U.S. deal no longer the gold standard
Cannes market another victim of economic downturnMore Cannes coverage
CANNES -- The once coveted and lucrative U.S. sales deal is becoming a rarer and less valuable commodity as yet another industry-damaging side-effect of the global financial meltdown. But the Cannes market may still show some signs of American buying activity, albeit at a lower level.
There was a small flurry of lower-end domestic deals kicking off the Marche du Film. Chicago-based Music Box Films picked up two German titles: Philipp Stolzl's mountain-climbing drama "North Face" from Beta Cinema and "Cloud 9," Andreas Dresen's senior citizens sex dramedy, from the Match Factory. Chinese indie sales company Infotainment this week struck its first-ever North American deal with specialty distributor Strategic Film Partners for the sci-fi feature "Kung Fu Cyborg." And IFC Films grabbed Romanian omnibus feature "Tales From the Golden Age," written by and co-directed by Palme d'Or winner Cristian Mungiu ("4 Months, 3 Weeks and 2 Days").
But the shuttering of the Hollywood studios' specialty labels New Line, Warner Independent Pictures and Picturehouse, as well as independents including Wellspring and Tartan Films USA has cut the number of buyers of international fare. Meanwhile, the lousy economic situation and so-so performance of many imports has caused buyers to become more reluctant to open their wallets.
The combined effect means the cash value of North American contracts has dropped and the volume fallen off. For many foreign sales agents, that has reduced the U.S. to just another territory, where once selling to America was the pinnacle of their international mandate.
"It is not worth what it once was," said Gilbert Lim, exec vp at Thailand's Sahamongkolfilm, which previously licensed "Ong Bak2" and "Chocolate" to U.S. distributors. "In terms of film finance (the U.S. presale) was always overrated, but it was a very major part of the sales component. Now many other territories in Europe are just as important for us." Last year's Cannes entry "Tokyo" was licensed by Wild Bunch to the U.S. at almost exactly the same price as it sold the film to Russia.
"The backstop position these days in our sales estimates is zero and the upside position is down on what it once was," Fortissimo co-chairman Michael Werner said.
The slowdown has come as a particular disappointment to Asian sellers, who have upped their game and sought to become global players. "We can no longer be sure how North America will receive Chinese and foreign-language films. There was a period when Chinese films appeared to have a growing audience base, but in the past year the U.S. market has become more focused on domestic issues," said producer and director Peter Chan Ho-sun, who recently founded Cinema Popular and sales outfit Wee Distribution.
Examples of the problem include many of the highest-profile Asian movies of the last year. These include John Woo's "Red Cliff," which was conceived as a studio-level pic and recut to fit non-Asian audiences, but has yet to find a U.S. distributor; Chan's "The Warlords," which is understood to be in final negotiations with Magnolia, but has yet to complete a deal; and Maggie Q, Sammo Hung and Andy Lau starrer "Three Kingdoms: Resurrection of the Dragon."
The situation for European titles isn't much better. Minimum guarantees have plunged, even for big festival winners, and deals are taking longer and longer to nail down.
"The (minimum guarantees) are definitely way down on levels from a few years ago so you have to be a lot more clever about what deals you do and what partners you choose," Beta Cinema managing director Dirk Schurhoff said. "You can't get the same sort of money up front, so you have to get in a good boxoffice bump and an Oscar bump into your contracts. Then if the film does take off (in the States) you can do decent business with it."
The days of frantic U.S. bidding wars for foreign films is long gone. "North Face" premiered in Locarno in August. "Cloud 9" bowed at last year's Cannes. Not only are they paying less, U.S. buyers are taking a lot longer to make up their minds.
"The U.S. sale isn't the locomotive it once was for international territories," says Torsten Ritter, head of Bavaria Film International. "Nowadays, the U.S. deal usually comes at the end, after most of the world has already been sold."
The growing home and regional markets, both in Europe and Asia, may mean producers and sellers will have to worry less about the elusive U.S. deal.
"Japanese films don't need other markets any more. And the way the Chinese market is growing, Chinese films are in the same situation. A modest budget Chinese film can recoup entirely from China," "Red Cliff" producer Terence Chang said.
And Dany Boon's blockbuster "Welcome to the Sticks" didn't need America to become one of last year's biggest international hits. The fish-out-of-water comedy sold upward of 24 million tickets across Europe. Even outside France, the film brought in more than $30 million.
But while a U.S. sale might not be the gold standard it once was, international sellers aren't canceling any meetings with Sony Classics, TWC and company. Even in the current climate, America still has the greatest potential upside for a breakout hit.
"You might not be able to do the big upfront deal in Cannes, where you can go out that night and celebrate, it takes a long, long time and the money isn't what it used to be," said X Filme head Stefan Arndt, a co-producer on Michael Haneke's Competition entry "The White Band." "But if have patience and get the right partners, it can go and go. And there's nothing better than getting those nice quarterly checks from SPC."