Arthouse films battle squeeze from Netflix and blockbusters

Powered by article titled “Arthouse films battle squeeze from Netflix and blockbusters” was written by Mark Sweney, for The Guardian on Monday 15th January 2018 15.30 UTC

As the latest clutch of arthouse films – including Darkest Hour and Three Billboards Outside Ebbing, Missouri – are feted during this year’s awards season, the mid-budget film sector is grappling with Hollywood’s blockbuster addiction and the new challenges presented by Netflix and Amazon.

The big US studios have become increasingly dependent on big-budget, populist releases that can pack cinemas around the world, for example superhero films and franchises such as Transformers, Pirates of the Caribbean and Fast and the Furious

Couple that with the Netflix-driven explosion in top quality TV drama that has wrested budgets and talent away from Hollywood, and smaller film-makers are struggling for backing.

“There is definitely a squeezing of the middle,” says Richard Cooper, a film analyst at the entertainment consultancy Ampere.

Disney, the most successful Hollywood studio in recent years, released just eight films last year, including the three of the five biggest box office earners 0f 2017 in Star Wars: The Last Jedi, Guardians of the Galaxy Volume 2 and Beauty and the Beast.

Top 10 low-to mid-budget films in 2017

The seven biggest Hollywood studios made 113 movies last year, hoovering up nearly bn (£7.2bn) of the total bn US box office take in the world’s largest film market. This meant that the other 618 films released had to fight furiously to capture the remaining 9% slice of ticket sales from the increasingly dwindling number of movie goers.

Despite the dominance of blockbusters, a near-record number of smaller-budget films were released last year. They are coming under pressure as the average US box office take of each film has dropped by over 40% since 2013, according to research by Ampere.

Then there is the impact of the rise of streaming services led by Netflix and Amazon. Netflix spent £100m (6m) on two series of glossy TV drama The Crown. This is almost triple what it cost to make awards favourites Darkest Hour (m) and Three Billboards (m).

Nevertheless, film-makers are also starting to cash in on the deep-pocketed digital players.

Netflix has increased its total content budget from bn to bn this year and intends to make 80 original films (up significantly from 50 in 2017) – about the same as the big five Hollywood studios.

“It is kind of like Dickens, it’s the best of times and the worst of times,” said Colin Vaines, producer of films including awards hopeful Film Stars Don’t Die in Liverpool and The Young Victoria. “There are new possibilities with Netflix, Amazon and Apple, potentially lots of opportunity if you can get a foot in the door and be one of the chosen few to go through.”

Vaines said one issue is that Netflix generally does not give a theatrical release to the films it produces or buys, which makes it harder to get the publicity for smaller-scale productions.

“Amazon do theatrical releases but Netflix don’t,” he says. “It does give additional lift in terms of selling your film. The biggest issue for mid-budget films is you want some kind of lift to get your film out there.”

The director of Film4, Daniel Battsek, who has developed and backed the hotly-tipped Three Billboards, said Channel 4’s film division has had to adjust its strategy to address the new-look market.

Film4 has increased its co-investment budget by two-thirds from £15m to £25m and now makes fewer films with a larger investment to increase its returns per movie.

“Audiences have a desire to see more than just superheroes and franchise movies,” he says. “Of course people can get satisfaction from TV and streaming services, but not exclusively.

“Three Billboards could have been made for a streaming service, but that is not how it was envisaged. It has made more than m already, that is testament to the faith we all had in creating something people would be incentivised to see in a cinema and get the most out of it.”

Darkest Hour and Three Billboards

Battsek said that the definition of success for an independent film is not in terms of box officesales, but in relative return on investment. “A film may be a blockbuster, but if it cost 0m to make and 0m to market that is a big bar to get over in terms of profitability,” he said.

Three Billboards has made m at the box office to date – more than triple its budget – having only just started a roll-out beyond the US, including the UK last Friday.

Darkest Hour, which also launched in the UK on Friday, has passed the m takings mark, covering its m budget.

Claudia Bluemhuber, managing partner at Swiss finance and production company Silver Reel, said that with independent film-making facing so much competition there is much tighter focus on which projects to back.

Silver Reel has invested in films including The Wife, which stars Glenn Close, Loving Vincent and Churchill.

“We have seen that awards-worthy films are something that have become increasingly important from an economic point of view, more so than before the digital revolution and rise of the streaming services,” she said.

“We are focused on independent drama, but the risk has risen. Buyers and distributors of films are more nervous, and under more pressure to get it right.”

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