I’ve previously discussed the current dire state of studio-based cinema, but have neglected to discuss the state of independent cinema. For much of 2009, it was widely considered that indie cinema was laid to rest, with many studio-based or affiliated distributors such as Warner Independent, Fox Atomic and Miramax either shutting their doors or being usurped by their studio parents in a reduced form. A decreasing number of companies such as Focus Pictures and Fox Searchlight were left carrying the distribution baton for most of the year.
Despite this, there has been considerable activity in the independent world. Jeremy Juuso, a Los Angeles based consultant, tracks independent film releases and writes business and marketing plans. His astuteness and business acumen stems from his Harvard economics background. He publishes monthly reports on independent cinema on his website in the film data section.
Each month, he publishes the AKA report which outlines the independent releases in North America (USA and Canada). There is a lag in data, so the following relates to releases from January to September 2009. It makes for refreshing reading. Of the 308 films released, 279 (90%) were independent and the remaining 10% were studio financed. Of those independent films, around 50% were privately financed (60-70% of budget) and 16% were distributor financed via pre-sales. This is encouraging to see since pre-sales had previously suffered a dramatic downturn.
84% of independently made films debuted at film festivals, so they still remain significant avenues for sales and marketing. The key festivals at which these films were screened are Sundance, Toronto and Cannes. Tribeca, Berlin and Venice remain major second tier festivals for independent films to be represented. Magnolia Pictures, IFC Films and Sony Pictures were the main distributed who purchased these films. It is of note that 22% of independent films were self distributed.
Just under half (48%) of these films were dramas. This in direct contrast to studio films which were almost exclusively comprised of action, comedy and thrillers. Documentaries were also well represented (22%) in the independent sector but barely seen in studio system. It is also refreshing to see that 33% of films, were in non English languages. According to reports from the AFM in Santa Monica last month, this figure is set to rise as film goers mature and embrace globalization. Diversity can only benefit independent cinema since it is not strangled by the high financial stakes plaguing studio films. Hopefully, we’ll see more “Slumdog Millionaire” type films, which was made on a modest ($15 million) budget, yet made a welcome impact at the box office. It would be ideal to see the profits filtering through to more independent films, so the industry can become self sustaining. Unfortunately, the majority of these films fail to recoup their budgets, let alone return a profit to investors.
It appears that the independent film market is competing for different audiences with different types and more varied films. It is rightly referred to as the specialty film business. However, such diverse films must be nurtured and delicately marketed to the boutique arthouse crowds in the face of blanket advertising of studio fare.
Given that the majority of independent films rely on a mix private equity and government funding, it is difficult to obtain reliable data on the proportion of films making a profit. Since much equity funding is regrettably purposed to generate a tax loss for high net worth individuals, and government funding simply supports local film makers with scant regard for factors such as market penetration, demand and profit, independent cinema remains a dubious business proposition. Hopefully, as distribution channels such as video on demand (VOD), cable tv and ancillary markets such as hotels mature, we will see more accessible independent films spread across a greater variety of platforms, and therefore stand a better chance of financial viability in the marketplace.