Cannes Report

As promised, following is a guest post from Jamie Thompson, COO of Quantum Releasing.  It is Jamie’s report on the overall market situation as experienced at Cannes — and includes specifics about the market reaction to Beneath the Blue.

NOTES ON CANNES ’09

by Jamie Thompson, COO, Quantum Releasing

It has been two weeks since we have returned from the Marche Du Film in Cannes. Since returning we have obviously been doing a tremendous amount of follow up from the market. Market conditions are tougher than they have ever been and there is a lot of work and communication involved with the buyers, so that is where most of our concentration is directed. First I will give you a quick set of details on Beneath the Blue — then will write more generally about the overall market conditions.

BENEATH THE BLUE

Regarding Beneath the Blue specifically, I have seen more positive, excited responses to this film that I haven’t seen in the marketplace for quite a while. It seems to be defying the odds with regard to the buyers response and the speed that decisions are being made. From the first day of the market, during which we screened a 15 minute promo of Beneath the Blue, we had a rush of buyers. That day we started receiving offers for territories, which is usually unheard of in today’s market (see the more general report below which provides context for this accomplishment by Beneath the Blue.) .   Although we had only intended to “sneak preview” the film and were not actively trying to close deals — at this point we have closed deals with France and Canada — each at an advance Mininum Guarantee that is 3-4 times higher than was the case in the same territories for Eye of the Dolphin (or any of our other films, for that matter.)  We have also taken deals  Czech Republic, Poland, Former Yugoslavia, Romania, Hungary, Bulgaria, and Thailand — all at very good prices in terms of the up-front minimum guarantee as well as the other deal elements.  We are in advanced discussion with buyers for Germany, Austria, Switzerland, Spain, Italy, and Australia with offers coming in. Additionally our buyers for Latin America are very excited and we are confident we are going to close a deal there soon. The excitement level for the movie was actually a great surprise to me, because the market has
been depressed. I had premiered other complete movies that we had anticipated to be our best sellers and we had expected Beneath the Blue to be a preview of what was to come, but with an interest level that high the decision was made to start closing deals at the market.

ASSESSMENT OF THE OVERALL MARKET CONDITIONS
In light of how difficult the market environment and industry in general has been since the financial collapse last year, the Marche Du Film was a very active yet cautious market. Leading up to Cannes this year far we have been dealing with severe problems collecting money on existing deals, having our buyers come to us to renegotiate existing deals, and sales have been down since the economy took a dive last year.

Michael Werner, veteran executive at sales company NonStop Sales was quoted prior to Cannes in the Hollywood Reporter as saying that “Prices have gone way down. You now need 10-15 deals to make the revenue you used to get on
1-2.” 

On Day 6 of the market, page 1 of the Hollywood Reporter had an article that quoted one festival veteran as saying that he had “never seen so much to buy… And no one’s buying anything.”

Variety’s day 6 headline was “In a tough market, it’s survival of the fleetest…

It’s not all bad news though… The market is changing considerably. This Variety piece concludes that “In the old days, a buyer would view a film, make a bid and firm a deal, all within a short timespan. Now it’s more common for companies to lay the groundwork for a deal pre-fest, then announce it at Cannes, or else do the basics here and unveil the deal later.”

I’m still very upbeat on how we are going to do in the current market climate. We came into the market with 218 meetings booked for our two sales people and I was there for support. We were so busy for the first few days of the market that we were often taking three meetings at a time, with me showing trailers from my laptop. Though I was there to primarily assist them in their meetings and be available for negotiation, we were often so busy that the end of the day would come and we would realize that we hadn’t even
had an opportunity to eat lunch.  [[Michael Sellers comment:  I want to try and provide some context for Jamie and his team’s accomplishment in lining up 218 meetings prior the the market.  Most companies like Quantum go to a market with, at best, 50-60 meetings lined up in advance.  A couple of year’s back we first heard about one company, American World Pictures, having more than 100 meetings lined up and that always stood as a high water mark.  Jamie and his team came up with 218 meetings through sheer hard work, including having sales personnel work graveyard hours so they can call Europe on European time, and call Asia on Asian time.  They are truly to be commended for the extraordinary level of effort prior to the market.]]

All of these meetings were fruitful, but we, like everyone else, experienced the reality that many meetings did not result in sales at the market, but rather were a step toward a potential sale that will close in the months after the market.  Many buying companies had cut the number of employees attending the market and were waiting to make offers until after the market, when their DVD sales departments and TV sales departments could also evaluate, crunch numbers, and come up with an informed offer. We are still closing deals from AFM last November and just starting to get offers from meetings in Berlin — there is a time lag and an ongoing process that has to carried out.

The challenges aren’t isolated to just companies like ours. Many of the large companies dealing with major theatrical movies are even having problems. With less overall buying in the marketplace, big movies are going for less money and many are having trouble finding distribution at all. This makes smaller independents with cast that is less internationally recognizable very difficult to sell.

But we did manage to stay busier than most companies, have more meetings, and extend our database of buyers who are actively engaged with us.  As the global economy stabilizes, we believe we are well positioned.

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