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Grouped: Marketing for the share of information

Forest Conner

Grouped.jpg

I recently read Grouped: How small groups of friends are the key to influence on the social web by Paul Adams, a social researcher at Facebook, and I’d like to share a few of the important takeaways from what he found. I apologize in advance for the very Bob Lefsetz-style of this post. Changing Consumer Behavior

“[People are] spending less time interacting with content, and more time communicating with other people”

Think about what you do most frequently on the internet. Is it typically a search for products, news, and information? Or is it specifically to see what your friends are up to and talking about? Whether it is checking photos, comments on the news of the day, or social gaming, more people are interacting with other people than they are simply consuming content.

The film industry has had a terrible time of trying to integrate social sharing and experience into the industry, it will be something absolutely necessary for the success of the next generation of content.

“Most of our consumer behavior models are structured this way— people acting independently, moving down a decision funnel, making objective choices along the way. Recent research in psychology and neuroscience shows that this isn’t how people make decisions.”

The general concept of customer acquisition in marketing is based on a funnel. People supposedly convert from the larger to the smaller end of the funnel and those that make it the whole way are your customers.

New-Marketing-Funnel1
New-Marketing-Funnel1

Turns out “the classic sales funnel is based on a view of humans as rational thinkers, making rational decisions as they move down through the funnel…. is simply not true.” Human being are influenced far more by emotion that ever accounted for in standard economic models. “We need instead to market towards emotion.“

Film marketers seem to know this, but only sometimes. In the four P’s of Marketing (Product, Price, Place, and Promotion,) the movie industry only appeals to our emotions with first, the Product. They seem hesitant to recognize that Price changes will become necessary, especially as the Place changes further from theaters to homes via phones and tablets. And Promotion has to change from the current top-down “barking at customers” model to a more community-based one.

“We share feelings, not facts”

Adams goes on to state “this included positive emotions such as awe, and negative emotions such as anger and anxiety. Emotions that were not arousing, for example sadness, did not trigger sharing of content.”

Could this be why dramas are typically so much harder to market than spectacle-based action movies or horror films? It is, in my opinion, why the trailer for Gravity was so effective. It spoke to viewers on an instinctual level of fear and survival. Not that every film can do this, but the even the ones who could don’t seem to understand the simple fact.

“Reason is dependent on emotion.”

Not only are feelings important in what we share, they are actually important in what we chose to buy and not buy. “Research has shown that offering people a smaller immediate gain activated different neural systems in the brain than did offering them a larger gain in two to four weeks.”

Think about this in terms of crowd funding you film. You can offer rewards to backers, sure. But what if you can provide Instant Gratification in the form of a small video as soon as they support your project. That is just one example of understanding the intricacies of human behavior that result in increased audience engagement.

Speaking of which, before you can speak to an audience in the right way, you have to know how to find them…

How To Reach Your Audience

The Myth of the Influencer

“Targeting large numbers of these people , potentially in the thousands, is more likely to spread ideas than trying to find a small number of influential individuals. These people won’t be visible on an individual level. You won’t necessarily know them by name. But you will know that they have the right attributes to be interested in what you have to say. Using many of these people to set off many small cascades averages out the random factor, and is more likely to produce consistent positive results.”

This is the general ethos for my research. By defining groups of similar people, similar in the right ways, we can determine how appropriate a film is for that group and realistically constrain marketing budgets. For more about this, check out my post on the cohort analysis done on the OkCupid data set.

The Real Influencer - Everyone

We tend to focus on those that have a seemingly large influence (think Oprah and her book club,) but it turns out what we should be focused on are groups of people who have a low barrier to being influenced. In other words, focus on to whom you are talking, rather than who is doing the talking about your film.

Ideas spread when people have low adoption thresholds. For ideas to spread widely, you need connected groups of easily influenced people. These easily influenced groups are called “Innovative Hubs.” Think of anyone who was an early adopter of technology like Betamax or Mini-disk players (shamefully, I was an owner of the latter.)

Innovative hubs are people who are highly connected and have a low threshold for new ideas. They embrace new ideas after being exposed to them a small number of times. The next group in the path to adoption are “Follower hubs” which are more common. These groups consist of people who are highly connected but have a high threshold for new ideas.

“As we increase our reliance on our social networks to make decisions, we won’t turn to strangers, nor will we turn to recognized experts. Instead we will turn to the same people we have been genetically trained to turn to for help— the people we’re emotionally closest to.”

Segmenting is Changing

 “Marketers currently segregate by demographics and psychographics, but in the future they’ll need to segregate by social network structure.”

The connectedness of a network is one component of prediction the spread of information through that network. The other is the ease at which the nodes in the network are influenced. These are not trivial questions to answer currently, but hopefully the work I’m doing during my fellowship will begin to increase the understanding of how to determine these metrics.

Density is as important as spread

“Focus on getting your message shared within a group as much as you focus on getting it to spread between groups…. When we’re planning marketing campaigns, we should concentrate on content that is likely to spread among friends, and friends of friends, but we shouldn’t expect it to spread to people more than three degrees away from the people who first encountered the message.”

This is the key for independent film without huge marketing budgets or publicity campaigns. You should focus on getting everyone, yes everyone, in you direct group involved and interested in your film. Only by obtaining critical mass in a small, closely connected group can you then expect to reach secondary groups.

I’m currently trying this strategy with a Kickstarter campaign for Anatomy of an American Dream, a feature documentary I am producing. Considering this as my case study, I hope to fill you in on the progress as I test these strategies over the next month.

Case study on dynamic pricing: Broadway

Michelle Ow

tkts.jpg

The movie exhibition industry is about 9x larger than the Broadway business (per total gross in 2013), but Broadway instituted dynamic pricing years ago and does face similar strategic challenges: a blockbuster-hits driven business that seeks to maximize profits under challenging audience constraints. About half of the tickets for most Broadway shows are sold the day of. In the movie business, studios spend millions towards a one-weekend gross or it’s a flop. But unlike movie tickets, Broadway ticket pricing continues to get more fluid. They sell three types of tickets – premium tickets, group sales, and discount tickets. Discount tickets are sold to those who don’t pay in full but will buy. These discount tickets won’t be assigned the best seats, nor will they fill a house with these buyers. By the night of the show, about half have been sold at various prices and no one knows what the other person paid. Sometimes, a producer would rather see the seat empty than sell too low of a ticket. You cannot discount too much if there are individuals who’d be willing to pay in full. The pricing power varies depending on the show’s popularity. For example, shows often up the price after a Tony Award win.

Movie ticket attendance has trended downwards at a fairly steady pace over the last 10 years, while Broadway ticket attendance has shown a more uneven trajectory. Despite a steady uptick in average ticket prices, the number of seats sold grew in 7 out of the last 10 years. A sign, perhaps, of the success of dynamic ticket pricing?

Annual Broadway BO
Annual Broadway BO

The pricing strategies vary from “The Lion King”, which has dynamic pricing down to an exact science, to “The Cripple of Inishmaan,” which is offering deeply lower tickets to lure young theatergoers to the art. In addition, new start-ups like Today’s Tix are pushing user-friendly ticketing experiences to attract those that won’t go to the box office for tickets or don’t find the coupon they want online.

It’s Lion King’s algorithm that is of particular interest to the scope of this project. The show draws from data for 11.5 million audience members so far, and has outearned other shows despite capping its prices. Their strategic decisions are all focused on sustainability. According to the New York Times, producers believe this keeps the show “relatively affordable for for large groups and families; lessens the chance of buyer’s remorse leading to bad word of mouth; and offers room to raise prices over the long term.”

Our analysis of Broadway, MLB, and airline ticket pricing underscores the importance of data. The next step of this project will be to gather as much data as possible about movie ticket attendance and demographics. Ideally, we can then chart potential pricing schemes for peak dates vs. off-peak dates. Just like the Lion King, the more data that is collected after instituting a dynamic pricing scheme, the better theater owners and distributors should be able to adjust and develop a more fluid algorithm to generate the price-attendance combo to maximize profits.

Misanthropes should go to movies on Tuesdays

Michelle Ow

CRI-Blog-Post-2-Seinfeld.jpg

The movie theater business is a weekend-centric one. It’s no surprise that movie tickets sold on weekend (Friday to Sunday) are triple the number sold on weekdays (Monday to Thursdays). To better define what type of dynamic pricing this project will pursue, I dove into data about attendance by date. The trends of the past tend not to chart the course of the future, but I hoped the data would yield some clues.

There are two primary sources online – BoxOfficeMojo.com and BoxOffice.com. I chose the former because the site also includes a cornucopia of data on attendance per title per date that will be helpful going forward. The data set is estimated tickets sold (top 10 gross divided by average ticket price) by day of the week from 2002 to 2013. Total estimated tickets is preferred, but since the top ten movies account for as much as 90% of total gross, most courts would say it’s a pretty solid dataset for industry trends. Here are the results:

CRI Post #2 Weekday Top 10
CRI Post #2 Weekday Top 10
CRI Post #2 Weekend Top 10
CRI Post #2 Weekend Top 10

Source: BoxOfficeMojo.com

Some takeaways:

-Ticket sales averaged lowest on Tuesdays. One of the most surprising trends is that over the last two years, ticket sales on Tuesdays have ticked up. It’s not clear if this is a shift from folks tired of wrestling with large weekend crowds.

-Ticket sales are highest on Saturdays, followed by Friday and Sunday.

-Monday and weekend attendance trends are fairly stable

-Tuesday, Wednesday, and Thursday trends show fluctuation and volatility (as confirmed by calculating standard deviation)

-Wednesday ticket sales have been the most volatile over the last decade.

If a dynamic pricing model does not cannibalize the preexisting audience, especially the weekend crew, a scheme focused on Tuesday-Thursday tickets for non-blockbuster event movies may capture extra demand. The goal and the big question remains: how can we grab those that hadn’t planned on going to the movie theater at all?

Transmedia Synergies – Remediating Films and Video Games

Ryan Silbert

This video from UCLA and posted on Indiewire is a great discussion on the dialogue between film and video games. My feelings on the word "transmedia" will be discussed in future posts, but aside from that, Matthias Stork makes some very insightful points.  

Screen Shot 2013-04-26 at 2.01.24 PM
Screen Shot 2013-04-26 at 2.01.24 PM

"All media work by remidating that is, translating, refashioning, and reforming other media"

- Lev Manovich

Community vs. Blob

Claire Harlam

I've written plenty here about innovative and exciting platforms for independent film distribution and/or discovery (plenty enough to make at least myself and probably you repulsed by the words Innovative, Exciting, Platform, Distribution, And/Or, and/or Discovery). I've also written a lot here about how few of these platforms actually deliver on their promises to connect filmmakers and fans. My CRI project is about this connection, about community--defining it, understanding why it is a critical component of the online ecosystem for filmmakers, and studying the attempts that startups and institutions have made to build and address it. Community is critical because if it isn't there, than it really doesn't matter if your film is. Is a good library enough to draw community? Recognizable and trustworthy curators? Interaction? Involvement? Empowerment? I think it's some kind of combination of all of the above, with an emphasis on everything that came after "good library." Which is not to say that the quality of content doesn't matter in the online ecosystem. Of course it does. And there are enough quality films not getting (or not getting enough out of) traditional, theatrical distribution to populate a robust online ecosystem. Rather, online communities want an ontologically online experience--they want a unique kind of empowering involvement that does not exist in an offline world. And so some excited rambling about two organizations (a bootstrap startup and a leading institute) that are tackling the community question in truly Innovative And/Or Exciting ways:

One of the platforms I've been researching that I think is killing it is Seed&Spark, (whose COO (and my Tisch classmate) Liam Brady is using the platform to seed and spark his film, FOG CITY). Emily Best, founder and CEO of the company, writes that she "founded Seed&Spark to allow indie filmmakers to leverage this WishList crowd-funding method specifically to build and grow their collaboration with their audiences for the entire life-cycle of a film," because "...when you activate the imaginations of your broader community, you set off a chain of actions, reactions and connections the result of which can push the boundaries of your film beyond what you imagined." The "WishList" to which she refers is essentially a wedding registry for an independent film. Best first experimented with the WishList idea for her film LIKE THE WATER:

What we came to call the "WishList" rendered our filmmaking process transparent to our community and sparked their imaginations. They started coming up with ways to get involved we hadn't imagined. They became deeply meaningful collaborators in the film who then lined up – literally – around the block to see the film when it was finished. ... When both you and your supporter can name the material contribution they made to your film, you both understand your supporter’s importance beyond the number of dollars they contributed. And they should feel important because they are.

Best understands that a community needs to be empowered and thus feel important in order to thrive. So many brands spend so many corporate dollars trying to create online communities and make them feel important. But this is a difficult verging on deceptive task since the individuals who comprise these "communities" are ultimately as important as any other individuals from like demographics. For an independent film, however, individual supporters are actually important because they can, as Best points out and as Seed&Spark allows, contribute uniquely to that film's actualization. I have $50 to donate, you have a car to rent cheaply, he has c-stands to lend, etc. It's kind of beautiful how the needs of an independent film and its online community align like this. All independent films depend to some degree on the good will of communities--local communities, friends, family and peers of the filmmaking team, etc. And a community by definition thrives on supporting its members (that's why it's a community and not a nebulous blob of loners). Seed&Park offers online tools to facilitate this good will and thus connect filmmakers and fans in a profound and uniquely online way.

The Sundance Institute has announced that its Artist Services program will expand its suite of digital tools through partnerships with Tugg, Vimeo, Reelhouse, and VHX. These partners join Kickstarter, GoWatchIt, TopSpin Media, as well as the usual retailer suspects. The above hyperlinked IFP release as well as this IndieWire article provide information on these platforms, and I've also written about several of them on this blog. Artist Services is further partnering with other organizations which will select filmmakers to share Artist Services privileges with Sundance alumni. The organizations are: The Bertha Foundation, BRITDOC, Cinereach, Film Independent, the Independent Filmmaker Project and the San Francisco Film Society.

It is clear that the Sundance Institute is committed through Artist Services to exploring the community component of the online independent filmmaking ecosystem. Between their retail partners (iTunes, Hulu, Netflix etc.), and the partner platforms that help filmmakers strategize their direct-to-fan distribution and marketing (TopSpin, VHX, Reelhouse), #AS is providing their filmmakers a pretty robust toolkit for self-distribution. By additionally partnering with platforms like Tugg and Vimeo, #AS is acknowledging that an engaged community is as important as quality marketing or visible shelf-space. Tugg directly involves and thus empowers its community to bring the films they want to see to their local theater. Despite their nascent experiments with monetization, Vimeo is essentially a community of people who make videos and people who watch them. Although YouTube's community is bigger (like hundreds of millions bigger), Vimeo's superior user-interface/experience, profile customization, and opportunities for discovery (staff picks, categories, etc.) make it feel like a prettier, comfier, more tight-knit community. (There are other differences, of course.) However it stacks up against its opponent, Vimeo is indisputably a community, not a tool for direct to fan strategizing. Artist Services does not end its suite of tools at direct to fan strategizing platforms because tools that empower communities are as vital to a film's self-distributed success.

I'd like to believe that we are in fact being wired together, not apart, but I also think that there's space and time for both the movies we watch together in theaters and the ones we watch alone on personal screens (as long as they're at least 13 inches or so). Personal feelings about the anthropological impacts of online connection aside, the independent filmmaking and loving community is very real and very capable of helping each other make and discover movies online. To me, online community means a collection of real individuals that make real things happen via the Internets (online communities fund films; online nebulous blobs produce analytics). To different platforms, community means different things. Some don't need it (Netflix) and others can't live without it (anything I've written about here). I'm interested in online tools that by virtue of being online tools help a widespread group of like-minded people come together and Seed, Spark, Kickstart, Gathr, and Tugg stuff--tools that empower our community.

 

Sundance Institute and Women in Film Release Unprecedented Study on Women Directors

John Tintori

Melissa Silverstein of IndieWire reported yesterday the findings of a study released at Sundance on the gender disparity in the film industry. Silverstein's bottom line is that "there is some great news... and some really sucky news," but the article deserves to be read in its entirety. This is a pressing issue for emerging filmmakers; take a look.

New Year's Resolutions & CRI Solutions

Claire Harlam

In the first week of the new year, most blogs and papers have published articles on new year's resolutions for the film industry and/or wrap-ups of last year's highlights and statistics. Some of The Wrap's resolutions are particularly relevant to the work that CRI fellows are doing now.

Some highlights and areas for consideration:

CHRIS MCGURK, CEO, Cinedigm: People have to re-screw their heads on about the way a film is released. It used to be that a movie had to be picked up by an independent distributor and get to 500 screens to be validated as a movie, but it takes $5 million to $10 million in marketing to do that, and it makes it difficult to get a return on your investment.

The way that a film can be released is an interesting consideration now from micro to ultratoobig budget projects. Ryan has designed his project to "address the lack of economic transparency in independent film with the ultimate goal of helping filmmakers better understand the options available to them when it comes to distributing their films." With a better understanding of the real costs involved in distribution, independent filmmakers will have a much easier time re-screwing their heads on in order to embrace changing release strategies.

FRANKLIN LEONARD, Founder, the Black List: I spend a lot of time thinking about data and how data can be used to improve the film business. One way that seems both obvious and interesting is making movies that already have an audience. Hollywood typically assumes that means, "Oh there’s a built-in audience for this board game." That’s wrong. It means determining ways to identify audiences for specific subjects or ideas via the internet, social media and surveys.

I agree with Leonard--the film industry has barely begun to collaborate with and learn from the tech world in order to harness data about what audiences want. Which is not to suggest that filmmakers should start making movies based on what audiences want. (That would be a cynical verging on gross thing to suggest.) Better tools to target individuals based on their interests and tastes mean better chances for filmmakers and grassroots distributers to build audiences around any film. I'm researching new digital platforms in this space, I'm trying to understand how to build community around film online and learn from that community, and I'm (hopefully) killing the word niche in the process.

GLEN BASNER, CEO, FilmNation: ...It’s much easier to have a hand in the creative process and in the development of a movie than when you're getting a big fee from the studios, making $20 million before you step on set. Don’t get me wrong, studios have a lot of strengths -- more advantages than disadvantages -- but they are not nimble. They can’t tailor each project to specific filmmakers. That has allowed smaller companies to enter the void and have a bigger impact than ever before.

Edward is aiming with his project to build "a new model of independent filmmaking focused on the production of feature films produced within the walls of the university system that will prove to make dollars and sense." Like Basner suggests, now is a perfect time for filmmakers working within a nimbler infrastructure than the studio system to "enter the void." And no one but no one is nimbler than a film student.

 

Full article here: http://www.thewrap.com/movies/article/how-improve-hollywood-9-experts-weigh-future-film-70126?page=0,0

 

"Torso" Consumption?

Claire Harlam

Will head end hit and long tail niche content producers battle to reap the audiences and revenues of the media consumption curve "torso"? Without a promotional budget and/or curatorial guide, it seems neither camp could have much success. Still, this is an interesting look at "torso" models for content with inherent audiences (anime, bollywood, south korean drama, etc.). The Power of Torso TV (Why Media is Racing to the Middle)

Editor’s Note: This is a guest post by Mark Suster (@msuster), a 2x entrepreneur, now VC at GRP Partners. Read more about Suster on his Startup Advice blog: Both Sides of the Table

Chris Anderson wrote a really influential book some years ago called “The Long Tail” that shaped how many people think about emerging Internet markets. If you haven’t read it you should consider adding it to you library.

It was especially influential in my mind in thinking about media.

At the simplest level you can think about markets in terms of the number of times media is consumed and/or purchased by people plotted against the total number of content of that media type that is available.

At the left of the graph is the “head end” of the market, where the “hits” are produced for mass audiences. This was how companies who produced media became big before the Internet.

Why is that?

When you have limited distribution, the costs of distributing media are so prohibitive that only the largest of media producers (and distributors) are relevant.

The book profiles markets like those for books. When you had physical stores selling books, the bookseller would have to stock the shelves with those books most likely to sell so consumer choice was more limited. It was by definition a hits-driven business.

This changed with Amazon because you could stock books in warehouses and ship them when ordered greatly reducing the costs of housing books and thus you could stock a much greater variety.

Now as an author you can actually publish and be able to sell only a thousand books. Even a hundred. That couldn’t happen without the advent of lower cost production & distribution. And as we know the book industry is moving fully electronic with the advent of the Kindle making the costs of production & distribution nearly zero.

Think about music as another example.

In the early days of music you had to produce records, which was expensive. You had to promote them via music venues by playing across the country to get your albums purchased. And with the rise of radio you then had to get airplay on radios to promote your music (leading to payola).

If audiences liked your music then you had to sell them physically at Tower Records or similar. That was the only way. And you would promote your music through expensive and limited media channels (radio, who had a strangle hold on market) and retail shops (who could control placement and promotion).

In the “head end” market you can make a lot of money if you’re a content producer. Mostly everybody else languishes. You also can make a lot of money if you’re a distributor to head-end markets, mostly these are monopolies, oligopolies or sometimes even mafia run businesses (for a great book on the emergence of these businesses read Lew Wasserman, The Last Mogul. Sadly, no Kindle edition).

In the “long tail” you can become enormously valuable if you’re a platform. Less so if you’re a content producer. It seems appealing at first since you can “ring the cash register quickly” and it feels good. But as every blogger, musician, novelist or YouTube emerging talent knows … it doesn’t add up to much unless you go big time.

TV was the same. You first had broadcast TV through local terrestrial broadcasting towers. The spectrum was so limited that as a child of the 1970′s we only got 4 TV stations. There were no physical forms to store the media – VHS, DVDs then DVRs have obviously changed this. Distribution strangleholds have dramatically decreased with cable & satellite (and now fiber) but distribution until recently has been very limited.

And then there’s film. It has been expensive to produce film on celluloid reels and then these had to physically be shipped to theaters (which were also, obviously, limited). When you think about “time windows” of film distribution you literally need to think about the fact that you would open a film in the US and later ship the physical reels to London then Europe to open overseas.

Physical limitations on both production AND distribution produced the hits driven business that many people associate with the media industry: Film, TV & Music.

We all know what happened with music when production costs went down (ProTools) and distribution costs went to zero (Napster). It had the effect of greatly reducing the industry size but also of allowing some less known artists to reach audiences that previously would be unthinkable due to cost constraints.

To some extent this lowering of production & distribution costs has been part of the YouTube phenomenon and more broadly of UGC (user-generated content) itself. YouTube has done a phenomenal job in aggregating audiences, which is why I have taken to calling YouTube the new Comcast and believe it will be a huge disruptor in the TV market .

To give you a sense of scale: 800 million people visit YouTube.com every month. 4 billion videos are watched daily. In 2011 YouTube had 1 trillion views, which is the equivalent of every human watching 140 videos. Put simply: YouTube OWNS the long tail. They own the audience and that is enormous asset to leverage, but more on that in a moment.

Netflix, Hulu & HBO Go are coming from the opposite direction – the Head End. Yes, it’s true that their deep libraries are virtual and therefore fit the long-tail properties. But their core asset (other than great tech & management) has been exclusive windowing of premium content that people want to consume.

They had to negotiate these rights with the major content owners – the studios. And this makes them definitionally more vulnerable than having control over a massive audience that turns up every month regardless of “hits.”

That is why Hulu has invested so much in building its Hulu Plus subscription service. With what is rumored to be around 2 million consumers paying $8 / month that is now a $200 million per year not including their ad revenue business.

Very smart people are running these online video businesses and they know that they need to diversify by either creating or sponsoring the development of new content. Hulu announced $500 million to fund new content and Netflix has, for example, resurrected the hit / cult show Arrested Development.

Interestingly Netflix plans to release the entire season all at once. Take that traditional time windows!

So to some extent I believe it will be a race in video will eventually be to the middle. The Torso. I know the big players still think of the next mega hit. But the fact that Netflix focused on Arrested Development tells me they are likely thinking more like me.

And I believe the torso is much more valuable than people perceive because it is growing rapidly with globalization and with the breakdown of physical distribution barriers.

Several years ago I became fascinated in the “torso” part of the media market.

...

Full article:

http://techcrunch.com/2012/06/06/the-power-of-torso-tv-why-media-is-racing-to-the-middle/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29

 

 

2011 Digital Home Vid figures released- Netflix tops iTunes for first time

Ryan

While there has been lots of talk about Netflix's pricing woes, new figures released from research firm IHS are showing that the streaming giant is still spending to get US content. For the first time, the streaming service surpassed Apple in terms of market share for total revenues derived from spending on movies, cutting Appls's share of homevid revenues to 32% (for reference, Apple's share was 61% in 2010). Key points about 2011 Home Video/Digital market

- nearly half of the online movie business comes from Netflix. SVOD represented $454M in total - Microsoft represents the 3rd place digital partner after Netflix and Apple - Electronic Sell Through remains soft (up only 2% over last year) - Physical disk business is down to $14.5B (from $16B in 2010)

Full article here: http://www.variety.com/article/VR1118054901?refCatId=1009

12 Key Traits of the “Indie-Friendly” Director

Edward

I found this article yesterday from Indie Producer Mynette Louie. Take a read...

Video Village, Indie-Style

Not every director is suited for low-budget indie filmmaking, and that’s OK if you’re Terrence Malick or David Fincher. But chances are, you’re not…or not yet, anyway. I get a fair number of calls from biggish directors and producers who are having trouble raising money for their films and want to explore how to make them on the super-cheap. I’ve entertained some of these requests, collecting funny anecdotes along the way, like the director who wanted to fly in stars from another country and rent large trailers for them, but forego unions and production insurance. Or the producer who wanted to cast an actor whose agent demanded $12,000 worth of perks, when our entire costume budget was just $4,000. As much as I want to work with these namey folks, I usually end up politely declining because I know that it will be difficult for them (and for me, especially) to make a movie on a fraction of the budgets to which they’re accustomed.

Read the rest of her article on the IFP website: http://www.ifp.org/resources/12-key-traits-of-the-indie-friendly-director/

Lights. Camera. Invest! Putting Filmmaking in the Portfolio.

Edward

A good friend sent me this article because she thought it would be of interest to me and my CRI project. It basically talks about how to invest in film.
Here are the highlights I took from it:
  • Make sure the the filmmaker will finish the film. Get a completion bond
  • Understand that film has other rights besides the typical theatrical release. There is money to be made in these other rights.
  • Think about investing in a portfolio, not a single picture.
  • Invest films with more captive markets, i.e. IMAX films for educational institutions
Chester Higgins Jr./The New York Times
Marc H. Simon is an entertainment lawyer at Cowan DeBaets Abrahams & Sheppard, but over the last decade he has produced three well-received documentaries.

By

Published: April 27, 2012

FOR most people, investing has not been fun these last few years. At best, it has been stressful.

But there are investments that have nothing to do with stocks or bonds or real estate that may be at least enjoyable if not always moneymaking. I’ve come up with about a half-dozen, and over the next few weeks, I plan to explore some of them, including investments as different as horses and restaurants. My goal is to see how people do this successfully — or whether they have a broader definition of success than just making money.

This week, I’m going to look at films, given that the influential Tribeca Film Festival is under way; it runs through Sunday.

Read the rest of Paul's article at the New York Times.

 

More on Micro Budget Film Slates

Edward

Last year around this time Lionsgate announced their new initiative to produce a slate of micro budget (sub $2 Million). Their President of Motion Picture Production and Development Michael Paseornek thought that the productions would function as an incubator for new actors and filmmakers, getting to experience the best of the independent and studio systems. This rings very true to me as it is exactly what my research project gets at. Students at NYU will gain the necessary experience needed to make the transition to the "real world" and discover some amazing talent, both in front of and behind he camera. Our micro budget slates will give our students the ability to make the films they envision while still in the safety of the university system. Project update: We are moving along nicely. We have some interest from parties looking to help raise the necessary capital. I'm happy to announce that Jay Van Hoy of Parts and Labor has joined the CRI family as one of my project mentors.

Check out Parts and Labor on Facebook , twitter, and imdb.

Read the original press release about the Lionsgate micro budget initiative here: http://investors.lionsgate.com/phoenix.zhtml?c=62796&p=irol-newsArticle&ID=1544330&highlight=

As DVD pie crumbles, is VOD sweet? [VARIETY 5.712]

Ryan

VOD is a growing component of domestic distribution deals but unlike boffo box office figures, such success adds no value for the international market. Indeed, releasing a film day-and-date on VOD and theatrical in the U.S. may diminish its appeal to foreign distributors, who still regard that as a sign of inferior quality. Plus, the secrecy surrounding VOD revenues undermines any positive reports regarding any business a film has done.

Full article: http://www.variety.com/article/VR1118053065

Chris Jones on how to navigate digital distribution

Ryan

Some interesting insights and ideas for how filmmakers should be thinking about the new economics of digital distribution to build an audience. http://www.chrisjonesblog.com/2012/04/12-ways-film-distribution-must-change-for-distributors-and-filmmakers-to-survive-a-manifesto-for-change.html

A Slate of Microbudget Features

Edward

My Project: Creating A Independent Funding And Distribution Model For NYU Feature Thesis Films

New York University’s Tisch School of the Arts offers a world-class education that teaches filmmakers how to write, direct, edit, produce, and compose their films. NYU alumni have changed the face of Hollywood and independent filmmaking. Now it is our chance to change the façade of the business of movie making and create a new model for independent film. I am creating a model that will allow NYU to help raise a film fund through private equity for a slate of micro budget feature films directed and produced by current Tisch students and alumni as thesis projects and first features.  This seems to be the natural next step for Tisch as a leader in the world of independent film.

It seems that several universities have tried to put into place similar models. Here are some articles I found that have helped me figure out where to start in my research.

Chapman University creates film production company http://articles.latimes.com/2011/mar/31/business/la-fi-ct-dodge-film-20110331

Burnt Orange Productions http://www.nowplayingaustin.com/org/detail/26919/UTFI_and_Burnt_Orange_Productions_LLC http://www.variety.com/article/VR1117905955

All Hands-on Set Industry partnerships help film schools shift learning from the classroom to the sound stage http://www.variety.com/article/VR1117950842

Tribeca 2011

Ryan

Tribeca Film Festival event programmers talk about the factors that influenced this year's competition pics. Among them: 1 - Smaller budgets 2- Kickstarter 3- The recession

http://www.hollywoodreporter.com/news/tribeca-film-festival-opening-robert-deniro-313698

What The Film Industry Needs: Transparency

Ryan

My project in a nutshell... http://www.tribecafilm.com/tribecaonline/future-of-film/What-The-Film-Industry-Needs-Transparency.html#.T4MYedX4JX4

By Orly Ravid | 0 Comments | April 09, 2012 11:00AM EDT In today’s digital distribution market, which ranges from VOD, to iTunes and other smaller online outlets, the numbers are hard to find or verify.

Recently I was helping a friend with a business plan related to publishing. So naturally I needed to reference revenues in the publishing space. There was plenty of revenue data available.

However, when one reads film business plans one knows that data is often unreliable, unverifiable, or misleading. In my dealings with people from other professions and others in business, it always seemed to me that sharing real information was considered good business and led companies to learn from others.

I’m sure there are plenty of business that do not function transparently, but after 13 years in this one, I can say I know why people hide real information and why it’s bad for the film industry as a whole.

Box office grosses can be verified to a great extent but P&A expenses cannot and now with VOD revenues it’s anybody’s guess what really happened except for those seeing the actual reporting (and even then…). When DVD was a key revenue generator one could at least get a lot of the main sales data via VideoScan. It covered the retail brick & mortar sales numbers and Rentrak covered the rental business as well.

In today’s digital distribution market, which ranges from VOD, to iTunes and other smaller online outlets, the numbers are hard to find or verify.

Most of us probably criticized the mysterious banking practices that led to the economic downturn within which we are still presently mired. Yet the film industry perpetuates a system that hides information and makes the data mysterious when it should not be.

This mystery and obfuscation leads to incomplete or inaccurate business plans, an uninformed investor pool and an excess of supply that creates a glut. In the end no one benefits.

What and why people hide:

• Filmmakers will hide the fact that their distribution deal was a service deal because they want it to seem as if their film was “acquired”. Why does that matter to them? Part of it is ego and part of it is the desire to attract future investment. Even though a DIY model can actually generate more revenue, there is a stigma associated with it. Filmmakers often hide their revenues overall for the same reasons.

• Distributors try to hide or not make public their fees or the specific revenues from VOD. Why do they do this? Simply, it’s harder to analyze and compare options. When one can do this properly, you quickly realize how excessive fees are for certain rights categories and that there are extra middlemen who often serve no benefit to the licensor. Further you realize how little is done to justify the fees. When I write “excessive” I mean that one can get the same job done for a lower fee or smaller overall cost. I commend the distributors and the filmmakers who have been transparent but these are few and far between.

• Studios are less transparent and public about data because their dealings with Cable MSOs and key digital platforms are required to be secret (I am told this is a condition of the platforms and the MSOs). So we understand that their splits / terms (with MSOs and some platforms) are better but we do not always get the exact data.

• Platforms such as Netflix also do not like to publicize how they arrive at the fees they offer as their deals vary with various suppliers.

So where does this leave us?

• With a pool of often revolving investors who know little about distribution and rely on business plans that contain little statistical backup. My sense has been that many investors do not get their money back and are therefore not repeat investors.

• With filmmakers who struggle just to create and have a career. They usually prefer not to focus on distribution and either take bad deals or have to spend money on consultants to help them have access and make decisions. In short, filmmakers are losing money and often making poor decisions because of the lack of information. Digital distribution does afford more access to filmmakers but not as much as it could and one day may do.

• With a glut of films, many made by wide-eyed newcomers who don’t know the realities of just how competitive it is and how tough their odds are. This lack of transparency and real data perpetuates a mystique around the industry that increases the supply. It also feeds an economy of middlemen and consultants and hell, even us.

The choice by filmmakers to hide their real experience in distribution is a disservice to future filmmakers and investors as well as in some cases to the filmmakers themselves. It only encourages competition and thus increases the odds of future struggle and disillusionment.

The choice by distributors to not be transparent is obvious in its motivation. Personally I think this industry would be well served by a market correction and a drastic adjustment of industry standards in reporting and transparency. Obviously with a book such as ours, and business practices such as ours, we hope to be a catalyst in that direction.

I have said from the day I founded our organization that I would be delighted if we facilitated our uselessness. It would show that an industry change for the better had taken place.

What would be the benefit of greater transparency?

1. We could all learn from others’ mistakes and successes a lot more easily and with greater certainty.

2. Filmmakers and industry folk could spend less on business-to-business transactions and more on direct-to-audience marketing and community engagement.

3. We might actually see greater quality and less quantity--which would also positively impact audiences and create a more sustainable career for those who are the more talented.

4. We might see more innovative thinking around marketing for a change instead of having everyone rest on their laurels because no one can really evaluate what has or has not worked.