So, recently the guys over at No Film School were nice enough to make our 4K or not 4K post a "Guest Post" on their site. There was a lot of great feedback and discussion generated in the comments. However, one topic really stuck out.
A lot of commenters didn't quite seem to understand the importance of market acceptance, and why it really matters when discussing 4K and independent film.
Many independent filmmakers roll their eyes at the advice that they should be planning the distribution strategy of their film before they start writing their script. Planning seems disingenuous; somehow disrespectful to the art they're about to spend a lot of time, money, and emotion bringing to life. But for those artists who want to be career filmmakers, filmmaking is a business as much as it is an art.
As we've said before, one of the trade-offs of accessibility to modern distribution channels like the Internet and lower-cost production equipment is that there is more content to choose from than ever before, and an audience with more venues to find content than ever before, and for a filmmaker to make themselves noticed and make a living in this environment, a filmmaker must also be a business person. And for a business person, understanding the lifespan of a project before you begin is simply common sense.
There is an often-repeated "golden rule" in local business: location, location, location. We believe that there is a golden rule for independent film too: know your market!
1. Know who is distributing films. Know which companies are buying films, why they are buying them, and how and where they plan to sell them.
2. Know your audience. Know who is watching films like yours, and how, when, and where they watch them.
These aren't easy questions to ask. They require a lot of investigation, and often require pragmatic thinking that might contradict the more grandiose hopes and dreams you have for your project. So here are a few good questions to get you started, and some links to help answer them.
Who buys films?
The majority of filmmakers are interested in traditional distribution through an established distribution company, rather than releasing online. There are three tiers of traditional distributors.
First, You have the big-league guys: branches of Hollywood studios and independent companies with major financing. Names in this category include: Fox Searchlight, Sony Pictures Classics, Weinstein Co., TWC, HBO, Showtime, and Lionsgate. Films released by these companies usually end up on pay TV or doing awards-qualifying theatrical runs with moderately big-budget ad campaigns, or both. They pick up a relatively small number of films, typically ones with high budgets and big names attached, or films that have won awards at major film festivals. What really sets these guys apart is that many of these companies (or their parent companies) purchase content to supplement the similar content that they produce themselves.
Second, you have the workhouse indie distribution companies who don't typically produce films themselves. Oscilloscope, IFC, Magnolia, Magnet, Drafthouse Films, Submarine, Anchor Bay, Strand Releasing, Kino are some of these. These companies buy the majority of films that play at the big festivals. Many of these companies have a model of limited theatrical runs not for major profit, but to support VOD and DVD sales. Generally these companies have specific markets they like to target, like horror, documentary, indie dramas and comedies (for American release only) without big name actors or directors. Rarely do these films get licensed to television. Often a filmmaker does not see a profit from their films beyond the initial sale price when they sell to these companies unless their film is hugely successful.
Third, you have the companies that only handle a few titles each or have a narrow focus, distributing specifically one genre. Dark Sky Films is a great example of a company that releases solely horror films. Other companies distribute only LGBT films, or Christian films. These companies are in their element at a film market like AFM, where filmmakers can set up meetings with them directly. They may be more willing to pick up films that didn't play at a big festival if it fits the specific audience they have built around the titles they release.
Which one of these companies is the best fit for your film? At your budget, which company is most likely to distribute your film? Just like you would with a high school crush, you should spend a lot of time getting to know the companies that are your best match. What are their favorite films that they've distributed? What have been their most successful? Their least successful? The more informed you are about the people who may buy your film and tailor your project and your materials to what they need, the more likely you'll score a date to the movie theater. (Making out optional.)
In a recent Film Collaborative article on the sales of Cannes 2012 films, Bryan Glick notes "that over 60% of the films acquired for US came from 5 distribution companies (and their subsidiaries). TWC, SPC, IFC, Strand Releasing, and Film Movement."
Why are these companies buying what they're buying?
There are many reasons why distribution companies pick up certain films. It may not always make sense to you, or you may not understand why your film is not getting the attention that a similar project appears to be getting. The most obvious reason why companies buy a film is that it fits the audience of their brand that they've spent years cultivating. Documentary distributors buy documentaries because they distribute documentaries.
They may also look for documentaries that have controversial or topical subject matter, or who feature or were made by notable individuals. They may passionately believe in the message of the film, or they may want to take credit for plucking a new auteur from obscurity. They may be friends with a filmmaker, or want to form a relationship with them because of a future or past project. It's hard to know why a film is bought, but try to learn. With every film you see appear in the theater or on DVD distributed by your crush, ask yourself: what was it about this film or filmmaker that drew attention from these distributors?
Try to be that.
What aren't these companies buying?
This may be a downer, but to put on your pragmatic business hat, you should also be aware of what kind of films do not sell. Especially if you are the type of filmmaker who makes these kinds of films; your battle to get to a traditional distributor will be much more uphill, and you may want to embrace non-traditional means of getting your film out there.
In an interview Sheri Candler conducted with Ariel Veneziano about indie film distribution last year, Veneziano says that indie dramas, particularly coming-of-age dramas, have a "zero percent" chance of international distribution; "Non topical dramas do not sell internationally unless the director is a big name or it's based on a property." Films that can't be distributed internationally are less valuable to a distribution company that relies on international territories to make a profit on your film. Veneziano continues:
Ultimately, if you want to make a career in this industry, you are going to have to make film that connects with paying audiences and make some commercial sense. First films can be something very striking visually or artistically, but not make much or any money. They can have an artistic integrity that isn’t necessarily attractive to a buyer, but can find a small audience. In order to capture industry attention, the films are going to have to be accessible to an audience.
It's important as a business person and an artist to identify which films do not find distribution. Try not to be that. If you want to build an audience, please investors so they come back for more projects, and gain traction for the hard work and money you've put into your film, it's your duty to yourself to make sure that work pays off.
How do distribution companies buy films?
Now that you know which company you want to woo and what kind of films they like to buy, find out where their reps are, and how to get their eyes on your film. Most companies have representatives at the major film markets like AFM, Berlin, and Cannes. Companies that buy films at festivals also usually send representatives to festivals, especially Sundance, Toronto, and SXSW. Figure out where the companies you want to approach buy their films, and try to arrange a meeting. Even if your film is not playing at one of these festivals or screening at a market, it still may be possible to "arrange" a "meeting" with a rep and talk turkey--it's why their there, anyway, and it's a lot easier to talk business in a place like Park City or the Loews Santa Monica than it is to stick your DVD screener in mailboxes all around town.
How is my film likely to be seen?
Let's say you successfully bed a great distribution company. Awesome! But when the adrenaline wears off, and you wake up the next morning, you have to roll over and have to face reality. How exactly is this distributor going to distribute your film?
This is the question that many filmmaker hate to ask themselves.
The reality is, most companies have a set strategy of how they release films. They have relationships with specific independent theaters for their limited runs, or major chains for their big award campaigns, or have a good VOD return with a cable channel. They will know which genres of films tend to make money theatrically, which don't, which cities like your kind of film, which don't. The strategy they execute is based on these questions. This isn't a guessing game, and the numbers can be disappointing for the independent filmmakers dreaming of box office domination.
What kind of screens do people watch indie cinema on?
Theatrical returns for independent films are really poor. That's because most screens in the US are chains, which rarely show independent films unless distributed by one of the top-tier companies we've talked about. If your independent film screens theatrically, it is most likely to play at what's snootily referred to as an "art house" theater, but are really independently operated theaters. Big cities like Los Angeles have a handful of these theaters that pride themselves on showing diverse content. So do New York and Austin. But in most cities, there are no independent theaters. And if there are, they aren't necessarily showing independent films. Many independent theaters are closing because they can't afford to upgrade to the 2K projectors needed to screen the DCPs that have replaced 35mm reels as the standard theatrical delivery format. IndieWire reported last year that 1,000 theaters (all independent) are in danger of closing because of the cost to convert to digital; theater owners estimate the number at close to 20% of all American screens. With so many Independent theaters barely able to show 2K, the ones that can project a film in 4K are almost non-existent.
Here are some stats:
- Movie Theaters Screens: Film = 15%. According to the MPAA, 2012 was the first year that digital screens surpassed analog screens in international market share. In 2012 there were 6,426 film screens in the US / Canada, making up 15% of the 42,803 screens in North America.
- Movie Theaters Screens: 2K = 62%. This is the way most of us see movies in theaters today, and the way we will see them for a long time to come. Movie theaters started buying 2K digital projectors in 2000, but didn't rise to a meaningful number until last year. At the end of 2010, the market acceptance for digital cinema projectors (2K) was still at 28%, but between the end of 2010 and 2012 it jumped up to 91% (2K and 4K projectors)! But even though higher resolution (4K) projectors have been on the market since 2007, the adoption rate has been slow, and is continuing to slow down. Theaters are used to projectors they install lasting at least 20 years, and most of the new 2K projectors were installed between 2010 and 2012. Most theaters can't afford to upgrade to 4K even if they wanted to.
- Movie Theaters Screens: 4K = 22%. According to The Hollywood Reporter, it may take some time to get to even 25% market acceptance for theaters because according to them, “the sad truth for technology vendors is that money spent on luxury leather seats and waiter service of drinks to your seat is a lot higher ROI for exhibitors than buying a 4K projector.” and, “4K is a bad match for cinema and growing that market will be a challenge." IMDB reports that so far only 35 films have ever been finished and released in 4K, all in the last 3 years. Which means most films shown on existing 4K projectors have been finished in 2K. Most of those 4K films you love to talk about? Chances are didn't even see them in 4K.
- Movie Theaters Screens: IMAX / Specialty = Less than 1%. Wikipedia's list shows that there are 394 IMAX screens in North America, and while the technical resolution of those screens is 12,000 × 8,700 (27 megapixels), many of the projectors have a 2K input maximum.
Theatrical limitations are the first barrier to entry in showing your 35mm or 4K independent masterpiece in the format it was originally intended to be shown in. And your odds only get less likely from there. Because the most likely way for an audience member to see your film is at home, on Blu-Ray, VOD, or pay cable.
What kind of screens are people watching at home (NORTH AMERICA)?
- SD 480i = 25%: A full 25% of people in North America still have ONLY SD TVs in their homes, and there are still a lot of channels that broadcast in SD. According to Wikipedia - "It is not clear whether broadcasting HDTV or multiple standard definition (SD) channels during non-primetime hours will become common. Many Public Broadcasting Service member stations are now carrying SD multicasts when not broadcasting in HDTV." According to Nielsen 25% of Netflix users in 2011 connected through their Nintendo Wii, which is an SD device. Many people are comfortable watching SD content, even if they have HDTVs.
- HD 720p / 1080p = 75%: According to Nielsen, HDTV ownership saw a huge 14% jump in 2012 finally bringing it up to 75% market acceptance, which is the standard for many big companies to feel producing a product is worth their time. But while the ownership saw a huge jump, HD viewership is still low. According to Nielsen, 61% of all prime viewing was done on an HD set, but only 29% of that viewing was in HD, the rest was in 480i.
- UHD 4K = .1% (yes that is 1 tenth of a percent!): According to IHS Worldwide Television Market Tracker there were 4,000 4K TVs sold in North America in 2012. This will rise to 2.1 million units sold by 2017. At that point 4K TVs will still only account for 0.8 percent of the global TV market which at that time will be around 300 million units per year. And the 4K units that do sell will almost all be above 60" and priced between $20,000 and $25,000, because very few people can see the difference between 4K and 1080 on screens 55" or smaller (from normal viewing distances). And here is the kicker: the number of 60" screens sold world wide today is around 1.5% of all TVs sold. Another words the only significant market share for 4K screens in the next 10 years will be very large sets to very well off people. I know 10 people will post comments that say "well this 4K TV is coming out for $799 or look a 4K tablet", but according to IHS those won't sell in significant numbers (millions of units) in the next 10 years. Every study you can find says 4K purchasing will be basically a flat line for at least a decade. And those studies traditionally are very optimistic! In all likelihood it will take even longer.
Mobile is also becoming a contender, as audiences grow accustomed to web video that can easily be disseminated to small-screen devices. iTunes streams much of its content to 720p and even SD because these devices are so small--and they still make a lot of money off of these lower resolution downloads. According to eMarketer movies are the most viewed things on tablets, and the second most viewed thing on smart phones. In the last two years, mobile views have started to outgrow TV and even home computer views, according to Nielson:
So, what IS your market?
Chances are, if you are an independent filmmaker, your film will be watched on a digital platform, most likely on 2K or 1080p. Even if you shoot your film at 16K, 2K is the realistic format that you will need to deliver to a distribution company, or what you will be able to upload online if you distribute yourself. That's the reality of the market right now, a market driven by consumer habits, which so far have not embraced higher resolutions. And why should they? Because camera manufacturers and TV companies say so?
As much as technology is progressing, the reality is that with sites like YouTube, audiences are getting more and more comfortable watching footage that's lower resolution. People aren't going to the theater as much as in previous decades. People watch content at home, and they spend millions of hours a month watching teens give makeup tips via webcam or skaters with shaky GoPros, just as easily as they watch the latest multimillion dollar music videos shot on new high-tech cameras. As it has been since the dawn of motion pictures, audiences care about content and story more than they do about tech specs. In 2010, Paranormal Activity, shot on a consumer handicam, became the most profitable film ever made in comparison to its initial budget.
Within the sometimes-myopic camera community, a popular opinion seems to be that just because 4K and higher technology exists means that it will actually be adopted on a wide-use basis. Chances are it won't, not for a very long time.
And as a filmmaker, if you don't understand your market, the way that people are actually going to experience your content--RIGHT NOW, while you're trying to build a career and make a name for yourself out of the millions of independent filmmakers on planet Earth, not 15 years from now in some nebulous "future proofed" world--you leave yourself vulnerable to the marketing ploys of the media giants that feed on you, like the electronics companies that have invested billions of dollars in pushing technology faster than it's capable of being adopted. They are counting on you for a return on those billions of dollars. They want you to feel like you can't be seen as a professional and you can't succeed as a filmmaker without buying their product.
But you can. If Oren Peli had felt that his handicam wasn't professional enough to make Paranormal Activity, if he waited to shoot on 4K with a $150,000 budget that could take years to raise, he wouldn't in the space of 5 years have become a powerhouse producer with 12 features and a TV series under his belt. He might still be waiting, like many of us are, for the "right" budget and the "right" equipment-- because the electronics game is to always keep filmmakers wanting, needing, and crippled by fear that making a film with what you have won't be good enough.
But you don't need to be afraid if you know your market.
So before you buy gear, before you write the first word on your script, before you even start thinking about fundraising--do your homework. Find the people or business models that can work for you and the stories you want to tell. And have a plan that enables you to tell that story to those who want to see it.