Hello again. It’s been a while since my last post. Been traveling to festivals after SXSW–we did Palm Beach International Film Festival, then TriBeCa. Next up is Cannes where I am invited to speak to the Producer’s Network. Will post about it all after Cannes.

Some Distribution TidBits:

MovieGallery is closing its doors, a further signaling of the decline of DVD in some way, and yet Netflix and Redbox keep it going on the rental side and Blu Ray sales are up. THE STATS ARE: According to US sales figures for the home entertainment industry released April 15, 2010 by DEG: The Digital Entertainment Group, “Blu-ray Disc software sales continued to rise in the first quarter of 2010, up 74% compared to the same period last year. BD Rental was up 36%. Hardware sales experienced remarkable growth, with set-top players up an “astounding” 125% versus first quarter 2009.

Household penetration of all Blu-ray Disc compatible devices, including set-top players, PC drives and PS3 consoles has now reached 18 million US homes. Some 34 million Blu-ray Discs shipped to retail in North America, up 72% over the same period last year. Consumer spending for the first quarter in the home entertainment window for pre-recorded entertainment, which includes DVD, Blu-ray Disc and digital distribution, was $4.8 billion, down 8% compared to the same period last year. Total rental was down 14% in the first quarter, largely as a result of brick and mortar store closures, according to Rentrak Corporation’s Home Video Essentials.” (SOURCE: DEG 1Q Home Entertainment Report).

Of course, one wonders how much of this relates to indie / art-house cinema. How long is long tail and how long and how many can it hold-up? That’s a rhetorical question. On the purely DIGITAL DISTRIBUTION side: Digital delivery rose 27% in the first quarter of 2010 from the year-ago quarter, growing to $617 million. 60% of adult Americans have Broadband but the FCC is committed to getting into every home while Verizon and Google are also are in progress on plans to provide faster connectivity and greater bandwidth to American homes. (see our Twitter Distribution TidBits for regular stats like these).

I wanted to remind you of the SXSW INTERACTIVE section. There were so many good panels and I covered some topics in the last blog but here’s a link so you can peruse yourself. I also caution ever relying on information from any one source or panel and in fact that is what today’s blog is all about. We encourage one to contextualize information. Filmmakers benefit from guidance on how to evaluate VOD vs Broadband opportunities and timing (and distribution options); VOD branded channels such as IFC vs going through non-branded aggregators to get to the Cable MSOs and TVN vs. building their own brands and platforms. These are questions of direct revenues (when one can even go direct) and garnering audiences and transactions, input vs output.

More to consider: MGs vs better back-end — and — how many layers of people handling sales are advisable? Is it the same for every film? When is it best to just go with one big deal vs when it’s best to split rights as much as possible? It is critical to know how to identify rights and classes when it comes to revenue terms and best distribution options? When and why to do Theatrical / Hybrid-Theatrical? And how to resolve timing of Theatrical and VOD and all windowing. To window, or not to window? With all the new online platforms, and expanding VOD and mobile distribution, and also now the intersection with PCs (e.g. iPad) there’s a lot to keep track of and decide on.

What about the festivals’ distribution offerings now thanks courtesy of Sundance and TriBeCa and others sure to follow…and of course the SXSW films on IFC etc. How to vet those opportunities or even get them. Do more DIY oriented digital platforms generate revenue? How much are filmmakers generating on their own sites, converting their own sites into platforms? Should you have an iPhone or iPad App for your film? The Film Collaborative will, but should each film individually? We touch more on mobile below. How to conceive of the best marketing plan for one’s dollar? How much can one rely on social networking and how best to work it? When is piracy good marketing vs. cannibalistic?

I won’t be answering all this today in this blog post but we will be covering all this and then some in blogs to come and also in our upcoming case-studies. Not all films are alike and it concerns me to see filmmakers reading books or attending panels and applying what they hear to their film when it may not be remotely applicable. Case in point: a documentary about a popular topic that can be serialized has different options than a narrative feature with no cast. A narrative feature with name cast has different options than a feature length documentary about a relatively obscure topic. We’ll cover the above one topic at a time as we continue to blog and post our Distribution TidBits on Twitter, Facebook and beyond. Of course if you have any questions before we get to the topics at hand, please feel free to contact us any time.

EXIT THROUGH A GIFT SHOP: DIY vs. MG / TRADITIONAL DISTRIBUTION: It interests me greatly that Exit Through A Gift Shop chose to not accept big offers by anyone’s standards and go the DIY route. Hiring good people to do the theatrical and marketing and of course John Sloss does not need help on the digital side. All this makes perfect sense because they are getting as close to the revenue as possible (CRM is at least) and they have a film that has built in marketing potential, plus Sundance buzz and of course a cult following and money to support the release. They, like anyone are dealing with Internet piracy (Torrents, YouTube) but that we believe is good marketing to some extent and in any case, cannot be avoided completely.

 “There are currently 39,000 movie screens in the U.S., of which 8,700 are equipped for digital projection so theatrical gets cheaper and more accessible, as more theatres are booking with filmmakers directly as well (AMC announced its indie initiative; and Quad in NY announced its, and of course there are many more). And of course now YOU TUBE is offering its new self-service rental plan will be the first opportunity YouTube users have to make money off of their content though it remains to be seen how many users (who is considered an “industry professional” and how well the content finds its audience and vice versa.

We cover YouTube on our Digital Distribution Guide and in past blogs etc and we’re curious to see if it can ever become a competitive platform to the leading revenue generators (Cable VOD / MSOs, iTunes, Netflix, Amazon VOD — usually in that order, and sometimes though so far rarely, Hulu (and time will likely change that one way or another). (Note: The Hulu-will-charge-you-money rumor is back and not going away and making many angry and accusing Hulu of greed. More on Hulu a tad further below).

But back to YOU TUBE — keep in mind: YouTube is the SECOND LARGEST search engine in the world with 100MM videos. YouTube streams/day is over 1.2 billion/day worldwide. Almost a day’s worth of video is uploaded to YouTube each minute. Every 2 hours, more video minutes are uploaded to YouTube than those broadcast across the big three networks since the dawn of television (1948). YouTube’s rental store now has hundreds of videos. We await the growth in revenue to filmmakers.

ON THE MARKETING SIDE TO HELP SUPPORT A YOU TUBE RENTAL MODEL and OTHER DIY DIRECT DIGITAL DISTRIBUTION: Social Networking developments: Facebook as of March 13 enjoyed more US traffic than Google (as of February they claimed 400,000,000 users; 50% of which log on any given day). 4 out of 5 Internet users visit a social networking site on a monthly basis with Facebook having over 400 million users Twitter has 105,779,710 users. 300,000 new users sign up per day and approximately 60% are from outside the U.S. Twitter receives 180 million unique visitors per month. 75% of Twitter traffic comes from third-party applications. 60% of all tweets come from third-party Apps. There are 600 million search queries on Twitter per day. Studios and corporate brands are using Twitter as a way to infer and define trends and popular interest, BUT, can relying on it to market be reliable enough? We’re doing case studies and would love feedback if you, gentle reader, have any.

RE: FACEBOOK as the POTENTIAL NEW INTERNET & POTENTIAL PENDING MOBILE OPERATING SYSTEM (OS): From Mark Cuban, owner of the Dallas Mavericks and cofounder of HDNet (and also owner of Magnolia& Magnet (the distribution companies) and Landmark Cinemas (leading art house theatre chain) asks the question if Facebook is the new Internet and if Microsoft will soon try to buy it: “Facebook is now where we kill time at work, on our mobile devices or while at home with the TV on.

Everything that the net was 5 or more years ago, Facebook is today…Slowly but surely they are extending their tentacles into traditional websites, mobile apps (android/iPhone/iPad) and soon your HDTV. It started with Facebook Connect. It extended with search from inside the Facebook Platform. Now they are accelerating their extensions through Virtual Currency (a future goldmine as it extends to business), allowing websites to add a Like button with user pictures through a simple widget and much much more. In other words, your favorite website doesn’t know it yet, but Facebook is in the process of annexing it…The only thing FB has not done is create a mobile operating system ala Android/iPhone as a platform for applications.

Why would Facebook create a mobile operating system? For the same reason Google (NSDQ: GOOG) did. For the same reason that Apple (NSDQ: AAPL) banned Flash and other meta platforms from the iPhone. The mobile operating system is the ultimate trojan horse for billions of devices. If you can create a mobile operating system that phone manufacturers adopt and that becomes a popular platform for application development, you have hope of controlling your own destiny. If you are just an application on someone else’s operating system and perceived as a threat you can be “Flashed.”

Does Facebook have a choice but to create a mobile operating system? It wont be long, if it hasn’t already happened that Google and Apple will see Facebook as a unique threat to their future. Apple has some level of connection to its customer/users, Google has minimal if any connection to their users. Facebook knows more than all of us like to admit about its users. They have our personal information, our pictures, our friends, our family members, our employers and business associates all in a database and they are extending that information base to what we like on sites outside the Facebook platform. Plus they are creating their own currency.

Just as important is the fact that we are progressively spending more time on Facebook than we are sites and applications that Apple and Google can control. That is a threat to Apple and Google. Microsoft (NSDQ: MSFT) is already a shareholder. Already with a mobile and desktop operating system /development platform. Most importantly, already with billions in cash and the capacity to pay 15 or 20 Billion dollars or more to acquire Facebook,” which is what Cuban predicts will happen and how Facebook will then undermine Google and Apple.

BACK TO MORE ON YOU TUBE & HULU… While we wait on seeing if the YOU TUBE rental model has any traction (Sundance films did not fare well)…what if Hulu does initiate a subscription model like Netflix has? According to James McQuivey, an analyst at Forrester Research: “currently online people watch video on 2.6 video devices a week. Young adults aged 18-34 have already expanded that number, watching video on 3.3 devices a week — usually a TV, a PC, a portable device like a phone or an MP3 player or both. We estimate that by 2015 people will watch video on four to five devices each week, including new platforms like netbooks and tablets. That’s a business that Netflix (NSDQ: NFLX) has already shown the world you can profit from by effortlessly serving up video on whatever device the consumer happens to be in front of. Hulu wants a piece of that action.

You as a consumer should want Hulu to get in that game so you can download a Hulu widget to your Samsung connected TV, pull up the Hulu experience in your Wii, and, yes, even get a Hulu app on your iPad.” In this multi-platform world, Hulu will necessarily have to offer more control – playlists, bookmarks, TiVo-like search, even auto-assembled recommendations that consider your entire viewing history, not just what you’re viewing right now. This is one of the secrets to Netflix’s success, with its back catalog of Watch Instantly content that you didn’t know you wanted to watch until Netflix identified it for you.” And soon services like this will compete with Cable VOD which is why the MSOs are taking on more content and banding together to market that to consumers.

MOBILE & APPS: This is a quickly growing distribution category and it’s just a matter of a few years at most before the US catches up to Asia in consuming feature content on a mobile device. And now that the PC and the mobile device are merging that trend will catch on even faster. Check out the Open Mobile Media Summit in London May 26 & 27 and we’ll be updating you… TFC is developing its own iPhone and iPad Apps and also works with its Mobile partner Babelgum as well as telecom licensing as part of VOD aggregation. Filmmakers are increasingly creating their own mobile phone Apps which is one way of having a film available through iTunes and of course the Apps can be a platform and a platform driver. 300,000 iPads sold within the first 24-hours they went on sale. Stay tuned.

My parting thoughts: Films are all different so in making decisions about yours try to compare like-to-like… and in evaluating distribution options, consider where the audience is most likely coming from.. to what extent your film can find it and the audience find your film via your various options and above all things, start thinking, researching analyzing and comparing notes BEFORE your first festival showing.

Collaboratively yours,

—Orly Ravid

May 10th, 2010

Posted In: Digital Distribution, DIY, Facebook, Film Festivals, Hulu, Long Tail & Glut of Content, Mobile / Wireless, Netflix, Social Network Marketing, Uncategorized

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