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How Netflix and Amazon Are Changing the Indie Movie Business
The leading subscription services are flush with cash, and they're eager to buy hot titles on the festival circuits. For first-time directors, that often means trading a theatrical release for a guaranteed payday.

Do they go for the money or the prestige?

That’s the choice some first-time movie directors face these days. When they bring their creations to film festivals, they’re hoping an indie-loving movie studio will take a chance and pick up the distribution rights. They’re thinking about theatrical openings and red carpets, with their names tossed around as talented up-and-comers. They’re thinking about audiences falling in love with their films and spreading the word, and they’re even thinking about award consideration. They want to follow in the footsteps of movies like 500 Days of Summer and Whiplash, which were plucked from the festival circuit and found mainstream success.

What they sometimes get, however, is an offer from Netflix, Amazon, or Hulu that includes a fat check and no theatrical opening. No theatrical opening means no red carpet and no award consideration.

So do they take the money or the prestige? They usually take the money.

“If you’re an independent producer, you want to make movies and you want to make your next movie,” explains attorney Lisa Callif. “When you’re paying your investors back, that’s a big deal.”

Entertainment attorney Lisa Callif says that the money offered by streaming services increasingly trumps the prestige of red carpet premieres for filmmakers who are seeking distribution.

Callif is a partner at the boutique entertainment law firm of Donaldson and Callif in Beverly Hills, Calif. She’s worked in the field for 12 years representing independent television and film producers. Her practice used to be primarily film, but now all her clients work in TV as well. She describes her office as one-stop-shopping for indie producers, since it handles financing production, and distribution, as well as contentious issues like life rights and trademark use.

Netflix’s and Amazon’s Deep Pockets

While over-the-top (OTT) services have been snapping up top indie movies for a few years now, it became especially noticeable to Callif at this year’s Sundance Film Festival in January. She saw Netflix and Amazon bring deep pockets to the event and buy the rights to several top films. Their buying power changes the traditional way of doing things, since they’re willing to pay much more than traditional movie studios. Where a studio might pay $2 million for rights, Netflix might pay $3 million. Deals vary, but in general, Netflix pays two-thirds more than studios.

One reason Netflix and Amazon are willing to pay more is because they often want exclusive rights in perpetuity. They want worldwide distribution so movie lovers who hear about a certain indie film can only see it on their platform. While both studios like the prestige of awards, sometimes also releasing films in theaters so they’re award-eligible, that doesn’t always happen.

It isn’t just the theatrical release that changes. When a studio like Sony Picture Classics buys rights to a film, that film goes through traditional release windows that include DVD distribution, video-on-demand (VOD) services, cable and satellite services, and other markets like in-flight movies. Each tier exposes the film to a new audience. With premium subscription services, there’s only one distribution point.

One deal Callif recently took part in was for a documentary called Icarus, a top movie at this year’s Sundance. Documentaries don’t typically get as much money as scripted works, so a documentary deal worth $500,000 or $1 million is a big deal. Icarus is a topical movie about the Russian sports doping scandal, and Netflix saw a big future for it. Netflix made an offer of approximately $5 million and took exclusive rights, making this one of the biggest documentary acquisitions ever. While there was strong interest from other outlets, including Sony Picture Classics, Magnolia Pictures, and Amazon, no one came close to that number. Icarus was directed by Bryan Fogel, a first-time filmmaker, and that money is life-changing.

“Amazon is more open to doing a theatrical and doing some other type of exploitation, but Netflix is basically saying we’re paying you all this money and we get all the rights internationally so that’s the only deal you’re going to do and your film is only going to be seen on Netflix,” Callif explains. “It’s really a shift in the filmmaker’s mind, because so many filmmakers really love that theatrical release. They want a theatrical release, they want the New York Times review.”

One festival hit that went the traditional route was The Birth of a Nation, Sundance’s 2016 grand jury prize winner. It went to Fox Searchlight Pictures for $17.5 million. But streaming companies are winning out enough to change the dynamics for filmmakers.

Bryan Fogel in Icarus, which was acquired by Netflix for $5 million for exclusive rights [Photo credit: Netflix]

It’s not just the top subscription video-on-demand (SVOD) services that are making these deals. Other online platforms like Go90 and Vimeo need exclusive content as well. That gives filmmakers more opportunities to get their works out there and to develop an audience. Callif’s office is busier than ever.

Signing with a streaming service might mean getting a large marketing push—or it might not. When Netflix brands a movie as a Netflix Original, for example, it puts a lot more marketing behind it. That means billboards and heavy promotion in the press. But Netflix doesn’t always buy exclusive licenses. If signing a non-exclusive license, filmmakers will want to look around and see what other licensing deals they can add in. As long as they’re making enough to pay back their investors, filmmakers sometimes opt for non-exclusive offers if they believe they’ll find additional opportunities elsewhere.

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