October 5, 2022
My work overlaps between two spaces – brand funded films, and indie/arthouse films (often with barely any funding, much less brand funding). But in both worlds, one thing has become the norm – the complete shift to development financing versus fully financing the making of the movie or show. This is a big change from just a few years ago, where the norm was to fully finance your movie, by hook or by crook, and then hope to sell it at a film festival to some distributor. And in recent years, if your film was halfway decent, that might happen, and the buyer could often be a major streamer like Netflix. In episodic/series world, it was rarer for people to fully finance a project, but you would see it happen, such as with the famous example of High Maintenance going from web-series to major hit in a short time. None of this really happens anymore, at least not in the US.
What has happened, in brief and leaving out a bit of nuance, is that the major streamers stopped buying as many finished films, whether directly from producers or from other distributors. They also stopped looking at film festivals for acquisitions, outside of a handful of projects from the biggest of festivals (meaning Cannes, Berlin, Sundance). They began commissioning more originals, or at least getting involved early enough to still call it one, and generally shifted their attention to series. All of this was likely based on real data – they could see that no one was watching many of the arthouse/indie films they bought, even fewer were subscribing (or churning) as a result of having these titles either, and audiences were watching series more than films.
This has quickly trickled down to the rest of the field, and smart producers got the message – stop making films on spec. Why bother raising funds for something that won’t sell? Not selling sure sucks for your equity investors, but also for everyone involved. Sure, the dream of selling a film at Sundance keeps the business humming, but if you want to stay in business, this isn’t a good strategy. And if you end up getting a middling offer for your movie, and it barely gets distributed, what was the point of making the film? Sure, it helps develop talent, but if we want these things to be seen, they need good distribution. That pays. That lets films and talent get discovered and that can sustain a career, an office or staff, and a sustainable investor class.
As I’ve written elsewhere, the smartest producers moved to this model a while ago. But now, nearly everyone has done it – if they can (and that’s a big if for many). It is now my main recommendation for brand clients and indie producers alike. Raise enough money to make the pitch deck and reel, or to fund the script and attach some talent, but nothing more. Take this out and shop it around to the distributors and platforms, and if no one bites, the project is dead, at least for now. This is especially true for anything in the episodic space, because even the best trafficked O&O sites of the biggest brands can barely find an audience without buying it.
This is another example of what’s old is new again. We’ve seen cycles like this in the film business before. Pre-sales and co-productions were much more the norm many times in the past, but we had a lucky period of 5-10 years where the buyers were buying, and you could take more risk. Those times are over.
There are exceptions to this rule. You might genuinely think your project can premiere at Sundance and drive a bidding war that brings you much greater financial reward (and promises of better distribution and marketing) than if you sell it early. Or you may just need to make the film now, no matter what. The latter can be especially true with passion projects and timely documentary films. I’m doing that with an indie film I' producing now, even as I recommend against this practice, here. And if you are a brand, you may want to make the film no matter what, and you can always budget for a service deal, or pay to play, or other methods to get your film to an audience. But the reality is that this is currently riskier than ever, and seldom works out for the best.
If you are an equity investor or a brand who might finance a film, and someone is pushing the old model on you – fully finance it and take the risk – you should be asking whether your producer partner or agent truly believes in the sales prospects or just wants your financing (and their fees that come as a commission for sales agents, and a percentage of the budget for many producers)? You should really be looking at your goals for distribution and metrics of success, and be sure you are willing to take these risks. You should also be asking whether this is a model worth pursuing right now if you are a producer – sure, you might get an investor to take that risk, or a brand to finance it. But when they get screwed, you won’t be able to go back to them a second time. To my mind, in this current moment, it’s smarter to stick with development funding and locking in the financing and distribution from the same source, or don’t make it at all. And keep those financing relationships for the future. Plus, dealing with a film that isn't getting distributed is never fun.
Of course, this will change again, and knowing when to take advantage of the coming change before anyone else is an art. Smart brands and investors should be wary of trying to pick those who excel at that art, and stick with the models that are working right now.
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Film
New Doc Venues in LA and NYC: This past week, two new doc venues opened, one in LA and one in NYC, and what a story these openings seem to tell about the state of the doc industry. First up, in LA, XTR opened XTR Studios, a 35K square foot studio housing their productions, a virtual stage, offices for their streaming company Documentary+ and facilities for rent to the doc community all in Echo Park. Evan Nicole Brown for the Hollywood Reporter has the story. I can't wait to visit, and as I'm doing some work with XTR with some brand clients, that might just happen soon. But I also couldn't help but notice how different this looks and feels than the other news this week - written about below by my colleague Gabriel - on the launch of DCTV's Firehouse Theater. The latter being community minded in a different way, but also feeling like the epitome of the difference between NYC and LA. LA being more Hollywood, more focused on what's happening now, more commercial, and somewhat more "of the moment." Kudos to both, but I couldn't help but notice the obvious similarities and differences on the Coasts (just look at the photos in the respective articles). (BN)
DCTV Theater Opening: Last Tuesday marked the opening of the Downtown Community Television Center’s Firehouse Theater, the only movie theater in New York City dedicated to screening documentaries. Based in Chinatown, the 67-seat theater serves as a docu-cultural center. It’ll host runs of first-run docs, documentary conferences, curate specialty programming and more. Through its programming and location, the Firehouse theater will aim to address a diversity problem in the documentary industry. “Public television supporting this level of uninvestigated privilege is troubling not just for us as filmmakers but as tax-paying Americans,” reads a letter signed last year by 130 BIPOC filmmakers tired by the lack of on and behind-camera representation. DCTV, which has for a long time produced socially conscious docs, will apparently use Firehouse to “showcase a plethora of perspectives that challenge power and ways of seeing and understanding (Dara Messinger, DCTV co-executive).” Addie Morfoot for Variety and Eric Kohn for IndieWire bring us the news. (GSH)
AMC is Violating the Laws of Economics: AMC and its meme-stock shenanigans have been dizzying to follow, and that's when it helps to have some sober financial thinking about all of this from a place like the Wall Street Journal. And here you have it. Hint: AMC ceo Adam Aron is not going to looks good at the end of all of this. (BN)
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Branded Content
These Bolivian Skaters Linked With Samsung to Change the Culture’s Perception of Women: In an effort to challenge gender inequality and machismo, nine Bolivian skater-women known as ImillaSkate took part in Samsung’s “Voices of Galaxy” storytelling series. Skating and dressed in polleras (traditional Bolivian garments), their 3-minute short also encourages people to respect and admire Bolivian cholas (women of indigenous ancestry). Check out the short video right here. Natalie Venegas for Adweek has the story. (GSH)
‘Put the brand into culture:’ Entertainment companies are leaning into branded merchandise to help boost TV-show fandom: Entertainment companies believe that consumer products are key to engaging viewers. Take Fox Entertainment, for example. Earlier this month viewers of Fox’s new series called Monarch were able to buy jewelry similar to that worn by one of its protagonists. Others could even sign up to learn how to play the country music songs featured in the show through Fret Zealot, a guitar-accessories company. But of course, Fox isn’t alone in the entertainment to consumer-products game. Disney made over $56 billion in 2021 off of retail sales and Warner Media and Warner Bros. brought in $15 billion. The big streamers are playing the game too – Netflix and Hulu have both debuted branded merchandise shops. The takeaway: In an extremely competitive entertainment landscape, it’s becoming crucial to give consumers different ways to engage with brands and brand narratives, on and off-screen. Kelsey Sutton for MarketingBrew has the piece. (GSH)
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Misc.
Everyone is Leaving Instagram as they Ruin it: This is kinda old news, but Kalley Huang at the NYT has a good summary of why so many artists and influencers who helped make Instgram get that capital I are now leaving it for other platforms. I almost didn't link to this, because if you're like me, you are also hating insta more and more, but this article is a decent summary of all the reasons. For me, it goes back to the mantra - do one simple thing, and do it well. Every time someone expands this mission - on a company already doing this - they fail. I understand the temptation to grow and encompass all new things, but it rarely works (ever?) (BN)
The Met F-s It Up with Streaming: Jessh, could you write a better obituary? The Metropolitan Opera announces what could be a great new program - streaming opera to your home. But in deference to (idiots) theaters, they are geoblocking the availability to places not served by their theatrical screenings. Which is a great way to cause confusion and actually limit your audience instead if expand it, Secret pro tip - movie theaters don't want you to know this, but there are two audiences - those who want to watch at home, and those who will go to the theater (movie or opera-house) and they don't really overlap. Evolve smartly or die. (BN)
GSH = Articles written by Sub-Genre's Gabriel Schillinger-Hyman, not Brian Newman (BN)
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