Park City Climate: Sundance Infographic 2017, Million $ Piracy Losses, Distribution Changes, and Slamdance Stats

Originally published in Cultural Weekly on January 18, 2017.

Park City has a change in the weather this year. For the first time in along time there will be snow, and, as if to counter deniers, Sundance has programmed a special section on climate change films. The festival will also be marked by social actions directed toward President Trump’s inauguration. As always, though, the action in the cinemas, events, parties, gifting suites, crowded restaurants, five-to-a-room-and-sleeping-on-couches rentals, and late-night negotiation sessions will not all be political.

Using Sundance data as a bellwether for the independent film industry, ground-truthed through interviews with producers, distributors, and sales agents, and, this year, also adding some data from the Slamdance Film Festival, which runs concurrent with Sundance’s opening weekend, here is our weather report on the independent film business. (Scroll to see the infographics at the bottom of this article.)

CLICK HERE TO SEE ANIMATED SUNDANCE 2017 INFOGRAPHIC
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$2.3 billion

Annual spending on independent films has remained fairly constant at $2.3 billion. This is because the number of submissions to Sundance seems to have plateaued. Our estimates of average budget levels are based on discussions with indie movie producers and sales agents. These estimates, too have remained constant since last year.

Piracy is worse than expected

The cost of piracy for independent films is significant. Working with Tecxipio, we are publishing the actual number of torrent illegal downloads for 14 films from Sundance 2015 and 2016.

To understand why our piracy numbers are probably low, I need to get geeky about piracy. There are two kinds of illegal downloads: torrents and streams. Torrents are able to be monitored and quantified; that’s what Texcipio does. Streaming illegal downloads, which in some cases comprise more than half of all pirated downloads of a film, cannot yet be reliably quantified. We are therefore only publishing torrent data.

In making our calculations for the amount of revenue piracy costs each film, we are assuming that only 5% of the people who did an illegal download would have actually purchased the movie, and that their purchase price would have been $3.

Our 5% figure could be a *very* conservative number relative to how much pirated downloads actually cannibalize sales. For example, peer-reviewed academic studies of sales displacement tell us that the rate of piracy displacement is in the range of 14% to 20% at the lower end, up to 100% on the higher end. To be conservative, let’s go with 5%; but I really think the lost revenue is much, much worse.

It’s interesting to compare pirate download numbers for 2015 Sundance films over a full year. For example, Brooklyn had an additional 4.3 million illegal torrent downloads in the past year. Nor are movies for older demographics immune: A Walk in the Woods has had 2.4 million torrent downloads. The film with the most illegal downloads from 2016 is Swiss Army Man (over 7 million torrents); by our minimal estimates that represents a loss of over $1 million in revenue, and based on the peer-reviewed studies cited above, that number could be $3-$4 million in losses.

Virtual reality

VR has fully come into its own, largely due to Sundance and Slamdance’s support of the emerging artform over the past several festivals. For the first time this year Sundance has an official virtual reality section; it received a whopping 346 submissions.

Distribution and sales

We also traced how many Sundance and Slamdance films got distribution – although I refrain from calling every instance a “distribution deal.” For our purposes this year, I am defining distribution as having the film available for sale on a legitimate and public platform – iTunes qualifies, as does traditional theatrical distribution. It costs more money to put a movie up on a major digital platform than it costs to press DVDs; that’s why not every film can get onto iTunes, as they and other platforms have become more selective.

Most of the films at Sundance will be distributed, and about half of Slamdance’s selections will achieve this milestone. However, the sales prices – when there are actual cash advances (or minimum guarantees) – will vary widely. Last year, Sundance saw a record sale of $17.5 million for The Birth of a Nation, an investment that proved ill-advised for Fox Searchlight. In contrast, the highest sales recorded at Slamdance was Batkid Begins (2015) for $1 million to Warners, primarily for remake rights. Last year, Slamdance’s Million Dollar Duck sold to Animal Planet and Lionsgate for a deal worth $350,000-$500,000. (The Slamdance infographic is right below the Sundance infographic.)

The Netflix of it all

Continuing a trend that began five years ago, streaming services like Netflix, Amazon, and iTunes will continue to be the dominant platforms for independent films. Netflix has four original features, one original documentary feature, and episodes from two documentary series screening in the festival.

In addition, the festival has fully acknowledged that some of the best “film” work is now done in episodic television. This year is the first year that episodic content has been eligible, and 403 episodic films were submitted. Nineteen episodic films will screen, including premieres from Netflix, Amazon, and YouTube Red.

Chillier

Like the weather, I expect a somewhat chillier buying season than in 2016. There will be even more responsibility put on producers and directors to deliver audiences for their movies, down-shifting traditional marketing efforts from the distributors to filmmakers. I suspect that buyers will be more cautious, and that even Netflix with its trumpeted $6 billion content-acquisition budget will be judicious. There is simply a glut of great content, not all of which is feature films, and Peak TV is already becoming a factor.

We can soon expect a cyclical downturn in our business, and we may see early signs of it in Park City this year, where the weather will be cold even while the politics will be hot.

Sundance Infographic

Sundance 2017 Infographic

 

Slamdance Infographic

Slamdance 2017 Infographic


Top: Jason Segel appears in The Discovery by Charlie McDowell, an official selection of the Premieres program at the 2017 Sundance Film Festival. The film will stream on Netflix in March. Courtesy of Sundance Institute.

Sundance Infographic 2016: Ample Distribution, Paltry Deals, and the Cost of Piracy

Originally published in Cultural Weekly on January 20, 2016.

For the myriad filmmakers descending on Park City this week we have good news and bad. The good news: If your film is in Sundance, it will get distribution. The bad news: Your financial return on distribution will probably be minimal and your film is likely to be pirated, further diminishing your income.

Those key findings come from our annual survey of the independent movie landscape, on view below in our Sundance Infographic. Each year, we crunch the numbers on the Sundance Film Festival and use it as a bellwether for indie filmmaking at large. When Sundance’s Transparency Project begins to share data (later this year, we hope), we will all have even more information for analysis.

CLICK HERE TO SEE ANIMATED SUNDANCE 2016 INFOGRAPHIC

Distribution Dynamics

The overall number of distribution deals at Sundance is staggering. Last year, 105 of the 125 films achieved distribution of one kind or another. That’s a twenty percent increase from the year before, and a stark contrast to 2010, when only twelve films got distributed. What changed? Massive penetration by streaming services like Netflix and iTunes and the increased appetite for cable players like CNN and Discovery to take on feature-length documentaries.

Filmmakers at the Slamdance Film Festival, which runs concurrently in Park City, will have the same experience – all will get some distribution opportunities and most will be financially minimal.

When I say minimal, I mean minimal. Based on my conversations with producers and sales agents, many offers from distribution companies have zero minimum guarantees and rely entirely on back-end participation. When a deal is made with a digital-only distribution company, filmmakers will be expected to show up with a marketing plan in hand and will be expected to help sell tickets or streams themselves.

Why are distribution deals so paltry? Two reasons. First, there is too much content in the marketplace. Last year, there were some 700 feature films released theatrically in the US, of which about 150 came from studios and their subsidiaries. Those studio films accounted for 92.1% of the total box office, leaving approximately 550 independent films to fight for less than eight percent of the box office. Then, there are hundreds or thousands of movies that get digital-only deals, via companies like Amazon or Gravitas. In addition, 2015’s audiences had the opportunity to watch 409 scripted television shows – not hours, but actual shows, each of which has four to 22 episodes. Meanwhile, the number of hours of content uploaded to YouTube each minute is approaching 500. This much content is enough to make one’s eyeballs explode, and yet, with all the tonnage, truly excellent work is still rare.

The second reason distribution deals are low is the continuing devaluation of creative content. Increasingly audiences want to pay little or nothing for content in a fixed form – movies, books, music – even as they will pay nearly $1,000 for a three-day pass to Coachella. This is a generational, cultural shift –  and that’s where piracy comes in.

Piracy Costs

We know that piracy is a big issue for studio films, and we wanted to learn how it affects independent movies. For this year’s Sundance analysis, we worked with Excipio – a company that collects forensic evidence against pirates and does analytics. Excipio analyzes data collected from BitTorrent networks and does not extrapolate or estimate.

The results should be troubling to all independent filmmakers. Excipio analyzed illegal downloads of fourteen films that screened at Sundance in 2014 and 2015. All had at least hundreds of thousands of pirate downloads; Whiplash was downloaded illegally more than 12 million times.

What does piracy cost? Some piracy proponents (yes, there actually are such people) say it costs nothing and that it even helps build awareness for films, but that argument is false on its face. There is already a surfeit of content and one more free movie does not make a ripple. Audiences must be targeted carefully with specific marketing campaigns to build awareness and want-to-see; pirated films subvert that process. Piracy directly affects the bottom line, because some percentage of people who download illegally would have paid for the film if there were no illegal no-cost alternative.

How can we estimate the cost? We decided to be conservative. We’re estimating that if the illegal option were not available, five percent of customers would have paid for downloads and that they would have paid only $3 per transaction, which is a low number for digital downloads. Using this formula, we found that the fourteen films we sampled lost between $57,000 and $1.83 million in revenue.

Jonathan Sehring, president of IFC Films and Sundance Selects, and a producer of Boyhood told me: “Obviously piracy hurts every film company and any owner of intellectual property, regardless of size and scope. It is painful to look at those numbers and try to rationalize why people do this, especially to indie films.” Boyhood has had 10,383,141 pirate downloads. By our estimates, that cost the film $1.56 million. Life and death money for an indie filmmaker.

$3 Billion Invested

Each year, we estimate the budget of all the films submitted to Sundance to get a ballpark on how much is being invested in independent movies. Based on my conversations with producers, distributors, financiers, and people familiar with the festival circuit, this year we are estimating an average budget of $1 million per dramatic feature and $400,000 per feature documentary. The aggregate total tops $3 billion.

Does investment in indie films pay off? Clearly not, in most cases. But it is difficult to calculate on a case-by-case basis. For example, our infographic shows the sales price and the US box office gross, but most often films are bought for many territories – not just for the US. With Netflix now available in 190 countries, they often buy the world. Further, digital revenues are not transparent and are closely guarded. Unlike theatrical box office figures, which are publicly available, the amount of total views and income from all aggregated digital sources is not possible to track. Even insiders who run streaming companies tell me there is no way to get a clear figure beyond what they see from their own services. That lack of transparency has to change for independent filmmakers to get a fair understanding of today’s distribution economics and be able to strike deals that are fair all around.

Given the state of things, film distribution is ripe for continuing disruption. Increasingly, independents are exploring alternatives and finding entrepreneurial ways to do it themselves. Filmmaker James Kaelan, whose virtual reality experience The Visitor is in Slamdance, and who produced Hard World for Small Things in Sundance’s New Frontier section, told me, “With the advent of crowdfunding, with the efflorescing of free range distribution platforms, you don’t need to wait to get picked anymore. You can make your film on your own terms, and exhibit it directly to your audience without signing away your most-cherished rights. That’s a monumental shift.”

That shift is a trend likely to be even more prominent when we survey the independent film landscape a year from now.

SEE ANIMATED AND INTERACTIVE SUNDANCE 2016 INFOGRAPHIC

Sundance Infographic 2016

Sundance Infographic 2016

Sundance Infographic 2016 | Produced by Cultural Weekly and Entertainment Media Partners | Sponsored by Macmillan Learning

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Infographic sponsored by Macmillan Learning. Produced by Entertainment Media Partners for Cultural Weekly. Tod Hardin, special features editor; Ahmad Zaeem, designer.

Top image: Sky Ladder: The Art of Cai Guo-Qiang directed by Kevin Macdonald in World Documentary section at Sundance Film Festival. Photo courtesy Sundance Institute.

Filmmakers: Get Ready for Film Festivals

On December 9, 2015, I did a seminar for the filmmakers whose movies have been accepted to Slamdance 2016. This seminar will be useful for all filmmakers getting ready for film festivals anywhere and hoping to take maximum advantage of the opportunity.

Adam Leipzig

Adam Leipzig talks with Slamdance filmmakers. Photo by Peter Baxter

Slamdance founder Peter Baxter joined us (you’ll hear his voice in the intro). We did the seminar in the CreativeFuture offices where I serve as COO.

In this 75-minute seminar, you will learn the answers to these questions:

  • Do I need marketing materials, and if so, what would they be?
  • Should I hire a publicist?
  • How do I pick the right sales agent?
  • How to pick a sales agent?
  • Should I stay for the whole festival?
  • What kind of deals are being make for independent films?
  • What can I do with my short film?
  • How do I answer the question I will be asked most often?
  • What about other film festivals?
  • How can the festival leverage my career?

Congratulations to all the filmmakers, and I hope you find this useful.

We did an audio recording of the seminar. Listen or download here:

Top photo: Adam Leipzig (l) and Slamdance founder Peter Baxter discuss indie film strategies in a film noir-ish parking lot. Photo by Deron Williams.

Free Range Distribution It’s Viable for Sundance and Slamdance Films

Originally published in Cultural Weekly on January 21, 2015

Inside Track for Independent Filmmakers, my new book that gives step-by-step instructions for filmmakers to get their movies made and seen, shares important tips on the newest distribution frontier. Call it Free Range Distribution, which captures the energy and Wild West experience you’ll find here. (It’s a term I learned from my friends at Seed & Spark, an organization that supports and facilitates independent filmmaking.)

If you’re a filmmaker with a film at Sundance or Slamdance, or if you want to be, you may find that Free Range Distribution is a viable option for getting your work in front of your audience. If you’re in the audience, and you want to see films that aren’t “big” enough for traditional distribution, you may find that Free Range Distribution is the best hope you’ll have of encountering movies that fit your taste.

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What is Free Range Distribution?

Free Range Distribution platforms are websites that make it possible for filmmakers to sell or rent their movies. In a digital setting, a “sale” can be defined as a download that the customer can keep forever, and a “rental” is a streaming or viewing opportunity that expires within a certain period of time, usually 24 to 72 hours. Sale prices are typically higher than rental prices.

These distribution platforms go well beyond the monetization strategies of more basic sites like YouTube, where interaction is limited to advertising or requesting a donation. Instead, these platforms allow you to have a direct, transactional relationship with individual audience members.

Some Free Range Distribution sites are open to everyone, such as Vimeo, which allows you to upload and sell your movie as long as you subscribe to its Pro service. Other ones are more selective and require a submissions and acceptance process. I prefer these selective platforms because there are fewer movies on them, and their curation procedure establishes a certain level of quality. At the same time, they charge more for their services, through either a setup fee or a share of revenue.

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If you’re a filmmaker interested in exploring the Free Range Distribution option, you need to do your homework. There are many Free Range Distribution platforms available (some are listed in the Essential Resources section of my book), and because this is an emerging and fluid marketplace, their terms and offerings change frequently. Look for a platform that has been successful for films similar to yours and that has the features most important to you.

If you select a platform that has a submissions procedure, study it carefully and make sure you have all your materials in order. Often, staff members are available by email or phone to help guide you through the process, and to answer questions as you determine if this is the right platform for you.

It’s a good idea to be in touch with your potential Free Range distributors early on in your filmmaking journey, even before your movie is finished. You’ll learn what is possible and what is not, and it will be just one more step in planning your release strategy well before you premiere your film—which is exactly what the big studios do.

A frame from the Indiegogo campaign for 'Across the Sea,' a first feature directed by Esra Saydam and Nisan Dag. screening at Slamdance 2015

A frame from the Indiegogo campaign for ‘Across the Sea,’ a first feature directed by Esra Saydam and Nisan Dag. screening at Slamdance 2015

However, no matter which Free Range Distribution platform you choose, be prepared: you must be your own marketing department. For any creative entrepreneur, in any field, this job requirement is the most important and the most uncomfortable.

Let’s look at discomfort and importance.

For creative people, those of us who work primarily alone in coffee shops or studios, it is truly difficult to step into the public sphere and trumpet their own stuff. This is true for filmmakers as well, even though there’s a lot of social activity involved in on-set camaraderie. When your movie’s done, you’ll probably feel the film will speak for itself.

Newsflash: it won’t. It’s your job to speak up for it. You must demonstrate to the world how important your film is, and you do this by talking about it, in every medium, at every chance you get.

If you choose Free Range Distribution, marketing is 100% a requirement, and you must build out and execute your own marketing plan. Movie tickets—or downloads—are not going to sell themselves. You must bring the audience to your film, hold their hands, entice and encourage them, and, finally, get their money.

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How do you prepare yourself? Fortunately, marketing is not magic; it simply requires that you plan for it, and that you have a clear understanding of your film. You need to:

  • Know what your film is about.
  • Know who your audience is with great specificity. Your film is not “for everybody.” By definition, each independent movie has a clear-cut, distinct niche audience, not a general demographic.
  • Know the size and duration of your social media following (and the social media following of your actors and creative team). You need to build it up over the year you are making your movie, so they are waiting for you on the day you release.
  • If you did a crowdfunding campaign, which is a good idea as an audience-engagement tool, maintain a strong relationship with the contributors (and the people who peeked but did not contribute), so you are ready to turn them into your core advocates.

If you and your team take these steps, you’ll be well on your way.

In case you didn’t notice, you have just become the Chief Marketing Officer of your very own film company! That, along with persistence, talent, passion and big ideas, is one of the essential attributes of successful independent filmmakers today.

Buy Inside Track for Independent Filmmakers here.

This article is adapted from Inside Track for Independent Filmmakers by Adam Leipzig. Copyright © 2015 by Bedford/St. Martin’s. Used with permission of the publisher.

Top image: ‘Western’ / U.S.A., Mexico (Directors: Bill Ross, Turner Ross), screens in the Sundance 2015 U.S. Documentary Competition. Photo courtesy Sundance Institute.