HD For Indies

Landmark, HDNet, 2929 Pictures, Magnolia Pictures, the Truly Indie program and others are all part of the same vertically integrated set of companies. Todd Wagner (present on the panel) and Mark Cuban are trying to change the way the film industry works, to find something new that works for films that don't work in the current model.

Here's my raw notes on the panel, undedited, typos and all:

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Landmark

came in late -

-top 10-20 films make most of the money, 300 films a year shown, bottom 50 or 75 lose money

-looked into other models to help - Truly Indie provides a turnkey fashion for what a traditional distrib would provide in terms of marketing or advertising

-filmmaker retains all rights, 100% of box office is kept by filmmaker, there's a cost associated with using theaters and providing publicity.

Basically, the filmmaker takes the risk.

What's the difference between four walling and Truly Indie?

In Truly Indie give a brand to the release, put a marketing team behind the film, provide local publicity, arrange press screenings, cause the print advertising to be done, creative services team of Landmark is on it, leveraging the existing resources in a way they can't do any other way

Q: Difference between getting acquired by Magnolia vs Truly Indie:

A: Quinn - if a film isn't quite an exact fit but is otherwise interesting, will recommend for Truly Indie rather than straight acquisition

Wagner - hear frustration of filmmakers who show at festivals and don't get distribution - should be listening to indie filmmakers to find a way for them to get released - wanted to open up the system for those who feel shut out (but they then carry the financial risk)

Quinn - as a national distributor - outside the big 5 urban market, films may do well in other or smaller markets.

Banowsky - as a film distributor, there are certain economic conditions to make it work at a sufficient scale for Magnolia, but if not can do this to get theatrical distribution in some way.

Q: Hernandez of Indie Wire is the moderator - the bigger state of distribution - how many films are acquired a year, etc? How is the game changing from 3 or 4 years ago?

Bowles on foreign films - people's tolerance for reading subtitles is greater than it has ever been. To hear a foreign film do over $100M like Crouching Tiger was laughable and unfathomable from perspective of years ago. Foreign, docs, etc. that doesn't have the obvious marketing hook is the real challenge they have right now if it doesn't have a sexy hook.

Day and date releases - they did Bubble and Enron and War Within are not pandering to public films. They're trying to create an economy where these challenging films are financially viable. As DVD gets to be a greater and greater slice of the pie, and the profit margin is way higher on those than theatrical, why not?

(Tech has changed - theaters are as expensive as ever, but home theaters get better and cheaper and DVD, HD, etc. gets closer to theatrical technical experience)

Q: in wanting to challenge the tradition of release windows for art films, why do this and how's it going?

A: a coupla years ago (this is Wagner speaking) were feeling their way around Hollywood. If you finance movies you'll be out of biz in 2-3 years if you play by the rules of Hollywood. They are taking their time about how they get into tihis business.

Movies today are made like this: In a "normal" business, if you put in riskiest money, you get that money back first. In any business, risky money gets paid back first. In movie business, it is absolutely BACKWARDS. Prints and advertising come off the top and a fee for distribution and advertising. "First money in" gets paid LAST - so riskiest money gets least reward.

Terry Semel about 4 years ago - he knew nothing of tech, they'd sit and trade war stories "If you guys are gonna survive, you're gonna have to look like The House." Think Vegas - Studios are The House. If production costs were paid back first and advertising last, that'd change things.

Wagner looked at it like an entrepreneur - how can we change this?

3 gotchas:
-size of the budget (out of control)
-print costs - shipping reels of film around to spend money
-advertising costs (also out of control)

shoot digitally (no print costs), just have one advertising run (compress the window), and perhaps could impact budgets - shoot digitally and get more efficent.

On the revenue side, there's a proxy for the industry - the music industry. The industry ignored the consumer, Steve Jobs came in and put himself in the middle.

Sale of physical CDs has decreased, but offset by downloads and ringtones.

Look at movies - look at customer base? Instead of assuming that in 5 months you still want our product you can have the product. Do they play songs on radio and make you wait 5 months to buy the CD? There's some flawed logic - "that's how it has always been done."

If some people aren't going to go see it in theater, if we can make it an impulse buy that they'll snatch it up, why not? That's increasing the consumer base. They want to share DVD costs with the distributors. It isn't a zero sum game, it isn't someone loses. Gotta find new revenue streams. 70-80% of folks like what they're doing and say so...only behind closed doors. Exhibitor community hates this and that's understandable. But this could HELP their business. if 1-2% of DVD sales drops to the theatrical chains, it makes a dramatic change. Sell things with yield management.

In this new digital reality, gotta change

-end Wagner rant, applause-

Folks can see films when they are current and available - if a movie is showing in NYC or LA, it'll show in a few months or not at all for these limited release things. Why wait months and have forgotten about it once it comes out on DVD?

HDNet - shows 1080i - accepts 35mm or other 1080 will not do. No XDCAM HD or 720p is not acceptable. No 16mm either. It's all about good stories well told, they don't cut or edit in any way, it's a basic cable service. 5.1 audio and all 1080. The challenge in working with indies is getting them to understand they need to shoot in the right format to begin with that is TV ready. Movies shot show briefly theatrically, it has to work on a 50" TV. HBO and those guys don't buy indie films, HDNet does. It has to work uncut/unedited on BASIC cable - can't be an R rated movie. Ultimately it will live on TV for the rest of it's life. make something inthe right format to begin with, and will be acceptable for a good movie market (male 25-54 etc.)

Schizopolis has sold 13,000 DVDs. Jerry with Matt Damon sold about 30,000.

bubble was experimental in a bunch of ways - it isn't a typical movie at all, it is a cinematic experiment. Bubble has done $200K theatrically. Films of this nature haven't had a good track record.

Bubble selling 100K DVDs so far - very successful .

Hotel TV - LodgeNet - Bubble was #3 film behind Walk The Line and something else

Nobody wanted to screen Bubble because of the day and date thing.

Wagner - Fox said they were going to put high def DVD 60 days after release. The quest has begun to try to find the new model.

Q: How will VOD play into this?

A: Wagner- keep trying to add pieces to this - for Enron, didn't have DVD in place. You walk before you run, and you keep trying things.

Why are screenings the way they aare? Why 200 people in LA and then spend millions on reshoots? Why so concerned with 4 boxes and who made them? Wouldn't you rather care about guy in Omaha and woman in LA rather than the 200 folks in LA who are all actors and wannabe directors and writers?

Q: Enron on HDNet movie - it doesn't meet the criteria - will you take other media material? Why was it done?

A: Historical docs will have archival footage - the interviews and new stuff were shot at 1080.

Q: will you consider a film not entirely shot that way?
A: they will look at them, but overall in needs to be 1080. They're playing Step Into Liquid. Content over clarity - interviews were 1080, surfing was 16mm. She went up against CEO and lost - it is showing, and it looks grainy.

Q: Relationship betwen Landmark and Magnolia Pictures
A: it is just like any other (incomplete answer)

Q: Truly Indie - when filmmaker brings film to them, does the TI team provide a budget?
A: Baonwsky - depends on the markets it'll play in - LA and NYC are more than Austin or Berkeley - 5 market one week is $50K to $150K depending on which markets chosen. If the film works, there's the option to either extend the program or if it sells well, the option to transfer that into a traditional distribution market. If the film is successful, the model is there to grow and be successful.

Now with home entertainment division, the selective opportunity for a DVD or HDnet distribution option

Mundorff - when a movie plays in a theater, films become competitive with each other. If Truly Indie becomes competitive, then they'll enter into a new negociation to see whether continues on same price structure or a new.

Wagner suggested that producers set aside money in their budget to be ready for Truly Indie or whatever. ($100K or more?)

Studio system gets out of whack whenever stars ask for $20M or whatever. Hedge funds and others are dumping tons of money back into the studios - Wagner thinks this is bad, will encourage more bad behavior

Actors should get a salary cap or something - but there needs to be confidence that there will be profits at the end of the day. "Take less up front to get it on back end" is hard to trust since there are so many shady things in the accounting of Hollywood. Try to keep your costs down and if it works and there's profits you'll share.

Q: what about the vertically integrated company - how has that been received?

A: trying to find a model that will work in the business? That would work with Landmark and not go out of business? Ancillary use of content on HDNet etc. is a strong thing for them. That's part of their overall strategy. You try to make good decisions each time as best you can and you hope they build on each other. If anyone tells you they know exactly what they're doing they are a moron or a liar.

Soderbergh stuff - they did a couple of movies together, and they got friendly, and then they sat down and

Q: What's up for Truly Indie? When's it happen

A: Tennis Anyone of Donal Logue was so pleased with the experience, even though the film didn't make the money he wanted it to. Cavite is next up from the Piersons. Releasing in NY and LA in May, seattle, SF, etc. in June.

Q: Next day and date movie -
A: Herbie Hancock doc Possibilities will be day and date and digital only

That's it. Talked to the HDNet VP about an interview to discuss acceptable specs for putting on air.

-mike