In a ever-changing context well known to most of you visiting this blog; it seems that a fundamental (almost ethical) question remains concerning the woes and virtues of the disruptions caused by the Internet… I will not venture into bluntly asking the question: Is the Internet good or bad for filmmakers … !? Nor will I pretend to bring an illuminate answer by sticking my thumb up or down; however, I will perform a quick analysis of current examples and try to launch a discussion on the topic (I’ll need your help for that)…
The Internet as a distribution channel
In the US and Canada, looking at Jeremy Juuso post on the Blogger News Network it seems that a decreasing numbers of independent films being released in the US and Canada so far in 2009 were either financed or distributed by Studios (less than 11%). This could just be the sign of troubling times for some, or opportunities to be grabbed by other… or not. Even Sales Agents are cutting back on their slates. According to Fortissimo’s Micheal J Werner’s Screen interview:
“We Began to realise that we’re probably taking on too many films”, says Werner. “They’re all wonderful films – we only take films we want to handle – but the market was moving against us in that regard.” (…) The company’s new strategy is to cut back from around 20 new pick-ups a year to 10-12, of which two or three will be tentpoles with greater commercial potential.
Up to September 09, the most prolific US distributors were Magnolia Pictures, IFC Films, and Sony Pictures Classic. The most important to note is the rise of video-on-demand (VOD) in the distributors strategy; all of IFC’s releases, and nearly half of Magnolia’s, were released in tandem with a VOD release (VOD can occur prior to, or within one week of, theatrical in these instances)… Theatrical profit margins are what they are… and as we mentioned in our earlier post on the VoD market size, US revenue in the first half of the year was about $140 million, with a significant growth in EST. These numbers do remain fairly small in comparison to the DVD industry, whose sales are currently plummeting, partly recovered by the likes of Netflix…
Speaking a few weeks ago, the Netflix CEO announced that Its subscriber numbers grew by 28% in Q3 compared to last year, drawn in by a $8.99 monthly subscription plan that gives consumers unlimited streaming and unlimited DVD rentals. In though times, that’s a price that talks to people, which in turn boosted a 24% increase in Netflix’s quarterly revenue year-over-year to $423 million.
Hastings noted that Netflix made its way to more than 11 million households in America. More subscribers are streaming video, too. Netflix said it witnessed a 145% increase in streamed video in the third quarter, compared to last year, and 42% of Netflix subscribers streamed at least 15 minutes of one TV episode or movie during the quarter.
However, as reported in Design Magnet:
In this environment “there’s a lot of jockeying for position,” said Tom Adams, the principle analyst and founder of Adams Media Research, a company that has provided market data to Hollywood for 25 years. “The studios don’t love the rental market as much because the focus has always been on sales. They’ve had Wal-Mart and Target, stores that are willing to take slim margins for the traffic-generating capability that comes with selling DVDs.”
Look at the situation from the eyes of a studio chief: Netflix charges $9 a month and that enables a subscriber to watch all the movie titles Netflix offers online. Compare that with the money the studios get when a consumer pays $14.95 for a single DVD.
As traditional players are focusing on quality as opposed to quantity, the Internet becomes the ground where the Netflix will obviuosly be offering the quality, but also depth of catalogue and consumer choice.
The Wild Wild West
The Internet is also, and mostly the stage of online illegal use of copyright material. This misuse by the audience of copyright material is still affecting the industry, here’s a pretty good example of how it can happen as reported by Times journalist Mike Harvey:
Guilty as charged ...
Paramount Pictures said that pirated versions of Star Trek were downloaded more than 5 million times in the four months after its release. Six camcorder copies of the movie were made and spread quickly before a perfect copy of the DVD was posted online.
May 8 Film released worldwide.
11.31am First pirated copy made by a Russian moviegoer with a camcorder.
Made available as a DVD and a download. Within days online “release groups” marry the video image with stolen copies of the soundtrack (easily recorded directly from the headphone jack in the cinema seat) in every language in which the film is released.
12.49 Camcorder copy made in the Philippines and released as a DVD.
18.39 Ukrainian moviegoer records a better version with a camcorder. This is released as a DVD and online. More online groups merge the copy with pirated soundtracks in every language. This version dominates copies online in the months ahead. By the end of the day there are 65 web links to pirated versions.
May 10 Version made in Spain goes online with 3,687 links. It is downloaded by 155,000 unique IP addresses.
May 12 Another version recorded in Germany is released online with 11,847 web links and 487,000 downloads.
May 18 A US viewer records another camcorder version. It is put online with 46,716 web links and 2,000,000 downloads.
August 63,366 web links, 4,915,000 downloads
September 9 A good quality pay-per-view version is put online. Films made in French, Spanish, German and Russian.
September 21 A quality version, taken from the movie DVD, goes online with 73,625 web links and 5,320,000 downloads. About 35 million people saw the film at the cinema.
Reaching to your audience
However, here’s is another example of how the Internet can really work for others, take example of Jamin Winans film, Ink … The Movie, as reported in Filmmaker Magasine: INDIE FILM INK PIRATED, FILMMAKERS PLEASED …
So how does this work?
Filmmaker: Why are you guys having such a positive reaction to your film being pirated?
Winans: The last eight months have been a brutal struggle for Ink. We premiered the film at Santa Barbara Int’l Film Festival, signed with the agency UTA, and opened in Denver for a very successful eight-week run. However, indie film distribution in general has imploded. All the indie branches of the big studios have shut down and no one is buying films. So we took Ink out one theater at a time for the last several months ourselves trying to gain some momentum. The little money we made on each screen we used to push to the next screen. Theater after theater we had amazing crowds, reactions, and new fans, yet every decent distributor wouldn’t touch the film. We knew we had an audience, but no way to get the film out wider to them. We were getting hundreds of emails, Facebook, and Twitter notes from people wanting to see Ink all over the world, but all we could tell them was “we’re trying”.
We knew Ink would likely get bit torrented eventually and accepted that it was unavoidable. However we never imagined it would happen immediately, blow up overnight, and spread all over the world. We were shocked by what was happening and spent the next several hours thinking there was some sort of mistake. But as it turns out, our one-year strategy of word-of-mouth was instead moving instantaneously. I’ve never seen a Hollywood campaign so effective and so instant as this has been.
Sure we could be upset that the film is getting downloaded for free, but that would make us jackasses wouldn’t it? Ink was a $250,000 film with previously unknown actors. Hollywood distributors made it more than clear they saw no future for it. It was too bizarre, a mixed genre, unknown actors, low-budget. They wanted nothing to do with it. To pretend that we’re really upset about the torrent would be acting as if we had all kinds of other options. No, we’re thrilled Ink is exploding so much faster than we ever hoped.
FilmmakerWhat is the actual number of downloads that Ink has seen since being made available on the bittorrent channels?
Winans: It’s hard for us to equate, but last I heard from the experts Ink‘s been downloaded over a half million times in about five days.
Once people watch the film, the idea and concept is probably to bring back viewers to this website. One thing is for sure Double edge Films prorbalby has quite a lot of information on who likes their work, and already have a fan base for their next film… However, maybe they could have benefited more by dealing with Aggregators such as Cinetic Rights Management, who at least would have pushed the film to legal VoD outfits, which probably could have secured more revenues from the film that the Pirate Bay presumably has…
Conclusions/Questions:
- There is still place for independent film distribution in the Industry.
- Number of (indie) films financed and produced by the studios are declining.
- There are still many more films out there than what the traditional “system” can handle.
- Internet based rental DVD and online streaming are steadily increasing.
- Money being back to Studio’s and rights-holders is on the decline.
- It seems some people want to watch films in their houses from day one…
- Is there a future for pure VoD distribution players?
- Do independent film budgets need to go down?
- What do you all think?
