Tag Archives: VOD

Cannes market adjusts as indie pic trends shift

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As the film world readies for the Riviera, Jerome Paillard, Cannes Market exec
director, sees reason for optimism. “With a growing attendance in Cannes this year
we’re seeing some signs of health and dynamism,” he says, noting that overall it’s still
a tough market where finding a distributor has gotten more complicated. He also
notes that it’s difficult getting films into theaters. “It’s not easy for films that aren’t
mainstream, crossover features to get released theatrically and stay in theaters long
enough to find an audience. Distributors, for the most part, have become risk-averse
and have restricted their minimum guarantees.”

Paillard addresses other shifting trends in the market.

VOD

“TV and video sales are tough to clinch, and while VOD is growing, it hasn’t yet
replaced video. On the upside, VOD negotiations are usually non-exclusive, but they
don’t give minimum guarantees whereas video did.

“In countries like China, the expansion of the VOD market represents a great
opportunity for foreign cinema: Films can now access the Chinese market directly
through VOD. Even if the prices paid remain small it’s encouraging.”

Digitization of screens

“We have yet to see if the digitization of theaters will benefit smaller films — there is a
risk that it will make it easier for exhibitors to program films that work well in
multiple screens.”

New distribution models

“For certain movies that have a limited theatrical potential, the traditional film
distribution chain is way too long. We’re seeing a growing interest for non-

commercial circuits, such as festivals, cinematheques and film societies. Some
companies like the Festival Agency in France are now specializing in these types of
sub-distribution, by helping filmmakers and right-holders get their movies on the
festival circuit and collect fees.”

Digital models

“There are too many films that don’t travel outside their country of production, co-
production and sometimes France (where there are about 350 foreign films that
come out every year and about half of them sell less than 15,000 admissions).

“Using digital technology, filmmakers can have their films seen and create mini-
events at a lesser cost — publishing expenses are very small and the cost of
advertising, taking into account the weight of social networks, is also very low. These
films can build an online community, access distribution via viral marketing and
social networks and ultimately get programmed in theaters through on-demand
screenings.”

Reality bites

“Documentaries now represent more than 14% of the completed films at the market,”
Paillard says. “One of the reasons behind the popularity of documentaries is that that
they can be promoted via social networks: each documentary can address its own
community in a way that a fiction film seldom can.”

Market innovations

The doc corner: A dedicated space at the market, it boasts a screening room focused
on feature-length documentaries and a meeting area for sales agents and buyers who
are exclusively seeking docs.

After the market, the docs will be available to buyers and sales agents on
Cinando.com’s Screening Room, where films can be downloaded. Site is run by the
market. The Doc Corner will also host about 10 mini-conferences for a group of 20
documentary producers and filmmakers. Each panel will feature leading figures of
the documentary world, from festivals toppers to doc commissioners and sales
agents.

Producers’ Workshop: The Producers’ Workshop is growing in its second edition.
It will address some 250 producers who have experience making local films but have
not yet been involved in international co-productions. There will be six conferences
discussing how to approach sales agents, how to co-produce with international
partners, what funds are available in Europe and elsewhere. There will also be a la
carte coaching sessions for producers.

“We’re telling producers, especially those from Asian or Latin American regions
where international co-production is still uncommon, that it’s crucial for them to not

wait to have a film in selection to come to Cannes, as they must build an
international network even if they won’t activate it right away,” Paillard says.

3D: The market has 17 3D-equipped screens (three more than last year) and some 50
screenings in 3D, which is about the same as last year, had been confirmed as of
April 15.

“Sales agents and distributors are finding that 3D movies, apart from animated
features, aren’t attractive enough to justify their bigger asking prices,” Paillard says.

New Partnership: The Cannes Market has signed a deal with Europa Cinema, a
network of European independent theaters, to allow distributors and producers of
films available on Cinando to connect directly with exhibitors.

Participation: The biggest growth in participation at the market comes from
producers. “I think that underscores the importance of co-production in this market,
as well as the fact that Cannes offers the best platform for co-production,” Paillard
says.

The market had registered 8,480 participants as of April 23, a 9% increase on 2011.

“The rise in participation is well spread geographically, with the biggest spikes
coming from Asia and Latin America,” Paillard says. “Another encouraging sign this
year is the fact that companies will send slightly larger teams to Cannes.”

More than 250 producers will attend the Producers Workshop — 40% more than last
year.

As many as 3,300 market titles, including 1,800 completed films, are set for the
market as of April 23. Documentaries rep 12% of all titles.

By ELSA KESLASSY Mon., May. 7, 2012. Cannes Preview 2012

Europeans take small steps in VOD market

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Video on demand remains in arrested development outside the U.S., to the
frustration of many foreign distribs who are pinning their hopes on digital sales to
replace their crumbling DVD revenues.

According to Richard Broughton, head of broadband for IHS Screen Digest, the
American VOD market for feature films topped $1.8 billion in 2011, whereas Western
Europe delivered just $900 million.

The entrenched power of European exhibitors remains a big obstacle to contract the
windows and moving toward a day-and-date VOD and theatrical model. In France,
there’s even a law against it. Euro distribs are frustrated that they can’t develop their
VOD revenues to replace their disappearing DVD income.

Sales companies say they aren’t yet seeing any significant revenues from VOD from
any territory outside North America, apart from the U.K.

But the launch of the Curzon on Demand platform in the U.K., offering VOD day-
and-date with theatrical releases, is a small but significant sign that new digital
distribution models are finally starting to reach Europe, following the example set by
the likes of Magnolia and IFC in the U.S.

“It’s a paradigm shift in the business,” argues Philip Knatchbull, chief exec of Curzon
Artificial Eye, the U.K.’s leading arthouse exhibitor and distributor. “This is now
where the market opportunity lies for independent cinema.”

The rest of Europe is watching this arthouse experiment with curiosity, and a degree
of skepticism. Benelux specialty distrib Cineart is a proactive VOD player, but has
decided against launching its own platform, for now at least.

“We did the analysis to see if it makes sense,” says Cineart chairman and co-
managing director Marc Smit. “But in a territory like Benelux, it’s hard to make it
work financially. The trouble with a distributor-led platform is having enough films
on it. People want choice, and you can’t rely only on your own taste.”

The Brit VOD market is already far in advance of the rest of Europe, with fierce
competition between subscription VOD players Lovefilm and Netflix to sign up indie
distribs and major studios with lucrative output deals. Those deals, with the likes of
Studiocanal, eOne, Momentum and Lionsgate, have revolutionized the economics of
U.K. indie distribution over the past 12 months.

Meanwhile, pay TV giant BskyB is also making an aggressive move into the VOD
market with its own Internet movie service to supplement the pay-per-view outlet on
its own satellite platform.

“The U.K. is very evolved, but continental Europe not as advanced,” agrees Exclusive
chief operating officer Marc Schipper. “The main reason is that the key European
players are the broadcasters and telecom companies, and they aren’t as
entrepreneurial.”

Knatchbull is convinced there’s also room for an arthouse player with a strong brand
and a distinctive programming policy to carve out a niche among the big boys,
particularly when its virtual service is closely tied to physical cinemas.

“If you’re only on the Internet, it’s quite soulless, but what’s great about having our
physical cinemas is that you are more connected to your community.” Knatchbull is
such a believer in the importance of combining the two that he says he’s eyeing deals
to take over the running of arthouse theaters in Berlin and New York as a prelude to
international expansion of his online service.

Cineart, which releases pics such as “The Artist,” “Drive” and “Carnage” across
Benelux, prefers to stick with the traditional theatrical window, and then market its

titles on as many VOD services as possible. “But the real money comes from the
telcos and the cable operators, not the Internet-based platforms,” Smit says.

He says the VOD market is more developed in Belgium, thanks to the investment of
telco Belgacom, than in the Netherlands. Overall, Cineart’s VOD income is growing
by 50% a year, from 2%-3% of sales three years ago to 8%-10% today. Aside from the
top theatrical titles, its best performers are pics with a thriller twist, such as
“Essential Killing” or “13 Assassins,” or arty pics with a misleadingly sexy titles.

Sales agents say that VOD is becoming a more noteworthy factor in negotiations with
Euro distribs, even if the revenues are not yet significant. “We’re all paying a lot more
attention to VOD in deal terms, but it’s not coming through significantly in the
reporting yet, except in the U.K. where we’re beginning to see impact on the bottom
line from Netflix and Lovefilm,” says Focus Features Intl. prexy Alison Thompson.

VOD deals are negotiated on either a royalty or a fee basis, which varies from
territory to territory. The distributor’s share is typically lower than on DVD — maybe
40%-50%, rather than 60%-85% — because the VOD entails much lower physical
costs for the distrib. “Historically the DVD splits were terrible for producers, so this
is a chance to roll those back,” says one top sales agent.

“The U.K. is the strongest foreign market for VOD. We’re seeing some value in
Australia and other parts of the world, but nothing that’s really moving the dial,” says
Alex Walton, sales prexy at Exclusive Media Group.

Broughton suggests the slow development of VOD in Europe may have more to do
with the relatively primitive infrastucture of cable and telco systems. Once they are
upgraded, the potential for VOD will increase significantly.

Many distribs are waiting to see if the likes of Netflix, Amazon (which owns the
U.K.’s Lovefilm), Google and Apple (via iTunes) will emerge as significant innovators
to challenge those traditional local players.

In the meantime, VOD remains stubbornly underdeveloped.

“Outside the U.K., it’s difficult to see where the value is in the VOD market,” says
Andrew Orr of Independent Film Sales. Sales agents who have experimented with
offering unsold or library titles directly to pan-European Web-based platforms such
as Mubi say that the returns so far have been negligible. “For social reasons,
European audiences are just not as advanced as Americans in terms of looking at
films on the Internet,” says Bankside’s Stephen Kelliher.

“VOD is still in its infancy in Scandinavia,” says Jim Frazee, acquisitions topper at
Scandinavian distrib Scanbox. “It’s doing business, but not growing as rapidly as we
hoped, and not nearly enough to compensate for DVD which is declining far more
rapidly than we feared. VOD needs to be 10 times larger than it is to make up for
DVD.”

Robert Beaumont of L.A.-based Lightning Entertainment sees a role for U.S. sales
agents and distributors in helping to develop the foreign VOD market by exporting
their domestic expertise.

“We’re a technical aggregator for cable systems in the U.S., and we have so much
experience about best practice, that we are contemplating offering this service in
Europe, to act as a go-between between distributors and VOD platforms,” he says.
“We would continue to sell rights as a sales agent, but because the VOD market in
Europe is immature, we could also service the ambitions of our European buyers by
providing technical support, not just for our content but for other sales companies as
well.”

By ADAM DAWTREY Mon., May. 7, 2012. Cannes Preview 2012

As DVD pie crumbles, is VOD sweet?

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The gulf between the evolution of video on demand in the U.S. and the rest of the
world is posing both an opportunity and a challenge for producers and sales agents of
indie films.

VOD is a growing component of domestic distribution deals but unlike boffo box
office figures, such success adds no value for the international market.

Indeed, releasing a film day-and-date on VOD and theatrical in the U.S. may
diminish its appeal to foreign distributors, who still regard that as a sign of inferior
quality. Plus, the secrecy surrounding VOD revenues undermines any positive
reports regarding any business a film has done.

“There’s definitely a lack of sophistication in the way that foreign markets view
what’s going on in the American VOD business,” says Alex Walton, president of
international sales and distribution at Exclusive Media Group. “But at the same time
it’s understandable when there’s no significant VOD market in their own territory,
and there’s no U.S. box office chart for the top VOD releases.”

This despite the U.S. model of launching pics on VOD alongside or even a couple of
weeks before the theatrical release, as pioneered by the likes of Magnolia and IFC, is
reaping healthy dividends for some specialized films.

“If you have a film that’s going to VOD in the U.S., it’s a negative signal for a
distributor who’s trying to book exhibition in France or Italy, because those
multiplex chains are driven by the domestic box office figures,” Walton says.

But the boom in domestic VOD is great news for companies selling films into the U.S.
market, where a much wider range of titles is being picked up than ever before.

“We’ve sold everything on our slate to the U.S. — some for traditional theatrical
releases, some for day-and-date with VOD — and the fact we haven’t got any films left
for the U.S. shows how interesting that market has become,” says Stephen Kelliher of
London-based sales outfit Bankside.

But conversely, the secrecy around VOD figures in the U.S. is significantly hampering
the international sales effort.

A year ago, producer Ted Hope complained to Variety that the robust VOD
performance of his film “Super” was irrelevant to potential foreign buyers, who could
only see its relatively paltry theatrical gross. “Theatrical box office clearly sends a
message loud and quickly to international buyers that yes, there is an audience for
this film — what’s different about the VOD market is that it’s hidden,” Hope
lamented.

Kelliher agrees. “Even if a film has supposedly done well on VOD, it doesn’t matter,
because verifying the figure is impossible.”

Mirjam Wertheim of Orange Entertainment, a veteran L.A.-based rep for multiple
foreign buyers, echoes that frustration. “If they would release the numbers, my
buyers would care.”

But Martin Moszkowicz of Germany’s Constantin makes the point that it’s not about
how many people see a film in theaters, it’s about the publicity that a U.S. theatrical
release generates.

“A film with a big theatrical P&A spend has repercussions around the globe, but I’m
not sure if that works if you go straight to VOD. Of course, the fact you don’t have to
spend so much on P&A is why VOD makes sense economically for producers, but it
doesn’t help to create the global branding.”

Stefano Massenzi of Italian distrib Lucky Red echoes the foreign bias: “A VOD
release in the U.S. is like straight to video, it’s a different kind of product from a
theatrical film.”

What aggravates foreign buyers most is when a movie they already bought for
theatrical release ends up going the day-and-date VOD route in the U.S.

That’s what happened to Neil Jordan’s “Ondine.” “It was frustrating for people who
have pre-bought it as a theatrical release, and didn’t get the U.S. platform they
needed to sell it to their exhibitors,” says Walton, who handled the title when he
worked at HanWay.

It’s not just the multiplex chains in some key territories that make their booking
according to the American theatrical box office. As Robert Enmark of Scandinavia’s
Svensk Filmindustri says, the domestic release pattern can also directly affect the
value of foreign TV rights.

“With some of our TV deals, the price of our free or pay TV rights follows the U.S. box
office,” he says. “The problem with U.S. VOD releases is that there’s no reliable
statistics on the transactions. If something has done well on VOD, it’s good to hear
about that, but it doesn’t make a difference to us. We have ‘Margin Call’ in
Scandinavia, but its U.S. VOD success won’t translate for our audience in any way.
It’s invisible, the press doesn’t write about it, so it doesn’t create any publicity.”

VARIETY’S CANNES PREVIEW 2012

By ADAM DAWTREY Mon., May. 7, 2012