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Are Netflix and Amazon Driving Smaller Distributors Out of the Sundance Picture?

Once again, Netflix and Amazon took a large share of the acquisitions at the Sundance Film Festival. Just three years ago, the two companies weren’t even contenders for acquiring distribution rights at the fest, but this year they took home 15 features between them, up from 13 last year — and just one in 2015.

It’s increasingly clear that these newcomers are driving up prices, with the average film selling for twice as much as it did three years ago. This year, 11 films sold for more than $5 million, up from just five last year, four in 2015, and none at all in 2014, when “The Skeleton Twins” set the top of the market at just $3.5 million.

sources: Company Reporting, jackdaw research Analysis

Of the $5 million-plus films at the 2017 festival, Netflix grabbed four (including “Mudbound” for $12.5 million), and Amazon took two (including “The Big Sick” for $12 million). Both companies also acquired several properties in the $2 million to $4 million range.

There was no record sale this year — the $17.5 million Fox Searchlight paid last year for “The Birth of a Nation” remains the highest price ever for a movie sold at Sundance — but overall prices did increase. The average of the highest 10 reported prices for movies snatched up at Sundance rose from $2.4 million in 2014 to $7.4 million in 2017; the average for all 2017 movies for which a price was reported was $4.7 million.

In the process of becoming the largest acquirers at Sundance, the two streaming giants appear to be squeezing out other buyers. Lionsgate, which acquired multiple properties each year from 2014 to 2016, bought nothing in 2017, while Magnolia snagged just one film after getting three or four in each of the past three years.

sources: Company Reporting, jackdaw research Analysis

Fox Searchlight and Sony Pictures Classics have held steady in terms of their Sundance acquisitions, and relative newcomers from the traditional side of the business, such as A24 and the Orchard, are also staying active. In fact, Netflix, Amazon, A24, and the Orchard snapped up more than half the movies acquired this year at the festival.

Recent history suggests that big bets haven’t always paid off. For Netflix and Amazon, that may matter less than for traditional studios, because the streamers don’t face the same scrutiny or transparency over their properties. But for a studio, paying twice as much for a movie with limited distribution changes the equation in a big way — which may be why some of them seem to be reconsidering their commitment to buying films at Sundance.

Jan Dawson is the founder and chief analyst at Jackdaw Research, an advisory firm for the consumer technology market.

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