Disruptors: How Netflix & Amazon Are Creating Greater Tumult In The Independent Film Industry

Disruptors: How Netflix & Amazon Are Creating Greater Tumult In The Independent Film Industry

“It’s tough for film in general,” Robert Redford said off the top of this year’s Sundance Film Festival keynote address. “There’s threats in distribution that take away from what used to be a simple equation. There’s streaming, online, all kinds of new distribution, all these other areas that didn’t exist way back, so as a result, it kind of bleeds away from film.”

Any concerns Redford may harbor for the health of independent cinema are understandable given the sea change that the festival confirmed. Two years ago, the biggest Sundance buy was “The Skeleton Twins,” with Kristen Wiig and Bill Hader, at $3.5 million. But with the aggressive and cash-flush Amazon and Netflix on the scene, encroaching on old territories and driving the competition skywards, the sales narrative has radically changed. Top 2016 prize-winner “Birth Of A Nation” shattered all existing records in a $17.5 million mega-deal by Fox Searchlight, and there were other big-money deals too: Amazon took the critically-acclaimed “Manchester By The Sea” for over $10 million, and Netflix picked up VOD on “Tallulah” and “The Fundamentals Of Caring” for $5 million and $7 million respectively. 

While some content creators and fledgling producers may look at the advent of streaming as a savior —more potential opportunities, more financial rewards, more outlets desperate for programming— there’s still the nagging question of the short-term value of this current boon versus its long-term ramifications. And as suggested by the founder of Sundance, which is essentially the launching pad for independent American cinema, there is unease in the industry.


What’s self-evident is that there are a couple of new big dogs in the indie eco-system. But as nature always demonstrates, the introduction of a new species to an environment, particularly one that resembles an alpha predator, most often disrupts that ecosystem, robbing indigenous animals of their food sources and generally causing chaos.

Just as Amazon nearly leveled brick-and-mortar bookstores by offering consumers lower prices, and just as Napster irrevocably damaged an entire industry by devaluing the worth of music, big tech companies investing in film could be bad news for the industry in the long term: They don’t necessarily care about the holistic health of the film world, but certainly do care about their own profitability.

If history shows us anything, the biggest threat could be that the encroachment of these companies could create an unsustainable bubble, because they’re over-spending in order to make their mark in the film world. Spending $12 million on “Beasts Of No Nation,” $10 million on “Manchester By The Sea,” or financing the $60-million Brad Pitt vehicle “War Machine” isn’t necessarily a reflection of those films’ value; these big acquisitions are statements of intent. If each process took place over several years, these transactions might have been seen as a bid to be taken seriously as buyers within the existing industry framework. But the accelerated, undeniable flexing of financial muscle is instead a major gauntlet thrown down, a territorial pissing that goes beyond “being taken seriously” and generates anxiety that not only do the new players want a seat at the big table, but they may want the whole table.


So these huge, media-attention-grabbing streaming buys don’t even have to succeed in traditional terms, because they’re essentially marketing tools. “If [Amazon head Jeff Bezos] loses $12 million on a movie,” Sony Pictures ClassicsTom Bernard told The Hollywood Reporter, “it’s not going to hurt him, and the amount of publicity he’ll drum up from buying it will make a difference.” 

Even when Netflix or Amazon don’t end up landing a particular movie (usually because the producers want a more traditional theatrical release, or an established awards push), as with “Birth Of A Nation” or “Brooklyn,” streaming outlets throwing money around drives the prices up. Without these disruptors in the mix, it’s unlikely that Fox Searchlight would have paid such an exorbitant sum for Nate Parker’s ‘Nation,’ even if the studio believed it had a chance of following a similar “12 Years A Slave” success (which took nearly $180 million worldwide). And so Searchlight’s risk has skyrocketed from what it would have been just a year or two ago.

This can mean that the more traditional distributors, or relative newcomers like Open Road or A24, are compelled to spend more than desired, or are forced to take second-tier product once the bigger spenders have feasted first. And as Picturehouse and Relativity have demonstrated, all it takes for a smaller distributor to face trouble or go extinct is one or two lean years. 


There’s also the subconscious influence on the filmgoing audience in general. The more the viewers for, say, “Tallulah” become habituated to that type of small-scale human drama being available at home, the less likely they are to go pay for such projects theatrically. And on a bigger scale, a film like “Beasts Of No Nation” debuting on Netflix doesn’t just minimize the theatrical revenue it might have made; it also essentially fills the casual moviegoer’s prestige movie “quota” without having to get up from their sofa, making them that much less inclined to seek out a “Carol” or a “Room” or a “45 Years” in theaters. It’s easy to see a future in which fewer competitors and a severely shrunken theatrical market enable streaming services to acquire movies for much less than they’re presently paying, devaluing the entire independent market. 

“You always want your film to be shown on a big screen with perfect sound and the best projection,” Sian Heder, writer/director of “Tallulah,” told the New York Times  after her movie was bought by Netflix. “But that’s not always the reality anymore. The way people consume media is changing.” And that change is putting a strain on overall industry health. Box office for most movies beyond mega-franchise tentpoles is down, and the highly sought-after 18-25 year old demographic’s interests are being pulled every which way —Peak TV, YouTube, video games and iPad apps, as well as the big streaming services. The DVD market has plummeted as well, and revenues from iTunes and the like are a long way from making up for it. 

“The audience for movies I might make is much smaller than it once was,” Todd Solondz, whose “Wiener-Dog” was picked up by Amazon, told Variety. “Most of my students watch things on Netflix or they download, so they’re not going to theaters. That’s why things are so difficult.” Increasingly, filmmakers, especially younger ones, are reflecting their audiences by moving between movies and TV, with Cary Fukunaga exemplifying this shift best by going from theatrical, to an HBO miniseries, to a featured debut on Netflix, to another TV series in the wings.

Of course, most filmmakers see the potential to extend reach. Netflix’s 75 million subscribers (Amazon has roughly half that but is rapidly expanding, while iTunes is about to start its original content push, which could be another game-changer) dwarf most indie theatrical viewership figures. The documentary market in particular has noticeably boomed in recent years, and has definitely received a boost from this new model. And though they keep actual viewership data secret, it’s clear that the streaming companies must be pleased with the audiences they are finding for indie films.

”Digital platforms are valuing films not only for their transactional value, but also for their prestige value and potential to attract and retain subscribers,” CAA’s Micah Green told THR, suggesting that, like with the HBO model, these kinds of prestige productions are important to retaining their audiences and attracting new ones. But in a few years’ time, when the market has settled, will Amazon, currently focused on taste-making and credibility, put the same emphasis on the Jim Jarmusch-es and Todd Solondz-es of the world? Will Netflix still be willing to spend this kind of money on cachet-driven 90-minute movies at a time when TV shows have been proven to be their meat and potatoes? At that point, there may be few other options than for independent filmmakers to drop their prices, as at least some of the smaller theatrical distributors will have fallen by the wayside.  

Indeed, amid this industry upheaval, some buyers have already all but disappeared from the festival circuit. Speciality shingle Focus has been absorbed into Universal’s international wing, and The Weinstein Company was noticeably absent from Sundance this year, and it remains to be seen if new companies like The Orchard, Alchemy and Bleecker Street will secure a sustainable foothold in the long run. In theory, the major streaming platforms’ entry into the original-content scene should revitalize the independent film scene, win more money for content creators and encourage more investors to finance these movies in the hope of getting a return. In practice, however, nothing is certain. Companies like Netflix and Amazon aren’t just dropping a pebble into the pond. They are letting loose a boulder, creating immediate change that studios are having to quickly learn how to navigate. These new opportunities for filmmakers are underscored by a quiet and anxious unease —it may be that this oasis is a mirage.

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Comments

Freddie Rosen

Very fucking worrying. One of the other key reasons for this shift in emphasis is that it’s so bloody expensive to go to the cinema. People are willing to go and see Star Wars (as they should), but you are getting more bang for your buck with a film like that. In the UK, on average, a trip to the cinema is 20 pounds all in (popcorn, drink and a ticket). Cinemas need to drop their prices if independent film is going to survive in theatres. Something tells me they won’t. George Lucas predicted cinema would become as expensive as going to the theatre and he’s basically been proven right. This was supposed to be a working man’s medium. Just depressing really.

Frank B

I don’t think cinema ticket are too expensive (especially compared to live theater) but I do often prefer viewing independent movies in the comfort of my home (often on Netflix) rather that go to see them in theaters with subpar viewing conditions such as the Angelika, Film Forum or Lincoln theater in NYC which always show great movies but in truly horrendous conditions. In my view only a very few independent theaters in NYC provide a satisfactory viewing experience (such as the Sunshine theater or the IFC.)

PhotographicAmnesia

@Frank B – I have to agree with the poor viewing experience with independant pictures as well. Vast majority of the time I find the seats very uncomfortable (for lack of maintence) screens not cleaned (same old drink stains splashed on the screen) poor sound or picture etc. I’d much rather see most of the independent films at home where all those things are a non issue. Sad to say.

Freddie Rosen

@Frank B – My point is that cinema is heading that way in terms of pricing. Tickets are gradually become more and more expensive. I have not experienced independent theatres in the US so I will have to take your word on them being less than desirable locations, and you have a point about the comfort of one’s home (and, as time goes by, the viewing experience is only going to get better with cheaper TVs and better sound equipment), but I dunno, there’s something to be said about the collective experience of going to the cinema. Maybe I’m just nostalgic for an era I was never part of.

recently_reaped

I agree about the pricing of movies being too much. I took my two boys, my aunt and I to go see a kids film and the cost of that was $30 and the treats (2 medium popcorn, 4 drinks and not much else) cost more than the tickets. Usually I hit up a dollar store for cheaper chocolate bars and candy for the kids and this was a reminder why.

Maybe going to the movies by yourself isn’t a big expense when you got a family of 4, it gets pretty darn expensive.

I recently went to see The Dark Crystal, through a digital film fest that is going on across Canada, and because it was an older film it only cost me $19.50 for me and my 2 boys to go. That’s a reasonable price that would have me going to the movies more if that was the regular price. However it isn’t so paying $16/month for Netflix but another Canadian streaming service just makes more sense for me.

KundaliniRising

Seems like people are always complaining about the cost of seeing a film, but then they go on to include drinks, popcorn, and candy into that cost. The ticket by itself is not that expensive really. I see new releases all the time for $5. Just go to the earliest showing of the day and not in the evening. The real complaint should be spending $10 or more on popcorn and coke. Cinema isn’t close to dead, there are just too many theater goers who cant sit still for 2 hrs without a soda and a snack.

Lily

I love going to cinema for big blockbusters but also indie films mainly because where I live in the US we have a great theater that shows them. Regal Cinemas headquarters is in my hometown so I think that’s why the theaters are so nice and I enjoy going to the one that shows all the great indie films. I love Netflix but nothing can replace going to the theater. Yes it has gotten expensive and I used to go to more films when I was younger but it’s an experience that’s so enjoyable I personally don’t mind.

Anthony Kaufman

This is good analysis, but how come you don’t do any original reporting.

JEROME MAZANDARANI

It’s simple. Producers have to follow the money. Netflix is offering above the asking price. It’s a good deal in the short term. And who are we kidding? Most producers live a hand-to-mouth existence. If the advance ask is $1 million for all English speaking territories and Netflix will pay $1.3 million isn’t that a deal worth closing? It could take individual distribution partners in UK, Australia, USA several years to recoup the advance, P&A, localisation, authoring and other costs. The Producers may never see another dime. Anyone who works in film and tV production is usually having to follow the money. Is it healthy in the long term? No. It isn’t, but film makers and their financiers have usually never had the luxury of choosing.

Sydney Weinberger

Although, streaming is clearly the new frontier for film and television viewing, in his article, Lyttelton unfairly focuses on the detrimental effects streaming supposedly has on the independent film industry. Netflix and other online streaming services have altered the traditional distribution system by increasing sales points and creating a greater barrier for independent films to make it to theatrical release, but the online platforms has made it possible for independent films to be seen by a greater audience than ever before. You can say what you want about streaming’s negative aspects, but for independent filmmakers, streaming introduces the possibility of not only finding an audience, but finding a wide audience—something that traditional distribution cannot offer.

Before streaming, independent films bought by major distributors were offered limited release in theaters or obscure art-houses, where viewership depended on a specific, dedicated indie film audience; one that frequented art houses and independent films already. Now, instead of being sold and distributed on a smaller scale to a smaller audience, independent films sold to an online distributor become instantly accessible to millions of viewers worldwide who do not fit the typical indie-audience profile.

With a subscription base of approximately 70 million, and growing, Netflix offers a diverse audience with a wide range of tastes, allowing a freedom to be bold with the movies they feature. Major distributors do not have this freedom because they are bound to the limitations of the box office and profitability which, ironically, is shrinking due to mobile streaming technologies. In 2013, it was reported in Variety that movie theater audiences between the ages of 18-24 shrank by 17 percent.

Conversely, streaming audiences are over 40 million, and growing. This is a monumental era for independent films because unlike major distributors, streaming services acknowledge the potential of films lacking widespread appeal because they have a stable audience and, in turn, are more financially stable. Their subscribers are not going anywhere, and there are so many of them, that there really is “something for everyone.”

This year, Netflix and Amazon proved that they value independent film when they were the biggest buyers at the Sundance film festival. Their grandiose offers influenced major theatrical distribution deals more than ever before, especially in the case of The Birth of a Nation, however, this is a special circumstance. The film sold for $17.5 million dollars but was produced for approximately 10 million dollars—an exorbitant budget for an independent film. While it is an independent film by origin, it aimed for the studio-award route, which not all independent films do. The online distributors may incite competition in relation to hot commodity films such as The Birth of a Nation, but, for the most part, their markets are completely different. As Roy Price, the head of Amazon Studios, told the New York Times, “We’re interested in distinctive films by artists who have something new and interesting to say.” Streaming services are popular because they are making all types of films accessible to audiences hungry for something different, and the industry is finally realizing that diversity in storytelling is something to be admired.

talia

@Freddie Rosen – I live in the UK and don’t think cinema tickets are expensive unless you live in London.

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