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The Realities of Video-on-Demand

ReelPolitik By Anthony Kaufman | ReelPolitik September 16, 2008 at 3:10AM

The Realities of Video-on-Demand
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With all this indieWIRE reporting on VOD -- the launch of the Sundance Channel's new VOD platform Sundance Selects and Peter Broderick's now familiar touting of self- and internet- distribution models -- I thought it important to temper some of the enthusiasm for the "New World" of distribution, as Broderick calls it. If you didn't see it in Variety's Global Independents issue, I wrote up what I think to be one of the more detailed, albeit brief reports on the current state of VOD and simultaneous distribution options for filmmakers. Thanks to IFC President Jonathan Sehring, who was forthcoming with VOD numbers and a handful of producers who were candid about their deals, I was able to determine both the positives and negatives of the new distribution alternative. And in the wake of IFC's purchase of "Che" in Toronto, folks are paying attention now more than ever.

To sum up briefly, what's seemingly astonishing about VOD is Sehring's claim that the gross dollar revenue ratio from VOD to theatrical is 2 to 1. That means a film such as "This is England," for example, which made about $350,000 in theaters made another $700,000 on VOD. That's probably not the most accurate example--I'm only guessing on the numbers--but what I do know, according to one of the film's backers, is that the producers saw money back, which is a rare case for a Shane Meadows film. Another good example is HDNet/Magnolia Pictures' "Flawless," which grossed $1.2 million in theaters and probably another $2-3 million via VOD. That's a lot of extra clams. And it's success stories like these that have everyone buzzing.

Here's the downside: As Roadside Attractions's Howard Cohen told me "The lesson for us is if it has no life theatrically, then it has no life on VOD." With VOD releases, you still have to make a name for yourself some way, either through theatrical business, good reviews or racy subject matter. Sex sells, especially on VOD. (Catherine Breillat's "The Last Mistress" is turning out to be a huge IFC VOD winner.) But as more and more companies and titles fill up the VOD channels, that's more clutter and competition, further dividing the audience and making it harder for individual titles to push through. In the near future, one sales agent told me, more film titles will likely start with the letter "A" so they'll top the alphabetical list on VOD offerings.

So here's the rub. VOD may provide a huge new untapped revenue stream for distributors and filmmakers--in indieWIRE today, Rainbow Media chief Josh Sapan predicted that within five years VOD will be the primary revenue stream for films. But it's still not enough to offset the cost of making a movie. As Jeffrey Levy-Hinte, producer of Larry Fessenden's IFC title "The Last Winter" and director of the Toronto breakout doc "Soul Power," told me, "If you can make a movie for $200,000, then all of these things are very interesting. But if you make a movie for $2 million, then I don't think any of them are interesting."