By gabe | Gabe's Declaration of Principles August 19, 2007 at 8:37AM
From the time I read Eugene's article: "At IFC Films, "Penelope" Shift Points To A Change in Focus; Company Emphasizing First Take Slate", I braced for impact on the blogs. (Too preoccupied with other matters to post anything meaningful during the week, I wanted to take some time to reflect on/and join in the discussion.)
Brian Newman drew first blood with his provocative post IFC Flopping and Flailing (and Media Buying It) with the pronouncement: "I think its time to call bullshit on all of this IFC malarkey."
IFC: Center of the debate
Newman's argument is essentially that IFC can't successfully market and release mid-level indie films like "Penolope" or "You Kill Me":
" IFC is essentially announcing a failure - they're either not capable of releasing...larger films or someone at the company...pulled the plug because these films aren't profitable." He continues, "IndieWire notes that You Kill Me has pulled in about 2.4 million at the box office - ahem, subtract marketing costs, etc and that there is a failure. A marketing campaign, sure, but not a success."
The second part of the argument has it that IFC's strategy to focus on releasing "smaller" films using it's day and date "IFC First Take" model is an attempt to save face. Or in Brian's words: "We can't compete, and might as well use this as a way to spin IFC First Take as some smart strategic move."
He continues: " Sorry, but I'm not buying that they feel so bad for "truly independent films" that they decided to stick to their core and work only with those films. More likley, First Take allows them to convince producers to sign over their film to them, getting it on VOD, which the cable operators want. Cable operators are telling places like IFC and Sundance (and others) that they want VOD offerings."
Finally, he questions whether IFC First Take makes money off these deals, and subsequently whether the deals are good for filmmakers: "Indies shouldn't look at First Take as a model for anything other than what it is - a strategy for a small cable channel to keep getting carriage on big cable systems."
(The comments section with posts by Eugene, Sujewa, and Ira (just Ira...could it be Deutchman?) continues a hearty and healthy discussion)
Ira's comment offers informed speculation on the success of IFC's current strategy:
"The best sign that IFC's program is successful is that it still exists. If it wasn't creating significant revenues, the cable systems would have abandoned it by now, and IFC First Take would be no more.
And one more thing, when a company like IFC says that they want to refocus on smaller movies that are in need, don't confuse that with altruism. A need in the marketplace is an opportunity for a company that wants to exploit that need. Why bang your head against the wall trying to compete with other companies when you can own a nitch? Seems like smart business to me."
Chiming in with his always informative, and well researched take Anthony Kaufman's What's the Fate of Day and Date features feedback from IFC First Take alumnus Caveh Zahedi. Anthony reaffirms Ira's position: "If the program ends up not being so beneficial to filmmakers, why would they keep signing up for it?
Conspicuously absent in the debate is IFC Blog. On 8/15, they ran a story speculating why Val Kilmer dropped out of Adam Goldberg's Herbrew Hammer 2 (because he was "too fat" to play Hitler), quipping, "Oh, don't look at us that way — there's not much news going on today."
One thing we can all agree on is that no one can make an informed argument until the VOD industry establishes a reporting standard on par with Rentrak and Nielsen EDI. Without these figures, there is no way for anyone other than the companies spinning the data, and writing press releases to know for sure whether this enterprise is worth pursuing. (Think about it--even with these reporting entities, companies have tried to gin up numbers to secure a top spot on the weekend box office.)
Eugene vows to continue to press IFC for the figures--but I am not convinced they will be easy to secure.
Even if the numbers are not staggering, I can't help but think they are solid enough to justify the program. IFC's decision to forsake $5, 10, 15 million releases for "smaller" films bodes well for Generation DIY filmmakers for whom "the need for traditional distribution deals is diminished when production costs are often as low as a few thousand dollars.' (From Dennis Lim's Sunday NY Times piece "A Generation Finds Its Mumble")
I think Brian's admission that he's never actually ordered an IFC First Take movie On-Demand is telling:
"I have cable, and I've never looked at any VOD offerings...."
Those living in NYC or LA take the variety of their movie-going selections for granted. Those of us who live in cities like Atlanta (A TOP 10 MARKET)--not to mention those who live in the sticks like Sonoma where I spent 2005--don't have the luxury of seeing every single film featured in the NYTimes and on NPR in a timely manner. Many films never open. The ones that do open weeks later. And they often come and go within in a week. If you blink, you miss them. VOD changes this formula. From my house, on my terms, at odd hours of the day, I can order "Hannah Takes the Stairs," or "Pierrpont" or "Boss of It All." This week, much as I'd like to, I won't have time to go see Kino's Landmark Midtown Art to see Lady Chatterly. It opened Friday and it'll be gone by Thursday. If I could, I'd order it VOD.
Those who live in NYC have the luxury of both options--a run at IFC Center, OR screening the film from home on VOD. For most other markets in this country--which is to say, the other 32 million Comcast subscribers--the VOD option may be our ONLY chance to see some of these films before the DVD window opens.
Brian takes issue with some of the math being used to justify VOD: "My math shows that if 150K watched this film, out of 40 Million homes, you have 0.4 percent chance of being watched. Any way you cut it, these numbers don't add up to me."
Having worked at Kino International (in non-theatrical booking), and having programmed for the AFI Silver Theatre, I can only say that math of a theatrical release is significantly worse. (Not that I even fathom what making a film available to 40 million seats would look like.)
While I agree with Brian that the 40 million figure is a bit of a MacGuffin, there's still something to it. The number of available viewers is not a significant indicator of how a film will perform, but it is an indicator of how many markets in which a film is available. The more markets, the more chances someone can watch it.
Once you have the numbers, then you can develop the marketing strategy to reach them. I believe the next wave of VOD is marketing, and changing peoples' attitudes about it.
Or as Randall Stross article in the NY Times: Pass the Popcorn. But Where's the Movie? concludes, "Ameircans have never failed to show their appreciation for services that provide speedy gratification; the instant variety is preferred most. Once the cooperation of the studios is secured, video-on-demand will become the most popular means of renting movies."
"Published: August 19, 2007
AS consumers by the millions install new flat-screen, high-definition TV sets this year, more than half of which will have 50-inch or larger screens, they can proudly say that they are doing their part to modernize the movie-viewing experience at home.
Cable operators have done their part, too, building a video-on-demand infrastructure that can supply viewers with a nearly limitless choice of movie titles, available at any time of day. No trips to the rental store. No vigils at the mailbox for discs from the subscription service. No purchases of additional computer hardware to transport downloaded movie files to somewhere else in the house. Just a couple of clicks of the cable remote control.
All is ready — except an unstinting supply of movies. The studios have balked.
According to Craig Moffett, vice president and senior analyst at Sanford C. Bernstein & Company, cable’s video-on-demand is well positioned, technically speaking, to be the preferred way that movies reach the home, but the Cable Guys cannot get access to Hollywood’s products: “They built a Ferrari of a delivery engine, but the content owners didn’t show up.”
The movie studios are preternaturally suspicious of the new and unfamiliar. Their fear has nothing to do with crunching the numbers, but rather with large organizations’ tendency to lose sight of their interests — not to mention their customers’. Thanks to the efficiencies of digital delivery, the studios actually earn three times the margin on each video-on-demand viewed that they earn on a store rental, while charging the same $4.
Comcast now has secured rights to offer only about 300 movie titles on-demand on any given day, excluding premium channels like HBO; about 50 of those are high-definition. It has a long way to go to match the comprehensive coverage of Netflix’s 80,000 titles or Blockbuster Online’s 75,000.
But the on-demand menu does not have to attain comparable size immediately, especially since Netflix’s and Blockbuster’s lists mostly consist of the long tail of backlist titles for which demand is low — and high-definition versions are scant. The overwhelming bulk of viewers’ requests could be met simply by having the newest releases on hand in all formats.
To their credit, the major studios have shown a willingness to re-examine the artificial limits they have placed on video-on-demand. Late last year, six studios began an experiment with Comcast in Denver and Pittsburgh, making their newest releases available for viewing on demand the same day the DVD went on sale. Time Warner Cable is in the third month of a similar, six-month trial in Austin, Tex., and Columbus, Ohio.
The studios contend that the trials are necessary so they can be certain that DVD sales are not hurt by immediate availability of video-on-demand. This is supposed to be a $16 billion question, which is the size of the domestic DVD market, the lifeblood of the industry. The sum dwarfs the $10 billion in total box-office revenue or the $8 billion from movie rentals. Because prospective DVD buyers have always had a less-expensive alternative the day when DVDs go on sale — namely, renting the title — it is hard to see why video-on-demand poses a different cannibalistic threat.
Comcast has not yet released details of its findings. Earlier this month, however, Jeffrey L. Bewkes, Time Warner’s president and chief operating officer, offered some encouraging tidbits. He said that when a movie title was made available on-demand the same day the DVD was released, revenue from video-on-demand rentals increased 50 percent — and retail sales actually went up 5 to 10 percent. To explain the somewhat surprising gains in stores, Mr. Bewkes speculated that sales of a new title were depressed in the past by the almost-instant availability of used DVDs for sale at rental stores like Blockbuster.
The movie studio is paid only once — when the DVD is sold the first time — and not when it is resold used. For the studios, digital delivery of a rental eliminates the problem of a physical product being resold, cutting into the sales of new copies without generating additional royalties. And studios are paid every time an on-demand video is viewed.
The digital delivery system of video-on-demand offers many advantages to consumers, too. The immediate gratification provided by instant fulfillment of a viewing request is no trifle. The Netflix model assumes that the lag between the time a subscriber enters a requested title and when that title finally shows up in the mailbox does not matter all that much — that as long as a consumer has at least one unwatched DVD on hand at any time and the queue of requested titles is kept full of good stuff, the customer shouldn’t care when a particular title reaches the top of the queue and wends its way through the postal system to the home.
Netflix customers apparently do care, however. The company has had to build out its shipping centers from one at its founding in 1998 to 44 today, in an effort to minimize transit delays. Even so, the time that elapses between a Netflix user’s request and the delivery of a title is measured in days. With video-on-demand, it’s seconds.
Netflix also struggles to have enough copies of the hottest titles on hand. The swords-sandals-and-pecs hit “300” was released on the last day of July and immediately became the top rental in the nation. Two weeks after its release, however, subscribers were warned on their on-screen queues that they faced a “very long wait.” (Blockbuster Online could not do better.)
So, too, with the No. 2 rental title, “Hot Fuzz.” In fact, in mid-August, Netflix had on hand, ready for shipping, only 4 of the top 10 titles nationally listed as the most popular DVD rentals the week before. With digital transport, a single master can simultaneously supply as many households that wish to view the DVD; inventory management problems — and “very long wait” notices — disappear.
AMERICANS have never failed to show their appreciation for services that provide speedy gratification; the instant variety is preferred most. Once the cooperation of the studios is secured, video-on-demand will become the most popular means of renting movies.
When Netflix made its debut almost 10 years ago, many movie viewers discovered that sitting at a desk at home and using a Web site to select rental titles was considerably easier than going to a store to choose a rental. Video-on-demand offers the next enhancement: ordering by remote control
while stretched across the living room couch. "