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The Realities of Video-on-Demand

by Anthony Kaufman
September 16, 2008 3:10 AM
3 Comments
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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."

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3 Comments

  • Sujewa | September 17, 2008 2:09 AMReply

    Great article Anthony, finally some VOD numbers (though they are not too exact, at least a rough idea re: several titles). I see a lot of positive stuff in the article; IFC, etc. are happy with the model - meaning we'll get to see more indies released via day & date/VOD, & some foreign movies are making money back for the distributors - which can lead to more foreign movies being distributed in the US. VOD is not the cure-all for indie & foreign distro troubles, but certainly seems like one part of the solution.

    - Sujewa

  • Andy Brodie | September 16, 2008 6:54 AMReply

    Thanks for this Anthony. As always, a voice of reason. And finally some numbers, which have been hard to come by in all this VOD/digital rights talk. What we've seen has mostly been hype.

    You hit on some important points that need further exploration as things continue to shake out.

    Best line of your post was Fessenden's quote:

    "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."

    Frankly, how many independent filmmakers these days are even working with $200,000?

    Do we want a future in which the only options filmmakers have (and therefore the only choice audiences have) are either no- or micro-budget DV features or watered-down studio projects with brand name actors?

    More than ever, there's plenty of reason to worry about the future of art film, especially in America.

    And if everything is niche oriented and sold primarily to target audiences, then we're not talking about art all.

  • Mike Everleth | September 16, 2008 4:40 AMReply

    Just a personal note about all this: I'm a major Larry Fessenden fan and I was really looking forward to seeing "The Last Winter" last year, particularly in a theater.

    However, it played in L.A. for like a week in one theater (two, tops), which fell on one of the rare occasions when I was out of town. It wasn't on VOD very long either, so I missed the whole thing. Now I don't even know if it's on DVD yet.

    I just feel really bad for this film and it's makers. Allegedly, I'm supposed to have all these "choices" now to see a film I really want to in whatever format I personally "choose." But I'm still stuck either having to rent the DVD (which I don't do often) or catch it on cable some year down the road.

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