Despite the economy, there was a slightly sunnier outlook at the Los Angeles Film Festival’s Film Financing Conference this weekend.

James D. Stern, chairman and CEO of LA-based production and financing company Endgame Entertainment, struck a more positive note than 2008’s famous keynote speech by The Film Department’s Mark Gill.

In his Saturday address, Stern tried to answer the question — “What does it take to be a filmmaker or financier in these difficult times?”

Stern said one key was passion. “You need to be as sly as a fox, as slippery as an eel, as thick-skinned as a hippo… and as rich as Sidney Kimmel.” He quoted to Annie Hall, when Woody Allen’s Alvie turns to the camera “and tells the joke about a guy who goes to a psychiatrist. He says, ‘Doc, my brother’s crazy. He thinks he’s a chicken.’ Doctor says, ‘Why don’t you turn him in?’ The guy says, ‘I would, but I need the eggs.’ That sums up why I’m in this business. Same for most of my friends. The way we feel about making movies is irrational, crazy, absurd… but we get by because we need the eggs.”

Stern, a business school graduate, did say that Gill’s “sky is falling speech” from last summer makes him look smart now.

Stern said that “indies are in a world of hurt” in the current market. “When the financial crisis hit, any awards that independent films were winning suddenly were not enough to appease corporate paymasters, who in turn severely damaged labels like New Line, Warner Independent, Paramount Vantage, Picturehouse and so on.” He also noted that foreign markets that could formerly boost indie films were now hit by the global financial crisis, still relying on Hollywood blockbusters but less likely to take chances on indie films.

Studios, which he called “by and large a vertically integrated business mostly concerned with film as part of a merchandising industry,” are having a boom year with 11 movies crossing the $100m mark so far in 2009, compared to four this time last year.

But the number of indie films grossing $1m went from 16 in the first half of 2008 to 6 in the first half of 2009.

“Despite it all, I absolutely believe there’s not just hope, but huge opportunity out there,” he said, continuing: “The next big revenue source, I believe, will be streaming video. It’ll give ADD types like me what we’re looking for: Impulse purchases! With streaming, we’ll all have the biggest video store imaginable, crammed into our little TV remotes, enticing us every time we turn on the set to make an impulse buy.”

He said services from Netflix to Amazon to Hulu and Apple are poised to be at the forefront. “Provided they actually pay us for our content in appropriate ways, these are the once and future friends of independent film,” Stern added.

Other drivers will be IMAX and 3D offerings in cinemas.

Meanwhile, the home theater experience is getting better and cheaper. This is good news. Maybe once in a while, instead of loading the minivan, driving and parking, buying popcorn and tickets, a family might rather stay home one weekend, invite the kids’ friends over and pay, say, fifty bucks for a new release on opening night - in high def and 7.1. Let’s say they make this decision for premium video on demand maybe six times a year. At fifty bucks a pop - those are big numbers.The point is, people will go to the theater. People will watch at home. And both are good for our business.So yes, there’s hope. Morgan Stanley says a new world of streaming content-on-demand will reach some level of critical mass - in two or three years.”

He called on the independent sector to “not just survive, to prevail.”To survive, we need to pay careful attention to the fundamentals of business. To prevail, we need to experiment to see what’s new that works.”

His rules for success are to make smarter movies (with clear target audiences), respect the money (talent and money have to be on the same page), and have a market in mind before the start of a project (marketing plans before cameras start rolling).

Stern added: “We’ve got to be willing to build a different set of muscles in this business. The way we operate is being dissected and reassembled in front of our eyes. The other day, my friend Glen Basner told me that everything we’ve learned about financing films over the last 15 years we have to forget. Which of course is uncomfortable, but it’s a window of opportunity to develop the muscles we’re going to need to dance this new dance in the coming years.”

He did note that “we’re cycling through a tough period.” But ended by saying, “If we stick to the basics - good business, smart movies; If we learn from the past and welcome the future; If we gather the eggs we need where we find them…We’ll be better than fine.”

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