Film Fund-amentals: No Show, No Business

The biggest problem in show business is that if there is no show, then there is no business. That’s why theatrical distribution (mostly, the lack of it) is one of the most critical problems currently facing indie movies.

Of approximately 38,000 screens in the US (a more updated figure than the one I’ve used previously), 16,306 are currently occupied by the top five movies on Variety’s list. The remaining six to 10 top films take up another 11,329 screens. Of the remaining 10,365 screens, you still have to deduct the theaters showing second-run presentations of earlier major Hollywood movies.

Once you whittle the figure down through the Hollywood parade, you are left with a mere handful of theaters showing much in the way of small, independent films. Furthermore, the number of such theaters is dwindling every year.

“In many towns there used to be a small art theater,” noted Ray Price when we talked with him last week. “Not now.”

Ray Price has a long and extremely distinguished career, covering the business in both exhibiting and marketing. In the 1980s, he was president of Renaissance Theaters, and at the start of the twenty-first century was Senior Vice President for Marketing with Landmark Theatres. In between, he was the Marketing SVP for Trimark, president and co-founder of First Look, and president of American Zoetrope (where he was involved in such productions as The Virgin Suicides). Price has been around the block enough times to conduct guided tours. Especially when it comes to issues concerning independent movies.

“The problem is that it is a very cost-intensive system,” said Price as he noted that the average young independent filmmaker doesn’t often realize the complexity (and expense) of the distribution system.

Just the basic core breakdown is intimidating. Even for a fairly limited release, the cost for trailers can average between $25,000 and $50,000. The cost for regional publicists averages about $5,000 to $6,000 a month (with a four- to six-months contract). The expenses hit “$100,000 before you even bought an ad.”

In turn, many distributors are no longer able to handle the smaller cost of distributing indie movies. Price pointed out that the average marketing budget for a movie at Fox Searchlight (which is one of the more successful distributors for indies) is around $3,000,000. The problem is, they operate on the notion that the movie has to be able to justify that amount of expense. “They can’t take a film that needs to be distributed for $100,000. They don’t even know how anymore.”

Although the average box office split on a small indie film favors the theater (standard split for a small film is distributor 60 percent and theater 40 percent as opposed to the standard major Hollywood divide of 80/20), the standard guaranteed run of three weeks leaves many theaters in a quandary. Basically, a lot of small films can’t play well enough to justify three weeks. At best, they may be good for only one week.

There is also the change within the basic structure of the business as small independent theater operations have shifted to large regional and national chains. In the past, small movies depended upon local owners who understood their market and would be able to select and promote films in a successful manner suited to that market. But the consolidation of ownership within large chains has shifted the focus from the local level to the national, creating a disconnect between the local market and a film’s distribution. Financially, it is more profitable to do it this way, but the system innately favors the large production over the small.

Or as Price reminded us, “These people are merchants, not curators.” So naturally, they are going to go with the financial flow.

At the theater level, the cost ends up outweighing the lower income levels. “We can’t turn the switch on for your movie – it just doesn’t have the horsepower.”

But beyond the frustrations of the current system, Price feels that we’re going through a major shift in the nature of the entire business. Very likely, the future will be fewer theaters almost exclusively devoted to only the biggest titles. Other films will have to migrate to another venue. A year ago, Price worked with director Wayne Wang and Magnolia Pictures in the release of Wang’s film The Princess of Nebraska to YouTube. They didn’t make any money with this release, but it was an interesting experiment in one of the possible emerging new forms for distribution.

Movies, like newspapers and almost everything else, are in the grip of a growing economic contradiction. “Cost of media is rising even as the base is eroding. No one can avoid the winnowing of the market. The paradigms of the analog world are collapsing before the digital can establish itself.”

But Price seems confident that the digital will finally succeed.