Art house fare getting elbowed out

Little retail space, higher prices have world cinema in world of hurt

Two factors have signaled the need for a change in the way the art house — or, as they are known here, "world cinema" — distributors operate, and they could have implications in other major territories.

Never a massively lucrative proposal in the past, the art house movie on DVD in the U.K. was traditionally a dependable business that catered to its committed fan base.

Releases sold predictable numbers based on limited theatrical runs that were only booked as platforms for the home entertainment release.

That has changed. First, there is tremendous competition for retail space as the Hollywood studios have fought harder to shift ever more back-catalog films to make up for the decline in DVD prices.

With prices of major studio new-release product down to £8-£10 ($15.91-$19.89) and quality catalog movies as little as £3 ($5.97), price is now a factor for a sector that previously floated above the turmoil.

Charles Fotheringham, head of DVD at HMV, the leading bricks and mortar entertainment retailer in the U.K., thinks the key to pulling customers in-store may well now be price rather than simply range.

"It is difficult to persuade someone unfamiliar with world cinema to risk £20 ($39.78) on an obscure Finnish movie, for example, when a more known quantity such as 'Pirates' or 'Bourne' can be generally less expensive," he says. "From our perspective, consumers have a limited amount of money to spend and we have to be very careful to balance where we put our resources into driving footfall into our stores."

HMV is running a series of campaigns with directors explaining what inspires them. Ken Loach and his film "It's a Free World" is featured in the latest.

But online retailers are less convinced by the price argument. John Devon, Amazon UK's DVD chief, says world cinema titles can hold their own far more than the mainstream products. "It still has such a high level of discovery around it," he says. "The demographic is more interested in the quality of the film than the price, so it still has a premium compared to a mainstream film."

Matt Kemp, who runs headline campaign buying at rival, also believes that consumers are ready to pay a premium to watch movies that are hard to catch anywhere else.

"I am sure there are lots of people around the country, living outside the big cities, who would be interested in seeing these titles but they can't find them unless they go to the cities like London or Manchester," he says.

The second factor changing the sector's dynamics is the recent success of Tartan's "Black Book" — 180,000 units and counting — and Artificial Eye's "Hidden." Both distribs have opened up the possibility that non-studio films can translate into proper cash and have highlighted the need for distributors to offer something with more mainstream appeal.

Justin Marciano, managing director at Revolver Entertainment, which recently had a £1 million ($1.99 million) boxoffice run with the French thriller "Tell No One," predicts a difficult future despite the successes. Without a broader retail base than the fans that inhabit HMV and the likes of Amazon, he says, many of the indie films being made today face an uncertain commercial future.

"Like every other company in this space, we are trying to figure out how we can grow these titles that we have and take them beyond the couple of thousand units that they usually sell," he says. "A lot of the smaller films are not being picked up because you just can't make the numbers add up, particularly if you are paying fair money for them."

Retailers want to see more done to drive greater awareness of the genre. "I would love to see those suppliers that have these kinds of films working more closely together," Devon says.