The hot topic of the night was "sex, lies, and videotape." A seven-member panel of industry experts was trying to explain the surprise success of the $1.2-million independent film that, they say, is destined to gross $20 million in theaters--more than many big-budget summer studio releases.
The question: Why is "sex, lies, and videotape" making so much money in a marketplace where the vast majority of independent films are failing to break even?
"Make a good movie," said Cineplex Odeon's head film buyer Neil Blatt, "and people will come."
Blatt repeated the familiar Hollywood wisdom to a crowd of independent film makers and marketers at the Writers Guild Theater during the first of six weekly panel discussions sponsored by the American Film Marketing Assn. and the Independent Feature Project/West, a nonprofit support group for independent film makers. The panels were formed to address the crisis independent film makers and distributors are facing in the midst of a box-office boom dominated by major studios.
There were 17 major-studio film releases in August, according to Variety, compared to only 16 independent releases--the first month in recent times that the majors led in that category. So far this year, independent releases are down 15% from 1988. And while film production has dropped overall, the biggest shakedown is occurring among the independents, where production has fallen off 33%.
Although the independents release almost three times as many films a year as the majors, they are capturing less than 7% of the total box office. And that percentage is shrinking.
"The general public does not want to see low-budget movies today, no matter how good they are," entertainment attorney Peter Dekom said. "What consistently sells in the marketplace are high-priced films with huge stars and lots of fast action or comedy. The summer bears that out.
" 'Dirty Dancing.' 'Mystic Pizza.' 'sex, lies, and videotape.' Everyone sees those and thinks that they are the rule," Dekom said. "But for every one of those independent films that made it big, there are 300 that did not."
Ironically, the independents' crisis comes on the heels of its own brief boom. Beginning in 1983, small film companies began to emerge and churn out products freely and film production reached new heights. What the films lost at the box office, they easily made up in the burgeoning ancillary markets--home video, pay television and foreign sales.
"The video market was an entrepreneurial guarantee that allowed independent producers to take risks," producer's representative Jeff Dowd said. "Video rights were often sold before the movie was finished, which virtually guaranteed a profit."
Today, the ancillary markets are no longer Third World viewing arenas hungry for programming fodder. As film audiences--foreign and domestic--grow more sophisticated, they are demanding more A-title movies instead of the traditional B- and C-titles that used to stock video stores shelves in abundance.
"Film audiences want more production value for their dollar, or yen, or franc, or whatever they are spending," Dekom said.
"There is a direct correlation between success in the theater and success in ancillary markets," Blatt said.
As a result, the pressure is on independent film companies to produce instant box-office hits. Independents cannot afford a flop, unlike large studios that have the capital to sustain occasional box-office failures. Consequently, independent distribution companies are dissolving, consolidating, refocusing and forming ventures with major studios.
"There's still room in Hollywood for independents to do business, but you have to do the right thing all of the time to make it," said Ronald Wanless, president of worldwide marketing for the Samuel Goldwyn Co., which is developing a sequel to last year's surprise independent hit "Mystic Pizza."
"We're in it for the long haul. We'd rather make less films and minimize our mistakes. Many of the companies that have not done well have had a major hit and then been less than judicious with productions after that and dissipated all that money."
Vestron struck box-office gold with "Dirty Dancing" in 1987. The sleeper grossed $62.9 million and ran for 44 weeks. Flush from that success, the small company beefed up its release schedule with no less than 20 movies, including "Earth Girls Are Easy," "Parents" and "Midnight Crossing"--none of which performed well. Now, Vestron's distribution schedule is in limbo.
"The marketers of quality independent films really aren't doing as effective a job as they might be doing," said Bruce Feldman, of the public relations firm Clein Feldman White. "And the main factor is money. They don't have the resources studios have. They simply don't. They can't compete on that level."
Studios routinely spend $8 million to $10 million in advertising and promotion over a short time to release a film, while independents average about $2 million for those films lucky enough to linger for months in the market. The prohibitive budget generally locks independents out of television advertising, where costs have risen an estimated 25% since last year.
Backed by a multimillion-dollar Warner Bros. marketing campaign, "Batman" was able to debut across the nation on almost 2,200 screens. In comparison, Miramax opened "sex, lies, and videotape" six weeks ago in only two markets--New York and Los Angeles. The film, which is currently on 363 screens, has been steadily adding theaters since to keep up with the spreading word of mouth--which the panelists unanimously agreed is the most powerful form of advertising independents have.
"There is a niche for independents as long as we act carefully and judiciously," said New Line's president of distribution Mitch Goldman. This summer, New Line wound up with a 2.4% domestic box-office share--higher than one of the studios, Orion--due largely to the ongoing slashing popularity of Freddy Krueger, who grossed $19.7 million with "A Nightmare On Elm Street 5: The Dream Child."
"You have to carefully pick your spots," Goldman said. "It's called guerrilla marketing. The majors sometimes have blinders on, stumbling forward and bumping into each other. We have to look at the whole competitive marketplace and time our releases."
Cannon demonstrated such marketing tactics last weekend with "Kickboxer." With no studio releases scheduled because of the slow post-Labor Day box office, Cannon released the Jean-Claude Van Damme action film on 973 screens and grossed $4.1 million--good enough for third place in the weekend box office.
Feldman suggested that independent film makers band together and form a trade association to advertise the intrinsic value in independent films and possibly lobby for legislative support. He says intelligent independent productions are often more artistic and culturally refreshing than studio films, where the bottom line is making money.
"It's cyclical. We're in a valley right now, a difficult period," Feldman said. "There are definitely hard times ahead, but the world isn't ending. It's up to us to make more out of what opportunities there are."