Oscar-winning producers Iain Canning and Emile Sherman knew their movie “Lion” was a gamble when they took the script to Cannes in 2014. The first 30 minutes of dialogue was in Bengali and Hindi, the kind of thing that studios normally shy away from, and they had no cast attached.
“People were really excited about the story, but those types of films are still risks,” Sherman said.
Although there was interest from some of the major studios’ specialty divisions, indie stalwart Weinstein Co. bought the rights for $12 million. It was a lucky bet.
“Lion,” about an adopted boy who finds his Indian birth family through Google Earth, became a box-office success and is up for six Oscars, including best picture, at the 89th Academy Awards gala Sunday at the Dolby Theatre.
Adult-oriented films such as “Lion” have dominated Oscar races in recent years. However, they’ve become an increasingly endangered species in the traditional Hollywood studio system as the major studios have turned their attention to franchise pictures that generate multiple sequels and spinoffs. That has created a big gap for independent producers to make movies targeted at grown-up audiences, the kinds of films that typically attract Oscar attention.
“It’s become much more pronounced as we see studios headed toward ‘Transformers 99,’ ” said Jonathan Wolf, executive vice president of the Independent Film & Television Alliance.
Indeed, 78 of the Oscar nominations this year are for movies produced by companies outside the six major studios, according to the Independent Film & Television Alliance. That’s 31 more than last year and 20 more than in 2015. (The data include the record-tying 14 nominations for best-picture favorite “La La Land,” the $30-million musical made by mini-major Lionsgate).
Even as studios produce fewer adult dramas, new deep-pocketed buyers have emerged, notably A24, Amazon Studios and Netflix. Amazon’s film and TV arm bought the rights to Sundance favorite “Manchester by the Sea” a year ago for a reported $10 million.
The trend marks a sharp contrast from the late 2000s, after the financial crash, when credit markets dried up, making it more difficult for independent producers to finance projects. Studios including Warner Bros. and Paramount Pictures shut down their specialty film labels, which reduced the number of potential buyers for Oscar-type movies.
Having more distributors is good news for independent producers looking to make ambitious bets, said John Penotti, president of Sidney Kimmel Entertainment, which made the best-picture nominee “Hell or High Water.”
“The pendulum has swung in a massive way with the advent of more distribution outlets,” Penotti said. “That’s a terrific inducement for independent producers to be bold.”
Seven of the nine best-picture nominees were produced by companies other than the six majors.
Sidney Kimmel Entertainment and OddLot Entertainment produced neo-western “Hell or High Water,” which was acquired in preproduction by CBS Films. “Hacksaw Ridge” was led by Pandemonium Films and Permut Presentations, with backing from Cross Creek and IM Global and distribution from Lionsgate. Even “Arrival,” a $50-million science fiction movie released by Paramount Pictures, was produced by independent firms — Shawn Levy’s 21 Laps, New York-based FilmNation Entertainment and Lava Bear.
Some of the Oscar nominees are still made in-house at the studios, including Paramount’s Denzel Washington drama “Fences” and 20th Century Fox’s NASA smash hit “Hidden Figures.” But the mid-budget market for prestigious movies has become increasingly risky for the studios, as evidenced by Sony Pictures’ “Billy Lynn’s Long Halftime Walk,” which wiped out at the box office last year. It’s little wonder then, that the majors have turned to animated movies and superheros.
“Much of what we see in film is for younger audiences, and that leaves an important market share that the studios are not filling,” said Daniel Levin, executive producer of “Lion,” who introduced the producers to the rights managers for Saroo Brierley, the subject of the movie, after his mother-in-law told him about a magazine article on Brierley.
To be sure, independent producers still face many hurdles in the digital era. Indies rely on “pre-selling” distribution rights to foreign distributors, who value the movies based on how much money they think it will make on home video and cable TV. Both those markets have crashed as changing viewing habits force buyers to be more selective.
Just four years ago, producers could count on foreign pre-sales to cover about 70% of a film’s production budget. That has deteriorated to about 50% now, according to Schuyler Moore, an entertainment lawyer and film finance expert at Stroock & Stroock & Lavan in Los Angeles.
“There’s been a ground shift,” Moore said. “You have to cobble together multiple sources of financing now for a film of any significant budget.”
Indie filmmakers increasingly depend on film tax credits and rebates to help finance their movies. The producers of “Hacksaw Ridge” filmed their World War II movie in Australia and hired mostly Australian workers to qualify for the country’s film funding program. The incentive, designed to encourage filming and hiring in the country, covered nearly half of the $42-million budget.
“These things are really hard to do now,” said former Fox executive Bill Mechanic, who produced “Hacksaw Ridge.” “I would say impossible without some kind of subsidy.”
But there is reason for independents to be optimistic.
Deep-pocketed financiers including Molly Smith’s Black Label Media and Gigi Pritzker’s OddLot Entertainment have stepped in to fill funding gaps. New distributors including A24 and Amazon Studios have been scooping up indie projects at festivals including Cannes and Sundance.
Last month, Megan Ellison’s Annapurna Pictures, known for making “Her” and “Zero Dark Thirty,” announced that it would start distributing and marketing films.
With “Lion,” the bold moves by Canning, Sherman and Levin paid off. The film, which cost $12 million to make, maintained momentum at the multiplex leading up to Sunday’s Academy Awards ceremony, taking in $77 million worldwide. Sherman said it takes an especially strong hook to prevail at the box office at a time when much of the grown-up, prestigious storytelling is taking place on the small screen rather than in movies.
“It is much harder for a film to work theatrically unless it feels like it’s an event,” said Sherman, who is nominated for an Oscar for producing “Lion.” “It needs a sort of spine tingle to the story, or something that makes people turn off the television and go watch it.”