2007: INDIES STILL DELIVER DESPITE SLIGHT DOWNTURN

In 2007, independent films had a slight dip from 2006, with the independent film share of the North American box office totaling $3.2B. While final box office numbers are not yet available, the total is estimated to be a record $9.6B by box office tracking service EDI. The official total won’t be known until ShoWest in March. Business Strategies estimates there were about 3% more films in our list than last year. On the other hand, a change in the specialty divisions has taken some films out of our independent definition. The Weinstein brothers’ old haunt Miramax, Warner’s WIP and Paramount Vantage technically are studio producers. While they acquired most of their films in 2006, this year those specialty divisions raised the number of films financed by the studios. In addition, the highly financed Cruise-Wagner Productions had a slow start with Lions For Lambs, while last year’s newbies — The Weinstein Company and Picturehouse — were slow to find their groove in 2007. On the other hand, a new business analyst, Global Media Intelligence (GMI), suggests that this summer’s record-breaking box-office figures are disguising underlying losses for the studios. Screen International says that the analysis is open to dispute, “but the underlying point seems difficult to deny. We already know that big stars [continue to receive] unrealistic fees while DVD revenues have dropped.”

When the final DVD numbers for 2007 are released during CES, they will show a drop of between 15% and 20%. With VHS no longer a part of the market, the upturn from people switching to DVD players is over, and the new formats have not had an effect. “Standard DVD is accounting for 95% to 98% of the business,”according to industry analyst NPD Group. “It will be a while before we see high-def become a replacement for the hot new category that TV DVD was. The great hopes for an upturn, such as 3D, video-on-demand (VOD) and online distribution, have yet to make an impact.”

The market is currently underperforming for a variety of reasons. According to consulting company Understanding and Solutions, “Online video services and title availability are limited, pricing strategies are embryonic and the technology infrastructure has yet to catch up. However, momentum is building, and by 2011, online video in the U.S. will represent 8% of total home entertainment revenue, with Western Europe close behind at 7%.” Of course, varying future predictions on the value of downloading are at the heart of the negotiations with the AMPTP for the WGA and DGA (scheduled to start as TFE goes to print). Since we only forecast from actual dollars, TFE and Business Strategies will stick to the old paradigm: box office, DVD and TV/cable. As it was at the end of 2006 and 2005, the theatrical digital revolution is still on the launch pad. Last year I told you to check back now. I say the same thing that I did last year. Even though festivals show some digital films, take your 35mm print. The less money a distributor has to spend, the more likely the company is to pick up your film.

Welcome to 2008. May all your movie dreams come true!
Louise Levison