Top Five Predictions for Films and Digital Distribution

The Independent Digital Distribution Lab –– IndiesLab for short –– is a joint initiative of ITVS and PBS designed to help filmmakers navigate the marketplace and to generate revenue streams while also having a social impact. Indie Labs Director Davin Hutchins shares his first of five predictions about the future of films and digital distribution. Be sure to visit Beyond the Box over the next several months to hear more predictions.

As independent filmmakers proceed with their projects for 2010, I thought I’d take a crack at making some predictions for the New Year. 

PREDICTION 1: Creative Destruction Will Continue… And That’s a Good Thing Video site Veoh Networks imploded this month. Not Chapter 11, mind you; it was a Chapter 7 liquidation. Veoh was an ad-supported, user-generated video site aspiring to be another YouTube. Even though it wasn’t a player in the indie film game, its demise is significant in that the company had burned through $70 million dollars of venture capital and was co-founded by former Disney chair Michael Eisner. This begs the question: if a guy like Michael Eisner with $70 million can’t make a video site work, what can one expect from smaller niche sites that have raised considerably less funding? 

Traditionally, there have been two ways for film startups to make money off independent films –– charge a rental fee to view an entire film or run ads against films that are offered for free. The real challenge going forward is this: data suggests few consumers seem willing to pay a rental fee for an independent film when there is so much free content available on the Internet or TV. And with the glut of video on the Internet –– from professional films to semi-professional shorts to user-generated video –– ad rates are driven lower and lower by an endless supply of video (and much of it mediocre). 

Both major film platforms and startups will face these same challenges. In the past ten years, many indie film startups have imploded, were acquired, or radically changed their focus in order to survive: Atom Films (re-branded as Atom.com), iFilm (re-branded as Spike), Jaman, and GreenCine. All promised more or less the same thing –– filmmaker and film lover nirvana –– but significant dollars haven't really materialized.

My hunch is that this creative destruction will continue… and that’s a good thing. It’s good because the firms that survive the next shakeout –– whether they are stalwarts like iTunes or upstarts like SnagFilms–– will do so by looking beyond the two obvious, traditional revenue streams and begin to adopt others. They will begin experimenting by convincing foundations or corporations to sponsor the delivery of indie films online. They will begin offering subscriptions for access to entire collections of curated films at affordable rates. They will begin the early release of films on digital platforms during festival runs when buzz is critical. They will begin offering personalized versions of their site so the films a person is interested in automatically rises to their customized homepage. 

Many of the majors like iTunes, Amazon, and Hulu are already realizing the limited growth potential of relying on a single revenue stream and are actively trying to forge a second or third. Independent filmmakers gravitate toward any company bending over backwards to put independent films in front of the right eyeballs at prices audiences will accept. Once that happens, we will be getting somewhere. In the next installment, I’ll take a look at the second of my five predictions for 2010: Curation Will Become As Important As Technology. 

-Davin Hutchins Director, IndiesLab