Features: the real bottom line

The business of film is increasingly international but the root cause is entirely domestic. Producers from territories with fairly large markets like France and the u.k. must turn to the world to recoup. Only the u.s. and India have the audience to support indigenous production entirely. And the u.s. is fast learning it pays to go international. In 1994, for the first time, major studios saw their foreign receipts outstrip u.s. box office performance. The Lion King earned 60% of its revenue from foreign rentals.

The importance of being international is a no-brainer for English Canadian distributors. Having watched with envy the supportive public of Quebecois filmmakers – there’s a very good reason that Golden Reel winners are usually from Quebec – anglos have had no choice but to look offshore for audiences.

For years, Canada has exported its product and seen excellent returns for its better efforts. The Decline of the American Empire, released in 1986, has made $30 million worldwide in all media, $15 million from France alone.

But now the competition is heating up. The air is thick with product – The Crying Game and Four Weddings and a Funeral have been followed by Shallow Grave and Priest – suddenly indie films are a hot commodity. With more and more films competing for the box office dollar, pound, and kroner, how does a Canadian company survive?

One way is to stop worrying about a theatrical release.

According to Shane Kinnear, director, marketing and distribution at Telefilm Canada’s Toronto office, ‘the exploitation of product is more than just box office. There’s a naive notion that you measure the success of a film by its theatrical performance. A film like Exotica is a genuine theatrical product, but a lot of films, including American ones, don’t even get a theatrical release.’

International non-theatrical markets – broadcasting, satellite, cable, home video, pay-per-view, in-flight – have been expanding steadily over the past 10 years.

Says Yves Dion, president of Malofilm International: ‘Around the world, there’s a tendency towards higher consumption of entertainment product in all media.’

According to the American Film Marketing Association’s Ten Year Statistical Survey (1984-1994), as a percentage of total sales, European tv/cable sales have nearly tripled, from 10.46% in 1984 to 28.3% in 1994, while theatrical has dropped from 29.7% in 1984 to 17.2% in ’94 and video from 26.3% to 13.5% during the same period.

It’s important to note that these shrinkages represent a smaller portion of a growing pie. European theatrical improved from us$111 million in 1984 to us$195 million in 1994.

(The survey represents the sales of the major u.s. independents such as Miramax, New Line, Viacom, and Canada’s Alliance, Norstar, SC Entertainment and North American Releasing; some member companies did not participate in the survey.)

One Canadian company tapping the tv/cable market is Vancouver producer/distributor Everest Entertainment. According to Everest president Rob Straight, the video market through the 1980s was fueled by films with budgets under $2 million. With the video market shrinkage, Everest is concentrating on higher-budget ($6 million to $7 million) product that attracts choosy tv buyers while still generating some theatrical returns.

Everest is producing genre fare such as science fiction and fantasy adventure with more star power and sfx, while maintaining a limited low-budget video presence that has some tv potential.

And how does Everest finance this? ‘Our business strategy,’ says Straight, ‘is to develop coproduction relationships with foreign companies. We have worked with (Japan’s) Fuji 8 and Highlight of Germany and we’re looking for others in Europe. We’re looking for companies who have their own releasing capabilities so that we can secure a release slot in (the territory’s) theatrical schedule.’

Norstar’s Linda Grinbaum, vice-president international sales, is in the same boat. ‘We had a field day in the 1980s, but as video has died out, distributors are looking for bigger product, bigger names. That’s why the major studios are seeing big gains in foreign earnings, it’s video, whereas we have to work a lot harder to make the same money. But television is really coming up as a revenue source, it’s like video was eight years ago.’

Bigger companies can afford to concentrate on international theatrical.

Says Charlotte Mickie, vice-president, Alliance International: ‘The majority of our films go theatrical and the majority go theatrical in all territories. We have very little video.’

And tv is often a hard sell. Patricia Rozema’s When Night Is Falling and Egoyan’s Exotica have erotic content that makes them too hot to handle. ‘So they have to be in theaters,’ says Mickie, ‘and they have to perform, if not at the box office then at least in reviews so that they can drive the ancillary sales.’

To make this happen, Mickie is very choosy about her foreign distributors. ‘Your clients are giving you guarantees but those are minimums. You hope they’ll perform and earn you more money, so I choose distributors who really care about the films.’

Mickie counts on her clients to choose optimal release dates. ‘They’re dealing with specialty films, and if they think a film won’t work at the end of September because it’s the end of the football season, I trust them.’

Lately, Alliance Communications, the parent company, has directed its production operation into two areas: auteur-driven films and more commercial product with mass appeal like Black Robe and most recently Johnny Mnemonic.

Such big-budget pictures demand perfectly synchronized release timetables to maximize their profit potential. That’s one of the reasons Alliance formed a joint venture with foreign distribution specialist Mark Damon’s MDP Worldwide in l.a. It’s a world apart from Mickie’s personal touch.

Says Damon: ‘For Johnny Mnemonic, we’ll be co-ordinating the release with 30 territories. Each territory submits its release plans and we review them together. We give them our input and once we’ve agreed we ship them the trailer, posters, photos, the electronic press kit, merchandising tie-ins and album deals, etc.’

By dint of their size, Columbia/ TriStar, which has the u.s. and Germany, and Fox, which has the u.k. and Latin America, are left to do as they see fit.

mdp has four specialists, including Damon himself, who each know several key markets inside out.

‘We have to know which theater is right for which picture, as well as who is the best distributor,’ says Damon. ‘We don’t just go with the company that promises the biggest minimum guarantee, because it’s monies over and above the guarantee that mean better grosses.’

Each territory, he says, has its own best time to release a picture. From the moment Japan’s Gaga signed on to distribute Johnny Mnemonic, it had pegged its premiere for Japan’s Golden Week, a crucial release date in April.

Summer may be a hot time for movies in North America, but not in France or Italy nor in antipodal Australia, where summer is winter. The film will more likely see a Christmas release Down Under.

Obviously, Johnny Mnemonic is exceptional. Alliance is spending $2 million promoting the film in Canada alone – enough to finance the average Canadian feature. If more modest Canadian films don’t have access to such promotional largesse, Canadian distributors are at least getting more mileage from their marketing budgets.

According to Telefilm’s Kinnear, companies are recognizing which markets are best for which genres and budgets.

‘If you have a low-budget film you don’t expect to sell it around the world. You aim at major markets. You don’t worry about landing a Southeast Asian deal. If you want to sell to Southeast Asia then you have to make a film that will sell there,’ says Kinnear.

And, he adds, Canadian distributors ‘have learned to value what they’re buying. They’re paying better prices.’ Kinnear credits Telefilm’s Feature Film Distribution Fund. ‘It gives Canadian companies a leg up in the purchase of foreign fare.’

Unfortunately, Canadian distributors face a perennial catch-22: how to cadge a foreign sale without first landing a u.s. sale?

‘It gets you more interest at foreign markets,’ says Norstar’s Grinbaum. ‘A u.s. deal validates a film, legitimizes it. Foreign buyers say, `If there’s an interest in the u.s., (the film) has to be worth looking at.’ ‘

Kinnear agrees and so does Mickie.

‘And,’ adds Mickie, ‘if the film performs well in the u.s. you make money and gain even more profile. Everyone is impressed by a successful u.s. release. Plus it increases your company’s profile.’

However, in the past few years, Mickie has seen ‘impressive minimum guarantees’ without a u.s. deal in place. Exotica, she says, sold well in the u.k. and Germany before it landed at Miramax.

Although Malofilm willingly discusses the success of The Decline of the American Empire (a film that was released in a different era), just how well Canadian films are performing internationally now is almost impossible to discern. Canadian distributors are unanimous in their enthusiasm over their films’ performances but no one is willing to prove it.

The reticence to discuss box office may be a competitive tactic, but in the long run it may not be a good strategy. A thorough understanding of how Canadian films fare at home and abroad could direct the production and distribution industry to greater success.

Exotica is a rare bird, a golden goose of the box office. While films like Jeremy Podeswa’s Eclipse earn Egoyanesque accolades, it will be 10 years before Podeswa sees Exotica-like earnings – if at all.

Meanwhile, Canada has yet to produce A Muriel’s Wedding, or a Priest, let alone a Four Weddings and a Funeral. It’s one thing to be international; it’s another to be internationally successful.