Top German Film Execs on Netflix's Global Dominance and the Importance of Star Power
Operating in a niche "we call commercial art house," DCM founders Marc Schmidheiny and Dario Suter — set to speak at Winston Baker's Zurich Summit, which takes place during the Zurich Film Festival — open up about opportunities, challenges and the future of virtual reality.
Marc Schmidheiny and Dario Suter are two of the four founders and managing directors of DCM, a Berlin-based film distributor, producer and investor in tech/entertainment startups. They are set to appear at Winston Baker's Zurich Summit, which takes place during the Zurich Film Festival. Schmidheiny will present during a master class on the future of productions, while Suter will moderate a panel on startups in the entertainment industry. THR, one of the event's media sponsors, spoke with them about the state of the industry in Europe and competing on a global level.
You distribute films and invest in startups. Are there similarities in evaluating opportunities?
DARIO SUTER We have a strong, growing startup scene in Berlin and also a very big film industry. That helps a lot for both business fields. It's all about people. We need to know who we work with, and we need to trust each other. That's a similarity.
MARC SCHMIDHEINY In essence you can say that every film has, in a way, the same life cycle as a startup. You find your business case or target audience, start with financing it and then you go into development, production and then the release. Maybe the exit seems a bit more obvious because you know to whom you sell your film. But the life cycles in an ideal case have strong similarity. For us, it didn't need a lot of adapting, also in building our team, as most of them do work for both sides, the start-up and the film side.
How do you feel about the state of independent film?
SCHMIDHEINY [Some] no-name French films … have been so successful in Germany — not that we released them — but it's significant that some of them went up to 3 million to 5 million admissions, which means competing directly with the tentpoles or even outperforming them. By no means would I say independent film is at its end. It's just that finding your audience will always be key. The younger generation is also slightly fed up with the franchises they are being fed currently. It is an interesting time and certainly a challenge, but we are young enough to accept it.
DCM produced 2014's Bibi & TIna, with Lina Larissa Strahl.
Any films that have been particularly important for you?
SUTER We are very proud that our latest Bibi & Tina film is the most successful German film this year at least with 2 million admissions. That's an amazing commercial success for an independent like us.
SCHMIDHEINY We also want to mention something like Carol. We are not just happy with the business, but even more proud to have released a film like that. We want to work with films where we know that it's not just for the commercial success, but also being able to convey a relevant message to the audience. Those two films are a good representation of what we stand for. Maybe also a film like Mediterranea I would mention as a film which we developed and produced together with a lot of partners, knowing it will have a hard time commercially. But it's a first feature of an extremely talented director with a relevant social topic of today's time in migration.
SUTER We also just started releasing (Alex Gibney's) documentary Zero Days. We see it as very strong in digital distribution. We did Cartel Land last year, which had similar distribution. It's the kind of film where we don't focus on a theatrical release, but see, especially for a younger audience, big potential for digital distribution.
Is the concept of star power changing, and how important are stars?
SUTER Sometimes a title itself is the star, because it is based on a well-known book. Sometimes the director or the auteur can be the star. Sometimes it's the cast. It certainly helps if you have something to work with that has star power.
Do you see Netflix and other streamers as an opportunity or a challenge?
SCHMIDHEINY On the production side, obviously we are very much interested in collaborating with them. We have had several conversations with the bigger players. On the acquisition side, however, we often compete with them. Netflix is really strong and aggressive, because they can offer [distribution] for the world, while we buy only our territories. Amazon, I would say, is more a partner than competition currently, but I'm pretty sure that will change.
Do you see Netflix and other streamers as an opportunity or a challenge?
SCHMIDHEINY On the production side, obviously we are very much interested in collaborating with them. We have had several conversations with the bigger players. Those films can have great exposure - worldwide, at the same day in every language. The downside, however, [is] that both film and filmmaker will never enjoy the same care and support [at] festivals and in single territories as they would get if it's going independent.
On the acquisition side, however, we often compete with them. Netflix is really strong and aggressive, because they can offer [distribution] for the world, while we buy only our territories. Amazon, I would say, is more a partner than competition currently, but I'm pretty sure that will change.
If we succeed in a bidding war, we are still very likely, currently at least, to sell the film to the platforms. So you can compete and then you can still have a chance to work together at the end, which is a concept we generally like.
How big will VR become?
SCHMIDHEINY I do believe in the gaming world it will certainly be revolutionary. On the film side, I would say it will add a lot to certain documentaries or travel formats. In the niche we often operate in, which we call commercial art house, I don't see how VR could work. Just imagine Sorrentino's "Great Beauty,” where every frame is a work of art, in VR! Also looking at 3D and how it has clearly declined from the height it had, I wouldn't see how VR will have a different future right now - in the classical feature space. But I'm ready to be surprised!
You distribute some German-language films with local flair and others that are more international (High-Rise, The Great Beauty). How do you balance between local and global?
SUTER Even if a film [is a global production or is based on a global topic], you still need to double-check if that also counts when it comes to your local audience — in our case, the German-speaking territories. You should always double-check if a film, which is a global production or based on a global topic, fits with the local flavor. It's all about knowing your audience.
Are there any trends in the German-speaking film world that are different from the U.S. and other markets or that people may not know of?
SCHMIDHEINY Romantic comedies and family entertainment over-perform clearly. If you have a German thriller, you are very likely to struggle heavily at the box office, because that is not something people are used to or want to see in cinemas.
What do you look for when you co-produce a film?
SCHMIDHEINY It depends. It also starts with the people, and if we have an opportunity to work with great producers more closely than to simply distribute a film, it makes sense. Germany has a great landscape to co-produce films. You can use local subsidy money and its tax credit. But it doesn't make any sense to bring a production with no local ties whatsoever to Germany and shoot it here only for the money. That we wouldn't do unless it's studio work in a place like Babelsberg Studios, for example. Ideally for us as a distributor and producer, we would be involved from the very beginning of a production to then have better access to the talent or the director on the marketing side of the local distribution.
Are the financial returns different for films you also co-produce?
SCHMIDHEINY You might have double the risk and it comes at a higher cost, but in a way you can diversify. That's the big benefit on the financial side. It's even better when you have your own production, of course, because you can control everything from the script to the release. And sometimes it could actually be more lucrative to just co-produce a film, because then you don't carry the risk of releasing in just one single territory.
Some say the film business has not been able to exploit new technology successfully. Do you agree and what could be done better?
SUTER With the development of Netflix, for example, there is a golden age of TV series, even though consumption has changed. I think that is something that should be recognized. Technology changes viewers' habits. We shouldn't always criticize. Things have changed and it feels like more and more consumption is possible due to new technologies besides the traditional theater and home entertainment formats.
In terms of your start-up work, what is your focus or what have you been looking for?
SUTER Our portfolio developed in a very organic way. I have been part of the start-up scene here in Berlin since 2006. We started DCM and followed people who we have trust and have shown they are successful in what they are doing. So the investments were a result of a growing network here in Berlin.
Do some of your start-ups play into or help your film business?
SUTER Zoobe started as a voice messaging app with characters from such movies as Ice Age. Currently, they are developing into a broader digital marketing agency for the studios and their brands. By the way: CEO of Zoobe is Naz Cuevas, former vice president of Rovio (Angry Birds). For us, it's fascinating to see how they are opening up new revenue streams in the digital world. If you have a successful film, such as Ice Age, how can that play a commercial role in a messenger, Whatsapp or whatever? What are the new forms of distribution in the digital world for these brands? We're thrilled by their path. This clearly broadens our horizons.
What topics do you expect to highlight at the Zurich Summit?
SCHMIDHEINY At our panel, we will talk about how the digital side of the business can work together with the film industry. It could be the same people investing in both films and start-ups, like we do. Overall, it's interesting to have people from Hollywood and independent film coming to a city like Zurich, which is known for private investments and, more and more these days, start-up investments.
SUTER The broad appetite for entertainment seems to become bigger and bigger. The Zurich Summit brings together the experts for business and entertainment, whether traditional film financing or new forms and new technology.
Do you see or foresee more companies trying to bring together film and digital start-up businesses like DCM?
SUTER There are certain areas where it certainly helps if you come from the start-up world and are an early adopter, such as in marketing, for example. The topics there include big data, social media, targeting - you certainly have an advantage when you take the best expertise from the digital world into traditional film marketing. For us, that's the case. New players with a fresh perspective support the whole industry and its development.
SCHMIDHEINY It also works the other way round. Successful start-up entrepreneurs, founders and companies have then moved on to film, whether it is Participant or Vice Media. There is more room for companies like these.
3 HIGHLIGHTS OF THE FEST
by Scott Roxborough
The Game Changer
The art and business of film come together at the Zurich Summit, which runs Sept. 24 to 25 at the uber-luxurious Dolder Grand hotel. Be sure to catch indie film maestro Patrick Wachsberger, Lionsgate co-chairman, who will receive this year's inaugural Game Changer award; hear Oliver Stone's dissection of the conspiracy politics behind Snowden; and schmooze with Sony Pictures Classics' Michael Barker, Killer Films' Christine Vachon, Black Swan producer Scott Franklin and Wei Han, CEO of Chinese producer/distributor Bliss Media.
Harry Potter's Master Class
Daniel Radcliffe is doing a double dip in Zurich this year, screening Daniel Ragussis' thriller Imperium, where he plays an FBI agent who goes undercover in a white supremacist group, and Swiss Army Man, the dark comedy from directors Dan Kwan and Daniel Scheinert, where he co-stars alongside Paul Dano as a very lively corpse. Radcliffe will discuss his transition from blockbuster child star to indie character actor at a workshop on Oct. 2, as part of the fest's Master series.
Egon Schiele: Death and the Maiden
Zurich remains Europe's No. 1 catch-up festival, and this year's program is full of highlights from Cannes, Venice and Toronto, including Peter Berg's Deepwater Horizon, Damien Chazelle's La La Land and Ewan McGregor's directorial debut, American Pastoral. But Zurich also is a showcase for the best in new Swiss and German cinema, and a can't-miss world premiere is Egon Schiele: Death and the Maiden. Dieter Berner's biopic of the legendary Austrian painter, starring newcomer Noah Saavedra, could be the film to watch for 2017's awards season.
This story first appeared in the Sept. 23 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.