Sundance InfoGraphic: Are Indies the 8th Studio?

With an annual production budget that exceeds $3 billion, independent movies rival the major studios’ spend on filmmaking, even as indies vastly outstrip the studios in sheer volume.

That’s a key finding of our exploration of Sundance by the numbers, which we’ve rendered in our 2014 Sundance Infographic below. There are seven major movie studios: Warner Bros., Disney, Universal, Sony/Columbia, Lionsgate, 20th Century Fox, and Paramount. Can we now reasonably call independent filmmakers the Eighth Studio, because their aggregate production expenses clearly put them in the major studio league?

I don’t believe anyone has ever attempted to quantify the amount of money spent on independent films before. To do this, we decided to use Sundance as a bellwether of the entire independent film sector; with more than 4,000 feature-length films submitted each year, Sundance certainly represents a healthy sample of the industry. While absolutely every indie movie isn’t submitted to Sundance, the highest-profile ones generally are. So the Sundance submission numbers represent a good statistical estimate of the most viable indie movies produced each year.

Then we needed to make an estimate of how much money had been spent on each film. After speaking to a dozen producers, sales agents and indie financiers, we settled on $750,000 per movie, as a blended average number. A few people urged us to estimate a higher number. Even though some movies are made for less, many are made for far, far more, which would put the average cost over $1 million. We decided to keep our estimate at $750,000 to stay on the conservative side.

We also estimate that more than 400,000 people work on indie movies each year, assuming that an average of 100 people work on each film, through all phases of production and post-production.

Opening Night Curse?

In other findings, we took a look at what many distributors call the “Sundance opening night curse”–their belief that if a movie is chosen for Sundance’s opening night, it won’t do well at the box office. Here we found mixed results, which means the “curse” is often true, but not always. Since 2010, 10 films have screened on opening night. Two of them, Twenty Feet From Stardom and Searching for Sugar Man were indie box office success stories; the rest were not.

We Also Discovered:

Distribution: 2011 was the pivot year; since that year, more than half the films screened at Sundance have achieved distribution deals. That’s because of the explosion of streaming and digital delivery systems. Of course, many of those deals are non-theatrical, and some are for acquisition prices as low as nothing (or nearly nothing–$25,000), which means that most independent financiers won’t recoup their investments.

Biggest sales: Since 2010, the movies that are sold for the most money usually have not been worth it. The winner of this game are Fox Searchlight and Focus Features, which bought well and had theatrical success with The Way Way Back and The Kids Are All Right.

The 8th Studio’s Balance Sheet

Still, the overall picture is far from pretty, and if we were to do a balance sheet for the Eighth Studio, the indie film industry, it would be bleeding more red than a Nicolas Winding Refn movie. In that way, the Sundance Infographic is also a cautionary tale. Fewer than 2% of the fully-finished, feature-length films submitted to the Festival will get any kind of distribution whatsoever. Of the more than $3 billion invested annually, less than 2% will ever be recouped.

Does that mean investors shouldn’t bankroll indie movies, and filmmakers should stop making them? Of course not. But I do wish financiers would invest more wisely, with seasoned guidance and a clear plan for distribution beforehand, and that filmmakers would concentrate on crafting far better movies. Creators and audiences alike would be better served with higher quality and lower quantity. The numbers make that abundantly clear.

Sundance Infographic 2014: The Festival by the Numbers

Sundance Infographic 2014: The Festival by the Numbers

Click on infographic to enlarge.

Sundance 2014 Infographic produced by Entertainment Media Partners and Cultural Weekly.

Sundance 2014 Infographic produced by Entertainment Media Partners and Cultural Weekly.

Update: Since this infographic was prepared, Sundance added 2 additional films; 121 films were screened this year.

Business Lessons for 2014: You Are a Media Company

“Don’t Become as Obsolete as the Sears Catalogue”

Of the business lessons you may apply in 2014, here’s the most important: You are media company.

What kind of company did you think you were? Practically everything we do today is media: social, personal, or commercial entertainment. We all walk around with mobile devices in our pockets, devices that are really mini-movie studios, capable of creating, editing and distributing content worldwide.

Of course you are a media company. This is true whether you employ 100,000 people or you work for yourself.

In case this surprises you, here is a history question.

Why didn’t railroad companies become the airline industry? After all, the railroads had the financial capacity, and knew about aircraft technology. They should have, could have, become airline companies, instead of being superseded by them.

What stopped the railroads from transforming? A failure of imagination, their own limited definition of what they did. In short, they believed they were in the railroad business. They should have said they were in the transportation business. This is one of the most common business lessons taught in business schools.

A similar challenge faces every business today, and every creative entrepreneur. If you define yourself within the limited framework of your discipline or industry, it is likely that you will become as obsolete as the Sears catalogue. But before you ask yourself “Why didn’t Sears become Amazon.com?” you should simply redefine your activities and embrace your media-company reality.

How do you become a media company?

Do what media companies do: Empower others to share their stories and information through you. Give your customers/audience/consumers the tools with which they share, articulate and improve their lives.

In other words, if you make trench coats, think like a TV channel, not like a clothing company. If you are a journalist, think like a publisher, not like a writer.

Existing media companies are, of course, well positioned to take advantage of the concept. But, ironically, they don’t always think like media companies, in the way I am defining them. Movie studios and television networks won’t endure for another decade if they don’t listen to their fans and embrace their creative partnership. Traditional publishing companies, with their slow turnaround-to-print process and myopic view of how audiences seek their content, are already witnessing a defection of high-profile authors.

In this decade, a media company needs to provide mechanisms by which all customers are audience members and also co-creators.

What should you do?

1. Get over your blocks, your feelings that you don’t have the time or ability or skills to do media, social media or video. It isn’t that hard.
2. Create content that people love and want to share
3. Focus on storytelling, because the best story always wins. If your company doesn’t have a narrative, it cannot be a viable company.

Likewise, when creative people tell their own stories, they give their work extra value. For example, have you ever walked into an art gallery and had the artist explain her work to you? The artist’s story always makes the work more interesting and valuable.

In her new book Blockbusters, Harvard Business School professor Anita Elberse recounts her interview with Angela Ahrendts, the CEO of Burberry, the company famous for its trench coats and outerwear.

Images from Burberry's Tumblr page

Images from Burberry’s Tumblr page

In the interview, Ahrendts surprisingly describes Burberry as a “digital-media company.”

Burberry has been so active in social media that it now has more followers than any other luxury brand. “And the company has launched several online destinations,” Elberse writes. “At artofthetrench.com, for instance, consumers can submit photos of themselves in its iconic rainwear. ‘Nothing is for sale; it is just a site to connect people,’ explained Ahrendts. At Burberry Acoustic, which falls under Burberry.com, people can find songs recorded exclusively by British artists who have been handpicked by Burberry’s chief creative officer.”

The strategy has worked. Burberry’s sales have tripled during Ahrendts’ tenure—which just ended when she got an offer she couldn’t refuse from another company. This month, she is moving to Apple, where she will lead strategy to grow sales Apple’s online and retail stores worldwide.

Whether you are a giant corporation or a sole proprietor working alone in a garret, your future as a media company is inevitable. If you haven’t embraced it already, now is the time. This simple mind-shift will transform what happens this year.

Top image from Audi’s YouTube channel. They’re a media company, not a car company.

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