American Film Market Kicks Off With the Movie Business in Flux

This year’s American Film Market kicks off with the movie business very much in flux.

All eyes are on Netflix, which has become a major presence on the film scene, releasing Oscar-caliber works such as “Beasts of No Nation” and making distribution deals with the likes of Brad Pitt and Adam Sandler. Amazon, another deep-pocketed digital player, has also been active, snapping up rights to the Kevin Spacey comedy “Elvis and Nixon” and bidding aggressively on high-profile projects at festivals.

In the process, these companies are shaking up the way movies are made, sold and released, and that’s forcing studios and filmmakers to reevaluate their priorities.

“I think a lot of snobbery around the theatrical experience has had to be jettisoned,” says Mike Goodridge, CEO of Protagonist Pictures. “I think filmmakers have had to realize that often their films won’t be premiered on the big screen or they’ll have to rely on festivals for the theatrical life for their films.”

But AFM is mostly concerned with selling rights to foreign territories. Netflix has been setting up meetings with key sales agents and appears to be intent on making a bigger splash than it has in past installments of the market when it nearly walked away with rights to Quentin Tarantino’s “The Hateful Eight.” Amazon has been quieter. Even if one or both companies break out the checkbooks, they are expected to behave conservatively. That’s because Netflix and Amazon’s streaming arms haven’t cast as wide a shadow overseas as they have Stateside.

“They’ve become a presence, but we’re not expecting them to be big spenders at AFM,” says Stuart Ford, head of production, sales and financing shingle IM Global. “They’ll be a significant buying force in years to come, but they’re not at this stage in their evolution yet.”

Netflix has put global expansion at the center of its growth plans, but roughly two-thirds of its 69 million members are in the U.S., and it has yet to break into major foreign markets like Russia and China. It is beginning to invest more heavily in local-language programming, backing shows such as the Chilean series

“Gringolandia” in Latin America, where it has a strong presence, and commissioning political thriller “Marseille” in France. But some producers caution that it’s early days, particularly in the film realm.

“Original foreign movies don’t seem to be a priority for Netflix right now — they’re making offers for exclusive pay TV rights that are well below what (French pay TV giant) Canal Plus puts down,” says Joel Thibout, co-founder of Paris-based Backup Film.

Amazon’s streaming service is in its infancy; the video offerings are available in the U.K., Germany, Austria and Japan.

There are other complications. Countries in Europe and Asia have different laws or practices regarding windowing. Not everywhere is as flexible on day-and-date releasing and some have mandates that protect the length and exclusivity of a film’s theatrical run. Other countries, such as Japan, still prefer physical discs over streaming video.

“It’s not uniform,” says Mimi Steinbauer, president/CEO of sales and production shingle Radiant Films Intl. “(Netflix) seems to be opening in a new territory every month, but the structure looks different in different places.”

The impact of Netflix and Amazon is double-edged. On the one hand, they are lifting prices and enabling dark and disturbing films like “Beasts of No Nation,” which centers on child soldiers, to score a massive $12 million payday.

However, they are also standard bearers for a form of media that threatens the primacy of movie theaters and thus imperils tickets sales. Many of the buyers and sellers who will be crowding into Santa Monica’s beach-side market in the coming weeks have profited handsomely from the old model, and they might not be so happy to see it change.

“We’ve long been challenged by technology, from the LaserDisc to the rise of streaming, and you have to evolve with it,” says Jamie Carmichael, president of Content Media’s film division. “If you’re smart enough and nimble enough, you keep finding interesting ways to bring cool entertainment to the world.”

Not everyone is as sanguine. There are fears that the panoply of distribution channels and the lower cost of shooting movies digitally is leading to an explosion of content that is unsustainable. FX chief John Landgraf made headlines this summer when he griped that there was too much television programming being made for a finite number of channels and viewers. The same irrational exuberance may be gripping the film business.

“It’s kind of like the housing bubble and at some point it’s going to burst,” says Nadine de Barros, co-founder of the sales and production company Fortitude Intl. “There are too many companies and too much content.”

That unease was evident at this year’s Toronto Intl. Film Festival where buyers seemed shy to pull the trigger on deals. Several buzzy projects, such as Michael Moore’s “Where to Invade Next” and Drake Doremus’ “Equals,” had to wait to find a home until weeks after everyone had decamped from Canada.

It didn’t help that pictures that scored big deals at festivals like Sundance, such as Noah Baumbach’s “Mistress America” and the urban comedy “Dope,” bombed at the box office, and a number of original productions, such as “The Last Witch Hunter” and “Crimson Peak,” have failed to break out amid a sea of franchises.

The companies heading to AFM are relying on an older formula of matching stars with hot genres, and that may be out of date even without the emergence of a digital rival.

“The most important thing is to actually make a good movie,” says de Barros.

And that can be the hardest kind of alchemy to master.

Leo Barraclough, John Hopewell and Elsa Keslassy contributed to this report.

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