Indie Films Show Them the Money
Posted by Jim on Thursday, July 15, 2010 in Author • Louise Levison - Independent Film Finance Consultant • Film Blogs • Film Revenue & ROI • (3) Comments • Permalink •
Throughout the first half of the year I have been reading about the “collapse” of independent film. Yet the domestic box office for independent films at $1.75 billion was 5.3 percent ahead of the same period in 2009 as of June 20th as well as holding at 35 percent of the total box office of $4.96 billion which showed a 4.1 percent gain over the same period. Did the whole sector really collapse, or were a few of the larger companies that pick up and distribute films getting a bit too loose with their checkbooks?
In January 2009 the New York Times had one of my favorite all-time articles, “Suddenly, Hollywood Seems a Conservative Investment.” Everyone going to investors, including myself, gleefully pointed out how recession-resistant independent film was. For all of this decade, independent films have managed to be 34 to 36 percent of the total North American box office (note: my definition and analysis of the independent film box office has been defined in earlier blogs).
Yet this past January, the same Times said in relation to independent film, “Reeling from soaring marketing costs, a glut of lackluster movies, and the closure of studio specialty divisions, the market virtually collapsed.” From that, the film trades, bloggers and other analysts took up the cry that the indie market had collapsed. Fortunately for us, on April 25th The New York Times announced in a headline, “A Rebuilding Phase for Independent Film.” Now I love that paper; however, I think to say “collapse” was going too far and “rebuilding’ is a bit of an exaggeration. Small companies in the market and bigger newbies, such as Summit Entertainment, have rolled along quite well. In the past month, other companies have announced their expansion into the theatrical market. On the other hand, some companies working in the indie segment had forgotten about the platform releasing style of distribution and begun to copy the studios with larger numbers of screens (and P&A spending) for a given film on opening weekend. Those companies presumably have seen the error of their ways and hopefully started reacting to the world around them.
Perhaps the most telling event in indie distribution was the sudden resignation of Bob Berney (a star among specialty distributors for The Passion of the Christ and My Big Fat Greek Wedding) from his newest company, Apparition, a few days before the start of the Cannes Film Festival and Market. Within days reporters were blogging that Berney was unhappy with the amount of money available by the money man for the distribution of and the inability to pickup from festivals key films that eventually were claimed by Summit Entertainment, Sony Worldwide Acquisitions Group and Magnolia. Berney, who comes from the school of platform releasing that helped make the independent segment important in the nineties is reportedly negotiating to run a new distribution division for Graham King of GK Films as this blog is going to print.
Paul Dergarabedien of Hollywood.com said at the end of May, "This year, higher ticket prices for 3D have already accounted for 25% of domestic box office revenue.” He also said that the revenue is from four 3D movies, referring to Avatar, Alice in Wonderland, Clash of the Titans and How to Train Your Dragon. In June he measured the increase in ticket prices at 6.6 percent. Even accounting for that information, the box office is still at the very least as high as the same period last year or a bit higher. All of those films would have brought in an audience without 3D, although I’ll leave to statisticians with more information to figure out what that difference might be. Even taking out 6% of the box office to-date for Dragon, the only indie film from that group and the just released Shrek Forever in my independent box office total, indie film is still running 4 percent ahead of last year.
Let’s face it. Making a profit in this segment has never been easy. If it were, everyone would be doing it. Wait a minute, out here in Hollywoodland everyone is. Sometimes it is easy to forget that between New York City and Los Angeles is a big expanse of land where a whole lot of people in places like Florida, Texas, New Mexico, Washington State, Chicago, Pennsylvania, West Virginia, Hawaii and, of course Michigan, are making indie films. When I started working in this business in 1988, they were doing it then, although the distribution network hadn’t yet found them. In those cities there also are investors, formerly focusing on real estate and hedge funds, who decided in the past two years to stick their toes in the risky but thrilling waters of indie film. Rather than buying stock in larger indie full service companies, they have favored investing with either new filmmakers or experienced filmmakers now forming their own making low-to-moderately-budgeted films. Not only are they taking into account the risk but more transparency for their investment Considering that companies tend to save their best independent films (or the ones that they think are their best) for release in the last quarter of the year, I’m looking forward to the next six months.
Louise Levison is the author of Filmmakers & Financing: Business Plans for Independents and publisher/editor of The Film Entrepreneur: A Newsletter for the Independent Filmmaker 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. She takes you through the steps to present the essential information to investors.
