Hollywood Biz 3.0 : Kickstarter

thefilmbook by Benjamin B

Greetings from Normandie where I'm attending the 39th Deauville American Film Festival.

I continue here my exploration of the business of Hollywood.

In PART ONE, we saw that Hollywood studios which used to be aimed at American audiences are presently trying to appeal to a global, increasingly Chinese audience with mega films based on franchises. Here I look at the new business models for American independent films, and the emergence of omni-screen cinema.


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Spike Lee Kickstarter funding - thefilmbook

crowd-funded Spike

whiteline775

Outline:

1. changing cinema

2. the $60 million minimum

3. crowd-funding

4. marketing: getting it seen

5. distribution: internet, TV, binges

6. omni-screen cinema?

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1. changing cinema

I ended my preceding post about the 3.0 version of the Hollywood Biz with these possible futures for global cinema:

-- Will the majors start shooting in China, and will studio movies morph into a hybrid form of American-Asian culture?

-- Or will Hollywood’s domination ebb, and will we see world cinema evolve into multi-polar cultural strands with competing production centers in Hollywood, Shanghai, Mumbai, London, Paris and – why not -- Lagos?

-- Or is cinema itself changing, and stretching into a protean art form for giant Imax screens to tiny iPhone displays and everything in between, with theatrical, television and internet venues?

One thing is clear: new business models are changing cinema before our eyes.

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2. the $60 million minimum

What about smaller American movies? What about smaller studio films and indies (independent films) that do not travel as widely as mega films? In a recent keynote about “The State of Cinema", maverick filmmaker Steven Soderbergh addressed the state of the indies. The savvy writer-director has recently announced that he is retiring from feature filmmaking, after making Behind the Candelabra, an HBO movie about Liberace’s gay lover which premiered at the Cannes Film Festival.

steven soderbergh the state of cinema

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Soderbergh explained that a small studio film needs to gross a minimum of $60 million at the US box office just to recoup $30 million in domestic studio marketing costs, and break even.

There’s the expense of putting a movie out, which is a big problem. Point of entry for a mainstream, wide-release movie: $30 million. That’s where you start. Now you add another 30 for overseas. Now you’ve got to remember, the exhibitors pay half of the gross, so to make that 60 back you need to gross 120. So you don’t even know what your movie is yet, and you’re already looking at 120.
That ended up being part of the reason why the Liberace movie didn’t happen at a studio. We only needed $5 million from a domestic partner, but when you add the cost of putting a movie out, now you’ve got to gross $70 million to get that 35 back, and the feeling amongst the studios was that this material was too “special” to gross $70 million. So the obstacle here isn’t just that special subject matter, but that nobody has figured out how to reduce the cost of putting a movie out.

Soderbergh makes clear that this kind of economics makes more sense when the film’s production budget is close to its marketing budget. Paradoxically it makes more sense for the studio to invest 30 million in marketing on an $80 million film than in a $10 million one.

That is why Soderbergh, a Hollywood insider, ended up making Behind the Candelabra for cable television. He is not alone, Stephen Spielberg recently disclosed that his latest film, Lincoln, came “this close” to being an HBO movie.

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3. crowd-funding

Crowd-funding is emerging as a new paradigm for financing American independent movies, with sites like Kickstarter and Indiegogo. The most successful Kickstarter film campaign to date is the one for a feature film based on the popular Veronica Mars TV show that was cancelled 8 years ago, which featured a funny, charming video with the cast and director.

The passionate fans financed the $2 million production budget in an amazing 10 hours. The film has started shooting, and the campaign now totals 5.7 million from 91 thousand fans, including one person who reportedly payed $10 000 to have one line in the movie. Of course, Veronica Mars is not the best example for indies, because it is a kind of franchise, a reboot of a popular TV show.

Director Spike Lee has raised $1.4 million from Kickstarter for his upcoming vampire film. Lee convincingly addresses the burning question about why an established filmmaker can and should use crowd-funding, by stating that it's just a new way of doing what independent filmmakers have always done:

QUESTION #1 – Why are you on Kickstarter? You’re an established wealthy Filmmaker!
I’m an Indie Filmmaker and I will always be an Indie Filmmaker. Indie Filmmakers are always in search of financing because their work, their vision sometimes does not coincide with Studio Pictures. But I do put my own money in my films...
The truth is I’ve been doing Kickstarter before there was Kickstarter, there was no Internet. Social Media was writing letters, making phone calls, beating the bushes. I’m now using TECHNOLOGY with what I’ve been doing.

In a way The Butler by Lee Daniels is an example of the older form of indie crowd-funding, with a smaller, more elite crowd. There are some 41 producers on the film, including many wealthy African-Americans who chose to invest in an independent film about the butler who served 10 American presidents.

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The Canyons by Paul Schrader

whiteline775

4. marketing: getting it seen

Despite the promise of crowd-funding, let's not forget the importance that marketing budgets have in the Hollywood equation. Director Paul Schrader says that his latest film The Canyons cost $ 260 000, including $ 170 000 from Kickstarter. Schrader states that the current cinematic challenge for independents is not to make the film, but to get people to see it. And he has succeeded in getting publicity for his VOD (video on demand) film The Canyons, by involving celebrated nihilist Bret Easton Ellis, celebrity bad girl Lindsay Lohan, and porn star James Deen -- proving the Hollywood adage that there's no such thing as bad publicity:

The number-one fact of the new low-budget cinema is that it is no longer impossible to get your film financed, but it is impossible to get anybody to see it. Because there are 10,000 people doing the same thing you’re doing, right now. And which one of those 10,000 films is anybody going to see? Fifteen thousand films get submitted to Sundance, 100 or so get shown, eight get picked up, and two make money. Those are the economics.
But Bret and I have some cachet. We were in with four different sub-groups of interested people: people who are interested in me, people who are interested in Bret, people who are interested in Lindsay, and people who are interested in James. Lindsay has four million [Twitter] followers, and James has half a million. Bret has 250,000.

Indie maven Ira Deutchman recently gave a keynote emphasizing the importance of marketing, concluding by saying: "Distribution is easy. Marketing is hard... Old fashioned showmanship has got to come back." Crowd-funding it seems, may not be enough, independents need to leverage that other Hollywood value: celebrity, or better yet, notoriety.

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5. distribution: internet, TV, binges

The future economics for independent films will surely depend on the distribution methods, as well as funding. Some independents like Larry Clark have decided to go directly to the viewer via internet. Clark is streaming his latest film Marfa Girl for $5.99 on his own web site. Internet distribution doesn't require a $60 million minimum.

It is also clear to me that many of the talented filmmakers of independent American cinema may continue to migrate to television series, because they cannot find a place in the current Hollywood studio economics. Indeed, the past ten years of American television constitute a powerful, historic cinematic movement, developing a long-form art medium that privileges character over story. Truly, some of the best American cinema is on television!

Kevin Spacey -TV -Give People What They Want -thefilmbook-

whiteline775

Actor Kevin Spacey gave a wonderful speech at a British television gathering where he emphasized the importance of offering the audience as many viewing possibilities as you can, giving the example of House of Cards, the Netflix series he stars in:

Clearly the success of the Netflix model -- releasing the entire season of House of Cards at once -- proved one thing: the audience wants the control, they want the freedom. If they want to binge, then we should let them binge…
And through this new form of distribution, we have demonstrated that we have learned the lesson that the music industry didn’t learn:
Give people what they want, when they want it, in the format they want it in at a reasonable price and they’ll more likely pay for it than steal it.

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6. omni-screen cinema?

Spacey concluded by imagining that in the future the meaning of cinema will be enlarged to include both features and television:

I predict that in the next decade or two any differentiation between these platforms will fall away.
Is 13 hours watched as one cinematic whole really any different than a film? Do we define film as something 2 hours or less? Surely it goes deeper than that.
If you’re watching a film on your television is it no longer a film
because you’re no not watching it in the theater? If you watch a tv show on your ipad, is it no longer a tv show?
The device and the length are irrelevant. The labels are useless, except perhaps to agents and managers and lawyers who use these labels to conduct business deals. But to kids growing up now there’s no difference.
Watching Avatar on an ipad or watching YouTube on a TV
Or watching Game of Thrones on their computer
It’s all content. It’s just story…

And this may turn out to be the most exciting result of Hollywood's new business models: a redefinition of cinema to include many more formats and forms that covers everything from short films to features to seasons, from Imax screens to iPhone displays, in theaters, on television and on the internet.

Future generations may look at the first century of filmmaking as the first phase of omni-screen cinema, an art form where projects of different durations across different screens are all expressions of the same cinematic language.

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LINKS

Life of Pi trailer

Box Office Mojo - The reference for box office numbers

thefilmbook.net: My analysis of the top 20 films of 2012

John Bailey's post on Casino Cinema and The New Abnormal

Rhythm and Hues VFX house

Steven Soderberg video & transcript of State of Cinema keynote for San Francisco Film Festival

Kickstarter: The Veronica Mars Video and Page

Kickstarter: Wish I was Here by Zach Braff

Kickstarter: The Newest Hottest Spike Lee Joint

Indiegogo: narrative films

thefimbook.net: my discussion of The Canyons by Paul Schrader - new paradigm?

Ira Deutchman keynote about indie marketing.

thefilmbook.net: Video of Kevin Spacey speech with partial transcript

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HOLLYWOOD BIZ 3.0 - PART 1 : CHINA

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