Big time


For some time now, the American Film Market, that weeklong gathering of film buyers and sellers from around the world headquartered at Loews Santa Monica Beach Hotel, has been undergoing a quiet transformation. Once known as the place to pick up not-quite-A-list titles that would most likely find their audiences in the home-video arena, the market, set to run Nov. 1-8, has developed a reputation as a home for more-sophisticated product ? bigger-budget, quasistudio fare that not only will play well theatrically but might even have Oscar potential. Think "Crash." Think "Brokeback Mountain." Think "Million Dollar Baby."

Gone are the B-level titles that could be cobbled together with near-shoestring budgets featuring a litany of has-been Hollywood stars. Gone, too, are the low-key comedies and art house dramas that would once have sold in solid quantities to international TV stations and product-hungry territories such as Germany and Japan. What remains is a selection of lower-budget horror films -- that are playing like gangbusters at the boxoffice these days -- and higher-caliber films, many of which already have domestic distribution deals in place.

"The buyers are looking for theatrical movies, and they are consistently asking questions in regard to the domestic release," says Brian O'Shea, executive vp worldwide sales and distribution for Odd Lot International. "I am seeing fewer and fewer distributors who are interested in discussing films that are possibly going to be direct-to-video or TV movies in the U.S. True, buyers have always favored films with a domestic release, but it's much more like that than it was before.

What they are doing is, they are evaluating the amount of money they are spending for a theatrical release, and (to justify that), the importance of having a domestic release is getting greater and greater."

These days, foreign distributors are increasingly cautious of making multimillion-dollar commitments without the litmus test of a North American release and the attendant avalanche of publicity and awareness that precedes a U.S. bow. At the same time, however, piracy concerns have made distributors keen to get movies into theaters quickly, and many now favor the kind of wide release patterns that once were exclusively the province of major studios. "As international distributors sense the need to fight more against digital technology," one insider says, "the (prints and advertising expense) needs to be higher and more focused."

That means today's buyers are sorting movies into two categories -- those projects that have a guaranteed domestic release and those that don't -- just as they once separated films based on attached star power.

"There is a real division between the price point for films that are getting a (U.S.) theatrical release and the price point for direct-to-video," O'Shea says. "It has gradually become very polarized. There are buyers internationally who will not meet with specific companies -- or at least don't put them at the top of their priority list -- because they perceive them to be producing direct-to-video product. Theatrical buyers are less likely to meet with sellers (who only have U.S. direct-to-video product) than ever."

That truth was made abundantly clear at May's Marche du Film at the Festival de Cannes and at September's Toronto International Film Festival. Al Munteanu, president of Munich-based distribution company SquareOne Entertainment, says that while Germany was buying more than ever -- picking up some 50-60 titles at Cannes alone, he estimates -- the prices paid for acquisitions varied greatly. "More often than not, all the viral marketing aside, any serious P&A budget in Germany has to include a television spend, and that makes it a costly effort," he says.

As a result of the hunger for projects that at least appear to be safe bets, American companies that have guaranteed theatrical releases and strong foreign sales arms to hawk their product abroad -- like Focus Features, which did particularly strong business at Cannes -- are enjoying increased power in the marketplace. Other companies with production and sales arms are taking notice, opting to make more films that seem likely to generate a domestic release -- films that are studio-style in terms of quality and star power.

Case in point: Avi Lerner's Nu Image/Millennium Films, which has gone from making ultralow-budget genre fare to studio-style releases like Universal's September offering "The Black Dahlia," starring A-list names Scarlett

Johansson and Hilary Swank and helmed by esteemed director Brian De Palma. What makes "Dahlia" unusual in today's climate, however, is that Millennium started production on the movie on location in Bulgaria with no domestic release in place -- having financed the midbudget period piece entirely on its own, mostly through presales -- and only sold the film to Universal, once shooting was under way, after studio chairman Marc Shmuger flew to the set to broker the deal.

Ironically, as studios have cut back on in-house production, they have found themselves needing to buy studio-style indie projects like "Dahlia" in order to feed their domestic distribution pipelines -- largely because acquisitions don't carry the same kinds of financial risks associated with in-house productions. Most insiders believe studios' need for product will only grow in the wake of recent cutbacks, most notably Walt Disney Co.'s decision to slash production and Universal and Paramount's exit from United International Pictures, the joint venture that released the companies' films in foreign territories.

With Paramount and Universal now creating their own separate international distribution entities, both studios need more movies to fill those pipelines. "They seem to be looking to the independents for more product as they cut back on their own," Kimmel International president Mark Lindsay says. "Now, the majors, instead of themselves putting money in development and production, can just pick the films and buy them."

Lindsay points out that studios are not just purchasing the domestic rights for a given film: They also are cherry-picking rights to choice foreign territories, recognizing that in a slumping environment, they must do everything to maximize revenue, even if that means handling releases in small foreign territories that might once have been considered too insignificant to merit much attention.

How well studio acquisitions perform in foreign territories is open to debate, given that many countries are experiencing a newfound passion for homegrown product. "In territories like Japan, there has been a renaissance of local product eating up a large piece of the pie," says Mali Kinberg, executive vp and head of international sales and distribution for Mandate Pictures. "It is hard to find international pictures that can compete with that, so buyers have to be increasingly selective about what they are going to buy."

That troubles many market veterans, who wonder whether buyers from markets newly flush with cash like Germany might choose to buy foreign films rather than American product. "Generally speaking, the economies are healthier in places like France and Germany and Spain and Italy," Myriad Pictures president and CEO Kirk D'Amico says. "And you've got some real growth in markets like India and China. But you have a lot of (homegrown) product out there, too, and a lot of confusion about what's going to happen in the future. How is the world going to change?"

While the Motion Picture Association of America has long argued that the growth of indigenous product is healthy for Hollywood -- in that it encourages moviegoing, creating more viewers who might develop an affection for American cinema -- the experience of independents at the markets is just the opposite. Many U.S. marketgoers say they have seen a downturn in the appetite for their films in those countries where domestic filmmaking has begun to flourish.

"For American independent films, this is obviously a big issue," D'Amico says. "As local films become more and more popular, they will take a larger share of the pie, both from the majors and the independents, and they will take those TV slots that might have gone to American independent films. It definitely has an impact and could have even more of one in the long term."

Another factor threatening to undermine the current robust market, D'Amico says, is "the unbelievable number of films on offer. Cannes had 4,000 films this year that were for sale at the market -- over 4,000! You have a proliferation of small new sales companies handling these films, which has fragmented the market from the point of view of the buyers."

Although such concerns are weighing heavily on some market veterans' minds, the majority of attendees agree that they're not likely to negatively impact business at the upcoming AFM. The Independent Film & Television Alliance, the market's organizing body, reports that attendance is at an all-time high, with executives from such countries as China and Vietnam coming to the market, some for the first time. To accommodate attendees, IFTA has had to book an entire floor in the Le Merigot hotel, which adjoins the Loews. Also, a record 589 films will be represented -- a 10% increase over the 534 films at last year's market -- with a lineup that includes 384 market premieres.

Other factors point to a strong market as well: Troubled territories like Russia have rebounded, foreign currencies are strong against the dollar, making American product affordable for international buyers, and the global boxoffice has enjoyed a solid year, thanks largely to films that appeal to the sought-after young male demographic.

"It's going to be a strong market," Bauer Martinez International president Karinne Behr says.

"If you have the right product, business is going to be very aggressive," O'Shea adds.
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