Streaming Services’ Strategy Starves Funding for Independent Films – The Hollywood Reporter

Genre films like The Avenue’s action film “Land of Bad” are still very popular with streamers, but it’s difficult to achieve success at the box office.

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The European film market is off to a strong start, buoyed by post-strike optimism and a truly impressive line-up of projects on display in Berlin this year, including available independent films featuring A-list stars such as Margot Robbie and Dave Bautista. Scarlett Johansson and Will Smith. After a strong Sundance festival performance and improved box office numbers, both in the US and Europe, hope appears to be slowly returning to independent filmmaking that seemed close to the brink just six months ago.

But many EFM vendors still see a cloud on the horizon with the unresolved issue of the home entertainment market, particularly the all-important single payment window. Ancillary revenue has always been the real driver of the indie market, but with streaming dominating post-theatrical exploitation and the biggest platforms pulling back on how much indie fare they buy, many are wondering how indie films can pull off the numbers.

“We’ve all become more and more beholden to streaming companies for additional revenue, and those licensing fees have been reduced significantly,” says one veteran seller. “If you’re building a financial model for an independent film, these days, your return on that one payment window is probably a third of what you would have expected just a few years ago. There’s not enough revenue from local markets to cover the production costs for most films.

Deals that made headlines, like Netflix’s acquisition of director Greg Jardine’s horror thriller for $17 million It’s what’s insideor Amazon’s $15 million purchase of Megan Park’s comedy My old assSellers say both Sundances this year don’t make up for the broader loss in single-payroll revenue as streamers generally buy fewer independent films.

Not surprisingly, most of the active independent buyers, like A24 and Bleecker Street, have paid-for production deals (with Warner Bros. Discovery and Paramount Global’s Showtime Networks, respectively) that guarantee additional money for their entire slate of productions.

“The future state of streaming platforms and their acquisition strategies is critical to the survival of independent film,” says JJ Carruth, head of marketing and domestic distribution at Highland Film Group’s U.S. distributor The Avenue. “Without that one-stop-shop revenue, it becomes much more difficult to finance independent films.”

Carruth also sees a split between the demand for streaming and mainstream genre films — and points to the action thriller The Avenue Bad land Starring Liam and Luke Hemsworth alongside Russell Crowe, as “exactly the kind of content streamers are looking for” – with “unique, unique indie fare” – think Celine Song Past lifeJustin Treat Anatomy of a fall Or Wim Wenders Perfect days — which attract audiences in theaters “but may not necessarily work well on platforms.”

“These types of generic action films are great for Netflix and Amazon, but they are no longer popular as a theatrical film,” notes one European-based packaging and reseller, referring to the Liam Neeson film. Retributionwhich earned $7 million domestically just for its roadside attractions, or Millennium Media’s Expend4bleswhich grossed less than $17 million at the domestic box office for a Lionsgate film, its worst performance yet on record. Expendables Commercial franchise.

But Joe Lewis, CEO of Amplify Pictures, sees new opportunities in the streaming market as platforms shift away from their gated approach of global all-rights deals and start “getting into a non-exclusive era with what’s super exciting… You can pitch your stuff on Many VOD platforms now and you’ll see that the numbers don’t break up each other, in fact, they can be additive.

Rather than reaching a one-size-fits-all deal with a streamer, “essentially a cost-plus deal, where you give up all global rights forever,” Lewis says independent producers can get creative with window-shopping rights, “pooling money from Different to allow “the value of the project to be better linked to its success.”

Carruth agrees, noting that a recent strategic shift by streamers, “where they have started licensing and showcasing content” and becoming more flexible with rights deals, has made her “cautiously optimistic again.”

But given the increasingly vital importance of streaming revenue for independent films, and the increasing dominance of a handful of vertically integrated production/distribution platforms, a long-term solution to the single pay window problem remains elusive.

“I will say something that will probably guarantee that I will never get hired by one of these streamers, but without some form of regulation, like in Europe where they require platforms to buy a certain amount of freelancers, it will happen,” says Carruth. “It’s very difficult for independent producers and independent films to survive.” “But for streamers, regulation is a four-letter word.”