With the streamers in retreat, there could be opportunities for independent buyers in Cannes. But US sales agents flag a quiet year so far for deals and the first US writers’ strike in more than 15 years as significant notes of caution.
Another Cannes, another cycle of opportunities and concerns. As the industry descends on the French Riviera, many will be toasting the tail end of the pandemic while hoping that the first Writers Guild of America (WGA) strike in more than 15 years does not drag on through the summer.
The industry anticipates robust market offerings as sales agents bring strong packages and, in some cases among the higher echelons, smaller slates reflecting a disciplined approach that places the emphasis on quality over quantity. That will chime with an independent theatrical distribution community emboldened by returning box office led by the $1bn global triumph of Universal/Illumination’s The Super Mario Bros. Movie and the global success of independent hits like A24’s Oscar winners Everything Everywhere All At Once and The Whale. Gower Street Analytics upgraded its 2023 global box-office forecast from $29bn to $32bn.
Heading into a summer packed with studio tentpoles, buyers are looking to build on the optimism around theatrical. Valid question marks remain over whether there will be enough for family and older audiences to see at their local cinemas. However, the distribution sector will have been encouraged by statements from Warner Bros Discovery (WBD) CEO David Zaslav reiterating the old studio adage that a good theatrical release creates value throughout the revenue waterfall (and ultimately benefits platforms like WBD’s soon-to-be-renamed Max).
Another source of encouragement for theatrical buyers is the retreat of streamers and studios with streaming platforms from the acquisitions arena. Entertainment giants are in a brutal period of cost-cutting brought on in large part by the huge cost of building their streaming services.
Nobody is counting out an opportunistic swoop by Netflix, Apple et al on a shiny package, completed market title or festival selection here and there, but by and large the streamers are focused on producing fewer, better films, rather than making and acquiring lots of titles as they used to do. That creates opportunity for independent buyers who can afford to pay for the right title, and makes more talent available for work, which is good news for independent producers, financers and sales agents.
“There is still an air of caution in the marketplace as buyers wait for an even more tangible theatrical comeback and most distributors are still heavily prioritising theatrical potential over volume,” says AGC Studios head Stuart Ford, whose team will launch pre-sales on the Neill Blomkamp sci-fi They Found Us starring Joel Kinnaman.
“That reality has governed AGC’s market strategy for the past five or six markets and has meant we can focus on driving our pre-sales titles quickly into production — every film we’ve pre-sold over the past 18 months was safely into principal photography within three to four months of the sales being made. There’s a reliability and a market efficiency to that approach.”
Yet despite theatrical’s green shoots of recovery, one of the biggest questions heading into Cannes is where exactly are the US theatrical buyers? Sundance yielded few hefty deals of note besides a few big buys from Netflix, Amazon Studios and Searchlight Pictures, and the community seemed relatively muted. Similarly, there was little activity of significance in Berlin and SXSW.
On top of that, the specialty community was shaken earlier this year by the departure of Netflix’s Lisa Nishimura and Ian Bricke — executives who championed arthouse and documentaries — signalling film head Scott Stuber’s mandate to focus on fewer and better large-scale films. Then the community was rocked by the departure of IFC Films president Arianna Bocco and IFC Center SVP and GM John Vanco.
“A lot of indie distributors are struggling to get the same level of pay-1 licence fees from the platforms, which has heavily restricted their theatrical buying power,” notes one producer-financier.
However, Dori Begley, who oversees all aspects of Magnolia Pictures alongside Eamonn Bowles, remains upbeat. “There are clearly a variety of factors, including audience and corporate behavioural shifts, that have paved the way to this inflection point,” she says. “Magnolia has always thrived during periods of uncertainty, and we have exciting plans going into Cannes that should position us well moving forward.”
Magnolia snapped up Hirokazu Kore-eda’s 2018 Palme d’Or winner Shoplifters days after the premiere in Cannes and also acquired Cannes jury president Ruben Östlund’s 2017 Palme d’Or winner The Square in a pre-emptive deal the year before. Magnolia’s pay-1 deal is with Hulu. Screen International understood at time of going to press that the Hulu team overseeing pay-1 partnerships had not been impacted in Disney’s cull of 7,000 staffers.
Pursuit of excellence
In a climate where filmgoing audiences and streamer subscribers want the best entertainment, the pursuit of excellence is key. “Theatrical is the way we’re going nowadays… and we have to go for the big ones,” says Tamara Birkemoe, former EVP of Screen Media and president of Mark Damon’s Foresight Unlimited who has launched Palisades Park Pictures with backing from Los Angeles- and London-based Ashland Hill Media Finance.
Birkemoe, who had not yet announced her first sales titles at time of writing, says she is looking to work with studio-level fare, commercial thrillers and action titles with name cast. “That’s what buyers are looking for.”
However buyers will have to dig deep for coveted titles. Asking prices are expected to continue to be at the high end as sales agents seek to recoup costs on pandemic-era productions which in some cases saw budgets swell by as much as 30% due to Covid protocols.
A recent survey by National Research Group (NRG) revealed that when audiences think of greatness on screen, they think of older stars, with 19 out of the top 20 talent cited being over 40 (the exception was Chris Hemsworth, who is 39). Tom Cruise heads the list, which includes Leonardo DiCaprio, Keanu Reeves, Sandra Bullock, Julia Roberts and Johnny Depp, who stars in Cannes opening night film Jeanne Du Barry.
“There are many actors who are famous but not beloved or huge movie stars, or filmmakers who are competent but not gifted,” says one independent source close to the development and finance community. “Buyers don’t value them in this climate. No-one wants that middle.”
As another independent stalwart puts it: “It’s [good times] if you have a great script for what’s intended to be a crowdpleasing movie with an exciting director and star power in the cast. That type of movie can be financed in this climate using equity and any number of sales and distribution models.” The source adds that while the road remains “far tougher” for small dramatic films, particularly those that lack major film star talent, there are opportunities to make these films at micro-budget level.
Overall, the resilient, independent industry professionals who have come through a pandemic and survived many challenges prefer to focus on the positives. Many know there are opportunities when streamers do not pick up good films even without star power.
It remains to be seen what type of stars will populate some of the late-breaking packages for Cannes, but already the market has Sylvester Stallone in a Cliffhanger reboot sold by Rocket Science and CAA Media Finance, Anton’s Breakout starring Arnold Schwarzenegger (who did not appear in the NRG top 20), and Elisabeth Moss and Kate Hudson in Shell, sold by Black Bear International, CAA Media Finance and WME Independent.
US sellers are hoping what they bring will drive productive meetings on the Croisette. “[What] would really energise the Cannes market would be increased buying activity from the US theatrical companies and any kind of real pre-buying activity out of Asia,” says AGC Studios’ Ford. “It’s unclear when, if ever, Chinese buyers are going to be a significant presence again but at a minimum we’re hoping to see bigger Asian territories like South Korea, Japan, Taiwan and Thailand return to being a reliable buying presence.”
As for the writers’ strike, sales agents and Cannes-bound producers are phlegmatic. Screenplays have been rushed to completion and producers with locked scripts can proceed to production so long as there are no WGA writers on set. In the case of packages, people are looking to start shooting later this year or in 2024.
That said, of great concern is what happens if the Directors Guild of America and SAG-AFTRA fail to agree terms with the Alliance of Motion Picture and Television Producers, the body that negotiates on behalf of studios and streamers, before both guilds’ master contracts expire on June 30. Were that to happen then Hollywood has a huge problem on its hands. Production would effectively shut down, forcing US filmmakers and those who work with US talent to look overseas, where a number of guilds and unions have already come out in support of the WGA.
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