FIRST-EVER SURVEY OF SPECIALTY FILMS AND FINANCING COMPLETE

Though this information "feels" accurate, I have to note that I haven't personally double checked its data or methodology. Example, industry reports usually only include data from the largest agencies and management companies because its very difficult to capture data from the small ones... like us, and all those small companies in aggregate are meaningful. Regardless, the important takeaways concerning trends are probably fairly accurate, and I applaud Jeremy's work as it helps demystify the industry, which allows investors to feel more confident and therefore fund films.

Jeremy Juuso Consulting has completed the first year of its ongoing survey of the U.S. specialty film market and its financing traits.

Defined as any film released into 1,000 U.S. movie theaters or fewer on opening weekend, specialty films are comprised primarily of independent films with no studio ties.

Summary statistics for the 2009 U.S. specialty market are available to the public in “The A.K.A. Report” at www.jeremyjuuso.com/film.htm .

Individual statistics on over 400 films are also available to the public at the same web address.

Findings about the 2009 U.S. specialty market include the following:

OVERALL:
----- 403 films were released, excluding reissues and the Academy-nominated short films compilation.

FINANCING:
----- 43 involved studio financing.

----- 38% were private equity financed (i.e., private equity comprised more than 70% of the budget).

----- 18% were distributor financed (i.e., at least one distributor or its parent company supplied more than 30% of the budget).

----- 12% were private equity driven (i.e., private equity comprised 30%-60% of the budget).

----- 10% were European government supported as part of an international coproduction.

----- No overlap exists among the previous four categories.

STARS AND BOX OFFICE:
----- 137 films (34%) had at least one star, where a star is an actor who previously was a lead in at least one feature grossing $50 million or more domestically.

----- The average budget for star films released during Q1-Q3 2009 was estimated at $7.9 million (excluding P&A), with an average box office of $1.8 million for these same films.

----- The average budget for non-star films released during Q1-Q3 was estimated at $3.6 million (excluding P&A), with an average box office of $1.0 million for these same films.

----- Less than 15% of specialty films released in Q1-Q3 generated 90% of box office revenues for specialty films released in Q1-Q3.

----- Late Q4 releases are still accruing significant box office receipts.

FESTIVALS:
----- 344 films (85%) debuted at a film festival prior to U.S. theatrical release.

----- The top debuted-at festivals were Sundance (64 films), Toronto (43), Cannes (37), Berlin (21), Tribeca (19), Venice (17), SXSW (13), Slamdance (7), and Telluride (6).

----- 95 other film festivals had less than 6 films represented.

PRODUCER’S REPS:
----- 113 specialty films (28%) had hired producer’s reps to attain and/or negotiate their domestic distribution agreements.

----- The producer’s reps did not represent the films in the majority of foreign markets, if any.

----- Among the films released, CAA had been hired as a producer’s rep on 21 films, Cinetic Media on 20, Submarine Entertainment on 17, William Morris on 14, Endeavor on 11, and ICM on 8.

Further details on distributors, self-distribution, foreign sales agents, genres and languages, and day-and-date VOD can be found in “The A.K.A. Report” at www.jeremyjuuso.com/film.htm .

Light vs. Dark

'The Road' versus 'Old Dogs'

Serious films like 'The Lovely Bones' are in a fight with lighter fare like 'Alvin and the Chipmunks' this holiday season. Guess who's expected to win?

By John Horn of the L.A. Times >>>

November 26, 2009

As any husband or wife who has picked the wrong kind of spousal Christmas present knows -- a gym membership, for example, instead of a trip to Maui -- there's a big difference between earnest and enjoyable gifts. The same can be said when selecting a film to see this holiday season: Some moviegoers actually welcome challenging stories, but many more prefer untroubled fun.

It's a critical distinction as Hollywood enters the final weeks of the 2009 movie season. Over the next month, audiences will be offered stark choices between disparate filmmaking styles, with perhaps the most telling choice coming this weekend, as “The Road” premieres opposite “Old Dogs.”

There's no question Disney's family comedy will sell many more tickets than the Weinstein Co. and Dimension Films' adaptation of Cormac McCarthy's post-apocalyptic drama.

The real issue is whether "The Road" is among the last of a dying breed: movies aimed at literate adults -- which literate adults haven't been supporting.
Everywhere you look the movie business is changing, and if you're a serious movie fan, it's been mostly for the worse. The makers and distributors of art house films are failing faster (latest victim: Miramax Films) than toxic banks

, and the makers of "The Road" aren't immune. Financier 2929 Productions, which backed "Good Night, and Good Luck" and "We Own the Night," hasn't made a movie since "The Road" wrapped in early 2008, and

distributors Weinstein and Dimension are now steering their limited resources into genre material like "Piranha 3-D" and "Scream IV."

Audience tracking surveys suggest "The Road" faces an uphill climb: Nothing quite says "Happy Thanksgiving!" like a movie with cannibalism.

Even though McCarthy's book about a father and his son struggling to survive a terrifying, inhospitable world was a Pulitzer Prize-winning bestseller, moviegoer awareness of the film is distressingly low -- less than half of the awareness of "Old Dogs." That's not the only worrying sign: among those who are "definitely interested" in seeing the end-of-the-world story, the only discernible bloc of support comes from older men and women -- the same demographic likely to attend "Old Dogs," but in much larger numbers for the John Travolta-Robin Williams comedy.

"The Road" isn't the only movie that audience surveys suggest has some work to do.

Early polling for writer-director James Cameron's $310-million "Avatar" from Fox isn't as favorable as it is for Warner Bros.' "Sherlock Holmes." The latter film comes out a week after "Avatar" yet still has significantly higher "definite interest." At the same time, young girls -- the fanatical ticket-buyers who pushed Cameron's Oscar-winning "Titanic" into the box-office record books -- are so far showing cool curiosity in Dec. 18's "Avatar," preferring by an almost 2-1 margin Dec. 23's "Alvin and the Chipmunks: The Squeakquel," also from Fox.

The new movie from another Oscar winner -- Peter Jackson's "The Lovely Bones" (Dec. 11) -- will obviously come nowhere close to doing the same kind of business as the director's "Lord of the Rings" movies. The adaptation of Alice Sebold's dark novel about a serial killer and his young victim will need four-star reviews to overcome its subject matter.

In the same manner, "The Road" will need to attract consistent critical acclaim and positive word-of-mouth to build box-office momentum. One of its earliest reviews was not kind but later notices, while mixed, have been more favorable.

The initial advertisements for the film made "The Road," which was once scheduled to be released a year ago, look more like a "Mad Max" knock-off than a serious adaptation of a critically acclaimed novel, as the first trailer used news footage of global destruction that isn't even in the film. "I wasn't very involved in that," director John Hillcoat says of the opening trailer. "All I will say is it's a tough sell, and I think it's a good strategy." A subsequent spot focused more closely on the against-all-odds survival tale between the Man (Viggo Mortensen) and the Boy (Kodi Smit-McPhee).

Director Hillcoat and star Mortensen say it is that hopeful father-son story that ultimately anchors the tale, and what they both believe audiences will take away from a movie filled with horrors (although an infamously grisly scene of infanticide from the book was shot but cut from the finished film) almost too numerous to count.

"It captures something very difficult -- the spirit of the book," Mortensen says. The world may be dying, he says, "but it's luminous. Even though it's gray and it has a terrible bleakness to it, it's still beautiful."

The movie, the actor says, "did not compromise on the bleakness of the book, emotionally or visually. It allowed everything to be naked, raw and visceral. But it was able to capture something uplifting."

It's the same view that is working perfectly with "Precious: Based on the Novel 'Push' by Sapphire," which has become a breakout hit for Lionsgate. Though "Precious" contains scenes of incest and physical abuse, it, like "The Road," is also a survival story.

Hillcoat says "The Road's" optimism is reflected in the connection between the Man and the Boy: "The movie is really about their relationship, and how one learns from the other." Readers of the book will know that's part of the tale and come see the movie, "but the challenge is to tap into the people who haven't read the book -- the wider audience," the Australian director says.

"My hope is that people see that the film is about human goodness and what makes us special. Just because it's set in a very harrowing world -- that's only to highlight why this relationship is so special."

Angel Group Likes Lights, Camera And Action Of Indie Films

From the Wall St. Journal, 10/12/2009

As an experienced tech entrepreneur and angel investor, Rizwan Virk was happy to see a solid return on one of his recent investments after just one year.


But the exit didn’t come from a software start-up or social media company finding a corporate acquirer. Instead, Virk’s quick payoff came from an independent film.

Virk is a member of FilmAngels, a Silicon Valley group whose members back film productions – mostly small, independent projects. Founded in 2005, Film Angels is made up mostly of tech executives and investors who apply their business and venture capital experience to the filmmaking world.

FilmAngels meets regularly, seeing about five pitches per month. Members are free to invest in whichever projects they choose. The group pre-screens the films, but does not endorse any particular films. About 12 films have been funded through the group, which invites hundreds of accredited investors to its events and has a smaller number of paid members, said Thomas Trenker, managing director at FilmAngels.

For many members of Film Angels, the about-face from their usual areas of investing is what makes the space appealing.

“A lot of investors I see FilmAngels resonate for are already successful investors and very heavily weighted in other asset classes such as technology or software,” said Saad Khan, a FilmAngels member and partner at CMEA Capital. “This is a way to diversify their whole asset class in new areas.”

Investing in technology is Virk’s specialty, having invested in Offerpal Media Inc., a large player in online gaming monetization, and Tapjoy, a mobile game developer. He also was previously chief executive of CambridgeDocs, which was acquired by EMC Document Sciences in 2007.

One film he invested in, “Turquoise Rose” - a coming-of-age story about a Navajo girl from suburban Phoenix who is forced to spend a summer on a Native American reservation - made its money back in under a year, despite the film not having big Hollywood distribution. The filmmakers and Virk self-distributed the film, focusing on the West and Southwest regions, where there are larger Native American populations and strong interest in the film’s topics.

Virk said he made 20% in profit after one year investing in the film, though he declined to say how much he invested. Many of the angels in the group invest in the “low six figures” per film, Trenker said. While such returns are not comparable to VC blockbuster deals, they have the virtue of a much quicker turnaround than the standard VC investment.

The VC model does play a role in the film financing. There are a range of ways that films are financed and structured, particularly for independent films. But many of these films don’t usually include VC-style concepts like classes of stock, valuation or liquidation preferences, Khan said, which give investors different rights based on when and how they invest.

FilmAngels investors seek to include more standardized concepts so that, for example, investors receive protections or preferences for investing at an earlier stage.

“Deals I’ve been in, you get 115% or 120% back, then profits are spread based on some ratio between producers and investors,” Virk said. “It’s similar to a 1.2x liquidation preference.”

At a recent FilmAngels event in San Francisco, director Dan Frisch screened his film, “The Rainbow Tribe,” which has yet to be released. Frisch’s case - he is seeking funding for a follow-up to “The Rainbow Tribe” - is somewhat rare for FilmAngels because, unlike most of those who pitch the group, he is not a neophyte filmmaker, having directed films such as “The League of Extraordinary Gentlemen” and films in the “Hostel” franchise.

But even though Frisch is an established filmmaker, he said he came to FilmAngels because there are surprisingly few groups in the industry where savvy investors are interested in being intimately involved in film projects. “I don’t want an arms’ length investor,” Frisch said.

Virk said a healthy rapport between filmmaker and investor is essential for the model to work. “I look for people who are entrepreneurial,” he said of the investments he considers. “They understand that this is a business and they need to make money back for investors.”

IT'S TOUGH OUT THERE

I include this portion of David Hayes article in today's Variety to emphasize the difficult environment indy film financiers and distributors find themselves in. Last year's Cinderella Coach (Hamlet 2) went for $10 million. However it promptly turned back into a pumpkin over the summer when it only grossed $5M. When you consider the marketing that went into the film's wide release, plus the $10M to buy it and the theater owners take, that's a loss of around $20 million, Ouch! Folks, that's real money, not the Monopoly stuff. If you're the type of person who slams the studios for being uncreative or short sighted, remember this financial loss before doing it again. Remember this is "Show Business," not "Show Art." And please think about the financiers' concerns when choosing what to write or which of your scripts to send to an agent, manager or producer. It's tough out there.

Industry dressing down for Sundance

Economy brings a more subdued festival

By DADE HAYES @ Variety

Sundance, the first major fest to take place in the midst of the brutal economic downturn, is likely to be a more subdued affair.

There will still be the usual distribs scouting pics and sellers offering a full range of fare, but the overall noise level at the fest, running Jan. 15-25, is expected to be turned down a bit.

Organizers are marking the fest's 25th anniversary with special "storytelling"-themed events and Web content. Steven Soderbergh will sit on a panel seeking to answer the question "What next?"

That question has haunted the indie and specialty arenas of late. Despite the fall emergence of breakouts like "Slumdog Millionaire," "Milk" and "Doubt" at the mini-majors, the hangover from 2008 has lingered as vets absorb the disappearance of Warner Independent and Picturehouse and a big pullback by Paramount Vantage just three years after its euphoric "Hustle and Flow" Sundance moment. Add the breakdown of ThinkFilm, Bob Yari's release arm and other pure indies and the ground has shifted significantly underfoot.

Funding for pics is available, but the capital-intensive distribution and marketing sectors have been in dire straits of late.

"It just feels a lot tougher this year because so much is changing," said Bob Berney, who headed Picturehouse before it was unplugged last year by Time Warner. "Even so, I'm looking forward to Sundance just for the chance to see movies because it's often been a place of renewal."

The 10-day fest will see an array of preems, some for pics that are already spoken for, some not. For many trekking to the Wasatch Mountains, memories of last year's cross-currents remain fresh -- success stories like "Frozen River" and "Man on Wire" mixed with misfires like "What Just Happened?" and "Hamlet 2." Focus bought the latter for a record $10 million in an all-night bidding war, only to see it gross barely half that in wide summer release........

(photo from last year's Sundance)