Disruptors: Netflix & Amazon

"It's tough for film in general," Robert Redford said off the top of this year’s Sundance Film Festival keynote address. "There's threats in distribution that take away from what used to be a simple equation. There's streaming, online, all kinds of new distribution, all these other areas that didn't exist way back, so as a result, it kind of bleeds away from film."

Any concerns Redford may harbor for the health of independent cinema are understandable given the sea change that the festival confirmed. Two years ago, the biggest Sundance buy was “The Skeleton Twins,” with Kristen Wiig and Bill Hader, at $3.5 million. But with the aggressive and cash-flush Amazon and Netflix on the scene, encroaching on old territories and driving the competition skywards, the sales narrative has radically changed. Top 2016 prize-winner “Birth Of A Nation” shattered all existing records in a $17.5 million mega-deal by Fox Searchlight, and there were other big-money deals too: Amazon took the critically-acclaimed “Manchester By The Sea” for over $10 million, and Netflix picked up VOD on “Tallulah” and “The Fundamentals Of Caring” for $5 million and $7 million respectively. 

While some content creators and fledgling producers may look at the advent of streaming as a savior —more potential opportunities, more financial rewards, more outlets desperate for programming— there’s still the nagging question of the short-term value of this current boon versus its long-term ramifications. And as suggested by the founder of Sundance, which is essentially the launching pad for independent American cinema, there is unease in the industry.

Birth Of A Nation

What’s self-evident is that there are a couple of new big dogs in the indie eco-system. But as nature always demonstrates, the introduction of a new species to an environment, particularly one that resembles an alpha predator, most often disrupts that ecosystem, robbing indigenous animals of their food sources and generally causing chaos.

Just as Amazon nearly leveled brick-and-mortar bookstores by offering consumers lower prices, and just as Napster irrevocably damaged an entire industry by devaluing the worth of music, big tech companies investing in film could be bad news for the industry in the long term: They don’t necessarily care about the holistic health of the film world, but certainly do care about their own profitability.

If history shows us anything, the biggest threat could be that the encroachment of these companies could create an unsustainable bubble, because they’re over-spending in order to make their mark in the film world. Spending $12 million on “Beasts Of No Nation,” $10 million on “Manchester By The Sea,” or financing the $60-million Brad Pitt vehicle “War Machine” isn’t necessarily a reflection of those films’ value; these big acquisitions are statements of intent. If each process took place over several years, these transactions might have been seen as a bid to be taken seriously as buyers within the existing industry framework. But the accelerated, undeniable flexing of financial muscle is instead a major gauntlet thrown down, a territorial pissing that goes beyond “being taken seriously” and generates anxiety that not only do the new players want a seat at the big table, but they may want the whole table.

Beasts Of No Nation

So these huge, media-attention-grabbing streaming buys don't even have to succeed in traditional terms, because they're essentially marketing tools. “If [Amazon head Jeff Bezos] loses $12 million on a movie," Sony Pictures Classics' Tom Bernard told The Hollywood Reporter, "it's not going to hurt him, and the amount of publicity he'll drum up from buying it will make a difference." 

Even when Netflix or Amazon don’t end up landing a particular movie (usually because the producers want a more traditional theatrical release, or an established awards push), as with “Birth Of A Nation” or “Brooklyn,” streaming outlets throwing money around drives the prices up. Without these disruptors in the mix, it’s unlikely that Fox Searchlight would have paid such an exorbitant sum for Nate Parker’s ‘Nation,’ even if the studio believed it had a chance of following a similar “12 Years A Slave” success (which took nearly $180 million worldwide). And so Searchlight’s risk has skyrocketed from what it would have been just a year or two ago.

This can mean that the more traditional distributors, or relative newcomers like Open Road or A24, are compelled to spend more than desired, or are forced to take second-tier product once the bigger spenders have feasted first. And as Picturehouse and Relativity have demonstrated, all it takes for a smaller distributor to face trouble or go extinct is one or two lean years. 

Tallulah
"Tallulah"

There’s also the subconscious influence on the filmgoing audience in general. The more the viewers for, say, “Tallulah” become habituated to that type of small-scale human drama being available at home, the less likely they are to go pay for such projects theatrically. And on a bigger scale, a film like "Beasts Of No Nation" debuting on Netflix doesn't just minimize the theatrical revenue it might have made; it also essentially fills the casual moviegoer's prestige movie "quota" without having to get up from their sofa, making them that much less inclined to seek out a "Carol" or a "Room" or a "45 Years" in theaters. It’s easy to see a future in which fewer competitors and a severely shrunken theatrical market enable streaming services to acquire movies for much less than they’re presently paying, devaluing the entire independent market. 

“You always want your film to be shown on a big screen with perfect sound and the best projection,” Sian Heder, writer/director of “Tallulah,” told the New York Times  after her movie was bought by Netflix. “But that’s not always the reality anymore. The way people consume media is changing.” And that change is putting a strain on overall industry health. Box office for most movies beyond mega-franchise tentpoles is down, and the highly sought-after 18-25 year old demographic’s interests are being pulled every which way —Peak TV, YouTube, video games and iPad apps, as well as the big streaming services. The DVD market has plummeted as well, and revenues from iTunes and the like are a long way from making up for it. 

"Wiener-Dog" - Todd Solondz, Danny DeVito, Julie Delpy, Zosia Mamet and Kieran Culkin
Daniel Bergeron "Wiener-Dog" - Todd Solondz, Danny DeVito, Julie Delpy, Zosia Mamet and Kieran Culkin

"The audience for movies I might make is much smaller than it once was," Todd Solondz, whose "Wiener-Dog" was picked up by Amazon, told Variety. "Most of my students watch things on Netflix or they download, so they're not going to theaters. That's why things are so difficult." Increasingly, filmmakers, especially younger ones, are reflecting their audiences by moving between movies and TV, with Cary Fukunaga exemplifying this shift best by going from theatrical, to an HBO miniseries, to a featured debut on Netflix, to another TV series in the wings.

Of course, most filmmakers see the potential to extend reach. Netflix’s 75 million subscribers (Amazon has roughly half that but is rapidly expanding, while iTunes is about to start its original content push, which could be another game-changer) dwarf most indie theatrical viewership figures. The documentary market in particular has noticeably boomed in recent years, and has definitely received a boost from this new model. And though they keep actual viewership data secret, it's clear that the streaming companies must be pleased with the audiences they are finding for indie films.

Manchester-By-The Sea
"Manchester by the Sea"

”Digital platforms are valuing films not only for their transactional value, but also for their prestige value and potential to attract and retain subscribers,” CAA's Micah Green told THR, suggesting that, like with the HBO model, these kinds of prestige productions are important to retaining their audiences and attracting new ones. But in a few years' time, when the market has settled, will Amazon, currently focused on taste-making and credibility, put the same emphasis on the Jim Jarmusch-es and Todd Solondz-es of the world? Will Netflix still be willing to spend this kind of money on cachet-driven 90-minute movies at a time when TV shows have been proven to be their meat and potatoes? At that point, there may be few other options than for independent filmmakers to drop their prices, as at least some of the smaller theatrical distributors will have fallen by the wayside.  

Indeed, amid this industry upheaval, some buyers have already all but disappeared from the festival circuit. Speciality shingle Focus has been absorbed into Universal's international wing, and The Weinstein Company was noticeably absent from Sundance this year, and it remains to be seen if new companies like The Orchard, Alchemy and Bleecker Street will secure a sustainable foothold in the long run. In theory, the major streaming platforms’ entry into the original-content scene should revitalize the independent film scene, win more money for content creators and encourage more investors to finance these movies in the hope of getting a return. In practice, however, nothing is certain. Companies like Netflix and Amazon aren't just dropping a pebble into the pond. They are letting loose a boulder, creating immediate change that studios are having to quickly learn how to navigate. These new opportunities for filmmakers are underscored by a quiet and anxious unease —it may be that this oasis is a mirage.