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Film Distribution, Cannes Scoop, Producers Network Guest of Honor Page Ostrow with Cannes Festival Director- Jerome Paillard- Business of Film


Cannes 2009 Time For A Reality Check
The film business as we have known it has changed. Irreversibly and forever. All the past standards, benchmarks and directions we once knew so well are today’s dinosaurs.
The reality is we are entering a completely new era. The tired old headlines that the Big Boys did Big Business at Cannes is hogwash – those deals were done way prior to Cannes. The buying that occurred reflected products that had to a large degree already been sold, and frankly did not need to be announced at Cannes but we all understand the reasons why those announcements are made. So let’s push forward with a constructive approach about what is really happening. It all began at AFM 2007…

The Market
The market is like all the other commodity markets that are currently floundering. It’s trading in the toilet and there is no point for going into denial. Does that mean we need to be depressed and have long faces? No. Like any other shift in the global commodity markets it’s a time for opportunity. Opportunity with a new perspective.

Was it a surprise that in Berlin the budgets were high and the buyers were not buying? Not at all. A large part of the film industry’s overall temporary woes is the independent’s inability to conduct R & D. Every other industry applies this basic business principle, but for years we have gotten away with not doing so. What do we base our decisions on to go into production on the next movie? Usually, broadly speaking, on the successes of the past. But the remakes and sequels are passé and old hat. Yes, there is a new audience for the next release in a blockbuster franchise, but maybe we should consider is ‘x’ film star really hot worldwide? When we look at the big pictures, maybe yes and maybe no. So do we need to spend $45million on a particular picture? The answer is probably not. Without the benefit of R&D we go with our gut most of the time. That is what the business of making films is about on the creative side, but the dynamics of film production economics in the current financial climate makes it necessary for us to re- examine not only the budgets but the stars and their value. There have been a number of very successful pictures with no stars. Instead they have been great concepts that returned good investment on the dollar spent.

Where the independents lead the majors have followed, in every facet of the commodity markets. Everyone expects that the bigger independents can always make it, but can they? At this Cannes one or two of the bigger independents did not make it. If we examine why, many anomalies are revealed, but one important asset is the executive’s ability based on history and experience. Am I questioning the ability of the executives? Not necessarily, but as Gordon Brown has proven, you may not make the grade in number one position but you can be an excellent number two.

Our business, I believe, is similar to the structure of the stock market, we need to go back to a number of fundamentals – the Mom and Pop operations. With low overheads, even if they did not sell at Cannes 2009, the Mom and Pop operations will survive. We need to look at our inventory and do some R&D as to WHY the product didn’t do well. Yes, it’s the economy. Buyers are not buying in bulk anymore, the audience is more sophisticated and they have other avenues to spend their hard earned buck. Each of us needs to re-examine the structure on which we have built our own business. We can no longer go with market trend, because the market trend is broken, and those of us who went with the trend ended up behind the 8-Ball. The ability to create a new path is the winner’s advantage. We moan and groan about the buyers taking advantage of the current buyers market, but we forget (as one executive pointed out) that not so long ago sellers were getting good prices for Product just because the market dyanamic allowed it.

In the final analysis there was hardly any new product at Cannes. Companies such as Nu Image with the wherewithal for lining up new productions did business, not the best but neither was it the worst. Nu Image can be likened to the independent’s barometer. They are like America – when they sneeze, the independents catch a cold. Why the make analogy with Nu Image? Because they represent the base on which the term ‘the real independent’ is centered. Finally, there is an oversupply of bad films, and companies selling that kind of product have to re-think how they will survive.

The optimistic outlook is that good affordable product sold at Cannes 2009. Was there enough of it to truly gauge the ‘market’? No. What is encouraging is that given the economic climate, which is not going away just at the moment, we can still sell product, but it needs to be affordably priced because the days of making out like a bandit on all sides of all commodities worldwide are gone baby gone!

The Festival
The Festival, even thought it enjoys a symbiotic relationship with the market, is in some ways because of its dynamics and fundamental raison d’ etre somewhat immune. The Festival did what it does best, in its wisdom as the organization responsible for assembling the films for future buys and discovery of talent. It has no way in which to be different. It can be more adventurous in its selection of the main competition films, but it would argue that it does that in the Un Certain Regard and Directors Fortnight sections. Its function is to bring together and encourages cinema from around the world. Every year the Press department overseen by Christine Aimee provides increasingly professional resources so that the many journalists attending the Cannes Film Festival can do their job, making the public aware of upcoming talent and recognizing established talent with new films.

The stars at Cannes 2009 supported the Festival, and hats off to the Brad Pitt, for the tremendous boost he gave the waiting public before the screening of Ingloriuos Basterds.

In the end it’s about the Product, and it’s time we faced the facts that a new era of dealing, producing and distributing films is not just ‘coming’ but has arrived, and we all need to cut the cloth accordingly.

The Market Organizers
A word of appreciation to Jerome Paillard, his team, his right hand Michele, and Miriam who is responsible for Business development and booth sales. In view of the difficulties besetting the business, they did as much as they could within the confines of their business model to assist in helping the independents. But was it enough?

The question is posed only because the climate is changed. The business is down 30 – 40%. It would be unrealistic for any of the market organizers – Cannes, AFM or Berlin – to reduce prices dramatically. Their business model, the facility in which we all do business, has a nut too!!! Where does the answer lie? I believe it is in these organizations taking the brave plunge of working with the economic situation and, saying for example just for 2010, we will give a 10% discount across the board, we won’t supply so many services, we will scale back, and if we can’t find sponsors, we will not look to the attendees to make individual business models continue to work in the same manner as before. That it is my two pennies suggestion. All for one and One for ALL.

The Business of Film innovated publishing the OnLine editions at Cannes in 2008, and have continued with The Pocket Guide at Berlin PLUS Online editions as the news warranted it, and through to MIPTV (110.000 hits) and Cannes 2009 (182.000 hits). These hits represent the start of a new era of publishing in the film business, spurred on in part because of rising costs, and in part because as an environmentalist, I want to make my own tiny contribution to ensure that my god-kids have a future on the planet.

In our now 29th year I would like to thank the advertisers and supporters of our niche publication for their continuing support as we make the necessary further transition to establish OnLine Daily Editions for all the markets.

Au revoir until 2010, and as always we hope you enjoy our selection of Young Executives for 2009! They truly are the reason we do what we do to earn the pennies, for in the end it’s all about the children and their future.