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Review: Future of Film Summit

by Jeff Steele

Jon Landau -- in 3D!

Variety and Digital Media Wire held the Future of Film Summit this afternoon at the uber-hip London Hotel in West Hollywood. This year’s agenda: Dealmaking in the Age of Digital Cinema. The event ran smoothly and the panelists were informed and engaging. The audience wasn’t as sophisticated as one might find at Variety’s annual Film Finance Forum, but it wasn’t entirely pedestrian either.

Like the America Film Market that preceded it this week, this conference could be summed up in two letters: 3D. 3D Films, 3D theaters, 3D televisions, 3D Blu-ray, 3D sound, Jon “3D” Landau keynote, and more were all well represented here today. And with good reason. The interesting statistic that kicked off the program was

3D adds 21% to box office.

Veteran foreign sales agent Robbie Little hit the nail on the head with: “saying your film is 3D is like saying it’s in color.”

The conference ran parallel tracks: one on film finance and one on digital distribution. In hopes of learning something new, I attended the digital distribution panel, which I found engaging. Dolby, Sony Home Ent., Oscilliscope, NATO, Magnolia, and Cinedigm represented the first panel: How is Technology a Game Changer?

As expected (and hoped), the dominant topic was Premium VOD (which I tweeted about last week) and the effect its window will have on theatrical exhibitors. John Fithian of the Nation Assoc. of Theatre Owners held the line that Premium VOD (the recently proposed $30 to $50 VOD release during the initial theatrical window) will lose two dimes in exchange for one nickel. The first dime being from theatre goers that opt to watch the movie at home as a group (like a pay-per-view event) instead of going out. The other dime from the fact that the Premium VOD release creates a pristine copy for pirates during the theatrical window, before any DVD release. He noted that four people watching the PVOD event will only generate $30 in revenue, compared to $80+ at a theatre. I don’t think the first dime is a fair trade for that nickel, because a lot of people will pay that wouldn’t have gone to the theatre anyway, like parents of small children. The piracy issue, however, has some serious merit and could wreak havoc for international distributors, especially in Russia, Eastern Europe, China, Spain, Latin America, and more.

Marc Cuban and Todd Wagner’s Magnolia Pictures (Magnet Releasing) has been playing with distribution windows using day-and-date and Super VOD offerings for several years now with tremendous success.  Tom Quinn (SVP Magnolia) had this amazing statistic that

80% of the time they see overages from Super VOD.

Obviously, we have no idea what kind of MG’s and marketing costs are being incurred and recouped on behalf of these films, but it appears to be paying off.  This is niche content that is targeted at niche audiences, which alleviates the need for mass market P&A.

Meanwhile, down the hall at the the film finance panel’s Q&A, an audience member asked the panel for their thoughts on crowd funding.  The response … crickets.  Apparently nobody knew anything about it.  That is a shame.

All in all, I recommend attending The Future of Film Summit in the future…. especially when I am on the panels.

21 Responses leave one →
  1. November 10, 2010

    This castle hath a pleasant seat; the air nimbly and sweetly recomments itself unto our gentle senses.

    Ah, yes, the 3D monster.
    I, myself, prefer the unencumbered point of view.
    But perhaps I am in the rapidly thinning minority.

    Tough to argue with numbers.
    One wonders how long the 3D monster will rage.
    It has come and gone before.

    I’m wondering if films such as Crash, The Tracey Fragments, Eternal Sunshine Of The Spotless Mind, In America, Amreeka and Nil By Mouth would have seen 21% box office increases had they been shown in 3D.

    Crowd funding good for microbudgets.
    But aren’t crowds always involved in film financing?

    I know, I know, linguistics.

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  2. November 10, 2010

    Oops, I tried to give my previous comment 5 stars but accidentally clicked on 1.
    What is vanity’s name again?

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  3. November 10, 2010

    Ahh, that’s better.

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    • Jeff Steele permalink
      November 12, 2010

      Please refrain from gaming the system.
      The system is watching.
      The system remembers.

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  4. November 10, 2010

    Dear Jeff,
    Lovely website, I am a fan. There are two terms in this article, which a novice like me would be grateful for a little more explanation.

    1. What exactly is Super VOD?

    2. What is “Mass Market P&A?” Is it simply a big P &A Campaign over 2000 theaters for example.

    Thanks for you time Jeff,
    best,
    Anand

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    • ernst gossner permalink
      November 12, 2010

      yes, would appreciate super vod explanation as well. thx, ernst.

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    • Jeff Steele permalink
      November 12, 2010

      Premium VOD (or Super VOD) refers to the premium charged for VOD releases that occur during the initial theatrical release. It doesn’t have to be day-and-date with the theatrical release, but it is within the initial theatrical release window, and before DVD or any other windows. For studio films, the PVOD pricing is anticipated to be about $30-$50 (vs. the $3.99 you pay for normal VOD.) Companies like Magnolia are charging around $10 for SVOD that “premieres” day-and-date with the theatrical release.

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      • November 15, 2010

        Dear Jeff,
        Many thanks for your reply!
        Best,
        Anand Varma

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      • Pierre Lapointe permalink
        November 17, 2010

        Interesting discussion, Jeff.

        Personally, I like the idea of Premium VOD. In my casual conversations with people, many say they rarely go to the theater mostly due to poor content and their perceived ROI. They like the idea of streaming or downloading from Netflix or other providers as well as paying for VOD even if the content marginally appeals to them.

        Premium VOD fills a void where people can experience a new release possibly as an individual, couple or family without having to dress up, go out, have dinner, find baby-sitter, etc. (these are added costs that have to be considered in this economy) and they can change the channel if they don’t like the content.

        As for the piracy issue which is a huge problem in certain parts of the world, I’m not convinced PVOD will have a significant effect mainly because I don’t think that “audience” segment will increase significantly despite the increase in quality. I may be completely wrong here. My take is that the segment of people buying pirated copies is a market share the distributors do not want to cater to because it doesn’t make financial sense. I don’t know the exact figures, but I’m assuming that the amount of money lost to piracy is still not high enough for distributors to adjust their prices, outside of including a certain percentage in their loss column which they can write-off.

        Could a distributor provide a “pristine” copy of their new release on the internet for say $3-5? How many purchases would that generate? Of course this goes against their current models, exhibitors, broadcasters would be up in arms and if the internet becomes the premier source for distribution then what would exhibitors or broadcasters play? I don’t think one negates the other.

        I think the bottom line is that there needs to be a centralized digital distribution platform that theaters can tap into as well as VOD and the internet. Day and Date allows customers to decide where and when they want…

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  5. BenL permalink
    November 10, 2010

    1. 3D=21% bump. I’m skeptical. That projection should have a expiration date as well. Will it last longer than the milk in my fridge? TBD.
    2. I agree that the 1st dime is not a fair trade. I know people in my “circle” who fit your example. Now we need some numbers to see if that projection holds.
    3. I agree the trend to VOD and Super VOD will continue. we can see some foreshadowing w/Netflix penetration and rising status. I can only imagine how future generations will grow this segment.
    4. Pirates… what can be done? if the ease of access and quality of VOD improves, could the bootleg become less appealing? We are talking about a market segment that is cost sensitive (not always about quality). Pirates via hard copy have fixed costs as well. I would like to see the equilibrium point between the two.
    5. Crowdfunding, wonder if the truly knew noting or were concerned about securities law?

    Thanks for posting Jeff.

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    • November 11, 2010

      @benL if you have questions re: crowdfunding and securities law and how some groups are dealing with legally give me a shout.

      another great post Jeff and I am saddened at the crickets comment…..of course.

      Thanks

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  6. November 11, 2010

    Jeff, thanks for the excellent (as usual) wrap up.

    First, for anyone who has been standing on the sidelines waiting to see if 3-D becomes “real,” I post a list of links to 3-D production information that can help anyone get up to speed on the subject:

    http://michaelrbarnard.wordpress.com/2010/11/10/3-d-is-or-is-not-here-to-stay/

    Second, Premium VOD sounds great. I hope it has potential for indie filmmakers, if we can gain the same access as the studios. Perhaps that will rely upon Net Neutrality, since an indie filmmaker will probably need to set up their own online process to run parallel to whatever the studios and cable cos set up. If it’s a closed system, and the ISPs implement anti-Net Neutrality paths (we saw a taste of this in the FOX/Cablevision dispute), we may find our paths are hindered.

    Third, combining 3-D Hi Def with Premium VOD may be a pirate-killer. Studies show that, especially with packaged media, consumers in the U.S. will give up on piracy efforts if too “cumbersome,” which studies show includes if it takes more than an hour to make it happen (and I’m pretty sure 3-D Hi Def would be cumbersome for mom and dad, and the kiddies, too).

    Of course, that presumes the existence of 1) a large 3-D TV base–and growing that base would be healthy for EVERYBODY; and 2) getting cable companies to get serious about delivering Hi Def, rather than wallowing in the “can’t be done” world that only exists in the comfort of cable (who else does nothing about old technology other than moaning about the difficulty of pushing its limits?? Everywhere else in our industry, we are well beyond the limits that were faced. IMHO or not-so-H, I guess.).

    By the way, another value of Premium VOD: as the world of content becomes a hodgepodge of every possible content and delivery method (YouTube, home video, micro-budget movies, tentpole movies, cable shows, webisodes, shorts, etc., via packaged media, theater screens, Internet delivery, wireless…

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  7. November 11, 2010

    Yikes!! I’m too verbose for the system!

    Here’s that last paragraph:

    By the way, another value of Premium VOD: as the world of content becomes a hodgepodge of every possible content and delivery method (YouTube, home video, micro-budget movies, tentpole movies, cable shows, webisodes, shorts, etc., via packaged media, theater screens, Internet delivery, wireless phones, etc.) there soon will be no distinction between any of it prima facia. At least with Premium VOD there will exist a distinction that now is held by the theatrical release. Premium VOD may ultimately SAVE the theaters, since the distinction will be maintained in a jumbled world of everything/everywhere.

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  8. November 11, 2010

    The quote “3D adds 21% to box office,” I find a non sequitur when it comes to films that ‘are not’ major theatrical wide releases.

    I highly doubt anything other than megabudget cartoons and CGI films see this ‘bump.’

    The jury is still out for me on 3D, again — this go around.

    While I admit the current technology is far superior to past 3D technology, I still see it as a niche market for the major studios.

    I think the comment, “a lot of people will pay that [PVOD price] wouldn’t have gone to the theatre anyway, like parents of small children,” is spot on. I would add the non-demographic of anyone over, let’s just say 55 years of age, who don’t want to put up with theater hijinks should be added, too. Digital delivery is the future of expanding the market space; it just depends on how fast we want to get there.

    Let me be brutal here. No one cares about 3D other than the majors. Indie filmmakers care about getting value out of their stories, on scant budgets and I bet 3D never entered their equation.

    The newest digital revolution will be sitting in the shadow of pirate ships until worldwide ISPs make a concerted effort to belay piracy.

    As for John Fithian’s comments, it shows NATO is just a struggling boxer trying to fend off the punches of the digital lightpipe.

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    • Pierre Lapointe permalink
      November 17, 2010

      well said.

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  9. Scott Hillman permalink
    November 11, 2010

    I think your slightly wrong about the dimes and the nickels(term i have never heard before) in the family with small children issue. I know when i was a small kid i tended to go to more movies then i probabbly do now. Not every kid, but i think a lot of them like going to the movies.

    One thing that the theater industry has above all other media distributions of a film is: Its an event. Its going out, its doing something. Kids can pick up that a lot more then adults sometime. If you put it on S VOD its just watching a tape, albiet one with better advertising. Kids will defenitly do that, but if given the option a lot of them would go out.

    I could see your logic somewhat for couples with babies who want to have a quasi night to themselves(in which cas the theater isn’t going to make the baby pay for a ticket) but to much S VOD i think in this market and others can kills the goose of theaterical distrubtion. If it stops being an event no one will do it.

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    • Jeff Steele permalink
      November 12, 2010

      “Parents of small children” refers to PVOD viewings by the “parents”, generally after the children have gone to bed.

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  10. Bernard Bourret permalink
    November 18, 2010

    21% bump at the box office sure is a headline that makes you think twice about going 3 D or not. As others have expressed, it probably works for studio releases but the indy game is a different story.

    I recently read an article on The Wrap entitled “3D at the box office: Down, Down, Down…” http://www.thewrap.com/movies/article/3d-box-office-down-down-down-19845?page=0,0 . The Los Angeles Times also had a piece bsed on that article: http://latimesblogs.latimes.com/the_big_picture/2010/08/no-surprises-dept-hollywood-killing-3d-golden-goose-faster-than-expected.html .
    Basically, the articles argues that the initial BO demand for 3D releases is declining rapidly – and this is for highly anticipated titles!

    It can be argued that there are films that shoud be 3D (Inception anyone?) and others that should not but in the end, I believe that 3D will become just like surround sound. The first “Surround” sound movie I saw was Earthquake. At that time, the surround sound experience was about shaking you out of your seat. Now, it is an everyday enhancement to every film. The same thing happened with CGI. It seems that we all have to “overdose” on new technology before we learn that moderation and discreet use of new technology make for a better viewing experience. Isn’t that what James Cameron did?

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  11. Joe Orlandino permalink
    November 19, 2010

    Great piece Jeff.

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  12. Myron permalink
    November 29, 2010

    If at least some information was accessible regarding the estimates of “Instant View” and VOD minimum guarantees I believe it would lead to filmmakers adjusting not only their budgets but their projects accordingly to create films that are in line for some type of profitability or at least provide a bit of stability in projected profit margins. This would lead to overall better projects and better investments.

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