Berlin was buoyant. Surprisingly so. Netflix’s splash for The Good Nurse and Searchlight’s deal for Perfect were among the biggest deals the EFM had ever seen. Things were looking up ahead of Cannes.
It didn’t take long for the mood to unravel. Just a few days after the festival and market ended, it became clear that the picture was darkening. Coronavirus would pose an existential threat to the entire business.
“I’m worried about the market”, one agent texted me at the time during a discussion about potential Cannes titles. “We need to work something out.”
“We thought, ‘shit this is our reality'”, says a leading LA-based financier. “‘Let’s be sure we’re communicating that this is an optimistic and vibrant business that can finance itself and that the marketplace is alive. It’s vital that businesses are alive and kicking and able to get out of this'”.
The situation was, and remains, critical. As March wore on, when they weren’t scouring news sites for the latest updates on the deadly virus, most film professionals were either trying to keep their jobs or keep companies afloat in the most turbulent of waters.
For many in the independent sector, the next landfall was the Cannes Film Festival. Traditionally, Cannes is a land of plenty; for many professionals and creatives, it’s their Super Bowl. 2019 was a banner year for the festival with movies such as Parasite, Once Upon A Time In Hollywood and Pain And Glory going on to storied success. And in recent years the market – which generates hundreds of millions of dollars each year – has hosted major packages such as 355, Moonfall, Cherry, Down Under Cover and Unhinged. These movies are prized assets for many overseas buyers. Today, the stakes are higher than ever in a climate in which Apple just paid $70M for Tom Hanks movie Greyhound.
But for the first time in its 73-year history, there was a real chance that the industry’s biggest and most important international event may not go ahead. “It’s 50-50 at best,” one person in the know told me in early March.
With those unfavourable odds hanging over the indie sector’s most vital cultural and business platform, it was sink or swim time.
A Tale Of Two Markets?
At the instigation of CAA Media Finance and with other Hollywood agencies such as Endeavor Content, UTA Independent Film Group and ICM Partners, a collection of the industry’s biggest independent companies began discussions to ensure that, whatever happened, a critical mass of business could be done in a systematic way.
In the middle of March, with growing uncertainty over the viability of Cannes, the group announced their contingency plan: a free virtual market to take place in May or June.
It was unprecedented. Never had a major film market gone online. Never had a major market been free. And rarely, if ever, had the agencies – generally such fierce competitors – collaborated in such a way. “It’s hard to recall an instance when the agencies pulled together so closely,” one packaging exec admits. “It hasn’t been about agency jostling. Everyone is trying to co-ordinate for the wider good of the business.”
“There was a level of anxiety because we hadn’t heard from Cannes,” a leading sales executive explains. “The movement was never against Cannes. The independent film sector at-large thought the festival was likely to have to cancel but was unable to do so until it was confirmed by the French government. We had to make alternative plans in case that came to pass.”
The plans created waves. For some, it seemed like an exclusive club or two fingers up to the Marché. For others, it was a sign of life and energy amid so much confusion and uncertainty. It was something. It was needed.
The Marché finally sprang into action and confirmed the very next day that it would host an official Cannes market on its Cinando platform. Marché chief Jerome Paillard has subsequently said their market had been in-the-works since February.
Thus sprung the idea that there are two competing markets. It’s a concept that lingers in the minds of some, as one prominent French seller attested to me last week, “We’re only going to participate in the Marché. We owe the festival and market a great deal in terms of who we are. We don’t think there needs to be separate events. The industry needs to be together. We don’t appreciate the other action but it’s a classic way of doing things in America. It’s opportunistic. It doesn’t surprise us, but we’re not supportive of it.”
A French buyer told us, “It feels like there are two separate markets completely. One for bigger English language projects and one that I’m still a bit unclear on.”
However, the leaders of both initiatives are keen to dispel the notion of two separate events.
“I don’t view it as a parallel market,” Marché chief Jerome Paillard tells us about the agency-led network. “They are organizing private presentations. At the beginning there was a discussion that they might create a market but that is finished as far as I know. We had discussions with them all and we agreed there would not be screenings and it would only consist of presentations.”
“There is no controversy here,” one leading seller in the agency network tells me. “This is a projection of physical Cannes in a virtual context. It’s the same structure as every Cannes. Some companies will do private presentations, and some will rent screening rooms through the Marché. Everyone will do meetings. You just replace physical with virtual.”
Every market is layered. Many companies that attend Cannes do their business outside the Palais, just as many at AFM prefer to do business outside the Loews. There are some bigger companies – largely U.S.-based – who prioritize commercially-oriented package pre-sales and there are those – usually with a more arthouse bent – who deal primarily in completed movies which will be oriented towards festivals. But there is also plenty of crossover.
“I think any resentment is down to a misunderstanding of what normally happens at these markets,” claims a U.S. seller. “For various reasons, all our presentations with key talent every year are privately organized and moderated.”
What To Expect
The festival announced last month that it wouldn’t be able to go ahead due to the pandemic, marking its first cancellation in almost 70 years. The online Marché will instead fly the flag this summer. Registration for the event opened last week. It’s a comprehensive offering including online screenings, virtual pavilions and industry conferences. Confirmed keynotes so far include HBO Max and Quibi. Participants will also be able to connect via the market app Meet&Match.
“The reaction has been good,” says Paillard. “We did a survey of sales companies and 90% of those we surveyed who would ordinarily take a booth said they would attend the online market. We expect to have between 200-300 sales companies and 60-80 institutions. We hope to have around 5-10,000 participants in total. We usually have around 12-13,000.”
Meanwhile, the agency-led network will comprise around 30 firms, including FilmNation, AGC, Wild Bunch, Endeavor Content, Hanway, Lionsgate, Mad River, Miramax, Rocket Science, Sierra Affinity and STX Entertainment. Some of the companies will operate in both markets – something a number of buyers we spoke to will do too. Some will retain the Marché market badges they had already bought. Some will not need to buy a Marché badge for the first time in many years.
The two groups have agreed to kick off business from Monday June 22 for the duration of that week. For the group leaning into presentations, Monday and Tuesday will be largely devoted to those and they will include some A-list talent. Virtual meetings will be more prevalent Wednesday through Friday. Some presentations will be live, others pre-recorded, and they will be available at three different times of the day to hit European, North American and Asian time zones. Each seller will use its own preferred platform but expect plenty of Zoom.
The number of packages on offer is expected to be solid. Likely in the 15-25 range. “While not quite as many as usual, there will be a relatively normal volume of projects,” says one top seller. Major movies are starting to emerge such as Songbird, the pandemic thriller (inevitably, it is one of a growing number of projects about pandemics or coronavirus itself) from former Paramount production chief Adam Goodman’s Invisible Narratives and Michael Bay. In a sign of collaboration between the agencies, that particular package is being sold by ICM and Endeavor Content. Conversations are going on almost daily between the leading packagers at different agencies, something that almost never happened before. They know that buyers are hungry. MGM and Netflix are on a tear. Amazon will want to get in on the mix. Indie buyers like Leonine are establishing themselves. Apple and Hulu have come to the table in a significant way and other financiers are emerging.
As for Marché screenings, they will be staggered, explains Paillard. “Every screening will be on local time, meaning Australians will see a film before Americans, for example. We will try to do Asian events in the morning (European time) and ones which are more US-oriented in the afternoon (when the US is starting its day). It will be hard to organize events between Asia and the U.S. It was a choice we’ve had to make and after talking to sales companies we thought it was better to give the buyers as good an experience as possible.”
One of the main challenges for the Marché is that it doesn’t have the fallback of the festival. Dozens of projects that would have launched in the Official Selection and generated deals in the market are now no longer getting visible premieres to build buzz. Last year, some of the festival gems that generated big deals included Oscar-nominee Les Miserables and Terrence Malick’s A Hidden Life.
Many arthouse stalwarts we spoke to have said they will avoid launching any arthouse movies at all until a festival context returns, whether that be later this year or next. In case it wasn’t already clear, the coronavirus crisis has only reinforced how essential festivals are to the lifeblood of independent cinema.
“We were thinking about announcing a foreign language movie with a good director,” says a leading European seller. “But attracting attention in this environment is harder. Distributors don’t have the same pressure to buy. Unless the people I’ve spoken to are lying to me, I don’t expect many European arthouse sellers to launch new movies. There will be a focus on older, known titles. It’s going to be a hard couple of years with all the shuffling in the calendar.”
“We won’t show anything that needs a festival launch,” another European stalwart told us. “We’ll stick to our more commercial and English-language titles. We’ll hold back our arthouse films for later this year.”
In a bid to help counter this added challenge for the arthouse sector, Cannes will reveal labels which can be applied to its would-be selections in coming weeks. “This could be a tremendous help for those movies,” says Paillard.
Inevitably, a large part of the buzz is taken out of a market if its adjoining festival is removed and face-to-face meetings aren’t possible.
One prestige American buyer, who will operate across both the presentations market (in which there could also be a handful of high-end foreign language movies) and the Marché, told us, “There’s nothing like launching a film in the festival as a way to focus attention. The market is a smaller part of what we do. The networking at the festival is so important. It’s a cauldron in which you can get a sense of market intelligence.”
Can we expect the all-night deal-making we so often see at Sundance and occasionally in Cannes? That’s perhaps a little less likely without the heat of the festival and everyone in one place. That said, with so many different time zones in play, communication could be non-stop.
“We’ll do screenings in the morning and deal-making in the evening,” one major European buyer told us. “We have American shareholders so we don’t sleep anyway. I’ve reserved from noon until midnight so I hope that’s enough time. For safety, we will have people in both markets. We want to be across both. There are a lot of projects around. I think it will be a good market; an interesting market.”
We canvassed industry far and wide for this piece. The majority of those we spoke to will take part next month. There is optimism about getting back to work in a meaningful way. About forward progress after so much stasis.
A few companies we spoke to told us they will be connecting with their buyers outside of these market structures. One was a leading seller from Asia. “I don’t think these virtual markets would work for us because of the time difference,” they said. “We need a physical market where buyers and sales agents from the world over can meet in the same place and time zone. During this difficult time, if we feel the need to talk to a buyer from the US or Europe live, we can always schedule a FaceTime or Zoom meeting ourselves. The same goes with virtual market screenings. We prefer to show our films on a big screen and oftentimes we are not even allowed to send out streaming links for films that have not been released. In cases where we have the streaming links and find it useful to let buyers stream them during the time of a virtual market, we can always do it ourselves without the help of the market.”
An Altered Landscape
Deal-making in the age of coronavirus will be different. Requests for discounts and extended payment terms are refrains we’ve heard quite a bit during our conversations about deal structures. Gripes about pricing are nothing new, but Coronavirus has altered the landscape.
“Major territory buyers are telling us they can’t pay what they usually pay with so much uncertainty,” one major U.S. company tells us. “They’re asking us what our methodology is when we are submitting sales numbers. Coming to those estimates is more complicated now because each territory is at a different stage of their coronavirus experience. And equity against the U.S. is contingent on movies performing a certain way at the box office.”
“We’re all wondering how and when people will go back to cinemas,” confirms one overseas buyer. “What will sellers base their numbers on? Number of screens, shows, projected number of cinemas that will be open?”
They continued, “A big challenge for us is how distributors are going to manage cash flows once the bigger films are ready to be delivered? A lot of international buyers are facing blows on films that are being released straight to VOD in the U.S. when the VOD business in the rest of the world doesn’t match the business generated in the States.”
“Every local distributor is trying to offload films to streamers at the moment,” adds a sales vet. We know of multiple buyers who are refusing to take delivery of major movies because they don’t know when they will be able to exploit them.
“There are so many new variables due to coronavirus,” says one veteran financier. “Will independent films be harder to finance? Netflix, for example, will have the money to get things made and crews are going to choose the safer, more secure production. There will be the cost of testing to factor in and extra costs associated with making sure a set is safe. Does a production have access to a physical studio where it can shoot?
“Then there’s the question of bonding and talent deals. Bond companies being asked to insure A-list talent amid a pandemic are much less likely to do so. That’s an essential element of any deal. Meanwhile, talent isn’t going to take a haircut because of coronavirus.
“I think we’ll run into issues on certain movies in terms of insuring actors and we’ll run into issues on force majeure language. Distributors are already sending us different clauses. The language says that if delivery dates aren’t met because of a pandemic then they can get out of a contract. What was once hard has become even harder. International distributors want to pay less, production costs go up and there’s lack of clarity around domestic box office. Everyone is trying to make lower budget movies and flip them to the streamers. Even the studios. Kill fees in the contracts are becoming more frequent.”
What of talent? “Talent is really leaning into reading and attaching to things they’re passionate about,” says one packaging vet. “It’s a good time for them to develop content. There will inevitably be hurdles to think about in terms of travel, immigration, visas and where things can shoot.”
Despite the above, there will be plenty for buyers to sink their teeth into, one financier tells me. “There will be a sweet spot for foreign distributors: local content remains strong and genre movies in the 10-20 million dollar range. American dramas will be challenged. But they have been for two years now.”
New Normal?
Many people are wondering whether Zoom meetings and online festivals and markets will become the norm. The film business relies and thrives on personal rapport and chemistry. It’s a people industry.
“People will be excited to come back to the Croisette next year,” says Paillard. “But next year we’ll do a hybrid market, with the possibility for those who can’t attend to take part online from wherever they are. That’s also useful in terms of environmental considerations. It could be a new way to work.”
The agencies are ready for that new way of working and acknowledge that their template could potentially be adopted for AFM. “Nothing replaces physical contact,” one packager said. “But if Europeans and Asians, for example, can’t travel to AFM in November, we’re going to have to figure out a way to sell movies.”
The independent sector has pulled together since Berlin to make sure that that can happen. Coronavirus has brought new concerns and challenges to the sales and distribution market but deals will get done next month. Major deals. What’s most important for many, is that there will be a market. “We all get to go back to work, it’s exciting,” one veteran financier said.
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