Independent film will disrupt Hollywood

The entertainment industry seems to be in a constant state of flux recently. Not that long ago, TV was delivered on a set schedule and ratings were based off a small sample set of people. Now with companies like Netflix, you can get content delivered to you anywhere, on any device. Series like “Arrested Development” with small, but devoted followings were able to thrive instead of being overlooked because they didn’t have mass-market appeal. However, the film industry still targets the masses with big budget films and targeted or local independent movies continue to struggle. Large studio films still rule the media and distribution channels preventing the smaller independent studios from getting the screen time they want and, in many cases, deserve.

Rise of the independent

The cost of producing a blockbuster film can range from about $200 million up to an impressive $378 million for dollars for Pirates of the Caribbean: On Stranger Tides in 2011. Over the last 5 years, the top grossing films cost an average of $196 million and grossed an average of $1.36 billion. That’s a return on investment (ROI) of nearly 600%.

In the last few years, the films promoted by independent film festivals like Sundance, Cannes, and TIFF have been gaining in popularity. An article by David Larkin, the CEO of GoWatchIt.com, states that 4 out of 5 films that go to Sundance get distribution deals. From 2014 the top grossing Sundance films include: Boyhood, Dear White People, Wish I Was Here and Whiplash.

While Wish I Was Here seems to have incurred a rather substantial loss with a production cost of $6 million and gross revenue of $3,591,299, the others have faired well. Boyhood cost a mere 4 million and grossed $50,688,615. Dear White People cost $41,000 raised using the crowd funding site Indiegogo and grossed $4,482,508. “Whiplash” cost $3,300,00 and grossed $33,474,334. Granted these are the only films I could find both production costs and gross revenue, but the successful films had ROIs of 1167%, 10831% and 914% respectively. These films combined with Wish I Was Here still produce an ROI of 591%. Comparatively, these films cost a fraction of most Hollywood films, but to most would-be filmmakers, production still requires substantial outside investment.

The perceived barrier to entry

Producing a feature length film is expensive. You need to pay for actors, crew, production, cameras and more. In 2005, the Red Digital Cinema Camera Company disrupted the market by producing the first “affordable” camera. Their current solution costs $32,000 to give you everything you need and start capturing “feature film quality” digital video. They made the equipment more accessible and took the market by storm. With the advent of 1080p and 4K DSLR cameras on the market, the question is: what qualifies as “feature film quality”?

In 2010, the Director of Photography (Gale Tattersall) of the TV series “House” filmed an entire episode using Cannon EOS 5D Mark II camera. A camera that as of this writing can be purchased for less than $1,500.

Recording is just a part of the process. You still need to process, edit and package all of the raw video. The perception is that these steps require a tremendous amount of training and expertise, but Adobe Premier Pro which is rated among the best of professional video editing software is now $19.95 a month and requires minimal training. For $49.99 a month you can get the complete Creative Cloud, which includes After Effects for adding special effects or animation.

In 2004 an independent film called Tarnation was produced on Apple’s iMovie which ships included on most Macs. The award winning Tarnation was produced for a grand total of $218.32.

With the cost of capturing and producing award-winning film so low, why hasn’t the independent film industry taken over?

The elephant in the room

Distribution is a bitch. Right now the best independent films strive to get into the aforementioned festivals. It’s the chance to get a deal with a distributor and screen time. With a 3% acceptance rate at most festivals, it’s hard to catch that break you need. Without the right distributor, your film will never make it into theatres and without views, it’s hard to make a profit. If you do manage to get a distribution deal, the distributor sets the terms on how often and when the film is shown and takes a cut of all ticket sales. It’s a model still based on the costly distribution of physical film and gives the distributors all the power.

Traditional models that are heavily dependent on antiquated processes leave them ripe for disruption.

It’s not that no one see the value of the independent producers; companies like Indieflix offer a Netflix-like subscription-based service free of exclusivity as a distribution platform for independent film producers. Indieflix is helping to promote independent film, but not disrupting the traditional model sufficiently. They pay the artist a rate for screen time, which is a well-known practice in video and radio. It’s time to take a new approach. But innovation doesn’t live in technology alone. Innovation requires changes to the technology, business model and marketing.

Inspiration strikes

Look at the closely related structure of the video game industry. The first boom in PC and console gaming took place in the early 1980’s and crashed again in 1983 do to poorly designed product and a lack of a mature distribution system. Through the mid to late 1980’s the retail chains and distribution systems improved allowing gaming to grow through the 1990’s and 2000’s.

Through this time most game concepts were expensive to produce, required negotiated deals with brick and mortar retailers, or required substantial development knowledge. It limited production to studios who had the capital and expertise.

In 1997 a new market emerged, took hold, and grew. The casual gamers. Starting with Snake on the Nokia 6110, people slowly understood the interest in short bursts of simple to play. Combining that interest with the growth of easy to use tools for development, open source code libraries allowed individuals to spend their free time crafting a simple yet addictive game for a mobile or web based platforms. Instead of negotiating with retail chains and the prolific nature of digital distribution through app stores, individuals could generate interest on Facebook and Twitter for little or no cost.

For example, Flappy bird was developed by Nguyễn Hà Đông over a few days and reports indicate the game made $50,000 in revenue per day through advertising and purchases. Another small studio published the short-lived Draw Something and generated $250,000 in revenue per day. These are rare cases, but the change in distribution and availability of development tools have given the small independent developers a chance to build something amazing.

That’s not to say the larger studios are no longer making big budget games like Call of Duty, Assassin’s Creed and others, but the dynamic has changed. Producers like Ubisoft see the disruption and are working hard to adapt. They’ve realized that “blockbuster” games only work for the top 5 games that year. Platforms like Steam are embracing the changing market and encourage indie developers to push the boundaries of budget and gameplay. They’re making room for, and profiting from, independent games that make gaming weird again, and gamers love it.

What’s next?

There’s an opportunity to disrupt this market again. Independent films are improving in quality, the production costs are dropping, and there’s value in addressing niche or local markets. It’s not that an “app store” for films is all we need. Curation and discovery in this space is critical and expression of the individual film makers can allow them to present their film in the most relevant way. Some will impress the world, some will fail, and some will succeed despite themselves. Some will charge subscriptions to their content stream and others will charge an outrageous price for their single masterpiece. The length of these films could vary from piece to piece because they’ll conform to the content, not to a time slot.

This isn’t going to be an easy shift. Distributors exist to build hype, advertise, market, and push. The solutions need to start with a driving force, a reason to explore. In fact, I think the best solution will drive people to a single solution through multiple channels. Like how Medium.com is broadcast on Twitter, LinkedIn, and other platforms as highlights, headings, or recommendations. There’s a vast variety of content and providers representing themselves through the channel they know best, all leading to a collection of curated published content.

It could start with an independent theatre taking on the role of distributor changing the way they make a profit or a website with compelling content and a recommendation engine based on criteria never before used. They’ll draw you in and encourage you to explore the content as well as the creators. It could be a collaboration among the existing players to create an entirely new model. They need to look at how they do business now, then throw out all the rules and start fresh. The independent producers are primed to disrupt the industry; they just need a champion.

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