DUH!™ – Netflix & The Indies
indieWIRE is reporting that indie filmmakers are saying that Netflix isn’t re-upping their deals.
Well, ya.
Netflix set down this path when it let Criterion get away from them and head to Hulu.
The mythology is that Netflix has or will make content choices, but they are all branding choices. I question the choice of focusing on television and EPIX as they sole studio content play in streaming,
The question in the marketplace is who will step up. SnagFilms, which owns indieWIRE, seems to want to own the documentary space. But are they/will they spend to own that space and put everyone else to the side? They should.
The studios space will take care of itself. But there is a strong opportunity in the indie sector for someone to become the dominant streaming player. How much will they be able to pay the filmmakers/distributors? Well, I think that’s the sad story about all of this. There may never be enough cash in streaming to make anything but the most popular product into a big amount of money.
But imagine and indie streaming co-op. The investor/owner takes 35% off the top for costs and the rest of the revenue goes to the content creators. 8 million subscribers at $8 a month is $768 million a year. That’s about $500 million going to the content owners. With 10,000 titles, that averages $50k per title per year. What if every one of the films gets $25k a year and the other $250m is split up on a popularity basis? Or maybe every film over 3 years old gets a $20k base each year and the newer product (1500 titles?) get $40k a year. That still leaves $270m to be split on a popularity basis.
Obviously, you need to have the subscribers to get to these numbers. But there is some combination of numbers in there that will work for someone with deep pockets and a few years to wait.
Or with a company like SnagFilms, maybe a 5000 film streaming-exclusive library and a target of 4 million subscribers at $5 a month. ($240m a year to work with)
The fantasy of an all-encompassing provider is over. Long live Netflix 1.0 and 2.0.
The future for everyone buy the majors is Bulk Niche. You can’t just be bulk. You can’t just be niche. But combine the two and there is a business model that will work. You can be greedy… just not too greedy.
It could be Mark Cuban. It could be The Weinsteins. It could be Cinetic. It could be Amazon or Google or Ted Leonsis. It could well be someone of whom we’ve never heard.
And yes, it could be Netflix. Or Hulu. Though it does not seem to be the way either is heading.
Unless Amazon buys in (in part because Amazon has an in in many devices), I just don’t see how this works. Unless Indie film is willing to take very little and maybe get a little profit sharing, then how does it make sense. I just don’t see millions of people saying “sure. I’ll add another monthly fee to my credit card to see IFC films or docs.”
On a side note, I wonder how Crackle is doing for Sony. That seems to be a good in for Sony to do some sort of Netflix thing. Does Crackle make any money for them? Will they release more content as it becomes more successful? I am impressed that it is on my Iphone, Roku, and Sony Blu Ray player.
During this Netflix outrage, Sony could really push this FREE service. If they doubled their movie content and add such successful Sony shows as Breaking Bad, Justified, King of Queens, Community, and Damages, I wonder if people will handle a few commercials for this free service….Hmmm…
No one is going to pay to see just IFC Films… kinda my point. You need a big, impressive library that makes indie film lovers feel the way they used to feel about Netflix.
As for the whole “another thing on my credit card,” it is a real issue, but it is a transitional issue. We pay for HBO and Showtime and HD packages and football and baseball, etc, on cable, each thing with its own charge. Yes, some people just have basic. But that’s why no one is projecting subscriber bases in the 80 million – 110 million range… at least yet.
The problem with something like Crackle is just what I was suggesting… it’s nice to have, but it doesn’t become a must-have with a very limited, ever-changing base of content.
When WB says to you in 3 years, “You can have the entire, massive WB library, plus our massive TV library, plus the shows we produce for all four networks, plus HBO for $10 a month and you can watch it all anytime on any device,” the resistance will change quickly. The value proposition is what wins.
I’m with you. I would love to have all WB service for $10 dollar a month. I just don’t seeing that happening anytime soon. First you will have push back from the networks. “Why should we lose even more viewers by letting you have this service.” If you could watch say Person of Interest at the gym or on the subway, why would you even bother DVRing it or watching it live. Will a reduction of license fees that the networks pay be made up by this service? They are bleeding viewers and a drastic change like this would scare the crap out of the networks/cable companies.
Then you have the cable companies saying “Why should we continue to carry a service that you are selling(for a reduce fee…well at least I pay 15 bucks a month to watch HBO’s orginal programming….who is really getting HBO anymore to watch movies) and costing us income?”
This is probably the most exciting time for television/movie delivery since the invention of cable. One day we are going to have to tell our children. That we had to wait to watch our favorite show and that sometime we actually had to physically go to a video store, where they may or may not have the new release, and then we had to figure out a time to return it.
On that note I still remember stalking out my video store for two hours just so I could rent the only copy of “Raiders of the Lost Ark”. How times have change…
how many people would use snagfilms if it was $5 a month? $8?
I’m really asking your opinion. My guess is a really low number, like 5 figures
I’m trying to figure out what you mean by “indie”. Those filmmakers who arent getting their netflix deals renewed, we’re talking about DTV product that has no marketing and is completely inter-changeable with each other.
What exactly is this indie streaming co-op?
As far as I can tell, Youtube already fulfills this purpose.
Indie means Roadside, IFC, Eros, Magnolia, Music Box, Zeitgeist, Oscilloscope, Anchor Bay, Criterion, Freestyle, Variance, Kino, Vitagraph, New Yorker, etc, etc, etc…
And I agree about SnagFilms today. But what if SnagFilms offered 90% of the documentaries that you can bring to mind and add 100 more of the best each year? That’s when I think you start seeing subscriptions in the millions.
Right now, offering anything has been a big deal… but it’s spread out… most of it is non-exclusive and free… and there is no specific branding that makes it viable for paid subscriptions. Time to change that paradigm.
And Bennett… agreed about WB TV today… but remember, Hulu already exists… HBO Go exists…. would you pay $15 for the WB service, including HBO? Wouldn’t that be – as HBO Go is – a boon to cable companies?
We need to start thinking about all the pieces of the puzzles being brought together and sold this way. Cable doesn’t need to die. Networks can be branded the same way that studios can.
Look back at the Ryan Kavanaugh deal with Netflix… most of his product, until recently, has been released by other studios. But he retained streaming and pushes the titles to Netflix with not pay-TV window.
It’s all just rights deals. What was the way things were done is being shuffled in a major way.
as you point out, those companies need significant revenue coming back to them from their vendors – prices to acquire and market movies arent going down. If you’re IFC/ Magnolia, you own your own theatres and the cost is much less, so you can play around more.
I think you hit on the right points on the challenges of an indie model. Maybe I’m being too cynical, i just cant see how the economics would work. all indie, all the time, when has that worked? Z Channel?
It does go back to what indiewire was calling indie filmmakers. Netflix would put those titles out with no cost to them, and wouldnt generate much revenue, but it fit their mission and it did make some money. It made sense.
But these are/were much smaller movies than the movies the companies you mention release. Much smaller.
“Indie means Roadside, IFC, Eros, Magnolia, Music Box, Zeitgeist, Oscilloscope, Anchor Bay, Criterion, Freestyle, Variance, Kino, Vitagraph, New Yorker, etc, etc, etc…”
Glorious. I’d actually pay money to have access to movies by these companies (say $4-5 a month), but only if it was Xbox compatible.
Which brings up the other issue here: my Xbox really is the streaming gateway. If it ain’t compatible on Xbox, I’m not getting it. When Youtube goes live on Xbox in a few weeks (?), that will undoubtedly change the game. It will probably double my time on the Xbox as a result…leaving cable and broadcast far far behind.
The thing is, WB won’t give you all of that for $10. They’ll give you WB basic – most network tv and some library titles. Maybe a few new movies a year. Then there will be WB mid-level, which will have more new movies and a maybe the full back library and cost $20. Then there will be WB major, which will include HBO and will cost about $30. Then you’ll also have to get Disney for the kids for another $30. Then there’s the other studios, and next thing you know you’re paying $150, which is suspiciously close to what cable charges. Hmmm…
“8 million subscribers at $8 a month is $768 million a year. That’s about $500 million going to the content owners.”
For god’s sake Poland, research some current subscriber figures before you start throwing out numbers like that.
Netflix has 9.8mil streaming-only subscribers, HuluPlus has ~1mil subscribers. HBOGo is being cagey on their active users despite 4mil downloads of their app. The only way an Indie co-op is getting 8mil subscribers is if it pays the customers to watch.
Netflix’s indie library was its main advantage over Blockbuster Online, as far as the DVD-by-mail side goes. This is getting worse and worse.
Indie means Roadside, IFC, Eros, Magnolia, Music Box, Zeitgeist, Oscilloscope, Anchor Bay, Criterion, Freestyle, Variance, Kino, Vitagraph, New Yorker, etc, etc, etc…
If Netflix drops even a few of these indie distributors than I’m done with Netflix since that’s the majority of what I watch on Netflix. Hell, the access to IFC and Magnolia alone is the main reason I haven’t dumped streaming already.
What does every one think about MUBI?
Dave,
There are aspects of this that are very close to Fandor’s model (www.fandor.com). We already have a bunch of great content and are moving towards getting the subscribers. Proving that the subscribers are there for this kind of supplemental service is what will get us more and more content. Come try it out, register with Facebook and get 7 days free!
It is clear that Netflix, Hulu, Vudu and Amazon are not going to focus on the Indie market. I’ve been working with Fandor, (www.fandor.com) another company working to fill the Indie gap, streaming commercial free Indie features, shorts and documentaries at a monthly subscription rate of $10. They already have more than 600 titles available (and 2,500 more licensed that are in the process of being encoded for streaming). Recent breakthroughs included a coordinated premiere of Sleep Furiously, in which the film streamed simultaneously for 24 hours during its theatrical premiere. The Indie Community needs to support players like Snag, Mubi and Fandor.
I can’t see large numbers of people lining up for the all indie/documentary package, even if they do enjoy those kinds of films once in a while.
Some above hinted at the new convenience of TV watching, but I find this fragmentation of content delivery most annoying. Just create some hub site through which we can access and pay for (if necessary) all content. Kind of like… oh, I don’t know… TV.
While I appreciate what the Fandor guys are trying to do I can’t imagine wanting to pay a $10 monthly subscription for something this niche. I might pay $2 a pop to watch one of these film but would I do that 5 times a month? I doubt it. Maybe Snag, Mubi, and Fandor need to pool their resources?
I think the indie library was a selling point for me to pick Netflix over Blockbuster in the first place even though I liked the thought of having that one in-store rental I could get if I wanted something spur of the moment. Mind you, it was a good six months from the time I decided on netflix and when I actually signed up and then it wasn’t long before I got PS3 and could stream but by that point the closer blockbusters had closed.
Generally I’m only thinking film title and not distributor. I may watch twice as many films from Magnolia and IFC and Roadside each individually than Starzplay but to hear that deal is going cold makes me feel like a lot of content is falling by the wayside. If I hear no more Magnolia I’d be like bummer but it wouldn’t register w/me as jump ship consideration. I think when I stop finding things really of interest I’ll let the service drop. I mean things I want to watch not just wouldn’t mind seeing. The sad thing is I don’t really know what I’ll do then. There’s such an amazing abundance of films out there but fewer avenues to actually see the films when maybe five-ten years ago it seemed like it’d be to the point where you wouldn’t be able to turn around and not bump into a mechanism offering a movie to watch.
But I guess it’s no different than education where schools are contracted and vacated while classrooms are overcrowded and teachers being laid off. Or healthcare where hospitals and care facilities are bankrupt or shut while people aren’t covered or coverage doesn’t allow for treatment. Or large scale commercial property vacancies. Or half empty baseball stadiums or revenue shortfalls in the NBA but beers go for $10 a pop. (Oversimplifications aside, it’s still the same principles.) Yeah, if you have $200/month discretionary income you can devote to entertainment, plus maybe a couple of grand startup for hardware, the world is your oyster.
The IFC/Magnolia and other like minded stuff is a pretty large chunk of the appeal of Instant for me too. The new(er) foreign and indie selection is what I love about the service, and I would be seriously bummed if that aspect started to drop out of favor. I’m curious to how large the portion of serious film fans (obviously most of the people here) is in terms of the subscriber base though.
I think a part of being a major player for these indie focused streaming companies is being available on TVs through technology like Roku or the PS3. In Snagfilm’s favor, they have made that move already.