Special Report: Indies Take Off

NEW YORK: Ahead of the American Film Market (AFM), World Screen looks at how producers and distributors of TV movies are finding new opportunities in the on-demand, nonlinear world.

So much of the television business has been overhauled by technology. Between niche channels, digital platforms, portable devices and second screens, it’s not surprising that TV movies and independent films have also felt the impact of the evolution of the industry.

Besides the relentless pace of new developments, some channels in the U.S. have shifted their programming strategies, and economic fluctuations in several parts of the world have affected acquisition budgets. It would seem that demand for the made-for-television movie would be in jeopardy. But the producers and distributors who have been able to navigate all this change have succeeded in carving out profitable businesses despite, and sometimes even because of, the upheaval.

“The universe of original movies on television is a relatively stable marketplace, though like everything else in our industry, it is quickly changing,” says Fernando Szew, the CEO of MarVista Entertainment. “There are windowing issues, digital players and theatrical day-and-date releases. It’s a very dynamic marketplace right now, very different than it was say 15 or 20 years ago, when the TV movie—or, as they called it back then, the movie of the week (MOW)—was primarily a network movie in a weekend slot.”

Indeed, the MOWs on the broadcast networks in the U.S. were often television events garnering high ratings. As the broadcast networks moved away from television movies, some of the cable channels, notably Lifetime and Hallmark Channel, made them a mainstay of their schedules. Then, as reality shows and original scripted series came in vogue, the number of slots for traditional TV movies diminished. However, there are still enough to justify the production of original movies, and a number of specific genres are still finding homes on channels around the world.

“We are very geared toward licensing our product to the traditional broadcasters, and when it comes to movies they are very focused on certain genres,” explains Gene George, the executive VP of worldwide distribution for Starz Worldwide. “A lot of it is because they don’t get this product from the deals they have with the studios, and that is where we come in—we fill the gaps for them.”

In producing and acquiring movies for distribution, Starz focuses on three main areas. The first, George says, is “the action disaster films, which have a strong family component to them—usually a family is in jeopardy or in a situation where they are tested. They then overcome their obstacles and there is a positive ending.” He continues, “The second category is female thrillers, which comes out of the demand in Europe for the type of movies that fit into Lifetime. The third category is the holiday movies, mostly Christmas titles.”

In recent years, a number of additional cable channels have started airing original movies. Besides Nickelodeon and Disney Channel with movie slots for the tween and teen crowd, Syfy offers science-fiction films and newcomers ION Television and UP (Uplifting Entertainment) are also programming films.

SOMETHING FOR EVERYONE
“Because there is so much diversity within television channels, we like having one or two things for everybody,” says Scott Jones, the president of Artist View Entertainment. “If Disney Channel comes in, we like to have one or two things for them. If an action or horror or sci-fi channel comes in, we’d like to always have one or two things to pitch to them as well.”

The importance of having enough product to satisfy numerous channels’ needs stems from Jones’s experience owning video stores. “Ever since I started Artist View, we have always had a wide variety of genres,” he says. “The reason I made sure of that over the last 23 years is because of my years as a video-store owner. We were constantly buying new titles for different genres, thinking, Oh we need a new horror film for the horror section, or we need a new comedy for the comedy section. I was very fortunate to recognize that it’s entertainment and everybody has different tastes. You can’t please everybody, but you can have a nice brushstroke and have a little bit of everything.”

American Cinema International (ACI) has carved a particularly successful niche with family-oriented movies. Titles to fill the “afternoon female slot of family entertainment is not what the majors are offering,” says Chevonne O’Shaughnessy, ACI’s president. “I want to provide that place where mom, dad, grandma, grandpa can all sit down and watch a movie together.” Among ACI’s recent titles in this genre are Wish You Well, based on a novel by David Baldacci; The Reckoning, the last of three movies based on books by Beverly Lewis; and the Ultimate Legacy, completing a trilogy based on novels by Jim Stovall.

LIGHTNING IN A BOTTLE
One of Lightning Entertainment’s new movies is the thriller Ask Me Anything starring Britt Robertson, who has one of the lead roles in Disney’s upcoming Tomorrowland, opposite George Clooney. “We try to get the actors who are starring in the big tentpoles, like Britt,” says Ken DuBow, the executive VP and general manager of Lightning Entertainment. “She is about to break out as an actress with Tomorrowland. If she is going to be the next emerging star, we want to get there a little bit before everyone else does.”

TV movies made for U.S. outlets are also finding audiences overseas.

“The Eastern European market is constantly growing; there seems to be greater demand there,” says Starz’s George. “We are doing a lot in Latin America and we are actually doing quite a lot in Africa.”

MarVista has also seen considerable activity in Africa. “Broadcasters there are acquiring quite a bit of content, which is very good to see,” says Szew.

There is so much activity in Africa that the American Film Market (AFM) has organized a roundtable called African Co-Productions: The Possibilities and the Challenges. “What we are seeing in Africa is an acceleration in their urbanization,” says Jonathan Wolf, the executive VP of the Independent Film & Television Alliance and managing director of the AFM. “This is leading to a growth in the middle class, which of course, for those who make films, is leading to more eyeballs looking at screens. While a lot of people are focused on China as the next gold rush, we also see that Africa, though the pace won’t be the same as it is in China, is going to be an area of continued long-term growth.”

There have been some territories around the world, like Italy, France and Spain, which have long held regular slots for TV movies. Even now with the economic troubles these countries are experiencing, the demand for TV movies remains strong. “We have seen some pushback in Italy—it’s gotten a little more challenging there—but France and Spain, with the right content, are still as competitive as ever,” says Starz’s George.

Among Starz’s new movies are the thrillers Secret Past, about an investigative reporter teaming up with a combat vet-turned-private eye to solve a mystery, and Eyewitness, about a mother/daughter rafting trip that becomes extremely perilous. Other offerings include the Christmas movie The Holiday Tree and the sci-fi film Impact Earth.

“Generally, the international market is robust as long as you have the content that people are seeking,” says Nat Abraham, the president of distribution at Breakthrough Entertainment. “The challenge for producers, always, is to stay on the edge of the content that keeps viewers glued [to the screen]. That’s really the environment we are in. We’ve got to create engaging content that people want to come back to over and over again.”

THE RIGHT STUFF
One of the reasons Starz continues to conduct good TV-movie business is that George asks his international buyers what subject matter is of interest to their audiences. “We do find out from our broadcast partners what they are looking for,” he says. “A specific example was Stolen Child, [which we developed after] talking to a broadcaster in France who told us they were looking for an adoption thriller. We talked to our Spanish partner and our Italian partner and they concurred that that would be a good topic to explore in a thriller. We went back and developed the property and had the movie at the next TV market. We are very responsive to the market’s needs. We try to react to the market and turn these products around so our buyers can use them. That is a big part of our strategy.”

This is also a significant part of MarVista’s strategy. “We try as much as possible to work with U.S. partners on some of the creative elements of the movies we produce and acquire to make sure they will also appeal to international broadcasters,” says Szew. “International distribution is at the core of our business, and we even solicit information and ideas from international partners for development purposes.”

The fact is that for some cash-strapped broadcasters in these economically challenged countries, a TV movie remains a cost-efficient investment.

“It’s greatly efficient,” enthuses Szew. “It is an established, sound business in three particular countries [France, Italy and Spain]. But for us it’s a much more dynamic business, and we are not just dependent on the Southern European marketplace. A Disney Channel movie is very different from a Lifetime movie, a Hallmark movie or a Syfy movie. We treat each one of these very differently. The buyers of these movies are sometimes the same and sometimes different, and each piece of content has a different strategy as to where it best fits and where it is distributed. Again, this was not necessarily the case 15 to 20 years ago. Today, ‘the right kind of movie’ shifts over time as well.”

The right kind of movie is not just the traditional TV movie. MarVista, in fact, has branched out and produced a horror movie for theatrical release, Satanic.

“Where we continue to do well, and are very thankful for the success we have had, is in pay TV,” says Artist View’s Jones. “That is a place where there is still a real need for independent programming. The free-TV world is very tricky these days. There is still a lot of local programming being made and a lot of traditional movie slots are now being taken up by hour-long reality shows. If you have the right titles, the TV stations won’t hesitate to pay you well for them, but you really have to have the right product.”

Two of Artist View’s new titles are A Dark Reflection, based on a true story about an undercover news reporter who finds out that certain planes have technical problems and the air on board is not as clean as the passengers think it is, and the war movie The Last Rescue.

DVD DOLLARS
Among the many shifts producers and distributors of original movies have had to adapt to is the slow decline of the DVD market.

“The DVD business is very difficult,” says Jones. “We are constantly fighting piracy. There are some territories where there basically is no DVD business and there are some where it is quite strong.

“When Blockbuster and Hollywood Video were healthy, if you got them to take their maximum order for an independent picture, together they would buy about 38,000 DVDs,” Jones continues. “Today, with Redbox, an average strong order for an independent title is about 35,000 units. I find that very interesting because what it tells me is that the market is still very similar, it’s just that the model has changed dramatically.”

Like Artist View, most of Lightning Entertainment’s DVD business is also primarily in the U.S. “Our DVD business is a U.S. business,” says DuBow. “It remains pretty strong because through Walmart and Redbox there still is a hard-disc business, and through Netflix and iTunes a VOD business. But there is less of a broadcast business. I came out of the U.S. syndication business. Ten years ago I would have syndicated our movies, but now I can’t syndicate any of them. There has been that shift, but we are still releasing a lot of things straight to DVD in the U.S. and around the world; there are still a number of countries—Germany, the Benelux—where DVD release is still strong. In the U.K. there are too many distributors, but the business in terms of total dollars is strong. Those countries have good DVD businesses, so if you have the right film it sells.”

A question looming over the independent film industry is whether revenues from digital platforms will start to replace the loss of DVD revenue. Artist View’s Jones, for the moment, is skeptical. “The number of nonlinear platforms is greater than the actual revenue from them,” he says. “At this point I can’t say that the digital platform revenue is in any way replacing the old DVD revenue.”

But again, for the right product, digital platforms have already started to provide distribution opportunities. “It is still the early days, but we are seeing some great results,” says MarVista’s Szew. “Not everything works the same for all the platforms, so each movie is approached with a bit of a different strategy. We’re seeing good success in certain genres when it comes to digital, which in a sense is not vastly different from what happened in the DVD era as well. From a macro perspective, everybody talks about how DVD was huge, and it was for some, but not every genre worked on DVD and not every movie was generating a lot of revenue.”

A key is extracting the best value from each movie. At Starz, George’s division works with Mara Winokur, the senior VP of digital at Starz Digital Media. She explains that most of the traditional TV movies, for the moment, sell to traditional linear channels better than to digital platforms. “There is one exception to the TV-movies rule—holiday films are in demand. Those sell very well. The Netflixes of the world love them,” says Winokur.

While the bulk of what Winokur is selling to digital platforms is Starz’s original series, there is potential for more original movie sales. “We are seeing an emergence in a lot of territories of digital players who are interested in getting a lot of content, particularly because Netflix isn’t there yet. TV movies are somewhat valuable to those players, but the flip side is that they are all effectively start-up companies that don’t have a lot of money. I don’t think we’ve come up with a situation where one of these digital platforms is going to pay more for TV movies than one of the traditional broadcasters, but it will be interesting to see where it is in a couple of years. Historically, we’ve seen that everybody starts with the most valuable content and then as they develop a bigger subscriber base and have more money, they can become more nuanced and start expanding their offering. Talk to us in two years and Gene [George] will be saying, Yeah, Mara took all of my movies for her digital clients!”

WINDOWS OF OPPORTUNITY
Windowing product effectively is becoming more critical with every new screen. In any given territory, DVD sales and other ancillary revenues, which could be second windows or transactional digital like iTunes, are largely dependent on the initial exposure of the movie. Distributors want to ensure that even if that first sale in a given territory makes less money in the short term, the future windowing will ensure a long tail of revenue.

But not all players in all territories are willing to window product.

“In a lot of countries it is a business that is in its infancy and remains mired by government regulation,” says Lightning’s DuBow. “You have a number of Western European countries where the theater owners have enough leverage with the government that they won’t let the windows between their release and other releases shrink. You can’t do the same type of releases that have become so popular here in the U.S., like ultra VOD where it is basically day-and-date [with the theatrical release of a movie]. You can do it in the U.K. to some extent, but in France, Germany, Italy and Spain you cannot. These are big countries and there are wide separations between theatrical release and other windows. What this does is open up the opportunity for films to be pirated.”

While there are still challenges to be faced, the right product tailored to the right channel, linear or nonlinear, is the key to success in the original movie business.