State of the Film Industry: Amazon Prime, Netflix, piracy and technology-led disruption

Panel of film industry experts tackle biggest challenges facing filmmakers today at the Mill Valley Film Festival.

Mark Fishkin State of the Industry panel at Mill Valley Film Festival (MVFF)
L to R: Mark Fishkin (MVFF executive director and founder), Paul Cohen (Florida State University), Ed Arentz (Music Box Films), Blye Faust (Rocklin | Faust), Amy Hobby (Tribeca Film Institute), Ruth Vitale (CreativeFuture).

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One key takeaway from a panel at the Mill Valley Film Festival: the industry is in the midst of major disruption.

Its future and how filmmakers navigate the new paradigm anchored by new platforms such as Amazon and Netflix remains hazy. Solutions? None are obvious, maybe they don’t even yet exist. It feels a bit like the music industry shakeup that Apple CEO Steve Jobs led with the advent of iTunes in 2001.

The annual panel, “MVFF State of the Industry Conversation” is always informative. This year’s edition, hosted by Paul Cohen (Florida State U.), was no exception. Throngs headed to the Rafael Film Center to hear from some of the industry’s foremost experts in filmmaking, marketing and distribution talk about their business. A show of hands revealed, in my estimation, about half the room were themselves either filmmakers or aspiring filmmakers.

I took some notes, and share some of the highlights below.

Piracy was a big topic. Ruth Vitale (CEO, CreativeFuture) was particularly vocal about its negative consequences. One shocking case study she noted related to Dallas Buyers Club (for which Jared Leto won an Oscar). Jean-Marc Vallée’s 2013 film generated about 7 million theatrical ticket sales. But, it amassed some 21 million illegal downloads, or about three times more than the legal transactions. Cohen noted that “The end result needs to be that they [filmmakers] receive some form of remuneration for their work.” Or, as was mentioned several times, we may be stuck with cat videos (not that there’s anything wrong with that!).

Copyright, related to the overall conversation of the criminal enterprise of piracy, was also a topic that received a fair amount of attention. Advice to filmmakers and distributors: protect your links. Ensure they expire. Control your content.

Even as a small indie publisher I can understand, at a microscopic level, what copying and illegal use of original content can have on a business. For example, this weekend we published a short 20-second clip of a brief interview (featuring shaky Clintcam) we shot at the Mill Valley Film Festival. In it we speak with actress Stana Katic (who apparently has a massive cult-like following, and, it would seem, an impressive army of Twitter-bots). Just a short bit, nothing special on my account to be sure. It got decent reaction on social media:

And, before I knew it, someone had downloaded the video, translated it into Spanish, and posted it on to their own YouTube channel (they get the views, not us). They never asked for permission. But, at least they provided a service of translating it! And, at the end of the day, it was just a social bit of content, not a viral campaign or 90-minute film that took six years to make. It’s not something we’d monetize, and far and away from a feature film. Just a small example of how this new world of fluid content operates. I can only imagine how real films and filmmakers experience and deal with this on a grand scale. It is sad whenever an artist doesn’t get compensated for their painstaking work. In this example, though, I do like to see an indie film like The Rendezvous and director Amin Matalqa get as much exposure as possible.

Quick aside related to YouTube: Ruth Vitale noted during the panel that there are 24 million take down notices (!) sent to YouTube (Google) every week.

Another interesting part of the Industry Conversation happened when an audience member offered a counterpoint on piracy, suggesting that it’s “money left on the table”. The panel was not amused.

My quick take overall is that when an industry — music (iTunes, Spotify), taxi (Uber, Lyft), travel (Airbnb), real estate (Zillow), classifieds (Craigslist), auto (self-driving cars) —  is disrupted by technology, the status quo ends. People who did business for years one way need to re-boot, re-tool and do it a new way. The flow of money changes. And it hurts a lot of people, initially. The shakeout takes time. Everyone re-positions, adjusts. But, eventually, things ultimately get better. It’s hard to say if that will play out for filmmakers. I hope, of course, it does. Kickstarter and crowd funding is a positive. So too is social media. Then there’s platforms like YouTube and Vimeo and Facebook that give up-and-comers great distribution platforms — mostly for free. It’s so true, there’s no such thing as a free lunch, and that you need to deal with both the good and bad that technology innovation delivers.

Meanwhile, having produced Stark Insider videos for 10 years now, I do know that it’s way harder to get views today. People are busy. They’re playing Pokemon Go or Tweeting or Snapchatting. Not only that, back then, circa 2006, cat videos were the only game in town. Now, in 2016, everyone is on YouTube: POTUS, John Oliver, Jimmy Fallon, Jay Leno, YouTube stars, you name it. Attention spans are now spread across far more mediums. Standing out is increasingly a challenge.

At the end of the day, I’m hoping the creative process grows stronger, and artists, somehow, can continue to make a living doing what they love. The world is a better place for it.

MVFF RECAP: State of the Industry Conversation

Note: this is my recap, not a verbatim transcript.

Moderator: Paul Cohen, director of Torchlight program at Florida State

Ed Arentz, managing partner of Music Box Films (GIRL WITH DRAGON TATTOO)

Blye Faust, partner/co-founder Rocklin | Faux – produced SPOTLIGHT

Amy Hobby, VP of artists programs at Tribeca Film Institute (PAINT IT BLACK – in MVFF39)

Ruth Vitale, CEO CreativeFuture

Mark Fishkin (founder MVFF) Intro

Mill Valley Film Festival is about films that are made for adults — art and entertainment. Some of these films are what we might call diverse. Not just ethnicity. Sub-titles. Films without recognizable names. The films that we show here, and the films we grew up with, amazing dedication to the “art of filmmaking.”

Paul Cohen Intro

“What we do is to share our understanding of doing this everyday, and living through the state of chaos that is the business of movie production and distribution.”

INSPIRATION  – What gets you up in the morning?

Ed Arentz (EA): “The basic thing is the aesthetic pleasure we get watching and experience a film, and sharing it with others. That will continues regardless of device or format, and future scenarios.”

Blye Faust (BF): “It’s been scary as we’ve seen the industry change, and the ability to release independent films. Netflix. Amazon. There’s a long way to go. At the same time it’s exciting to know there’s new options out there.”

Amy Hobby (AB): “Who gets to tell our stories. Gender parity. More exclusive members of society telling stories. There’s been a lot of progress on that in the last few years.”

Ruth Vitale (RV): “Sitting in a screening room or at a festival, and thinking if Fox Searchlight doesn’t steal this movie… I’m going to bring it to the marketplace! I’m going to help bring this movie to people and try to help this filmmaker. That used to get me up in the morning… now it’s piracy.”

CHOOSING PROJECTS

BF: “We only do projects inspired by true stories. We want to tell compelling stories, but we’re also in the business of entertaining. It might be something studios would have made 10-15 years ago. Is it Open Road? A24? Who’s slate does this project fit into?”

AH: “Tangerine entertainment, we only work with women directors. Do we like the filmmaker? Do they have a vision? Is it someone we want to work with for two years. Maybe I’ll have a light bulb moment… this could play Cannes! Or this thing could hit a nerve a year from now, the timing feels right.”

RV: “You love some movies. Then don’t have a clue what to do. If you can’t make a trailer, if you cant figure out the essence of the piece or the hook, don’t do it. With all the noise out there — digital media, YouTube — you have to be able to break through the clutter. So you better be sure you know what it is.

PIRACY

Jared Leto and Matthew McConaughey form an unlikely bond in Dallas Buyers Club.
Jared Leto and Matthew McConaughey form an unlikely bond in Dallas Buyers Club.

RV: “All time high. DALLAS BUYERS CLUB (MVFF interview), about $50 million worldwide, it sold 7 million tickets. There was 22 million illegal downloads. So three times as many transactions as theatrical sales. I gave that number out at Sundance. A producer said those 22 million illegal transactions are from “tastemakers”. I said I found your argument specious. Those people are directing people to illegal links, not to a proper way to buy the product. But, okay, let’s say 5% are legit, that’s about $3.5 million. For a film like DALLAS BUYERS CLUB that is essential. Those people need that money. Without creativity this plant would be a pathetic place. With advent of tech, somehow the value of what we do is diminished. Without what we do you have 24/7 cat videos. We love technology. We can bring our product to people faster and more efficiently. But without us you have shit. Half the people in the world think we shoot movies in our backyard with a flip mom. My mom says what do you do? Now she thinks I work with the FBI.”

BF: “People worked for very little money (SPOTLIGHT). People were counting on the backend. Piracy comes right out of the filmmakers backend right away.”

RV: “Piracy is a criminal enterprise. It’s a vertical for them that cost no money. They go into theaters. Shoot it with HD camera.

AB: “The quality is terrible.”

RV: “They don’t care. These kids are watching on their phones, maybe their iPads. Once legit version comes out, they swap it out..”

RV: “Protect your links. And make sure your passwords expire.”

PC: “It’s every film. Not some films.”

DISTRIBUTION WINDOWS

EA: “90 days theatrical. Then DVD. Transactional VOD (iTunes, Amazon). Output deal 60-90 days after VOD. We do occasionally do day and date.”

AH: “I thing the 90-day thing is on the way out. With Amazon, instant release.”

AH: “101 on distribution for filmmakers. I had a great experience with Netflix (WHAT HAPPENED, MISS SIMONE?). I have no complaints. But when I asked them how many watched the film. No idea. But that was not a bad experience knowing what I was going to get out of it. I like to say you have 3 ways to exploit your film: (1) TIME – you can license something for a year, 6 months – then re-license, (2) TERRITORIES – if you’re selling something to IFC to North America for example, give me more money, they say no, then can I have Canada back. Oh yea, Then I can sell Canada for an extra $60,000. (3) MEDIA – DVD, Blu-ray, VOD, SVOD, CVOD. If you can retain your copyright.”

FINDING FILMS

EA: “There’s too many films being produced for us to even consider non-solicited. We do it the old fashioned way. We go to film festivals. The festivals are the first level of gatekeepers. They’re the ones seeing thousands of submissions (Sundance  more than 10,000, for example). The first filtration level so to speak. We go to the biggest festivals, the ones with the most premieres. There’s a lot of regional festivals, there you might find the diamond in the rough. So we like to talk to film programmers when we’re not in attendance to get feedback on what audiences are responding to. (e.g. at Seattle Film Festival and MVFF).”

BF: “Before you even start to make your film. Think about who makes and releases my film. And at what scale. It’s really working backwards. Being strategic. Know your market. Know how your film is going to be seen, and how, and how it will effect you.”

AH: “Your film may be ready for Toronto and it’s a small film. This happened to me. We could hustle up (to Canada). Our sales agent and myself know we’ve been to Toronto and it’s really hard to sell a small film. There’s celebrities. It’s a zoo. You’re better off waiting for Sundance. But that’s six months ago, so that’s a challenge.”

AMAZON PRIME & NETFLIX

AH: “Netflix works really hard to have everyone watch it on the platform.”

EA: “There’s a concern, Netflix acquiring documentaries, could starve distributors out there who have been in business for decades. If an investor puts in $2 million to make it. Netflix offers $2.1 million. Filmmaker takes the Netflix money. But in some cases filmmakers are left with little notoriety. The former model has a sales agent, who sells territory.”

RV: “I spend a lot of time with the other side. They don’t care about what we’re making and the story we’re telling. A Romanian Home wedding video is just as important to YouTube, someone said, as your film. It’s just another product. I’m a huge fan of cat videos, but it can’t be the only thing we have. It’s incumbent upon us as lovers of cinema to help. Because they don’t care about us.”

BF: “We all know. We’ve taken a lot of hits over last few years. Amazon and Netflix come in and our flush with cash.”

PC: “If Amazon or Netflix can take your film out, and help you make money, then they’re a player.”

RV: “Blu-rays still do well, at Christmas. because it’s a physical gift. The gesture is there.”

EA: “Without our Amazon output deal, I doubt we could function.”

RV: “The problem is the next generation of kids don’t believe it, that if you keep stealing it will be fine. Look at music. IRS has 40% less people compared to 10 years ago filing tax returns. That’s going to be the same with our business if we don’t wake up. Amazon and Netflix will keep our business alive, but I fear for what that will look like in the long term.”

BF: “We’ve moved into television. We’re not giving up film. But to have a successful business, we need to be halfway into TV.”

Q&A

— Zappa film example [ed-I’m not sure if this is EAT THAT QUESTION: FRANK ZAPPA IN HIS OWN WORDS or another Zappa doc]. Stalled over U.S. rights. Now looking for new options. Focus World. Ruth Vitale suggested perhaps a music/film tie-in — time with his death or birth or some special event.

— “Piracy is a good thing, it’s money left on the table, a lost opportunity.” – it was good to have counterpoint. PC: “The end result needs to be that they [filmmakers] receive some form of remuneration for their work.”

— “There’s a lot of films being made. A lot of opportunities. Some are crappy. Some are good. Is anyone out there marketing films (feature, independent) realizing they won’t go to theater, but making an industry out of a direct market? How do you fix that? If you can, is there any potential for marketing films to the home ($2/$3 a pop for example).”

As is always the case, the 90-minute session was over in the bat of an eye. I could’ve easily enjoyed another half hour, though the conversation did continue later across the street in San Rafael. Filmmakers love a good glass of wine and hip party!

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