VIEW FROM SUNDANCE & BERLIN: International buyers feel the streaming squeeze

Although Netflix and Amazon Studios have been shopping at international film markets for the past few years, this year’s Sundance and Berlin films festivals marked the first time they’ve swung into town with their cheque books on fire.

Amazon made several high-profile acquisitions in Park City, including Kenneth Lonergan’s Manchester By The Sea, which it paid $10m for, beating out bids from the likes of Fox Searchlight, Focus Features, Sony and Lionsgate. In a markedly different strategy to Netflix’s day-and-date theatrical/VOD model, Amazon is partnering with a North American distributor to carve out a theatrical window before the film streams and will also orchestrate a big awards season campaign.

The Sundance world premiere was Amazon’s splashiest acquisition, but it also shelled out for Joshua Marston’s Complete Unknown, starring Rachel Weisz, Whit Stillman’s Love & Friendship and Jeff Feuerzeig’s documentary Author: The JT Leroy Story (see below for details).

Netflix also charged into Sundance firing on all cylinders, snapping up Tallulah, starring Ellen Page, The Fundamentals Of Caring, with Paul Rudd, and Farsi-language horror Under The Shadow, among other titles.

Neither streaming giant was as aggressive at the European Film Market (EFM) in Berlin – which showcases more arty, European fare – but Netflix buys included Beta Cinema’s Hitler satire Look Who’s Back, while Amazon took US rights to Park Chan-wook’s The Handmaiden.

With competitive and deep-pocketed players shaking up the market, it’s a great time to be a content producer – or a filmmaker who wants to get work seen by a larger audience. Online audiences far outstrip those of traditional indie distribution, both in North America and overseas, and as the streamers don’t have to spend on theatrical marketing and distribution, they can take risks on casting and subject matter that the old school financing model never would.

But the situation for international sales agents and distributors is much more complex. Film buyers in North America are missing out on titles that go straight-to-VOD, while international buyers are watching the value of some of the movies they acquire plummet.

“We can only go after the really big titles that are guaranteed theatrical distribution in North America, because we don’t want to be stuck with a film that might already be streaming in the US by the time we get to release it,” laments a Hong Kong-based distributor recently returned from Berlin. “The challenge is that there’s already way too much competition for those bigger titles.”

And while Amazon is mostly sticking to acquiring North American rights, Netflix is buying films for worldwide distribution, which means a growing number of titles will not even be available to buy for international territories. Both streaming giants are also moving into the foreign-language space – Netflix also bought out world rights on Indian satire Brahman Naman at Sundance, while Amazon has US rights to Park Chan-wook’s Korean-language The Handmaiden.

Sellers’ market

The situation for international sales agents is not as bleak, but no less confusing. For those who are only in the commissions game, they may have to decide whether to sell the world to Netflix or gamble on trying to make more money by licensing a film territory by territory. The latter option usually only makes sense when you have a really strong package – a great concept, director and cast – but very few projects have all these pieces of the puzzle in place.

Currently Netflix and Amazon are mostly buying finished films – but they’re likely to increase their pre-buying activity and start talking to content producers directly, bypassing the age-old ‘US distributor/international sales agent’ model. In this case, it makes more sense for sales agents to move into production, control rights from the get-go, then pick and chose among a growing number of online or offline buyers. Most big companies that shop films – Lionsgate, EuropaCorp, StudioCanal – are already producers. Now smaller sellers will have to scale up or merge to stay in the game.

Adapt or die

Buyers will also have to figure out how to board projects much earlier in the development and production process. Pre-buying will increase but become even riskier for distributors who may see the value of their acquisitions decline if titles go day-and-date or straight-to-VOD in North America. It makes sense to start structuring deals where payment depends on the fate of each title in the US.

Buyers may also need to bypass sales agents and deal directly with producers to secure the choicest titles before the streaming giants sweep in. The current system of holdbacks in international territories may also change, with greater urgency for films to be released simultaneously across the world.

Resistance is futile

As always with disruptive business models there will be pockets of resistance. At the EFM, Netflix lost out on Sundance title Southside With You, which was sold to traditional distributors Miramax and Roadside Attractions, while Jeff Nichols’ Loving went to Focus Features for $9m, despite the fact that Amazon had offered more. In Sundance, Fox Searchlight acquired Nate Turner’s Birth Of A Nation for $17.5m, despite a $20m bid from Netflix.

In each case, the sellers opted for distributors with a strong track record in awards campaigns and theatrical positioning. Neither of the two big streaming giants have proved they can win Oscars and this will remain a consideration for as long as little gold statuettes help draw audiences and give visibility to a film.

But for the vast majority of films for which awards are not an option – it may be time to rethink the theatrical model. Product will be divided into award-worthy films that join blockbusters or franchises in North American and international cinemas, while everything else plays on VOD.

Without enough product to sustain them, a growing number of international buyers will disappear, merge or diversify, perhaps becoming digital aggregators or marketing agencies. After all, they know their local market inside out, and somebody other than Netflix needs to position and win eyeballs for all those films that are not going to get a theatrical release.

NETFLIX ACQUISITIONS AT SUNDANCE

Sian Heder’s Tallulah, starring Ellen Page as a Beverly Hills housewife trying to offload her toddler.

Rob Burnett’s The Fundamentals Of Caring, starring Paul Rudd, Craig Roberts and Selena Gomez, in a story about a caregiver and a youngster with muscular dystrophy.

Babak Anvari’s Under The Shadow – a Farsi-language horror set in post-Revolution Tehran.

Bonni Cohen and Jon Shenk’s documentary Audrie & Daisy, about teenage girls suffering sexual harrassment.

Qaushiq Mukherjee’s Brahman Naman – a comedy about a group of sex starved students that also has a dig at the Indian caste system.

Chris Kelly’s Sundance opener Other People, about a struggling comedy writer who returns home to care for his dying mother. Netflix has streaming rights outside the US, where Vertical Entertainment will distribute.

AMAZON ACQUISITIONS AT SUNDANCE

Kenneth Lonergan’s Manchester By The Sea, starring Casey Affleck as a traumatised janitor who becomes guardian of his teenaged nephew when his brother dies.

Joshua Marston’s Complete Unknown, starring Rachel Weisz and Michael Shannon, about a man who runs into an ex while contemplating a move to support his wife’s academic career.

Whit Stillman’s 18th century-set romance Love & Friendship, based on the Jane Austen novella, starring Kate Beckinsale and Chloe Sevigny.

Jeff Feuerzeig’s documentary Author: The JT Leroy Story, about a woman who wrote books while posing as an HIV-positive transgender male.

NETFLIX ACQUISITIONS AT BERLIN

David Wnendt’s Look Who’s Back – a German-language hit comedy that imagines Adolf Hitler waking up in contemporary multi-cultural Germany.

AMAZON ACQUISITIONS IN BERLIN

Park Chan-wook’s The Handmaiden – a Korean-language 1930s-set drama based on Welsh author Sarah Water’s 2002 novel Fingersmith. Amazon acquired US rights from Korea’s CJ Entertainment.