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Transmedia Infusion...Are Indie Film Distributors' Days Numbered?

Expert Witness: Kathryn Arnold
Hollywood’s move into the OTT/direct to consumer service, seen by HBO and potentially Showtime and Starz, is both inevitable and a game changer. As more and more consumers cut the cord and view their programing direct from the creator —as seen for the last several years on YouTube— and now on Netflix, Amazon Prime and others, it makes sense for the major content creators like HBO to follow suit.

Developing an OTT service, or partnering with a Multi Channel Network, allows strong producers such as HBO to reach an online market that they would not otherwise be able to reach through traditional Cable and Broadcast services.

Will the same course be taken for producer’s and sales agents who currently work with local independent film distributors in the U.S. and abroad? Is the OTT service/transmedia paradigm definitively the new business model?

Over time, the answer is…yes.

With the disappearance of the DVD market, and films now being released Day and Day (Streaming/VOD happening on the same
day as the theatrical release,) such as Arbitrage, Snowpiercer and recently Sony's The Interview (which as of the date of this article has raked in $31 million in sales due to the enormous amount of press it received during the " Sony Hack" news cycle,) producers and sales agents may begin going directly to consumers with their feature films as well.

And the main reason is cost, fees and access. Each company, individual or middle man that brokers a deal takes a fee. There is the sales agent, then the distributor, then the exhibitor, the VOD streaming channel, and the Pay TV/Free TV buyers. Each layer takes a cut of the revenues, which leaves very little for the producer. In certain Latin American territories, the government takes a fee of as much as 28%!

This means that smaller movies that generate low to mid revenue figures (under $10-20 million dollars,) which are released theatrically, don’t really have a chance to deliver an ROI back to producers and investors of “lower budget” films.

According to an article in the Hollywood Reporter, many producers are shifting to making content for television that can be sold worldwide for all markets. "We produce a lot for the Syfy channel," says Paul Hertzberg of Cinetel. "Having a TV partner helps us have reasonable budgets."

The other alternative is to produce directly for the web. Although a less chartered territory, with the right cross-platform marketing strategy and perhaps an existing fan base to tap into, web series are seeing a rise in the success rate.

Here’s a quote from a Biz Journal article on transmedia producer Luke Ryan, CEO of The Alchemist, “The old model of sales, distribution and marketing for film or television is slowly fading and quickly being replaced by companies that can distribute narratives across multiple platforms, especially on mobile devices. These companies are taking a singular IP and creating content specific to each screen. More than building a show to air once a week, transmedia companies build worlds where fans can interact with fresh content related to an IP on demand.” The Alchemist produces “East Los High” for Hulu, and is one of Hulu’s top 5 rated shows.

When distributing direct to consumers, producers like The Alchemist have a better understanding of consumer viewing habits and are better able to tailor programming to fit what the audience actually watches. Direct feedback and interactivity enables the companies to pivot—reassess their creative choices— and produce programming that will have higher value to the consumer.

As the transmedia approach becomes THE marketing strategy, the independent distributor will need to become more than just an “agent.” They will need to provide services, marketing savvy and resources that a producer can’t or doesn’t have the time or money to do. As with all sectors that enter a disruptive cycle, the most innovate and creative companies will be the ones that stay in business

It is exciting to see how technology and creativity are converging to create both new shows and new types of experiences for the consumer. What are your favorite transmedia examples that may have engaged you in a show that you might otherwise have skipped over?

ABOUT THE AUTHOR: Kathryn Arnold
Kathryn Arnold has over 20 years experience in the film production and distribution arenas. Having worked in both the studio and independent film environments, Ms. Arnold understands the inner workings of the entertainment industry, its hiring practices, business development, financing and the economic complexities and the nuances involved.

She has served as an expert and consultant on 3-dozen cases, with plaintiffs and defendants, such as producers, production companies, studios, investors, writers, directors, on-air personalities, crew, and other entertainment personnel.

She has provided expert testimony, reporting, consultation, and financial forecasting on cases regarding economic damage and lost wages from copyright infringement, breach of contract, disfigurement, personal injury, wrongful death, and economic downturn. Clients include Gibson, Dunn & Crutcher; Bowles & Verna LLP; Haynes & Boone; Shook, Hardy & Bacon, Dummit, Buchholz & Trapp; Hosp, Gilbert, Bergsten.

Copyright Kathryn Arnold

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.For specific technical or legal advice on the information provided and related topics, please contact the author.

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