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Constantin’s Martin Moszkowicz on a New Market Realism (EXCLUSIVE)

CANNES  —  2019’s Cannes  hit the floor running. Even after just two days of business, major sales companies were fielding offers from much of the world on top titles. After four days, quite a few were pretty confident they’d sell much of the world. Some of those deals are now being confirmed. Martin Moszkowicz, executive chairman of Germany’s Constantin Film, the company behind the “Resident Evil” franchise and now “Monster Hunter,” and Germany’s biggest independent distributor, gave his take on this year’s Cannes Film Market before it kicked off and then for a provisional Variety industry wrap. Constantin Film has of course skin in the game, producing “Black Beauty,” with Kate Winslet voicing the horse, and “Wrong Turn,” a reimagining of its hugely successful horror film franchise, which, brought onto the market by Mister Smith Entertainment, look like two of the market hits. Europe has few, if any, more sagacious industry observers. As the 2019 Cannes Film Market winds down, it is well worth quoting Moszkowicz in full:

Do you think that in any way the market has rebounded at this year’s Cannes?

There’s a sense the market’s rebounding somewhat. It’s been better than over the last two years in volume, and quality. There were definitely more movies with commercial potential  coming and some big ones, though the actual number of deals that have come through to date may be somewhat limited. But there’s definitely more optimism in the market than we have seen at the last AFM or Berlin.

How would you explain the larger number of more commercial propositions? What’s changed?

After the streaming shock that everybody had over the last years where everybody was running saying let’s to do something for Netflix or for Amazon or whoever, people are seeing that there’s a limited upside in those deals. If you have a film with clear theatrical options, you’d be crazy to do it for Netflix or another streamer. You get  your mark-up, but no rights whatsoever to build asset value for your company. So there may be interest in getting back to the theatrical market, although that said though only a couple of independent movies really make big numbers theatrically each year.

One thing is more films being brought onto the market, another their actually selling. Some top sales agents were pretty bullish in early Cannes about the sales prospects for their films by market end. Slightly more than  normal seem ready to announce sales across multiple territories.

In every territory you have one taker that seems to be saying ‘I’ll just roll the dice on a big movie, I need one big film. Especially when those distributors have limited access to in house productions. Major Studio type big budget movies are extremely hard to pre-sell in today’s environment. Movies below $20 million-$25 million dollars is the right budget range to approach most independent distributors. Even though more expensive movies are necessary in the market for distributors, we at Constantin Film look for other financing concepts, equity-based financing rather than pre-sales.

Has the independent industry finally become more realistic? 

Yes, the market has adjusted, asking prices are way more reasonable. We’re hearing it from everybody and in many territories. Buyers  are saying: ‘If I buy a movie priced in the $400,00 to $600,000 range, if it works, it’s great. If it doesn’t work, it won’t kill me.’ Movies with $1 million-$4 million asking prices for Germany three-to-four  years ago, are now tagged at $500,000 to $2 million. If you go today to a British distributor and ask him for $6 million, $7 million dollars or more for a movie, he’ll be absolutely scared. Distributors no longer have the parachute of DVD, just one roll of the dice in theatrical and if that does not work, you loose money.

Sales to China, which were a market driver in recent yeats, have slowed. Do you see more movement in the market elsewhere?

The Mexican market, which is performing quite well. Even Spain, the problem child in Europe, is getting a little bit better There are new companies: Solstice, former Lionsgate executive Erik Feig has launched Picturestart. In Germany, an American investment bank, KKR has bought Tele Muenchen, Universum and some more companies. I don’t think the business can be so bad as some have maybe been thinking in the last couple of years.

Apart from China, what are the major headwinds for the independent industry?

“There aren’t a lot of U.S. distributors, period. There are studios and then small and very small  companies. Companies servicing the mid -size market are not doing a lot of movies currently. But overseas distributors appear to be more willing this year to plunk down minimum guarantees on movies without a deal in place, as sellers guarantee specified U.S. release structures, whether distribution to hire or day-and-date releases, and some have been able to  bring in investors to back P & A campaigns.

There is a lot of family entertainment on the Cannes market. At Cannes Animation Day, the Cannes Film Market’s Jerome Paillard said that there were 130 animation films tat the Marché his year, between productions and completed features. Genre movies are also prominent. at bot h the festival and market. Constantin has two new movie projects at Cannes, both sold by Mister Smith, and both selling well, “Black Beauty” and “Wrong Turn.” Is it a coincidence that one is a family feature and the other a horror film?

I think there’s a gap in the market. Also, if you’re looking for something within a certain budget range, you can’t do action, sci-fi or fantasy because these are all way more expensive. You’re limited to family entertainment, drama or horror. Drama is so execution driven. We tend to try to go more for genres that have more of a built-in audience, like family entertainment and horror.

Many film projects at Cannes this year also seem more carefully calibrated in their audience targets… 

Yes, “Black Beauty” has a very clearly targeted audience: Young girls 8 to 14 with their parents. It’s family entertainment in the best sense of the word,  a very theatrically-oriented audience.

What do you think will be the market impact of the upcoming wave of global platforms?

Once new players arrive, the market is going to change, because then there’s more competition, though both Disney and Warner Bros. are creating platforms mainly for their own product. These companies are so big, have so much product they don’t need so much third party product. I am not so sure if the independent producers are going to get so much out of it. Netflix definitely has a local language strategy, I don’t  think many others have that.

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