Roberto Olla, executive director of the Council of Europe’s Eurimages co-production fund, is concerned that as Netflix starts acquiring Eurimages-supported European art films, the type of global deals the streaming giant is doing can force these films to largely bypass theatrical and festival circuits, which are an integral part of Eurimages’ raison d’être. He spoke to Variety during the Locarno Film Festival’s StepIn Initiative, the prime European forum where the disruptive effect of global streaming platforms on the indie film industry is being discussed.

How is Netflix impacting what Eurimages does?

What we are seeing at Eurimages — and I think everyone is seeing this — is that producers are increasingly finding themselves in a bind. Let me describe it with  the following scenario: They’ve had their project co-financed; the film has been released theatrically in the territory of the majority co-producer but is struggling to get released in the minority co-producer’s territory and elsewhere. The world sales agent is looking for buyers. Then Netflix comes along and says: ‘I will give you 300,000 Euros [$355,000] for global rights, except for its main country, where it’s been released. But the film can’t go to more than five festivals. What does the poor producer do? He comes to me and says: ‘Roberto, this is an art movie. What else can I do?’

So what position does that put you in?

I’m faced with having to choose between saying ‘no’ based on the principle that the film has to circulate freely in movie theatres and especially festivals, which is one of Eurimage’s goals. But that puts the producer in a bad spot because he or she may not be able to sell the movie anywhere else. Also, if I accept these Draconian conditions I can also get some money back for Eurimages. But the movie will end up in the bottomless Netflix well, with zero visibility. A few cinephiles will find it there, many others won’t even know it’s there.

Tough choice….

Either I stick to the guiding principles under which Eurimages finances auteur movies which without us would be difficult to produce — and we do it with the goal of giving them visibility. Or I accept their diktat, which nobody goes against, because everyone is happy to get the 300,000 Euros — not for all movies, of course — which are also the project’s kiss of death. Netflix’s saying ‘no more than five festivals’ is a bit like gagging the film. I realise that, since the main audiences for art movies are at festivals, Netflix wants those eyeballs to see it on their platform instead. It’s a Catch 22. But those movies can sometimes go to as many as 40, 50, 70 festivals. I don’t blame the producer, who is already thinking about financing his next movie. If I were a producer, I would do the same thing.

Does Eurimages have specific rules about movies they support having to play in movie theatres and go to as many festivals as possible?

Yes, the general rule is that the movies we support have to play in movie theatres. But there is a proviso that Eurimages can accept other types of distribution outlets outside the film’s country of origin. That’s a necessary escape clause due to the current theatrical distribution woes art movies face. We can veto it, but it’s not in our spirit. Our spirit is the movies should be released at least in their co-producing countries and then have an extended festival life. But we all know that this does not always happen so we are authorised to make exceptions.

Will Eurimages put their foot down and tighten the rules?

Not for the moment, because if we did that it would add to the producers’ burdens but would not change the modus operandi of Netflix and other VOD players. It would just put producers between a rock and a hard place, which does not make sense. Eurimages is a small fund compared to the impact that Netflix has on the market. But this should make us think about Netflix’s role in the production cycle. If Netflix invested in European arthouse movies at script stage they would probably be more interested in getting a return on their investment instead of relegating these movies to the depths of their bottomless library.

Can you give me an example of movies financed by Eurimages where this scenario occurred?

I know Match Factory chief Michael Weber has talked abut Felix van Groeningen’s “Belgica,” which they sold to Netflix. Van Groeningen’s previous film “The Broken Circle Breakdown” was a success on the festival circuit and also circulated theatrically. Match Factory accepted the Netflix deal for “Belgica” and Weber has lamented that this hotly anticipated film did not get much visibility.

How many Eurimages-supported films to you think have ended up in a Netflix black hole?

That’s a tough question: To tell you the truth, I don’t know. But I would say probably a dozen.

What else can be done to try and come to terms with this problem?

I’ve never talked to Netflix but I don’t think they realise that, especially with their festivals policy, they are limiting the visibility of an art movie made by an obscure director. Reviews and word-of-mouth are key in this process. The European film industry has to have a dialogue with Netflix so that they understand that for art films going to as many festivals as possible is beneficial to everyone.