Sundance Once Again Proves Good Films Can Be Commercial
Posted by Jim on Tuesday, February 02, 2010 in Author • Louise Levison - Independent Film Finance Consultant • Film Blogs • Film Revenue & ROI • (3) Comments • Permalink •
Before Sundance 2010 started, new director John Cooper (and longtime programmer under former director Geoff Gilmore) said that in taking the festival back to its roots, they would be picking good films. “We will not be thinking about the industry much.” The slogan “rebelle” was everywhere including on an outfit that I bought for my friend’s two-month old baby. Yet that message seemed to be lost on the filmmakers, whose works they chose for the festival. Not only were the filmmakers interested in telling stories that could engage an audience but also ones that could find a place in the market. Not all films were earthshaking or eligible for Oscars; however, quite a few have enough merit to travel to a theatrical screen and other commercial outlets.
My job is not to critique the films, except to my friends. It is to talk about the business of the indie business. As I write this, I have a list of 20 films that have been picked up. To be considered a Sundance pickup, I include films that have been admitted to the festival but picked up shortly (usually within 10 days) before the festival starts. Distributors often get screeners of films and choose to beat out other buyers who may be interested. Five of the 20 films fit that category. The majority of buyers need to see the audience (which includes a lot of nonindustry people) and press reactions to a film to know if there is a market for it.
In earlier years when distributors felt flush with coin, there were interesting bidding wars during the festival. In the last couple of years, having made missteps with several high seven figures purchases, the offers have been more sensible. This year reported deal prices ranged from $200,000 to $5 million. Focus Features paid $5 million (or $4.6 million depending on who you talk to) for The Kids Are Alright, and Lionsgate paid $3.2 million (or $4 million) for Buried. Both films have the edgy themes that make a Sundance film. (Lesbian parents have to deal with the return of a drifter who was the sperm donor in the former film, and a U.S. contractor in Iraq is buried alive in a coffin but with a cell phone in the latter). Four of the other films had prices in the $1 to $2 million range and three made deals for under $500,000. Keeping in mind that many deals are finalized after the festival, I normally include all of them made in the two or three weeks after the festival concludes. With the number of films being negotiated as everyone returned to their home offices, I expect the total pickups for the festival to be between 26 to 29 films, the same as the pickups at the 2008 and 2009 festivals respectively.
If you are counting, you know that I haven’t found deal dollars for all the films acquired. Nor do we know what the deals are, which is why I am calling them deal dollars. They can be buyouts, payments based on eventual box office results or based on a myriad of other factors. An interesting note for this festival, that appears different from others, is a proliferation of service deals. Not only from companies that normally operate that way, such as Roadside Attractions, but also with larger companies such as The Weinstein Company and Lionsgate. A service deal involves the filmmaker paying a fee to the distributor to place the film on movie screens. In many cases, it also involves putting up the P&A money which may come from private companies that specialize in P&A funds (as opposed to banks which charge higher fees, if they will even be in that business) or additional money from equity investors. Personally, I don’t like to see my clients raise P&A money upfront. I go with the theory that the more money a distributor can make overall, the harder he or she works. Service deals pay a smaller percentage ― 10 to 15 percent compared to an overall 30 to 35 percent of revenues. While the filmmaker may get a better deal from the domestic ancillary (DVD, Blu-ray, VOD, etc.) this way, I would rather see the distributor go all out for a film. In the end, though, you have to see what kind of deals are offered.
The question remains: can the 20 films from this year’s festival be profitable in the long run? Depending on their budgets, sources of financing and intelligent media manipulation, many can return a profit when all potential revenue windows are exhausted. Whether there is a Precious or Little Miss Sunshine in the group remains to be seen. In the end, it is still up to the audience.
Louise Levision Independent film finance consultant (www.moviemoney.com) and author of “Filmmakers and Financing: Business Plans for Independents”, she also created the business plan for The Blair Witch Project. Louise Levison is the author of Filmmakers & Financing: Business Plans for Independents and publisher/editor of The Film Entrepreneur: A Newsletter for the IndependentFilmmaker and Investors. Her clients have raised money for low-budget films such as The Blair Witch Project, the most profitable independent film in history, and for companies raising as much as $300 million. Levison is President of Business Strategies, a consulting firm that specializes in creating business plans for films and film companies, as well as consulting on other aspects of the independent film business.
