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The gulf between the evolution of video on demand in the U.S. and the rest of the world is posing both an opportunity and a challenge for producers and sales agents of indie films.

VOD is a growing component of domestic distribution deals but unlike boffo box office figures, such success adds no value for the international market.

Indeed, releasing a film day-and-date on VOD and theatrical in the U.S. may diminish its appeal to foreign distributors, who still regard that as a sign of inferior quality. Plus, the secrecy surrounding VOD revenues undermines any positive reports regarding any business a film has done.

“There’s definitely a lack of sophistication in the way that foreign markets view what’s going on in the American VOD business,” says Alex Walton, president of international sales and distribution at Exclusive Media Group. “But at the same time it’s understandable when there’s no significant VOD market in their own territory, and there’s no U.S. box office chart for the top VOD releases.”

This despite the U.S. model of launching pics on VOD alongside or even a couple of weeks before the theatrical release, as pioneered by the likes of Magnolia and IFC, is reaping healthy dividends for some specialized films.

“If you have a film that’s going to VOD in the U.S., it’s a negative signal for a distributor who’s trying to book exhibition in France or Italy, because those multiplex chains are driven by the domestic box office figures,” Walton says.

But the boom in domestic VOD is great news for companies selling films into the U.S. market, where a much wider range of titles is being picked up than ever before.

“We’ve sold everything on our slate to the U.S. — some for traditional theatrical releases, some for day-and-date with VOD — and the fact we haven’t got any films left for the U.S. shows how interesting that market has become,” says Stephen Kelliher of London-based sales outfit Bankside.

But conversely, the secrecy around VOD figures in the U.S. is significantly hampering the international sales effort.

A year ago, producer Ted Hope complained to Variety that the robust VOD performance of his film “Super” was irrelevant to potential foreign buyers, who could only see its relatively paltry theatrical gross. “Theatrical box office clearly sends a message loud and quickly to international buyers that yes, there is an audience for this film — what’s different about the VOD market is that it’s hidden,” Hope lamented.

Kelliher agrees. “Even if a film has supposedly done well on VOD, it doesn’t matter, because verifying the figure is impossible.”

Mirjam Wertheim of Orange Entertainment, a veteran L.A.-based rep for multiple foreign buyers, echoes that frustration. “If they would release the numbers, my buyers would care.”

But Martin Moszkowicz of Germany’s Constantin makes the point that it’s not about how many people see a film in theaters, it’s about the publicity that a U.S. theatrical release generates.

“A film with a big theatrical P&A spend has repercussions around the globe, but I’m not sure if that works if you go straight to VOD. Of course, the fact you don’t have to spend so much on P&A is why VOD makes sense economically for producers, but it doesn’t help to create the global branding.”

Stefano Massenzi of Italian distrib Lucky Red echoes the foreign bias: “A VOD release in the U.S. is like straight to video, it’s a different kind of product from a theatrical film.”

What aggravates foreign buyers most is when a movie they already bought for theatrical release ends up going the day-and-date VOD route in the U.S.

That’s what happened to Neil Jordan’s “Ondine.” “It was frustrating for people who have pre-bought it as a theatrical release, and didn’t get the U.S. platform they needed to sell it to their exhibitors,” says Walton, who handled the title when he worked at HanWay.

It’s not just the multiplex chains in some key territories that make their booking according to the American theatrical box office. As Robert Enmark of Scandinavia’s Svensk Filmindustri says, the domestic release pattern can also directly affect the value of foreign TV rights.

“With some of our TV deals, the price of our free or pay TV rights follows the U.S. box office,” he says. “The problem with U.S. VOD releases is that there’s no reliable statistics on the transactions. If something has done well on VOD, it’s good to hear about that, but it doesn’t make a difference to us. We have ‘Margin Call’ in Scandinavia, but its U.S. VOD success won’t translate for our audience in any way. It’s invisible, the press doesn’t write about it, so it doesn’t create any publicity.”

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