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The Current State of the Business: Where It’s Been, Where It’s Going

The Current State of the Business: Where It's Been, Where It's Going

You can’t control the wind, but you can adjust your sails.
–Yiddish proverb

The mood this year at Cannes was lively and upbeat. Prices are not where they were a few years ago and new methods of doing business are popping up everywhere. However the new players, companies and methods of business add an invigorating element to the business life of our film world. Most importantly the quality of the films remains high.

How are American films traveling?

Summti’s moving great with its 3D The Three Musketeers, Myriad Pictures’ late sales slate addition Margin Call, starring Kevin Spacey and Zachary Quinto whose U.S. sales are being handled by Cassian Elwes, along with UTA and Untitled Entertainment, has already struck deals for the picture in Germany, the Middle East, Turkey, Romania, Yugoslavia and Latin America for pay TV. Focus with Another Year and Biutiful in Competition and the other top tier sales agents have sold out on many films as they always do. Richard and Patricia Rionda’s genre + name actor films under their Hannibal label are doing well too. Their banker has not forsaken them as they have always paid him back and they give the stars equity in the film. Their films include Kevin Spacey starrer Bagman aka Casino Jack directed by George Hickenlopper, The Big Bang starring Antonio Banderas,, Delroy Lindo, Sam Elliott, Snoop Dogg, Dario Argento’s Gaillo starring Adrien Brody, Emmanuelle Seigner and Elsa Pataky and produced by Adrien Brody and Rionda. They also have Emmet/ Furla on board to produce such films as Gun starring Curtis “50 Cent” Jackson and Val Kilmer. Upcoming Wesley Snipes starrer Chasing the Dragon produced as all his pictures are by Richard Rionda del Castro himself and Wallis Nicita, W. Peter Iliff.

“There are something like 10 solid commercial titles [here] with name directors and financing in place”, said SquareOne president Al Munteanu. “It’s a clear sign that the indie market is recovering.” Munich-based SquareOne Entertainment has acquired such titles as Mark Steven Johnson-directed actioner Recoil and Terrance Howard/ Liv Tyler starrer The Ledge from Foresight. SquareOne also took German rights for SXSW hit Monsters from Ben Roberts’ U.K. sales company,Protagonist.

French company MK2 CEO Nathanael Karmitz thinks there are “fewer films in the market overall and hardly any interesting indie titles from the U.S.” for his French distribution company. In other words, the smaller American indies are flat.

Are prices beginning to firm, suggesting that we are coming out of the recession?

Money is flowing once again. 2009 was widely seen as a ‘down year’ overall. If the American Film Market in 2008 made U.S.$700 million as was stated by IFTA, then by extrapolation, Cannes in 2008 made U.S.$1 billion and the European Film Market in Berlin made U.S.$500 million in transactions in rights trading and coproduction deals.

Jerome Paillard of the Cannes market has stated that the attendance levels are back up to 2008 levels with a 1% increase, and the number (4,500) of films and projects on offer is also at its 2008 levels.

While that does not mean prices are as high as in 2008, at least commerce is picking up. Edward Noeltner of CMG notes that it was a busy market for him but where one company was once the buyer of 3 titles, now it is only buying 1 which means 3 times the amount of work is required to move titles.

Other sellers joked that last year even the guys who ‘buy’ but never pay didn’t show up.

In 2009 the sales figures had sunk to its lowest levels. In effect market activity was that everyone (buyers) came to market and were renegotiating prices downward and there was no money being backed by banks to invest in production via presales. By February in Berlin 2010 things were beginning to move, though slowly, with acquisition executives beginning to acquire finished films rather than prebuying, and those were buying at depressed prices, but still money was beginning to change hands again. And the U.S. was quite noticeably no longer leading the market so films needed to make their money from other major territories that needed films and seemed to want English language films. As U.S. rights were not being snapped up, the international buyers had to determine pictures’ viability without the benefit of their U.S. release (e.g. for many territories in recent past years US distribution ‘was a must’ pre condition to them buying certain films). However, while the news reports that the buyers want names and the bigger deals involve names, the art house specialty sellers are also reporting increased theatrical and digital activity.

Cannes buyers all have pipelines to fill. In a discussion with Robbie Little, of The Little Film Company, ongoing changes are positive in that they are requiring distributors to do more than pay an advance and take the film for good or bad. There is more cooperation between sales agent and distributor in rolling out films on multiple platforms.

Majors will increasingly be putting their local (“foreign”) productions on the market. Fox is licensing sales rights to its territorial productions to Fortissimo. This trend will be further developed by other studios and if their locally produced films are equal to other local indie product, more titles will mean more competitive selling will take place thus shifting the market in the sellers’ favor while increasing revenues once again for the majors.

From Screen Daily June 10, 2010:

The studios’ acquisition divisions are certainly not a new presence on the international industry landscape. At different times and in various guises, the majors have been making forays into the independent international marketplace for the past 20 years.

Some of the current executives and set-ups ― Fox Searchlight’s Tony Safford, for example, and the Sony Pictures Worldwide Acquisitions Group ― have been consistently active for a number of years.

Recently, however, several studios have been gearing up for what could be a more aggressive push into the independent business.

Paramount formed its Worldwide Acquisitions Group, led by Matt Brodlie, in the summer of 2008. And since the start of 2010, Universal has promoted UK-based Christian Grass to president of international productions and acquisitions for Universal Pictures International and Warner has installed former New Line International Releasing president Camela Galano in the new post of president of Warner Bros International Film Acquisitions.

Disney, meanwhile, recently named long-time executive Jason Reed as head of Walt Disney Studios International Productions, though it is not yet clear whether Reed will be acquiring for international territories as well as producing in them.

Studio product of course is not counted in the above quoted figures as the studio system has been entirely another system. But filling slates as the studios scale back on output is a major driver for the international distributors looking to fill release schedules in a well running dry. This practice used to be anathema to the indie sellers and more, to the point, to the indie buyers who felt threatened by majors with big pockets competing with them in their territories. However, Nick Meyer of Sierra now sees this as good for business.

Some examples of major studios buying multiple territories are as Sony’s acquiring most territories of IM Global’s Hanna, Warner Bros. taking major territories of Dream House of Morgan Creek and Universal’s multiple territorial deal with Relativity’s Immortals.

Hanway>Hanway has licensed presold David Cronenberg’s A Dangerous Method to Universal Pictures International (UPI) for Germany, Austria, Switzerland, Spain and South Africa. Picture will start in May.

Sierra Focus licensed Hanna to Focus for North America, the U.K., Australia/New Zealand, Greece, Israel, Middle East, and CIS, while SPWAG (Sony Pictures Worldwide Acquisitions Group) acquired territories in continental Europe, Asia and Latin America. Features and Sony Pictures Worldwide Acquisitions Group sliced and diced rights to Joe Wright’s Saoirse Ronan-starring teenage assassin thriller Hanna as high-profile presales during Cannes began to pick up.

Americans buying:

Pre-Cannes, international sales agents felt U.S. deals were going to be weak as they acknowledged that U.S. worldwide market share had descended from 90% (15 years ago) to 50% (10 years ago) to 30-40% now if there was any U.S. sale at all. Whereas the 2008 Cannes featured high-profile titles with U.S. distribution rights available, such as Two Lovers, Che and Synecdoche, New York, this year buyers complained there didn’t seem to be as many substantial titles available this year. As the U.S. Rights Roundup shows, pickups were pretty scarce, though Summit did sell Doug Liman’s Fair Game before the festival. CAA is repping Inarritu’s Biutiful, another picture destined for a domestic deal, and Hanna went to Focus.

The current trend of Americans slowly acquiring rights to specialty films will not last however, as the majors are also now buying multiple territories though NOT YET for U.S. and because the field has become more crowded (hence competitive) with new distributors. Such thinking as that of Mark Urman and his now defunct Thinkfilm who had the courage to wait out the market to acquire films no one else was looking at will not last much longer. With Mark’s eye, these films were often overlooked gems. But with the current proliferation of small U.S. distributors the Mark Urman modus operandi and who have now filled the void left by the majors’ classics divisions, such thinking as that articulated by Oscilloscope’s David Frenkel will no longer be heard in the coming markets: “There are some gems out there that we’re going to be going after…You’ll see, there will be plenty of deals over the next month. It is a quieter year but that’s not because there aren’t good films. The big companies aren’t going after these movies right now, and that is what typically creates a lot of excitement.”

This idea that one can take one’s time acquiring is already belied by John Tilley, newly installed buyer of theatrical rights for Detroit based home video distributor Olive Films. Tilley, who with his partner, recently deceased Rene Fuentes-Chao brought Pedro Almodovar’s early masterpiece films to the U.S. until SPC caught on and took over with Women on the Verge of a Nervous Breakdown and Pedro changed his direction. Watch out U.S. distributors because the game is going to get serious. This Cannes, Tilley acquired the Danish film R from TrustNordisk, and made a major package deal with The Match Factory acquiring North American rights to Semih Kaplanoglu’s Yusuf Trilogy: Yumurta (Egg) and Sut (Milk) and Berlin Golden Bear winner Bal (Honey), as well as last year’s Berlin winner The Milk of Sorrow from Peruvian director Claudia Llosa and San Sebastian favorite Me Too from directors Alvaro Pastor and Antonio Naharro. And Tilley himself knows distribution and does not need to call on another expert to book films properly.


• Coproduction is driving production. Large coproduction funds for English language films are now in place in France and Germany. Major studio and big budget producers are drawing on these funds.
• Smaller art house films are being financed as coproductions based upon international coproduction treaties, national subsidies, film funds for emerging countries and premarket pitches which bring together international buyers and financiers.
• U.S. studios’ international arms have put more money into making their own local foreign-language productions which are now entering the market
• Potential international buyers/ independent distributors have begun to put more equity into movies to ensure they get made and so they can have a piece of the films’ rights.
• Equity investors are getting into the picture precluding the need for presales. Gersh’s Jay Cohen foresees more models like Reliance Big Entertainment’s recent purchase into IM Global. Cohen is repping three equity funds in Cannes. CAA Micah Green has three levels of equity investors and other agents to assist him in a similar strategy he has developed since leaving Cinetic.
• Revenue sharing will shift with increased digital deals. International sales agents and distributors are already in discussion about sharing in more cooperative ways beginning with theatrical loss leaders and extending to digital distribution.

Where are the great stories originating that will be headed into the U.S. market?

For the current Cannes pickups, see my blog U.S. Rights Roundup. They are sparse.

On the indie front, films which will appeal to art film buyers worldwide in the next two to three years will be developed in many venues with the aim of preparing signature feature films which will launch or develop filmmakers’ careers. Future “signature” filmmakers will be profiled here throughout the year.

• Some international sales agents as Coproduction Office, Memento, Films Distribution nurture the future auteur filmmakers.
• Workshops, Labs, and Ateliers such as ACE, Sundance Labs, Binger Institut, Maia in Italy, and now the London Film School and Skillset’s Hothouse, a new professional atelier,offer filmmakers further professional guidance as they develop their scripts and packages.
• Premarkets Rotterdam CineMart, Pusan’s PPP, Hong Kong’s HAS, and IFP’s No Borders which is making its long wished for comeback. No borders is for scripts; IFP’s market should be mentioned because from now on it is only (per Joana Vicente) for unfinished films, no more complete works, only ‘ works in progress…’
• San Sebastian and Toulouse programs for Iberolatino Works in Progress
• Guadalajara Film Festival and Berlin’s Coproduction Market
• Cannes Cinefondation which is also now taking place in Guanajuato (
• Funds such as Backup Films, Hubert Bals, World Cinema Fund, Goteborg finance coproductions and art house films.

FILM FINANCING: Coproduction is leading production.

• The larger countries France and Germany are now helping English language production for larger name films as well, Gaumont and Constantine being two companies among others capitalizing off this trend. Other films finding backing through European financing and sales include Woody Allen’s upcoming Midnight in Paris, sold by Spain’s Imagina, and France’s MK2 backing Walter Salles’ Jack Kerouac adaptation On the Road, which is preselling well and will start production Aug. 2.

• It looks like Arab sources of financing may be kicking in on selected large budget films or else to support a growing local production pipeline. The realities may yet belie the headlines however, leading off with the news of Kadafi’s son and Martin Beckermann teaming up. But news of funds, festival awards and other private equity initiatives originating in the Middle East may bear fruit for film production both in the Middle East and abroad.

• The same possibilities for renewed production growth lie with the rich individuals being courted by production / international sales companies and banks on the yachts in Cannes. CAA steadily continues to back quality films with funds from private sources under the leadership of Micah Green and Dina Kuperstock. Gersh too is following this path. Increasingly the private equity investors hold the rights. This strategy was misdirected by the Mexican producer owners of Biutiful. Because Focus did not have U.S. rights to the very film it was selling, opinion makers felt it was a sign of the film not being good enough. Not knowing that the producers were holding back and wanted to make the decision themselves, the word – including critical reviews and market buzz after its festival screening – was sharply divided as to the film’s value. That contractual terms kept Focus from acquiring the film for its own U.S. distribution was not factored into the opinions. There are 3 U.S. companies that want the film, but some damage has been done to Biutiful by the sharp differences of opinions.

• On the specialty film front, international coproductions have been growing and continue to allow films to be made from emerging countries where local movie goers help local films, and international culture subsidies and distributors allow for greater worldwide distribution. And thank goodness for art house films, countries are still subsidizing filmmaking in Europe, Asia and even, when possible, in some parts of Africa, bolstered by the proliferation of pre-markets such as Rotterdam, Pusan, Hong Kong, Mannheim, once again New York’s IFP and festivals just entering this area of commercial activity to bolster their own coffers.

Depressed TV and DVD markets continue, but theatrical is moving ahead positively not only in U.S. but in France and other countries, with 3D capitalizing off Avatar and Alice’s energy and documentaries continuing to populate some screens. 3D helps the digitization of theatrical. Though digital is still not bringing in the hoped for figures of the future, its potential is apparent. Digital news reports small financial returns but volume of deals are up.


Digitization of major theater chains is receiving support in U.K. and the European Media countries and Asia with 3D being the prime motivation. However, on the specialty film front as well, New York based Emerging Pictures whose success with projecting live opera from La Scala and the Met in U.S. has been paying its bills steadily for the last few years is beginning to achieve its original goals and has closed a deal with Australia to syndicate its titles with Emerging Pictures’ 65 digital venues throughout U.S. Screen Australia is partnering with Emerging Pictures in New York to present the U.S.A–Australian Film Showcase, which will be a quarterly showcase of new Australian films. Emerging Pictures’ digital network will release three films per quarter that haven’t been released in the U.S. Films will screen in up to 60 cities, at a minimum of 12 venues. This is a working model for other countries and territories to follow to create new year round theatrical audiences the U.S. for titles usually only seen in festivals. Festivals themselves are beginning to go year round as well, with Toronto International’s and Pusan’s new headquarters nearing completion, Mill Valley Film Festivals buying theaters, Seattle, Denver’s and New York’s year round film societies. International sales agents such as Memento, Celluloid Dreams and Film Boutique are also gearing up for the non-theatrical theatrical venues showing films in museums, auditoriums and even theaters at nontraditional time slots. And of course, Celluloid Dream’s MUBI (while not theatrical deserves mention here) for its digital art house streaming platform. It is more than merely an experiment for social networking, building digital word of mouth with discussion of films and it is building steam as it curates more films to its online network.


3D deals and IMAX deals around Cannes include Taiwan’s leading exhibitor VieShow adding six IMAX theaters in Taiwan, Japan’s effort to reinvigorate its depressed market by Toei’s remaking the hit film Battle Royale in

3D which will enter the international market in October and be released in Japan on November 20.

Toho will make ‘Umizaru 3’ in 3D and this latest pic in the franchise will bow on 400 screens in Japan.

Financial resources are redirecting themselves into the 3D trend, as London-based Repremiere 3D begins to fund the 3D conversion of library titles. This and other digital developments are reinvigorating the perpetually depressed traditional mid and lower level U.S. international sales agents report reinvigorated sales on catalog titles, thanks to digital content aggregators.

The British Film Institute (BFI) has entered a 3D partnership with electronics giant Samsung to screen at the BFI IMAX and the BFI Southbank in London.

Odeon & UCI Cinemas Group, Europe’s largest cinema chain, has a deal with Universal Pictures International for UPI to provide digital versions of its releases in the UK and Ireland. This is the fifth studio deal that Odeon has done and the company notes that it can now access its funding for the UK part of its full digital roll out. The chain expects to be at 100% digital projection on all its 800 screens by 2012, in a move costing more than £70m.

Apollo Cinemas launches first all-digital, all-3D multiplex in Europe.

Variety reports that family and faith-based production company Grizzly Adams Prods. is joining forces with 2D-to-3D conversion company Passmore Labs to convert its entire library, some 700 programs totaling around 500 hours, to stereoscopic 3D. Company says the project is expected to cost $200 million over seven years. The majors have been sending footage out for tests and pondering when and how to convert library titles to 3D but have been slow to move ahead, in part due to concerns over the number of 3D screens.

Lightstorm Entertainment producer Jon Landau recently told Daily Variety that a 3D version of Titanic is going to happen, though the project has not been officially greenlit and a conversion vendor has not been named.

George Lucas has said he will convert the Star Wars pictures to 3D, and those plans are firming up, though that project, too, has yet to be greenlit.

A look at Variety’s or Screen International’s past month’s headlines alone shows the brisk business being done in 3D.

Developments are proceeding quickly. A new Federation has been formed showing early stages of international organization as seven European companies have created EuroVoD, the European Federtion of Indpependent Cinema VoD Platforms. The partners UniversCine (Belgium), UniversCine (France), Good!Movies (Germany), Volta (Ireland), Filmin (Spain) and two production companies, Blind Spot Pictures (Finland) and Bold Cadre Films (Switzerland).

Mubi’s agreement with Sony Computer Entertainment Europe to stream films via the PlayStation 3 game console coupled with its aggressive buying during the Cannes Market puts the Turkish Silicon Valley technologist Efe Cakarel (a grad of MIT, Stanford and Goldman Sachs) founder of The Auteurs way ahead of the digital Vod game. Founded in November 2008 with strong support from Celluloid Dreams, The Criterion Collection and Martin Scorsese’s film preservation unit, the idea of “Your online cinema, anytime, anywhere, watch, discover, discuss” looks ever more promising as the place to social network and build word of mouth for the films that have always required special marketing.

Other new developments include the recent events as listed in Screen Dailies of the past month.

• iTunes launches movies stores in France and Ireland
• Virgin Media launches online movies service in UK
• Reliance, UFO pact for digital film operations in India
• UK Film Council extends digital marketing funding for distributors
• Hong Kong’s Anyplex signs VoD deal with Sony
• Smaller exhibitors debate digital dilemma at ShoWest
• Glickman, Fithian trumpet strong 2009 box office at ShoWest
• India’s FICCI predicts media, entertainment sectors recovery in 2010
• Broadmedia partners with AAM for digital roll-out
• UK pro copyright body launches cinema trailers
• Norway’s Film & Kino appoints Unique to handle digital roll-out
• Korea’s CLP steps up with new KT deal
• Landmark digital piracy case opens in Italy
• Festival Darlings, Eureka, Pecadillo make films available on i-Tunes, Lovefilm
• UKFC appoints Film Tree to develop advertiser-funding for film
• Revolver seals iTunes deal for Robsessed
• German nationwide digital exhibition plan in tatters
• The Auteurs unveils membership, visits data
• BFI to offer classic movies through Blinkbox
• Desedo Films founders snap up the Babelgum Pixel Pitch Award
• Steve Perrin to lead UK’s Digital Funding Group
• UK industry welcomes tougher plans for tackling digital pirates
• UKFC trials funding scheme to support digital marketing

For the best analysis of market by market / top distributors survey entering Cannes go to Screen International
For the best personal testimonials of the market’s rebound see The Hollywood Reporter.

We shall see at the next market the consequences of the lower value of the Euro.

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