TODAY AIN’T THAT UNIQUE
The messages blasted from Cannes and from all the film markets in the past 2 years are how much the industry has CHANGED. Yes, the industry has changed, but is it going through a change that is unique? No. The film industry, just like every industry, goes through waves of stagnation, disruption, growth, then a fall. The rise and fall of Orion pictures is a great example and foreshadowing of the independent film industry’s future. Watch out A24.
THE DISRUPTOR OF THE PAST
The major blockbuster studios dominated the industry in the 1970’s. Orion Pictures was formed after 5 top industry leaders from Transamerica’s United Artists left to form their own company. In fact, many independent production and distribution companies formed during the early 80’s when the independent film market was booming. Orion locked down a $100 million line of credit then hit the ground running. They were a major disruptor in the industry. They respected the art of filmmaking and invested in filmmakers such as Woody Allen and Francis Ford Coppola.
THE FALL OF ORION
However, they didn’t hit a major win until their 4th or 5th film. Orion faced many flops. They also scored quite a few Oscar wins and nominations. But their number of flops outweighed their wins causing them to file for bankruptcy in the early 90’s, the same year their little film “Silence of the Lambs” swept the Oscars. Orion was not the only company to go belly up. Many small distribution companies got out of the business once they saw the industry “shifting” (i.e. people not going to the theaters as much) and couldn’t maintain their overhead. United Artists eventually got bought out by MGM, MIRAMAX continued to flourish in the 90’s and early 2000’s but we can see where they are now…not at the top.
THE DISRUPTORS OF TODAY
The story of Orion repeats itself today. The studios and cable networks dominated the industry in the early 2000’s after the independent film boom fell to bankruptcy and buyouts in the 90’s. Then NETFLIX came around. Then AMAZON and HULU. Then a boat load of independent production and distribution companies…still looking at you A24. These companies have disrupted the market for studios…or have they? Many continually ask, “why haven’t the studios or networks created their own streaming platforms?!” Well, maybe the studios and networks can see the bigger picture here.
THE INEVITABLE FALL
Netflix is currently $3 Billion in debt, even though their market share value is at $157 and continually expanding. Amazon loses $1 Billion a year in streaming and barely breaks even as a company, but their market share value is $959 and is also continually growing. A24 is a private company who recently won the Oscar for best picture, has released 49 films since its creation, and has only made money on 9 films.
The studios and networks are waiting. They are waiting patiently for the opportunity to buy these companies and their libraries for cheap. It was recently rumored that there’s a 40% chance that Apple will buy out Netflix in the next 3-5 years. I wouldn’t be surprised if A24 is bought out in the next 5-7 years.
ISN’T THIS ALL JUST SPECULATION?
Yes, this is all speculation. This is speculation based on patterns from the past that occur not only in the film industry, but every industry. The economy exists on highs and lows. There are many distribution companies opening up because of the seller’s market that we are currently in.
These companies see a high and they are riding that wave. But what are they going to do when that inevitable low happens? The European Union is currently battling licensing negotiations. This will greatly effect the course of European distribution. The world economy is going through a lot of changes so how are you going to position yourself to come out profiting instead of losing?