AFM: Market Resets to Near Normal as Buyers Seek Value and Currency Worries Present a (Manageable) Risk the rules are still the same. You have to have the quality of content and the talent. And somebody’s going to want to buy it. That decision making isn’t any different.”
Large new product announcements have been relatively scarce so far, and are coming late. But that may matter less if the new crop has this year’s must-have quality – value for money.
“There probably is a lack of premium products in the market. But we are back to people being a little more selective, zeroing in on what it is they want, focusing on the top three to five projects and going all guns blazing into those,” says Jonathan Deckter, president-COO of Voltage Pictures.
“Buyers are looking for things that are sure bets. Audience friendly. We stick to our motto, freely borrowed from Marie Kondo, ‘does it spark joy?,’ says Fortissimo Films GM, Gabrielle Rozing. “That doesn’t mean a film has to be light or easy, but it needs to come with a message from the heart.”
The stuttering recovery of global theatrical markets and the space taken up in cinemas by Hollywood titles and by local films playing their home markets mean that far fewer independent imported titles are expected to be given the holy grail, a theatrical release, than in years gone by.
“From a theatrical standpoint, we’re all trying to figure out what can work and what can’t, because we don’t have any clue anymore,” said Todd Olsson, president of international sales at Highland Film Group. “These days, it has to be something truly unique or an event film that’s going to get people to leave their house. There’s just too much quality entertainment at their fingertips.”
The shadow that streaming giants cast over the indie film marketplace remains significant – platforms are tying up talent, crews and facilities to make film and TV content for their own walled gardens, and, as deep-pocketed multi-territory buyers, they have the potential to upset indie deals – but this is no longer new. And many local distributors which previously attended a market with a TV deal in their back pocket have instead now found an understanding with a streaming partner instead.
In a geographical analysis of the market, Europe, the Middle East and Latin America look to be the strongest buying regions. Asia-Pacific is patchy and generally weak, with Japan having made the most robust theatrical recovery. Prewitt’s data on market participation also shows a surprising surge of attendance from Malaysia.
“Cannes was the first physical market since the start of the pandemic but a lot of buyers skipped it,” said Charlotte Boucon, head of world sales at France’s Orange Studio. “So, this AFM will be the first full in-person market with our Asian or Latin Americans buyers whom we haven’t seen in a long time.”
Given the degree of uncertainty over import permits and censorship, Chinese firms have essentially stopped buying new film titles. But, then again, few Chinese buyers have been physically able to attend in-person markets this year. And it is not news that sellers are putting a zero against China in their revenue forecasts.
Russian firms, which had been significant buyers in the past, have largely been cast out from the marketplace – whether or not they actually endorse the war in Ukraine. But a grey market may also exist.
“Whether you’re dealing with Russia is definitely a topic of conversation. And one where there’s likely to be a degree of convenient ambivalence,” said one seller, on condition of anonymity. Russian finance and dealmaking may be routed through other territories such as Cyprus, one financier told Variety. Or even be rebadged as Ukrainian.
Several market players pointed to currency movements, notably the rapid strengthening of the U.S. dollar against nearly every other currency over the past six months, as a worry. With film deals generally priced in dollars, rights purchasing has become some 20% more expensive in some cases than it was a year ago. With budgets limited, buyers may choose to buy fewer titles or to negotiate harder on price.
Other sellers worry about the potential for disruption of previously agreed pre-sales deals which have become more expensive between the time of signing and delivery.
“People who are worried about their currency will be cautious and probably build a hedge into their offers,” said Mister Smith Entertainment’s David Garrett.
Currency movements also affect production, with weakness against the dollar boosting the case for filming and post-production outside the U.S. But, here too, the potential for rapid change may be limited if overseas studios and labs are already operating at or near full capacity.
If nothing else, the might of the dollar is making attending physical markets less attractive.
“It really doesn’t help anyone that all these markets are so expensive, and AFM is the most expensive by far,” said Rozing. “Especially for Europeans, it’s really expensive to go to LA. I’m spending $300 a night on a mid-range hotel.”