Yahoo Finance 2021 Sundance Market Preview: Can Live Links Replace Park City Theater Showings And Ramp Up Bidding Battles?
What kind of market will a pandemic-slimmed virtual 2021 Sundance Film Festival bring?
There are half as many films as last year, with lower than usual star wattage. The two most titles most often mentioned that could spark eight-figure deals are Passing — the Rebecca Hall-directed adaptation of the Nella Larsen novella that stars Tessa Thompson and Ruth Negga as two light skinned Black women who can ‘pass’ as white, and who reunite after choosing to live on opposite sides of the color line in 1929 New York — and Coda — the Sian Heder-drama about the daughter of deaf parents who is the lifeline to the family fishing business, wants to leave to pursue a study music, but fears abandoning her parents. Most buyers are hoping this festival will lead to reasonably priced discoveries of new voices, as much a Sundance tradition as the megabuck deals that have happened in the past few years.
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Last year, many expected a cautious marketplace, after a 2019 fest in which a string of 8-figure titles bought by streamers did only modest box office. And yet, Amazon (which bought several of those movies) and other streamers drove a bull market topped by the $22.5 million that Hulu and Neon paid in total for Palm Springs, the $4 million budget existential Groundhog Day-like comedy that had a $13 million bid on the table 45 minutes after the premiere ended. By the time Hulu/Neon and Netflix got done fighting over it, the pic sailed well past the $17.5 million record that Searchlight paid for The Birth Of A Nation. The film’s star Andy Samberg copped to $17.5 million and 69 cents on a late night talk show, but a built-in bonus structure brought it to $22.5 million. Not to be outdone, Apple and A24 teamed to smash the documentary record with a $12 million deal for Boys State, which beat the $10 million paid the previous year by Netflix for Knock Down The House.
Were these deals worth it? Not if your measuring stick is Palm Springs’ pandemic-stunted North American theatrical gross of $164,000, or its WW gross of $765,000. But the old metric of judging based on acquisition cost and P&A versus box office, doesn’t work anymore. This was something Amazon head Jennifer Salke told Deadline readers at the start of last year’s Sundance, as she said that theatrical grosses on the movies she acquired the previous year were nice, but not the defining factor of success. The bigger metric: how the films put Amazon Prime on the map as a tastemaker film destination. I’m not sure how many believed her at the time, but all she said was borne out by the way the business has evolved in the past year, everything exacerbated by the pandemic.
Despite a lack of transparency from Amazon and other streamers even for hits like Borat Subsequent Moviefilm, the huge viewership of films this past year validates her argument that the holy grail isn’t ticket sales, it’s monthly subscriptions in the heavy competition between streamers. For its part, Hulu seems very pleased with the results of Palm Springs, a movie that gave the streamer a hip title, helped by a Groundhog Day-like storyline that reflected the repetition and malaise of many a life in this pandemic. That the film is now showing up on Best Picture lists in awards season is a bonus. But was it worth precedent-setting money? As is the case with product released by most major streamers, we might never know. If the movie prompted an extra 200,000 subscribers, Hulu monetized. All Hulu will disclose is that Palm Springs delivered the highest opening weekend viewership ever for a film on Hulu; it was the #1 most talked about Hulu Original Film to date on Twitter over its premiere weekend; and it generated the highest amount of social interest of any Hulu Original Film to date over premiere weekend.
Palm Springs is a small bet compared to the one that WarnerMedia made by staking its entire 2021 slate to a day and date premiere on HBO Max, unwilling to clog its pipeline any longer when it could be used to grow the paid subscriber base. Yesterday, the company said that it doubled subscription activations to 17.2 million in the fourth quarter, ostensibly to watch Wonder Woman 1984 and all the other WB films coming this year. WarnerMedia will have to add a lot more subscriptions to cover what the studio might lose by not holding its big films back until the pandemic is eradicated with mass vaccinations, but it is clear how much these companies are leaning into a streaming future, replete with stock valuations.
So the streamers might show once again this weekend that for the right movie, money is no object. That was certainly the case in the virtual Toronto market last fall with a flurry of deals that included $30 million Netflix paid in a pre-buy deal for the $2.5 million budget Malcolm & Marie, based on 20 minutes of footage, of the whopping guarantee of $13 million that Apple Studios paid in a pre-buy for the Antoine Fuqua-Will Smith film Emancipation in hot bidding at virtual Cannes market, far and away the most paid for a film sold at Cannes. Clearly there is demand for product. But there are factors that might limit this crop of films.
The challenge facing sellers and buyers this time around is the virtual nature of the festival. There are some great Sundance war stories of career-making deals that were based on the combination of hungry buyers jammed into a crowded Park City theater, sparking to a movie they believe they can turn into a prestige hit, and maybe a bit less cautious thanks to the high altitude and thin air. That was always the equation for some big all-night bidding battles.
That will be hard to replicate this year, simply because the pandemic has kept everyone home and watching the films on their televisions as links go live. We all know the difference between watching in a screening room, and the potential for distraction even in nicely appointed TV rooms with oversized screens. Will bids suffer along with the lack of the great war stories and gamesmanship that buyers and sellers like to recount? Like that year when there was a fevered battle to land The Birth of A Nation after its premiere, and Manchester By the Sea, in quick succession. Deals that work out great and not well are part of Sundance lore. When he was buying films for Artisan, Miramax CEO Bill Block recalled the year he went to the Midnight Madness premiere of The Blair Witch Project. Figuring not that many key buyers would show up that late for something called a “found footage” movie, sellers sent cassettes to buyers. The herky jerky ‘found footage’ camera work was distracting to watch alone on a TV set, and so not many big buyers were on hand when Blair Witch tore the roof off when it premiered January 23, 1999.
Block recalls approaching the film’s WME agent Phil Raskind, just after the late great indie exec Bingham Ray — who was running October Films — sarcastically thanked the agent for wasting two hours of his life. Block came right up behind and told Raskind that Artisan would pay $1 million for worldwide rights. They closed for a little over that number.
“It was not a movie you could understand if you watched on a cassette,” Block said. “You had to be in that theater. I don’t think you will ever see a Sundance film, or maybe any other film for that matter, deliver the return on investment that Blair Witch did.” The film grossed just shy of $250 million worldwide and Block said in its total ancillary run brought in closer to half a billion dollars in business for the distributor. “I got a bonus,” he added.
Gems are harder to find now, because of the feasting streamers. Sellers are hoping to get buyers to watch their movies at the same time they are premiering at the festival, by making secure links go live at a specific time. Will that substitute for the ticking clock that has always been a key component of the Sundance market?
“We’re all struggling with it,” said IFC’s Arianna Bocco, who has always used Sundance to supplement film slates. “The agents have been really clear that they want to force the buyers to watch the films as they’re scheduled, so there is some sense of urgency created by an imaginary room with everybody in it, it’s just we’re all in our living rooms. I respect the effort for them to try and create some kind of urgency; I’m not sure how successful that will be, ultimately. But we are blocking off all four of the days as if we were in Park City and we’re going to watch all the movies in real time, as they’re scheduled.”
As their core business of theatrically distributed product got walloped by theater closures and the pandemic, many traditional distributors have had to lean in heavily to things like drive-ins, and quicker moves to PVOD and ancillary channels. The pandemic has added another temporary change to the way business has always been done.
CAA Media Finance’s Maren Olson acknowledged the challenges, and the changes in the age of streaming, but said “The market has been changing as studios pivot to PVOD, but there there is still a strong need for content, and this is about making the economics work for the filmmakers and the different films. There is still huge enthusiasm and we’ve gotten a lot of inquiries from those indies and the studios that are PVOD focused right now to fill those coffers and compete where they can with the streamers.”
Said CAA’s Nick Ogiony: “We’re optimistic that the market is vibrant in general. The streamers have been active, and the studios are working to get back in there for when theaters open. We have great titles with the world available, and the titles are diverse; we’ve got a crowd pleaser, a gothic horror werewolf film, an awards driven drama. We’re covering different touch points in content that the market needs. There is still a lack of production, and we think some of the movies can break out. Fingers crossed.”
Endeavor Content’s Deb McIntosh also believes that buyers need product and will respond to the films, a situation helped by supply and demand.
“We think the film sales will be robust,” she said. “There’s no question there are not as many movies that are for sale for the rest of the year because there was not as much made. Every buyer knows that and everyone will look at each of these movie carefully and say, will I be able to monetize this, and how, and where should this live for my company. Even the streamers have very different agendas. The theatrical film distributors need product for later in the year, or the next year, after they released what is on their slates. There’s no question they will need content.”
The bigger challenge to sellers is the level of sophistication and discipline among the buyers now, said Endeavor Content’s Kevin Iwashina.
“What’s happened overall is, historically there would be unsophisticated money coming into the business and we’d all take advantage, but in general, everybody, buyers, sellers, financiers, filmmakers, everyone is smarter,” he said. “It went from an A game to an A+ game and that’s what happens each Sundance. When Deb and I negotiate now, it’s with MBAs, strategists and analysts because that is what the streamers are evaluating. We are playing our A+ game because we know we are dealing with A+ buyers and you need A++ content to make it work. It has made everybody function more professionally, with more thoughtfulness and intelligence, and it is reflected in how the business has changed with those big reorganizations that happened last year. Maybe every decision won’t be correct, but smart people are making these decisions.”
ICM Partners’ Jessica Lacy credited the festival with creating an atmosphere where brisk sales are possible despite the obvious hardships.
“Sundance has done an amazing job pivoting in this environment and buyers and sellers are adapting well,” she said. “We are expecting a lot of interest and activity on the available films, so many of which represent hope and an emergence from the darkness we’ve all come through this past year. I expect some interesting partnerships and am excited to kick off this year’s unique festival.”
Like their peers at CAA, Endeavor Content and ICM Partners, United Talent Agency Independent Film Group comes in with about half the number of sales titles as at past Sundance festivals. UTA’s Rena Ronson and Mikey Schwartz-Wright said that the signs are strong that buyers want to fall in love with new product.
“We are hopeful that come the back half of this year, the theatrical marketplace might get further on steady ground as these vaccines roll out, and knock on wood, there is some kind of real recovery in the theatrical marketplace, and people will buy,” said Schwartz-Wright. “You buy movies at Sundance for the back half of the year in general, and we are hopeful that is going to happen again.”
How much does the in-theater buzz and competitive nature and thin Park City air really help anyway?
“What’s helpful is just having that sense of buzz,” Bocco said. “Even going to the bathroom after the movie and hearing local, non-film people talking about it. You do get a sense of the general buzzy-ness. We’re going to be relying on our own opinions, we always do, but it helps you decide, is it right for us, what is the market value? All those things help the deals go faster. It will be harder for the agents this time. But working in their favor is that there are fewer titles at this festival, and buyers still need films for their slates. I do think it’s going to be a seller’s market, for the bigger titles certainly.
“I don’t there will be $22 million deals, but I do think films with commercial potential will sell for a lot of money because you’ve got all the same buyers, including the platforms, fighting over a much smaller pool of titles,” she said. “Everyone’s still buying. We all need films and there has been a lack of production because of the pandemic. Nothing has been in production, and that is almost 100% on the indie front. Looking ahead, people are going to need to buy films. I don’t know if that means the sales will be bigger, that will be dependent upon the films.”
Traditional theatrical distributors acknowledge they’ve had a tough year with theaters closed, but several believe to their core that a big renaissance is coming as soon as herd immunity is achieved and moviegoers — older patrons in particular — once again feel comfortable going to the theater. That might be a ways away and some distributors I spoke to were concerned about being used to gin up bids from streamers. But resilience is a virtue of distributors adhering to legacy business models.
“We’ve continued to release films since the pandemic started, and we had our best year ever, last year,” Bocco said, with The Rental, Relic and The Wretched each grossing over $1 million theatrically before performing well on ancillary platforms.
“The thing to remember is that audiences are still watching films, they’re just watching them from home,” she said, adding that these films were helped by performing strongly at drive-in engagements, something IFC never courted in the past. “There are only 350 drive-ins in the whole country, and many of them are closed in the winter. For studios, they’re not a replacement for their business, but for us they were an additive we never tapped into prior to last summer.”
Bocco said she and her IFC Films team, and likely every other buyer, will be front and center when the links go live today, just on the off chance of finding a gem and turning it into a hit.
“For sure it’s going to be muted and a lot depends on the films we’ll see screened,” Bocco said. “Nothing can replace that feeling of being at the Eccles, walking out and seeing every company huddled in the lobby, or going to the after party and watching who is talking to the producers. Certainly, that is something you’re not going to be able to replicate. But you have to have a little vision,” she advised. “If you approach the job with a sheep mentality, you would never get the Blair Witch movie anyway. But if you approach with an open mind and a sense of risk and discovery, you will be ahead of the pack. On The Babadook, I’ll never forget the first Midnight screening at the Egyptian, sitting in the front row and feeling scared shitless. I think people maybe thought it was Australian, or small, but we got that movie for a reasonable price, just snapped it up. Also, In The Loop, I’ll never forget that one. It was the day of Obama’s Inauguration when we got it. People slept on it. I knew the minute I walked out of that theater that we had to have that film.”
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