AFM: COVID-19 Uncertainty Puts Damper on Deals

Dave Bautista, Brad Peyton
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Dave Bautista, Brad Peyton

Concerns about the near-term future of cinema releases and a lack of big blockbuster titles has impacted dealmaking at the 2020 American Film Market, which wraps up Friday.

A lack of big tentpole titles and continued uncertainty about the near-term future of cinema distribution put a damper on this year's, online-only, American Film Market. 

News, announced on Monday, the first day of AFM, that a coronavirus vaccine from drugmaker Pfizer was more than 90 percent effective in initial tests gave hope to the industry that movie theaters will reopen next year and production, hampered by the difficulties of shooting during the pandemic and of the cost of insuring against COVID-19, could return to normal. 

But that hope doesn't mean much for the sale of finished films, or for pre-sales on titles that expect to be hitting theaters in the next few months. 

"We don't know when, and how, theaters are going to reopen," noted one French buyer, "so anything set to go before mid-2021 is a big risk for us." 

"My impression of the marketplace as a whole is that this AFM traffic is very much affected by ongoing uncertainty over production start dates and by the current fragility of the U.S. theatrical landscape," added Stuart Ford of AGC Studios. AGC did report strong pre-sales interest among global buyers for Universe's Most Wanted, a sci-fi action comedy from San Andreas director Brad Peyton starring Guardians of the Galaxy alum Dave Bautista. 

"[But] I think Universe's Most Wanted is probably an outlier," noted Ford. "International buyers are willing to spend aggressively to secure a film which could form the pillar for their 2022 slate by which time there’s a strong expectation of the global box office having rebounded." 

Most of the business at AFM 2020 was focused on smaller genre titles, with distributors betting on the booming home entertainment market (premium video-on-demand and streaming sales have shot up during the COVID lockdown). Saban Films, a group with roots in home entertainment, snatched up a series of titles, taking North America and U.K. rights for football drama Under the Stadium Lights with Laurence Fishburne from Film Bridge International, and sci-fi thriller Tides from Constantin Films, as well as North American rights on both Constantin's horror reboot Wrong Turn, and, from CAA Media Finance and France's TF1 Studio, North American rights to Jaume Balagueró’s heist thriller The Vault starring Famke Janssen,  Freddie Highmore, and Sam Riley. 

"VOD, PVOD and direct-to-home distributors are all blowing their numbers out of the water right now," noted Jonathan Deckter, president and COO of Voltage Pictures. "It's a real interesting and profitable time for those players, the Vertical Releasing, Saban Films, Shout Factory guys."

But Voltage has also shown how to turn a theatrical buck under COVID. After We Collided, the sequel to YA romantic drama After, which Voltage sold worldwide, was a surprise global success, pulling in close to $50 million, despite a much weaker theatrical bow in the U.S., where it earned around $2 million in theaters, compared to $12 million for the first After movie. 

After We Collided has matched or exceeded the theatrical performance of the first film in multiple territories, including Germany ($9.2 million), Russia ($4.2 million), and Spain ($3.8 million). In the U.K., where Voltage "couldn't give the first film away for theatrical," according to the Deckter, After We Collided pulled in more than $5 million from cinemas thanks to an opportunistic post-COVID release with U.K. distributor Shear Entertainment. 

"Timing was a big factor. This was just the right film in the right place and with the right audience, a younger audience that wanted to go out to the cinemas,"  says Deckter. "And the producers delivered a great movie."

Voltage is pre-selling the final two films in the After series, both of which are currently shooting in Bulgaria. 

Being able to guarantee a film will be shot, and delivered, is proving a key factor in closing sales at AFM this year. Lionsgate recently pulled out of The Plane, a Gerard Butler action film which it had pre-bought from MadRiver International and CAA Media Finance for North and Latin America, as well as the U.K. and India, reportedly because the producers were unable to secure insurance to cover a potential COVID-19 outbreak.

MadRiver and CAA are expected to close a deal with another distributor soon —a $50 million Gerard Butler action film is a safe bet in the current market —but any new buyer will have to self-insure against possible pandemic problems. 

This isn't a hypothetical issue. New Line temporarily stopped production on the Olivia Wilde-helmed film Don’t Worry Darling when a member of the production tested positive for COVID-19, and Sean McNamara's political biopic Reagan, starring Dennis Quaid, only recently resumed shooting this month after a two-week coronavirus-induced shutdown. 

All of which goes a way to explaining why AFM felt a bit flat this year. But both producers and distributors are optimistic that, as theaters reopen, the business will return

"Things might look a bit gloomy this month, with theaters closed [in Germany] but we think the cinemas will bounce back," says Alexander Janssen, SVP Acquisitions at German mini-major Leonine. "And with the studios continuing to push back releases, the theaters need content."

At an online AFM finance conference panel this week, Motion Picture Corporation of America CEO Brad Krevoy was bullish about a (near) future where a reliable vaccine makes production easier and theater-going safe again. 

"It will be the roaring twenty-ones!" he said. "Content is going to come back strong, and it is going to be happy times, it is going to be fantastic for all of us….There’s going to be tremendous demand."