This article is Part 2 in a series of 3.
In the first article we’ve discussed Straight Outta Compton‘s ‘surprise’ hit at the box office. The film has already passed 100 million dollars in domestic revenue, and already made close to 7 million abroad. The traditional distribution model worked well for this movie, but for many other mid-, small- and micro-budget films it’s close to impossible to achieve the same results.
While the number of films produced by major studios each year has decreased, at the bottom of the budget range the situation is very different. There are complaints that there are too many films being made. At market level the consequence is that indies end up competing against each other instead for limited attention and fragmented audiences. So is today’s established distribution model really the way to go?
Between 2004 and 2013 the disparity between the change in the number of tickets sold and the change in the price of the tickets grew to 54%. And with cinemas that cater to a broad audience charging the same price for a blockbuster as for an indie, the latter comes out at a loss. When relying on theatrical releases (and the opening weekend as a predictor of success) indie movies face a triple threat of challenges First of all, they need to put in the effort of distinguishing themselves from the several other indies opening at the same time. Secondly, they need to invest efficiently in identifying and reaching the right audience. And thirdly, they need to convince that audience to pay for a ticket that reflects the venue’s investment in upgrading to technologies ultimately meant to enhance the experience of watching blockbusters.
Indexed Ticket Price vs. Ticket Sales Growth Image via REDEF
Small budget films- who tend to rely a lot on being selected in festivals worldwide in the hope of finding their audiences and a distributor- might be met with praise by critics, yet they struggle to perform commercially. Many of them have limited box office potential, because they cater to the taste of a niche audience, so they struggle for adequate distribution. Hope is on the horizon though.
The distributors’ role as gatekeepers is being challenged more today than it ever has been in the past, as there are plenty of tools available for filmmakers to take matters into their own hands (both when it comes to marketing their films, and in terms of making them available).
The indies are beginning to explore video on demand as a distribution method. But this is still new game- there’s very little information about how much demand there really is out there, in spite of an ever growing supply. Few distributors venture openly into this new territory and even fewer of them release any information about performance. Some assume it’s because there’s nothing to write home about- and that the revenues there are already declining. Others, filmmakers in particular, have more faith in VoD’s future, but call for more transparency in order to better understand where the future economy is heading.
RADiUS-TWC seems to lead the way both in pushing for VoD as a release strategy (whether day-and-date or after theatrical) and in sharing the results of that experiment. They are committed to be one step ahead when it comes to inevitable changes in the distribution business. Out of the films they’ve handled, several success stories emerged already, with the most notable of them being Snowpiercer. The film was made available on VoD after a limited theatrical run of only 3 weeks. In addition to word of mouth about the film itself, the added buzz of its unusual release strategy probably further contributed to its success. But RADiUS doesn’t treat VoD releases as a one-size-fits-all solution. When It Follows proved to perform better than expected in theaters, they did not hesitate in pushing back the VoD release.
Blue Ruin (2013) Image source
It Follows came on the high of an excellent reception at the Cannes film festival, just as Blue Ruin a year before. While David Robert Mitchell had already had an indie hit (The Myth of the American Sleepover, back in 2010), Jeremey Saulnier had not experienced the same success with his first feature. Blue Ruin was praised by critics in Cannes and soon got picked by RADiUS for distribution. After a day and date VoD release, it did not necessarily become a commercial success in absolute numbers, but it definitely made a profit after recouping the micro-budget invested in its production and performed exceptionally on iTunes. It was a real study case in favour of shifting the focus of indies more on VoD.
There are plenty of other examples of successful releases that relied heavily on VoD- including The Sacrament (released by Magnolia, who opted for a limited theatrical run a month after the VoD release) or Upstream Color (which was actually self-distributed by filmmaker Shane Carruth who, in order to support the VoD release turned theatrical screenings into events to which he was present for Q&As with the audience).
Relying on VoD has great potential for indies for a number of reasons. First of all, even when associated with a limited theatrical release, it minimizes the cost of making copies. The distance between the information about the film and the access to it is shortened, and the potential audience is no longer limited to the geographical area where the film is showing in theaters. Distributors, or the filmmakers themselves, can cast a wider net when looking for the right public and they can direct them promptly to a purchase decision (whether it’s renting or buying). Flexibility when it comes to pricing is also a great plus, not to mention that the commission VoD platforms can charge is much smaller than exhibition. A theater keeps 50% of the money from ticket sales when they start showing a film, with the cut then gradually decreasing. On demand, in the case of self-distribution, typically 70- 90% of the profit goes directly to the filmmakers.
Paradoxically, the real common denominators when looking at the current state of VoD releases is that every movie requires a different approach, depending on its genre and its target audience. With all the examples here having been in the festival circuit prior to their wider release, it is highly likely that for small and micro-budget projects being selected comes with a good start in terms of word of mouth and a chance to prospect the target audience that can then be reached by clever marketing strategies. Although in smaller scale, bigger budget projects are also foraying into VoD (with a good example being The Interview). But they are mostly treating it as a replacement, now that the sale of physical copies is in decline. The likelihood of distributors attempting more radical experiments with the films at the top of the budget pyramid is minimal- there is a lot at stake in maintaining theatrical releases as the most risk-averse option for all those involved. This leaves enough space for indies to experiment and gain the upperhand in the VoD game.
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