The world of film finance is changing so quickly that John Sloss had difficulty preparing for his recent keynote on the subject.
“I sat down to think of a list of recent trends during this incredibly dynamic period we’re in the middle of, and I realized that if I did that, by this morning they would probably all be out of date,” Sloss joked to kick off his keynote discussion during the 7th annual TV and Film Finance Forum East, which took place April 14 in New York City.
In addition to being a media attorney and the founder of Cinetic Media, Sloss is an accomplished producer, having produced the Academy Award-winning “Boyhood,” among many other acclaimed films.
Here are the key takeaways from his keynote:
In regards to film distribution, everything is changing. And that’s a good thing.
“Everything is changing. The form of the content, the way it’s being financed, the way it’s being delivered, the way it’s being consumed,” said Sloss. “I do think this is an incredible, exciting time of opportunity because so much is up in the air….Technology is driving that. No question. The ability to identify your audience, market directly to your audience…”
Sloss went on to comment on how streaming services, such as Netflix and Amazon, are changing the landscape of distribution and blurring the lines between TV and film. “We come from a place where the two-hour narrative was king. It was the aspiration of everyone who created narratives…it was a beginning to end story,” he said. “Then what came along was the 11-hour narrative that used to exist an hour a week at a certain time slot and is now being put up for view all at once occasionally.”
What does the change mean? “From a creator’s standpoint, it creates an irresistable opportunity to tell a more involved dynamic, complex narrative story than the previous state of art of a two to three-hour narrative,” said Sloss. “And what’s happening is it’s causing the greatest creators to leap-frog the public viewing creation and jump straight to the small screen and it becomes a question of whether 11-hour viewing will make its way to public viewing.”
Maybe France has the right idea.
“The economics on content in France is actually brilliant, because you are not allowed to advertise theatrical films on television,” said Sloss. “Since the cost of releasing films is brought down for everyone, everybody is basically in the same boat, so they can’t ratchet up the cacophony to get ahead of everyone…by the same token, you are not allowed to put your film on digital until 36 months after theatrical release. So you’ve got places, like our friends at Vimeo, and Netflix that have to wait 36 months…So in a weird way if you had a piece of content that people wanted to see and you didn’t necessarily want or need it to be released theatrically in France, you could go license it directly to Netflix who would wildly disproportionately value it because they can put it on their service right now rather than waiting 36 months.”
Transparency and data are key.
“One of the things I’ve been banging on about most in recent years is increased transparency. Things are evolving so quickly and there’s so much data that it is really incumbent upon all of us to understand performance in various windows if we’re going to figure out how to optimize actual windowing,” said Sloss. As examples, Sloss referred to the documentaries “Client 9: The Rise and Fall of Eliot Spitzer” and “Freakonomics,” both released by Magnolia Pictures in 2010.
“They both came out at the same time on theatrical and VOD and ‘Client 9’ did wildly well on cable VOD and did negligibly on iTunes. At the same time, ‘Freakonomics’ blew up on iTunes and did almost nothing on cable VOD. After the fact you can rationalize why that was, but the fact of the matter is that data is incredibly value in figuring out, in this increasingly difficult world, how to optimize monetizing your contract.”
READ MORE: John Sloss Urges Filmmakers to Demand VOD Numbers
Distributors track the VOD gross at the same time box office results come in.
Sloss has a solution for filmmakers in this situation. “What I say to these distributors is, if you want me to sell your a movie for day-and-date, and convince my clients to do that, what you need to do is create a simple statistic that is the functional apples-to-apples equivalent of box office for films that are released day-and-date, and that is combining the box office, which is obviously repressed by virtue of the fact that it’s available at home at the same time as it’s available in theaters with the actual gross that is being paid by people who purchase the film on transactional VOD. It’s actually a very simple statistic, it’s clearly accessible and would allow an apples-to-apples comparison to a traditional theatrical release,” he explained.
Are the financial figures for films proprietary?
Sloss discussed the differences between the early VOD release of “Snowpiercer” and the recent horror hit “It Follows,” which won’t be released on VOD until further into its theatrical run. “Would ‘Snowpiercer’ have grossed more had it been released in a more traditional theatrical sense like ‘It Follows’ has?” Sloss wondered, raising the question of whether the financial figures for film are proprietary. “Every film that has ever had net profits has had accounting statements and those statements without very little additional information like what the video royalty was would be used to reverse engineer the to-the-penny PNL [profits and loss] for that film,” said Sloss. “It’s something the studios are keenly aware of and they use it to model performance and they use it to figure out what kind of adjusted gross or gross to give people and how to be profitable.”
Filmmakers should demand those figures.
“The fact of the matter is it’s data that’s available to all the producers and filmmakers and they could use that information to level the playing field vis-a-vis the studios, but for some reason no one has,” said Sloss. “”It would always confuse me because every agency has accounting statements for every film that has been released in the last 20 years and if they wanted to dedicate the resources, could basically have a complete database of the performance of every movie. and put that in the service of their clients. If I was the client I would press them to do so.”
Crowdfunding is the sleeping giant of film finance.
“If you look at crowdfunding as not getting money for nothing or putting your hand out to people to support your pet project but as first and foremost community building around these affinity communities of the content you’re trying to produce and you go from there, you basically focus on bringing the core fans in from the inception and make part of the actual production process,” said Sloss. “Then you create a loyalty and support that is much more than just relying on fans to show up at a sneak preview.”