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VOD: An Indie Alternative?

Alexander the Last

By : Billy Gil | Posted: 01 Mar 2010

Video-on-demand, either online or through cable operators, seems like the answer for film distribution, on the surface.

Studios like it for the high margins — they can garner up to 65% of the revenue from VOD or pay-per-view, compared with about 35% from DVD/Blu-ray rental, according to analyst Michael Pachter with Wedbush Morgan Securities in Los Angeles. And for independent studios and filmmakers, the medium seems to offer unlimited potential to distribute a film beyond a festival premiere, the limited shelf space at Wal-Mart and disappearing video stores around the country.

But how effective is it?

Google’s YouTube recently tried independent film rentals through the Sundance Film Festival, offering films with a decent amount of press behind them. Among the films was The Cove, the Oscar-nominated documentary that exposes an annual dolphin slaughter in Japan and sports appearances by Hayden Panettiere. (The film picked up DVD distribution from Lionsgate). Still, even The Cove, the most popular of the five initial YouTube rentals offered at $3.99, 72 hours after launch had only had 303 takers. The effort generated $5,673.78 for the five titles 72 hours after launch — astronomically fewer viewers than the average kid-falling-down video seen for free on YouTube.

Still, Google spokesperson Chris Dale is positive about the effort, given the fact that YouTube rentals are still in beta testing and that these films may not have been seen otherwise.

“I think that there was an inclination to want to compare these independent films released through Sundance and YouTube to mainstream Hollywood movies like Avatar,” Dale said. “I think that’s a mistake. That’s certainly not the expectation YouTube went into this endeavor with. We’re actually really pleased with the results.”

Dale said YouTube is seeking more content partners for its transactional rental service, whereby content holders can charge 99 cents to $19.99 for a rental, putting the control in the hands of the content holders. Ad-supported, free streaming is available as well.

“If you look at Sundance 2009, about 9,000 films were submitted and only 53 got distribution deals,” Dale said. “If you do the math, that’s probably a little less than a 0.6% chance of getting picked up at Sundance. Those are pretty daunting odds.”

He stressed the importance of exposure.

“The films that are on YouTube … are mostly original works, low- to no-budget films, mostly first-time filmmakers that didn’t have the promotion and fanfare typical Hollywood movies have,” he said. “We want to be a platform for all kinds of content.”

Netflix chief content officer Ted Sarandos said Netflix has gone a long way to make independent films readily available to its users.

 “Independent film has always been among the first drivers of new technology because it tends to be less encumbered by old business rules,” Sarandos said. “We’ve been able to feed a lot of films to Netflix subscribers [via streaming] as early as the days and weeks before the DVD release, on the DVD release, within 30-60 days of DVD release. We’ve been able to play with the windows in such a way to make it a really compelling proposition for people.”

Sarandos said that flexibility can add revenue for filmmakers.

“On a larger scale, you can look at it as every time you add new technology (such as streaming) to consumers, the money they spend on entertainment keeps rising,” he said. “Will it cannibalize some window or another? Perhaps, but in total, it will grow the revenue an independent filmmaker can make on any given film.”

Sarandos said Netflix would be open to streaming films that don’t yet have DVD/theatrical distribution deals, citing the release of German Oscar nominee The Baader Meinhof Complex, which had no distribution deal before filmmakers signed with Netflix to stream the film, which then helped finance a small theatrical run. MPI Home Video will release the film on DVD March 30.

Sarandos said Netflix keeps an eye on festivals such as South by Southwest to build its streaming offerings.

“South by Southwest, in particular with its focus on technology, it really speaks loudly to that new technology user, such as someone who’s likely to stream on their Xbox,” he said.

Studios seem to be taking a chance on indies on cable VOD as well, with such recent deals as “Direct from the Sundance Film Festival,” which put three Sundance movies on VOD in 40 million homes through Comcast, Cablevision, Cox and Time Warner and DirecTV. SXSW has seen some action in this department as the IFC comedy The Overbrook Brothers was made available Feb. 17 on VOD through Bright House, Cablevision, Cox and Comcast. Now IFC Films is providing cable operators with three films from the 2010 SXSW day-and-date through VOD with their festival premiere.

Digital licensing company Gravitas Ventures, which delivers about 350 films a year to the VOD industry, has inked a deal with Netflix to deliver titles to Netflix's Watch Instantly service. Gravitas is handling the 2009 SXSW films Splinterheads, The Ceremony and The Snake, the latter of which Gravitas founder and CEO Nolan A. Gallagher says will generate about five times its production budget through VOD.

“What’s really fantastic about cable VOD and the Internet is you put titles up nationwide into potentially 70-plus million homes and it’s up there for 90 days, generally,” Gallagher said.

Joe Swanberg, writer and director of Alexander the Last, had his film released last year on cable VOD at the same time that it premiered at SXSW. Now, a year later, MPI released the film on DVD Feb 23.

“The thing that I always have liked about [VOD] and still like about it is it makes the film accessible to people who don’t live in major cities,” Swanberg said.

He said VOD can be as profitable for independent filmmakers as DVD and promote the DVD, whereas small theatrical releases usually end up losing money. But he conceded that signing with a partner such as IFC for his film meant that a DVD release didn’t come near its film festival premiere, when the film had the most press behind it.

“That’s the problem with indies,” said technology analyst Rob Enderle with The Enderle Group. “You can make a great movie, but if no one sees it, who cares?”

Enderle said one way that can be done is through social media, which can provide a free means for promotion, while ad support through a media such as YouTube can provide revenue alongside a link to a self-released DVD. But, as Swanberg said, it’s a field that everyone, from filmmakers to those that deliver the films to viewers, is still testing.

Related Stories :

SXSW Film Festival Attendees Say the Disc Still Spins Profit
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YouTube Bows Rental Service With Sundance Movies
Analyst: YouTube Movie Rental Bow a Dud
SXSW Film Festival Announces Screening Lineup
SXSW Comedy ‘Overbrook Brothers’ Comes to VOD


User comments

Commented by Angelo
Posted on 2010-03-01 15:40:34

Google spokesperson Chris Dale lost my confidence with this quote: “I think that there was an inclination to want to compare these independent films released through Sundance and YouTube to mainstream Hollywood movies like Avatar,” Dale said. No one in his/her right mind is trying to compare a Sundance indie film released via VOD on YouTube with "AVATAR." At best, this is wishful thinking, at worse it's a gross exaggeration.


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