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Distribution As A Craft - The Variables That Need To Be
Synthesized To Promote & Market The Individuality Of A Film

Meyer Shwarzstein
  
In 1995, Meyer Shwarzstein formed Brainstorm Media, which handled sales for various companies including Lionsgate, Magnolia, and Image to name a few. Today Brainstorm Media has evolved into a full-fledged US distributor with high profile domestic partners and has been involved in producing a number of movies. Latest upcoming films in development and production include A Daughter's Nightmare, Danger Close, Veiled Threats and Mortified Nation.

I have been in the distribution business for 30 years. When Elspeth asked me to talk about how the new technology is affecting distribution, it's needless to say a huge topic, and we've seen so many changes happen over the years in the movie business that you have to first put it in some kind of context.

In the 70's when I first got involved in the business, I was involved in distribution of the first prerecorded video cassettes where we were selling tapes to record stores because there were very few video stores on the streets of Chicago. At that time the video stores only had tapes available for sale, and none were available for rent, which occurred later. A small store in Michigan was the first one to rent video cassettes and eventually a case was brought before the Supreme Court because the studios felt that the store didn't have the right to rent a movie, putting forward the case that the movies were owned by the studios. The case resulted in the Supreme Court passing what was known as the First Sale Doctrine, whereby the store that bought these tapes then had the right to rent them and market them as they wanted.

It was an extremely important case, because without that, there would not have been video rental, and without that, there wouldn't have been Netflix. The studios then, when Netflix was established, tried to have control over Netflix's inventory and eventually Netflix said, "We can buy DVDs wherever they're available and we're able to create a subscription program," which eventually evolved into the streaming service they have today.

Every new phase of technology has allowed us to have a new entrance of players into the business. Obviously when television came out, we had television networks, and they became dominant players in the entertainment business. When cable came through in the mid-70's – in the US we had it earlier in mountainous states that otherwise couldn't get television reception, cable became the subscription growth model, with HBO starting in its earliest form in 1975. And then we had an evolution of sale and rental models that came through the hard goods business and some early pay-per-view models that also started in the early 80s. Of course we had a pretty fully evolved free distribution system of programming that was developed by the television networks. So every format of distribution was pretty much evolved by the time we got into the early 80s, whereby there were four ways in which you could merchandise a film: by selling it, by renting it, by offering it on a subscription basis, and by having it available for free, generally with advertising support.

Those models were then applied differently, in different manners, and we saw that evolve with technology. HBO, being one of the earliest pay television services at that time – around the US there were many – but HBO was the most effective at being able to create a nationalized service early. Showtime followed in their wake, the Movie Channel followed in their wake. Eventually those companies merged, and of course, HBO was started by Time Life and eventually it was acquired by Time Warner.

Now we have a modern incarnation of a subscription service, a company that also played as a middleman in the space that acquired programming from suppliers and then made material available on subscription basis to consumers. The most successful of those without doubt is Netflix. Like HBO did in its early days, Netflix has turned to original programming to establish the sense that you need to subscribe to not miss an episode or miss some kind of new programming that they're promoting, and they're doing it very effectively. So in some ways, a lot of what we've had in distribution occurred over time, and things have stayed the same. There have been some fundamental changes, such as the advent of the video store, which built an entire independent movie business. The reason I credit the video store is before that there were drive-in theaters, but there weren't the same kind of independents as we think of today. It's certainly not the same volume of films we had then, which started the independent business that boomed in the 80s. That's when the American Film Market started and we saw foreign sales take off as an independent means to finance movies. It was really the video business that drove a lot of that.

So we in the movie business, particularly on the independent side, but certainly on the studio side as well, depended very heavily on video to sell films. But when we were selling the movies, we were selling to say, 25,000 video stores around the country who then acted as middlemen to sell through the product to the consumer. We and the consumer conspired to get rid of the middleman. At the beginning of this year, Blockbuster started with 1,000 stores. It's now October, and they're down I believe to about 300 stores, and they used to be, without a doubt, the dominant player in the home video business, particularly when it was a rental business. With the destruction of that middleman, and this has happened in other businesses as well, we are now in the business of having to market directly to the consumer.

The first thought was that if we were able to get our product, our movies, out to the consumer, say for example through Video on Demand – through the cable companies, the telephone companies, the telephone and satellite companies, and of course also with overbill via the Internet - we'd be talking about 310 million Americans, over 100 million television households. With that reach-through to the consumer, we thought we'd be able to go ahead and sell our product. The fact is that distribution's no longer an issue. It used to be that getting distribution, getting your visibility, getting to the consumer, you had to go through a series of gatekeepers to make it there. Now that the gatekeepers are gone, all the product flows through.

But the problem is: how do you create an identity for a movie and how do you get the consumer interested in renting or buying, acquiring, or even watching, a movie? The key is how do you get them to know about it, how do you get them to be willing to pay something for it, how do you create that conversion from learning about something to transaction?

Mortified Nation

Now we have this problem of having to market directly to the consumer. It's a big lift. The studios acknowledge that by doing it two different ways. The key thing that they do is advertise very heavily. They spend more money than ever before to promote their movies, because ultimately and essentially every movie is like launching its own brand. And even then, they like to rely on having some pre-known identities in the market to be able to help them market a film. For example, Disney very smartly acquired Marvel, very smartly acquired Lucasfilm, both known brands that ultimately the consumer is aware of what they stand for, what they can expect, and they can get on a reliable basis.

Independents have a much harder challenge in front of them: how do they market their individual products to the consumer?

It used to be that the Theatrical releases would allow you that ability to get reviews and be able to attract the attention of people who like film, and they could rely on the movie review – and certainly a review could break a movie, but that is no longer true. The New York Times is committed to reviewing any movie that has played on at least one screen for two showings a day in Manhattan or Brooklyn, and so now the number of reviews that you have in the New York Times has grown substantially. To sit down and read all the reviews would take as much time as it would to actually watch a film. So that process by which we would rely on reviewers to essentially be the tastemakers who would get people interested in watching movies is now broken as well, because even if you have a good review it's crowded in with a bunch of other product. Part of what's driving that number of theatrical releases on an ongoing basis is the Video On Demand business, for which the cable, satellite and telephone companies are giving priority position to movies that are released day-and-date theatrical and VOD.

They've come to really not want any so to speak 'movies' that are straight to video anymore, so they're putting pressure on all the independents to get these movies into theaters, which is then creating a lot of clutter for screen space. Add to that the Academy consideration rules for movies. There are Documentary filmmakers who are renting screens to get their films to qualify for the Academy Award consideration and you've got a glut of product trying to trade on a lot of screens. Ultimately what's happening is the theatrical mechanism that was relied upon so much by filmmakers and distributors to get acknowledgement and recognition for movies is also not working. So it's an even bigger burden, a bigger lift, to get your movie recognized in the marketplace where distribution's become so easy.

Add to that the fact that it's easier to make movies than ever before. The cost is lower than ever before, so we have a glut of product coming from a variety of people, whether they raise their money from their family or from Kickstarter or Indiegogo, who put their own money up, or just shoot and edit themselves. So now we have more product than ever before going into the marketplace.

As a student of distribution I look at this and say, how does one address this problem? We have been doing it, for example, by licensing the Fangoria brand a year ago. We're releasing movies under that brand and we're aggregating product in that brand, because we are now creating a bit of an identity for Brainstorm, by licensing the right to somebody else's identity. Essentially, that's been around for 35 years. We use that as a means to help curate products. So when you have a whole list of horror films, that are 'alpha-stacked', as we call it, or listed from A to Z, that are available on your cable system under "Horror" and it's just a list of movies, how does one make a decision as to which one is worth watching? We're attempting to take some examples from the studios but also what was used before and what worked for basic cable, back when each of the channels was branded, plus other kinds of distribution. Essentially, even with other product, it's better to use an identity in the marketplace.

It's clear in the consumer's mind that being able to deliver a product on a consistent basis that can be relied on for being of a certain quality and that will provide a certain level of satisfaction is the goal. If we compare it to the food industry, the most familiar example is McDonald's, which will offer pretty much the same tasting hamburger whatever McDonald's you visit. People like to know they can get what they're expecting. The comparison may be considered a low bar, but the truth is that's a very high bar to be able to create that level of expectation in the consumer's mind.

That is one approach. The other approach, actually I will only generalize about it, is that I no longer look at distribution as a business. It's obviously a business, but as something where you can create the same pattern for every movie and take them out the same way, I now perceive distribution as a craft. When is something available? Where do you make it available? What elements do you have in the movie that ultimately, hopefully, have some kind of viral value? How do you reach the audience that's particularly interested in an individual film? This is something Brainstorm Media has been doing now for years. In some cases, we'll do day-and-date theatrical VOD, because we know that by marketing our platform of a certain genre and certain kind of cast in conjunction, and in partnership, with a platform, we can maximize value. In some other cases, we decided that wasn't the most effective way to build value because we needed the film to establish its own reputation, its own identity in the marketplace, partially through reviews, by repeating the reviews, and by identifying an audience that would be particularly attuned to and interested in a certain product and then doing our best to reach them.

And of course we do that in conjunction with all the various platforms we work with, whether it be television networks, SVOD, VOD, AVOD, and in an order via which we know that we can maximize the revenue for any given film. And that is fascinating, because it really brings an artisan aspect to distribution, which as someone who's a student in the field, I find very interesting and exciting. As I mentioned earlier, just putting something out there is meaningless. Imagine, for example, if you start a website and it's available all around the world. If someone chooses to click on that URL, terrific! But how will anybody know the URL is there? Why will they go there? It's the same problem we have with movies. If you put a movie into the marketplace, how will anybody know it's there? Why will they go watch it? And even harder yet, because we have so much programming available, why will they transact to watch it? The other point I should mention is that we have more mechanisms than ever before by which we can sell product to the consumer, and from the consumer's point of view, we've created more mechanisms by which they can acquire the product. In their minds they're subscribing to a certain number of services, whether it be Hulu Plus or Netflix or whether it be cable television, satellite television, etc., and they're getting so much programming in a stream –in terms of accessibility of product that they can choose from – it has become much more difficult to get them to pay extra for something. In fact I think we're moving to a system whereby people will be paying less for programming out of their pockets, and thinking more about paying for programming in keeping with the time they're going to spend watching it.

The big exceptions are those big event programs that you should see in a theater, otherwise you will not get the same sensation. Seeing Gravity on a television is going to be substantively different than seeing it in 3D in a movie theater. That also applies to a movie in which one feels there's a personal connection, somebody you want to follow, somebody you're excited about. A lot of comedy performers have proven that to be exceptionally interesting, like Louis C.K. who sells his DVDs directly to his fans at five bucks apiece instead of going through traditional distribution.

So there are many variables that we have to synthesize as we look at any individual film program. At the same time we have to determine which services have a need for certain kinds of programs. We have to work with them to come up with the best deal structure, and ultimately find a way to reach the audience effectively so that we can maximize the revenue on any given platform. We can't look at everything the same way. You know, not everything should be an iTunes premiere, not everything should be a DirecTV premiere, not everything should be a traditional theatrical release. There is no 'everything' for independent films. Studio films are a different category because if you're going to distribute something that ends up being on two or three thousand screens, your set of criteria for making that that decision is fundamentally different, as you look at the percentage of revenue you can get out of different media in a more traditional way. Even there, the studios are moving toward trying to collapse the windows and offer EST (early Electronic Sell-Through) to motivate people to download and own films earlier. And even there, it's a question of trying to figure out ways to establish a more umbilical connection with their audiences. That's something digital technology allows us to do, but it also means that the consumers are flooded with Content. We have to create an environment and a world for an individual product where the consumer isn't just going to get the programming, but they're going to opt in to watch it and be messaged about it.

The above article also appears in The Business of Film's innovative AFM 2013 Printed QR Reader Magazine & Product Guide launched in 2011 and available during the AFM Market.


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