When the history of this decade’s movie industry is written, 2019 could go down as a tipping point in the power balance between the traditional international industry and the rampant building of new OTT platforms.
That balance is already playing out across fests, including this year’s Berlin Film Festival, which has its first Netflix movie in competition, Isabel Coixet’s “Elisa & Marcela,” and the European Film Market, Europe’s second-biggest movie meet.
Hollywood studios’ transition to a predominately OTT model could take a decade, says Ampere Analysis’ Guy Bisson.
But the pieces are falling into place. New OTT platforms Disney+ and AT&T’s WarnerMedia launch later this year. In November, Apple announced its first movie slate production deal with A24, now led by Sofia Coppola’s “On the Rocks.”
Netflix, riding the wave of its 80 million-plus first-four-week households for Susanne Bier’s “Bird Box,” will spend “more of the same, but on a continued larger scale,” Netflix head honcho Ted Sarandos said at his company’s earnings call this month. That means increasingly more on movies, when feature length shows represented 66% of Netflix’s global catalog titles in November 2016, according to Ampere Analysis.
The money for independent production is increasingly coming from SVOD and independent platforms. “There’s a big shift in the independent movie financing model,” says Bisson.
The sales agent business certainly isn’t dead — sales companies announced deals, pick-ups or sales on at least 50 movies in the first three weeks of January.
But it could be downscaling. By Jan. 21, less than three weeks from this year’s Berlin Film Festival, only one high-profile title had been announced for the market: YA sci-fi thriller “Voyagers,” from Stuart Ford’s AGC Studios, directed by Neil Burger (“Divergent”).
Whether there will be any movies of the scale of AGC Studios’ Cannes duo, “Midway” and “Missing Link,” budgeted near or at $100 million, is a moot question.
“Voyagers” is “big, glossy and commercial” but “not even half of that $100 million figure,” Ford says.
“With the distribution landscape in so many territories in transition it’s now very hard to finance from pre-sales those bigger movies in the $60 million and upwards range,” he says. “The streaming platforms, meanwhile, have an economic model that, for the moment at least, makes these films viable and now are able to offer some theatrical exposure and genuine awards profile as well.”
“The traditional business as invented by Dino De Laurentiis in the 1970s, which worked very well through to the 2000s, is for the time being pretty much over,” says Martin Moszkowicz, at Germany’s Constantin Film.
“Only a handful of big, big movie projects will get made each year by pre-selling on the open market.”
Notes FilmNation’s Glen Basner: “From the supply side, it’s clear that [OTT platforms] will take, finance and own a lot of the films that would have traditionally been on offer in the independent market place. So it does choke off the supply.
“At the same time, as that keeps talent and crews very busy, it means that in order to get people to work on your movie, you may have to pay more than you expect in more challenging times.”
For the independent movie industry, the battle to thrive or survive in both film, TV and OTT will become a battle for talent.
Key creative talent is a “finite resource,” says Moszkowicz. Constantin has signed a dozen or so exclusive deals with writers over recent years.
Competition for talent will inevitably modify the role of sales agents.
“Sooner or later, sales and distribution companies all have to get into financing and production. If you look at the few who are doing well right now, all have their own production capacity,” says Moszkowicz.
FilmNation has taken that route. “We try to identify and cultivate great stories, which will, on their own, attract talent to come and work on it,” says Basner. “We have to find new talent and take chances on them often before others are willing to do so. It certainly worked with Kumail Nanjiani.”
Indeed, “one of the directions which we must take is to accompany a new generation of talents, prepare and help them develop projects, which will be financed by streaming services,” says Emilie Georges at Memento Films Intl. The sales company has Benedict Andrews’ “Against All Enemies” with Kristen Stewart, and Justin Kurzel’s “True History of the Kelly Gang” with Russell Crowe and George MacKay.
Or sales agents can negotiate movie sales to digital platforms on behalf of producers, a role performed with Netflix by Mister Smith Entertainment on Constantin’s “Polar.”
But where does that leave the traditional independent sales distribution business?
Distributors can hope that Netflix’s limited release of “Roma” on 900 screens worldwide will set a precedent.
“With all the strong films being made available for the audience across media and platforms, more than ever we’re seeing the value of the theatrical experience as a way to connect a film with audiences and to make it part of the culture landscape. It’s also a major curatorial tool,” says Sony Pictures Classics’ Dylan Leiner.
Salability and success are not just a matter of budget size, however. Voltage’s Jonathan Deckter points to
the Voltage-sold “Skin,” directed by Guy Nattiv and starring Jamie Bell as a reformed white supremacist. It is “for the most part sold out with only a few territories remaining.”
Big movies “are great, we are very excited to have them but that’s not the only type of film creating value in the marketplace,” says Basner. He cites “The Children Act,” a smaller movie starring Emma Thompson that will gross $17.5 million worldwide.
For Basner, “it might not be as flashy and big as ‘355,’” FilmNation’s high-profile spy thriller starring Jessica Chastain, Lupita Nyong’o, Penelope Cruz, Fan Bingbing and Marion Cotillard, “but at a time of tremendous transition in our business, it is still creating value for our customers and our creative partners globally.”
To sell out, however, titles often have to press multiple buttons, as happened with “Skin”: an “A” fest selection (Toronto, now Berlin); strong reviews (Variety called it “potent fact-inspired drama”); eye-catching U.S. distribution deal (A24 and DirecTV closed at Toronto); prizes (a Toronto Fipresci nod); and marketability, such as Bell packing on 20 pounds to play the lead in “a stunning transformation that is drawing comparisons to Edward Norton in ‘American History X,’” Variety reported.
But the independent sales and distribution sector seems heading towards an era where individual films can certainly do well but the sector as a whole is increasingly challenged.
“It’s a difficult time for companies that are strictly involved in sales,” says Georges.
But, she adds, “there is still a role to play as a sales agent for films backed by local players and aimed at a theatrical distribution scheme, especially within the festival circuits.”
In marked contrast to TV, however, foreign-language movies are not carving out more theatrical openings abroad.
More OTT platforms look likely to also hasten indie to revamp business models to become movie-TV content producers with more emphasis on high-end drama series creators.
The U.S. currently has “about 90 — nine-zero — different entities that you can approach with your product: Broadcasters, platforms, distribution companies, studios, mini-studios,” says Moszkowicz. “Never in my lifetime has there been a time with so many different opportunities.”
AGC’s business already revolves around at least 50% around scripted and unscripted television production and distribution, Ford says.
So the Berlinale Series, the festival’s TV section, and the Drama Series Days, its TV forum, will take on more weight in the festival mix.
In another sign of the times, two out of the seven Berlinale Series titles are backed by OTT platforms: Amazon’s “Hanna,” based on the 2011 movie, and Netflix’s “Quicksand,” its first Swedish original.
OTT platforms may or may not be threats, depending on companies’ vested interests. They are certainly an evermore pervasive reality.