock market-listed company that also includes a movie producer and a TV management firm.
Meanwhile, Media Asia, Hong Kong’s biggest producer-seller with a track record that includes “Infernal Affairs,” is to be taken off the stock market. In its regulatory filing, the firm pointed to the increasing unwillingness of distribs in the U.S. to pre-buy.
Michael Weber, who left Bavaria Film to launch his own Cologne-based seller Match Factory, is sanguine. “Arthouse films have always been a niche market; the question is: How big is that niche?” He says that it has gotten smaller of late, while production volumes worldwide have grown.
“We spend much more time than a few years ago finding the right movies,” Weber says. “We have to think about each three, four or five times.”
But in a sea of mediocrity, the balance of power may have swung toward a limited number of proven producers with ability to assemble solid talent packages.
With the myriad soft coin options as well as growing amounts of private equity pouring into film, leading producers have seen a reduced need for pre-sales to support simple production budgets. In turn, sales companies have to offer something more, be it an output deal or equity finance, to secure standout product.
“We sought a major financial partner in order to increase the number of titles we handle, to secure more commercial titles and to allow us to work with more internationally acclaimed directors,” says Cineclick topper Suh Young-joo. That logic applies at Dreamachine as much as it does at Cineclick.