Sundance 2012: The Day-And-Date Success Story of 'Margin Call'
This story first appeared in the Jan. 27 issue of The Hollywood Reporter magazine.
As a video-on-demand offering, Margin Call, the financial thriller that debuted at last year's Sundance, saw its stock rise dramatically. And for filmmakers, producers, buyers and sellers navigating the annual Sundance market, it's become the latest bellwether pointing to the real potential of VOD, a relatively new route for indie film distribution that observers are betting will figure in an even greater number of deals cut at this year's festival.
Margin Call was one of the first notable sales of the 2011 festival, with Lionsgate and Roadside Attractions picking up U.S. rights for slightly more than $1 million. Written and directed by J.C. Chandor and starring Kevin Spacey and Zachary Quinto, the film earned strong reviews when it opened in theaters Oct. 21, riding the coattails of the Occupy Wall Street movement. It grossed $5.3 million domestically on a budget of slightly less than $3.4 million, a tidy return for producers and investor Michael Benaroya of Benaroya Pictures.
But theatrical was only half of the story. Simultaneously released day-and-date on VOD, the film picked up another $5 million in revenue, according to sources, an eyebrow-raising accomplishment. Rather than undercutting its theatrical release, its VOD availability and the resulting buzz it created is credited with giving the movie a boost in theaters. Although other VOD models were offered by other bidders for the film, including both a theatrical release prior to a VOD run and a VOD bow weeks before a theatrical run -- the "Ultra VOD" model that Magnolia has successfully employed -- the filmmakers chose to go with the day-and-date strategy, which paid off.
"We felt [those other VOD models] would undercut the classy nature of Margin Call," says Neal Dodson, one of the film's producers, alongside Quinto and a handful of others. "We were drawing a line in the sand."
The cast had taken small paydays in exchange for backend deals, and the producers wanted the movie to receive a simultaneous release in a guaranteed number of theaters. The deal cut by sales agents UTA and Cassian Elwes had a commitment from Lionsgate to release the film in a minimum of 10 markets, and Margin Call ultimately debuted on 56 screens in 15 markets before expanding to 199 screens in about 75 markets. (Roadside, which is partially owned by Lionsgate, declined comment.)
At the same time, Margin Call debuted on several VOD rental services, including iTunes, Amazon and Time Warner Cable, at a price of $6.99. Sources say the film has racked up about 500,000 VOD rentals and the talent's bonuses have been paid. While the precise revenue split Roadside received from VOD is unknown, Nolan Gallagher, CEO of Gravitas Ventures, which has released more than 1,000 films through VOD, says that for an independent film, a 50-50 split is common, although sometimes distributors can command as much as 70 percent of the split. Gallagher predicts more such deals this year that have "VOD as a centerpiece of the ultimate distribution strategy."
Preferred Content managing partner Kevin Iwashina observes that the VOD success of Margin Call is changing attitudes, noting, "the revenue is encouraging for filmmakers and sellers of content."