What does it mean for you as a Filmmaker or Film Financier?
Director of Development, Altar Identity Studios
Web-based, streaming platforms are changing the film industry as we know it, leaving filmmakers and investors scrambling to stay ahead of the curb. Fortunately, if you’re a filmmaker, there will be plenty of opportunities to profit from this change. Just take your cues from the disrupters at the helm — Netflix, Amazon, Hulu and Apple.
Netflix is on top of this wave of change. On October 16th 2015, the movie-streaming service released its debut feature film, “Beasts of No Nation” in theaters and online simultaneously, leaving exhibitors in arms. Nevertheless, releases are likely here to stay.
Movie Theaters and DVDs aren’t as Popular Anymore
Recent statistics show that theater attendance hit a 20-year low in 2014. Improved TV technology and on-demand video are making consumers willing to forego theaters and wait for movies to come to them. While filmmakers used to make just as much money on DVDs as they would at the box office, streaming media has also caused DVD sales to decrease.
There’s Still Big Money in Film
Economist Kevin Klowden, who directs the Milken Institute in California, believes the film industry is performing well — but he acknowledges that digital distribution is changing the investment landscape. Klowden says that the future of film will see Hollywood making its money in different ways. Filmmakers will start to rely more heavily on co-financing and international markets to finance their budgets, minimize risks and stay profitable.
Slate Financing can Minimize Risks
Slate financing, or co-financing, is one way movie makers can get financing from film investors while minimizing risk. It involves pooling together investments from individual investors and hedge funds to finance a string of movies that a studio will make over several years. If one movie in the slate flops while another succeeds, it helps to spread out the investment risk. Considering today’s uncertain markets, slate financing can help you avoid putting all your eggs in one basket.
Foreign Markets are Key
Foreign markets — especially China and other Asian countries — are becoming increasingly vital for the success of U.S. and European-based filmmakers. This fact might be why Hollywood has made more large-scale action movies recently. Action flicks with big explosions and nonstop fight scenes — like “Transformers” and “Iron Man” — are easier to understand in “post-translation” than romantic or intellectual films like “The English Patient.”
Amir Malin, Manager of the private-equity media-investment firm Qualia Capital, describes how 20 years ago, big-budget films generated about 60 percent of their box-office sales domestically and 40 percent internationally. These days, international markets reign supreme. He says that international revenues are often double or triple that of domestic box-office profits.
Foreign countries like China, Russia and Brazil have significant populations. These areas have also seen increased economic growth in recent years, and these rising middle classes are eager to consume American films.