Financial crisis in the film industry


Financial crisis in the film industry – Internet as rescuer of indie film

The financial crisis is now being felt in the film industry as well. While cinemas have not yet seen a decline at the box-office – in crisis times this business is even regarded as anti-cyclical – the downturn has long since hit home at the beginning of the production chain. The triggers are declining pre-sales to dealers and distributors. These film buyers are tending more and more, particularly in the independent sector, to sign a contract only after a film is completed, i.e. they are no longer willing to put up production capital. And even purchases of finished films are down, making an impact on film markets and festivals such as Sundance or even Tribeca of late. The main cause behind this development is the credit crunch in which distributors and film dealers are now caught up. A second factor is the decline in television advertising proceeds, leaving the industry with fewer resources for purchasing film rights.

Especially hard hit are the producers of indie and low-budget films. The big American studios were the first to react to the crisis. They not only cut down on production in general, but also closed down indie film departments or subsidiaries by the dozen. Paramount Pictures already pitched its “Paramount Vantage” label last summer and Warner Bros. followed suit shortly thereafter, closing “Independent Pictures” and “Picturehouse”.

Also hard to take is the fact that “New Yorker Films” was forced to close its doors in February after 43 years of successful work. The legendary enterprise rendered outstanding services in bringing international film art to the US public, eventually becoming a veritable film culture institution. Without “New Yorker Films”, works by Almodóvar, Antonioni, Fassbinder, Godard, Tarkowski and many others might never have become available in the USA.

The longer the crisis goes on, the stronger the presence of online dealers is becoming – so much so that they are now touting themselves as rescuers of the independent film scene. They target their efforts primarily at filmmakers and producers whose films, after running through the film fest circuit, have still been unable to find a theatrical distributor or which were perhaps not even shown at the festivals. Particularly in these days of crisis, online companies as rivals of classic distribution are enjoying an enormous upswing.

Netflix, for example, has seen growth despite general hard times. Netflix lends subscribers DVDs which they order online and then receive in the mail. Subscribers also have access to an online streaming portal on which films can be viewed in “˜near DVD quality’. Netflix works similarly to the way Atom Films once did: demand for certain films by online customers and the films’ ratings are registered and serve as a kind of free market research tool for future purchases. With what is in the meantime a portfolio of more than 12,000 films – including mainstream productions by major studios – Netflix is today an industry sales giant. Originally established to profit from the “˜long tail’, it’s questionable how long Netflix can still credibly present itself as representative of the independent film scene.

DVD distribution and video-on-demand are long since no longer promoted merely as secondary release options. And independent filmmakers are beginning to see the Internet as well as a primary distribution channel. The online sales company Cinetic Rights Management systematically addresses filmmakers who have not had any luck with theatrical release, publicizing its mission to save the independents. Cinetic’s head of programming, the former SXSW festival director Matt Dentler, told the Wall Street Journal that: “There’s this huge gap between the festival circuit and theatrical releases that we’re trying to reduce,” (wsj, 18 October 2008).

What is not often acknowledged, however, is that most films don’t profit at all from online release, which is often not the primary and not the secondary, but rather the one and only form of distribution they’ll see. And there’s another catch: the modest quality of Internet playback. Matt Dentler hopes people will gradually lower their standards: “We’re seeing the first generation of filmmakers coming of age when watching things on a pixellated screen is the norm, not a novelty.”
If this is indeed the case, independent films will soon vanish from the cinemas and the crisis will have brought things full circle.


Original Page