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Call it the ultimate catch-22.
When it comes to the most in-demand festival films, traditional distributors are being forced to overspend in order to compete with streaming giants Amazon and Netflix. Then, months later, they watch their prized film’s box office get cannibalized by the very streamers they were pitted against in the first place. Take the case of Sundance darling Patti Cake$, which Amazon chased but Fox Searchlight ultimately landed in January for $9.5 million — a mammoth price tag for a tiny hip-hop drama fronted by an unknown actress. Earning just $206,941 after two weekends in theaters, the flop illustrates how theatrical-focused buyers are being squeezed more than ever as they try to recoup their investments.
“We always love a Moonlight story — the little film that could and did,” says ICM Partners’ Jessica Lacy. “With Patti Cake$, it’s unfortunate that it didn’t do better, but it doesn’t surprise me. Outside-of-the-box and discovery-driven films always have the potential to not work.”
In a similar scenario, Searchlight also overpaid for the Sundance feel-good dance documentary Step, which opened Aug. 4 and has earned just $1 million — a respectable number for a doc about inner-city kids but not at the $4 million-plus purchase price that was driven up by Amazon. And Searchlight wasn’t alone. Sony Pictures Classics also fell into the trap, paying $5 million for the offbeat Sundance comedy Brigsby Bear, which has earned just $459,295 since opening July 28.
Perhaps the only saving grace for veteran buyers heading into Toronto is that Amazon and Netflix — both voracious at festivals in recent years — are expected to be more muted as they move away from finished film acquisitions and into homegrown fare. Under new film division chief Scott Stuber, Netflix plans to make as many as 50 films a year. And in the fall, Amazon will move full force into the distribution business, releasing its first original movie, Woody Allen’s Wonder Wheel.
But just as one monster retreats, others loom. Apple, Facebook and other tech giants are poised to step up to the plate. The stage has been set, with YouTube Red picking up Nick Cannon’s King of the Dancehall out of Toronto in 2016, while Google Play nabbed the Peter Dinklage starrer Rememory at Sundance in January. Both were seven-figure deals.
With $1 billion earmarked for content, Apple would seem the most promising new buyer. “They’re moving in that direction. We can all sense it,” says UTA’s Yale Chasin. “Whether it happens now or later is an unknown.”
But other sellers are skeptical that Toronto 2017 will see any major movement from the tech giants. “All of these people have been active in varying forms. Is it now expanding? Are they going to put up $10 million and buy a movie at this festival like Amazon does? No,” says WME Global’s Graham Taylor. “They’re at these festivals to sit with filmmakers and say, ‘Come into a long-term film and television deal.’ ” And if the tech giants remain dormant at Toronto, that would be welcome news for the traditional buyers.
This story first appeared in the Sept. 6 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.
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