As more movies are made, is this good for the art and business of film?

By David Larkin , written on February 10, 2014

From The News Desk

We all know that the Internet is hastening the decline of  “old” media formats that require capital to produce and attention to consume. And movies are no exception, with exceptions for so called tent pole films or blockbusters that are increasingly dependent on international theatrical revenue. Nevertheless, more films than ever are being made.

This years Sundance had a record 4,057 feature films that applied, up from 3,287 in 2007. This year, 121 features were accepted. That’s a lot of movies for Sundance’s Director John Cooper and his team to watch. (The odds that your short film will be accepted are even smaller. In 2014, 8161 short films were submitted and 66 were accepted.)

As with most things, technology has been a catalyst for change. In the same way it's possible to start a technology company with cheap and easily available resources like Amazon cloud, it is possible to shoot a film for far less on digital cameras and edit it on your laptop than with traditional equipment. On the distribution side an expensive theatrical release is no longer required, although that is what most film makers still yearn for.

Digital distribution through companies like Amazon and iTunes is ubiquitous, and a host of Do It Yourself distribution hubs like VHX and Vimeo that offer better margins for filmmakers are springing up. Social media marketing is emerging as an alternative to TV commercials and newspaper ads. One thing is for sure, the business of film is changing, and everyone is not  happy.

Prior to the start of the Festival, the press had a slightly curmudgeonly feel. Manohla Dargis of the NY Times complained that there were too many films, and she didn’t have time to review them all. At Sundance I attended a gloomy panel put on by film industry website The Wrap, moderated by it’s founder and editor in chief, Sharon Waxman, who bemoaned the lack of a breakout hit. The panel could be summed up in her article: 5 Cold Truths from an Uninspiring Sundance, and blames many of the film industry's woes on emerging technologies and platforms (emphasis mine):

There are TOO MANY movies being made … and we see it in the middling quality of too many films that are not getting bought. The production tools that make filmmaking accessible to just about anybody are resulting in a glut of films that aren’t nearly good enough to attract an audience of consequence. How can we make it stop?

Crowdfunding is creating a bottleneck. The wonderful financing platforms of Kickstarter and Indiegogo are fueling dozens of new projects. That’s a great thing for filmmakers, and a big problem for the indie business. Because now hundreds of movies are getting financed that have no prayer of financial return for the filmmaker. Yes, there is distribution on VOD and Vimeo and Netflix in addition to Sony Classics and The Weinstein Co. Good luck paying your rent with that revenue.”

There are many new buyers, but they don’t pay much. So we now supposedly have a wide array of distribution channels: traditional theatrical, VOD, streaming on Netflix/Hulu/Amazon and the like, iTunes, Snagfilms, Indieflix. The problem: none of it pays enough to support a proper filmmaking culture. Do we need to start thinking about a government-subsidized model like they have in Europe? (Short answer: that doesn’t work either. Their films aren’t any better.) New ideas, anyone? Filmmaking is a curious fusion of art and business, and each film is both a business that aspires to be a work of art and a work of art that wants to be a business. At Sundance, art is the emphasis and that is how it should be. From that perspective, the more films the better. But the business of film is under a lot of stress.

Unlike someone painting a picture or recording a song, independent films are capital intensive to make. They are usually structured as an LLC with investors that likely aspire to a financial return on their investment. Since  the supply of films is increasing faster than total film revenues, on average there is less revenue available per film.

At this year’s Sundance, a good percentage of the films have been picked up for distribution, but there is no big headline deal for the press to crow about. Last year $9.75 million was paid by Fox Searchlight for The Way, Way Back. The biggest deal at this year’s fest was a $3.5 million for The Skeleton Twins.  Many fewer people would be excited about playing the lottery if the prizes got smaller.

The percent of films that make a profit has always been low and it is likely it has gone down. It’s hard to know, as the independent film industry is extremely non transparent. (John Sloss from Cinetic Media made a brief sensation when he actually revealed sales numbers from one his films acquired at Sundance 2013).  According to the NY Times, Adam Leipzig, chief executive of Entertainment Media Partners, a film consultancy, estimates that filmmakers spent about $3 billion to make the more than 4,000 films submitted to Sundance, but in the aggregate will probably recoup only about 2 percent of their investment. If the venture capital industry had made those returns, there would be no venture capital industry.

Who will be the winners in the evolving landscape for film? In aggregate, I think the artists are winning. Less expensive means of production are fueling a greater amount of self expression in the medium. The fact that more films, like more music, do not mean that many better films are being made is beside the point from that perspective.

Film Festivals are flowering. This year’s Sundance featured an extraordinary line-up of films, from all over the world. The eight films I saw, three of which I loved, were all passionately told stories that made me glad to be a part of such a dynamic industry. Please, please queue Difret on If enough of you do it, perhaps a distributor will pick it up. It’s an extraordinary dramatization of a true story, set in Ethiopia about a girl who kills the man who abducts her. I can’t wait for the Tribeca Film Festival in April.

Agile, new breed film distribution companies like Magnolia, Cinedigm, IFC, Radius-TWC, Film Buff, Gravitas, A24 and others are winning. Two of this year’s Oscar nominees for Best Documentary were acquired at last year’s Sundance by Jason Janego and Tom Quinn from Weinstein spin-off, Radius-TWC. They are evolving infrastructure, expertise and economics to benefit from the new economics, not fighting it, and using social media and working with companies like The Audience to inject their films into the cultural conversation. And the increasing numbers of films is allowing them to cherry pick the best, and pay less for the films they acquire.

Online distributors like Netflix are ingesting an increasing number of independent films, and they acquired last year’s Sundance documentary and current Oscar nominee, “The Square” for exclusive distribution rights.  has recently hired indie legend Ted Hope as CEO and, like, is building an indie filmmaker friendly subsciption streaming platform.

Technology companies are winning, too. Distributing films in movie theaters by messengering cans of celluloid or by shipping plastic disks is capital and infrastructure intensive, serving as a barrier to entry to new entrants. Kickstarter,  Reelhouse. Yekra, Vimeo, VHX and others are just starting to change the economics of financing and distributing independent film. The formation of  Sundance’s Artist Services  run by Joseph Beyer, Chris Horton and Missy Laney has greatly helped to spur innovation in this area.

Studios are holding their own, for now. Although the decline of DVD sales is a hugely worrying development, in Blockbusters: Hit-making, Risk-taking, and the Big Business of Entertainment, Anita Elberse shows how the major studios are really only in the massive bet/massive hit business, and they are globalizing at a furious pace to preserve their overall margins.

Conversely, film goers may not be winning. Watching films is far more convenient, and that is a win, and more choice is in general better, but as the film audience is fragmenting, the unit economics of independent films will favor smaller films, made for less money, that will  more easily recoup their modest production costs.

I fear that this will bifurcate the industry and limit the films available to audiences, with poles represented on the one hand by blockbusters like Iron Man 3 and Hunger Games and on the other by modestly budgeted  fare like most of the films at Sundance.

Some of the best and most original movies that are made are in the shrinking middle range, that have the  budgets that can attract and support a cohort of professional grade  talent and artisans. All of the movies awarded the Academy Award for Best Picture the last few years have all been the kind of terrific, risk taking, artistically satisfying movies that are getting harder and harder to make in what Lyda Obst, the producer of classics like Contact, The Fisher King and the upcoming Christopher Nolan film, Interstellar, calls the “new abnormal”. In fact, her new book is called  Sleepless in Hollywood: Tales from the New Abnormal in the Movie Business.

When I asked if there are too many movies, she replied:

We're in a universe of tent poles and tadpoles. And the crisis of overproduction that Dargis speaks of is true. In an oversaturated tadpole market, I fear devaluation -- and loss of eyeballs. Fewer and fewer movies are even generating modest sales or buzz out of the new venues.
For those of us who love movies, the trends are, in fact, worrying. In the future, I may not want to choose between Spiderman 12 and the latest mumble-core film set in two 0r three apartments and coffee shops about college students graduating and learning valuable life lessons about love, self reliance and contraception.

Ironically some of the best new films are being bankrolled by tech dollars, and Oracle heir Megan Ellison and E-bay’s Jeff Skoll are making some of the most successful  and bravest films of every year.

So good luck to Uber’s Travis Kalanick, Snapchat CEO Evan Spiegel, and Facebook’s Mark Zuckerberg. And by the way, I’ve got a script you may want to look at.

[Image courtesy InvernoDreaming]