Q&A: Jonathan Wolf
EmptyOverseeing the annual give and take between buyers and sellers at the American Film Market in Santa Monica, Jonathan Wolf is ideally positioned to measure the various tidal forces at play throughout the worldwide film industry. This year, as the AFM's participants deal with a global economy just beginning to show renewed signs of life, he spoke with the Hollywood Reporter's film editor Gregg Kilday about how a new equilibrium is setting in, where new buyers are coming from, and how non-English-language movies could be the wave of the future.
The Hollywood Reporter: Last year, as the AFM was getting under way, the U.S. market was tanking and credit was frozen. Do you expect improving markets and the easing of credit to have an impact at this year's AFM.
Jonathan Wolf: I think they'll be a response to the credit-tightening that began about a year ago. Everything with film is somewhat a delayed indicator. We have films premiering at the market that were financed before the credit squeeze, because it took that long to get the productions going. Basically, we knew two, three years ago, that there was a glut of production, and it took outside factors unrelated to the industry to really start to pull back on the amount of global production that was taking place and to bring that in line with consumer demand. Our industry is elastic, but it can't absorb the surge of production that took place during most of this decade. The credit squeeze -- for some it's better, for some it's worse -- is helping bring the supply of independent film more in line with demand.
THR: Are you seeing impact on attendance at the AFM?
Wolf: We'll probably be slightly off of last year. Partly because we'll have about 15% less sellers, and when you just count individuals coming to the market, sellers account for greater portion of our attendees. So we'll see our attendance down five, six, seven%. I don't know the number yet. What we're really looking at right now are buyers, and buying companies are tracking about 4% above last year. Part of it is the surge of new, nontheatrical buyers coming for the first time.
THR: Explain the new buyers, if you can.
Wolf: The trend that we are seeing is an increase in the nontheatrical buyer, meaning all forms of television and video. In many cases, those buyers were sublicensing in country, and one of the trends we are seeing is in an increase in those buyers who are looking to buy directly rather than sublicense. I can't tell you what at the moment is driving it.
THR: How about cable video-on-demand and online distribution services -- are they also showing up as new buyers?
Wolf: I don't see a lot of them attending the market. When you start talking about anything related to Internet rights, there's usually a buyer further upstream who has secured those rights along with other rights. The pay-per-view, cable or satellite buyer might tie up those rights or the broadcast television buyer, a buyer that is buying more significant rights today. Or the seller is holding those back and waiting to license them all at once all around the world. We're seeing very little of that on an a la carte basis.
THR: At the same time, here in the U.S., there have to be fewer theatrical buyers. Is that also happening in other parts of the world?
Wolf: There are challenges in Australia -- there has been for quite some time. There are challenges in Japan. But there is an ebb and flow. This has to do with entrepreneurs and risk capital. Twenty years ago, we saw Dino (De Laurentiis) and Vestron and Cannon and New World -- all doing theatrical distribution. There is just a constant ebb and flow.
So you are expecting fewer films for sale?
Wolf: We don't count or track the films in preproduction. We're screening 445 films, about 50 less films, so that's down around 10%. But we've had 18 films in the last two weeks -- after our book went to print. So there are a lot of films coming, and part of that trend is an increase in non-English language production. One of the steady trends we've seen -- very slow, maybe not measurable over one year, but measurable over a decade -- is the slow contraction of English language sellers and the increase in non-English language. This year, 62% of the sales companies are coming from English language companies -- the U.S., U.K., Canada, Australia and New Zealand. In 2004, it was 71%. So there is that slow movement. It's both a contraction, primarily within the U.S., and a slow but matching growth around the rest of the world.
What accounts for the growth of non-English language film?
Wolf: Thirty years ago, you didn't have television industries in many of those countries. The deregulation of television, the advent of satellite and cable in the '80s, built television industries where they didn't exist. By the '90s, in a lot of countries, you had the artists -- the producers, the writers, the actors -- all starting to matriculate to the next step, which is long form. Film industries started to spring up where television industries hadn't existed 20 years before. And cultural funding helped support that. Today, we are starting to see these film industries mature to a point where their films do travel, the production values and storytellers do resonate around the world, and that's just going to continue for a long time.
THR: With a somewhat smaller inventory of finished films for sale at AFM, how do you see that affecting prices?
Wolf: What happened about two years ago, the pricing curve for film inverted. When a buyer pre-brought, the buyer expected to pay less for the presale, because the buyer was taking on additional risk, buying a film that hadn't been made. On the spot market, the finished film market, pricing would rise because risk was reduced. Well, sort of like airline tickets that suddenly were cheaper on the day before the flight, the same thing happened with film.
The buyers saw such a glut of finished product, they no longer felt they needed to take the risk of pre-buying. It didn't have anything to do with consumer demand, it had to do with over-supply. That's something that's sometimes missed in this whole discussion. And so the buyers waited for the finished film market and saw an abundance of product they could buy and even found that they were paying less than they would have paid for the projects years earlier as presales. We're going to see that inverted pricing curve right itself beginning with the AFM. We'll see it completely settled out by Cannes. And that's because the supply of product is coming in line with demand and buyers do need films, despite their claims that there is nothing to buy.
THR: Can you predict what the mix of pre-buys and finished films will look like?
Wolf: No, we never know until afterwards. A lot of it depends on how a company positions a given film. But what I'm hearing from a lot of companies, and I'm giving you the macro view, is that lots of companies are moving back into prebuying because they recognize the glut isn't going to be there on the spot market. Remember, they are buying for mid and late 2010 so they are starting to look at what the finished film market will look like a year from now.