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Indies Battle Cinema Marketing Costs

August 23, 2021 by Robert Marich Leave a Comment

Demon Slayer movie
Independently distributed “Demon Slayer: Mugen Train” is a surprise $47.7 million boxoffice hit.

There’s an unfolding tug-of-war over independent films, defined as titles not distributed by Hollywood’s five major studios. Cinemas want to keep them on their silver screens while video streamers, which enjoy more-favorable economics, are siphoning them away.

Distributors of indie movies generally want theatrical release, but cinema marketing costs are a perennial obstacle. Cinema release positions films for top movie awards, Hollywood talent want the prestige of theatrical release and a successful theatrical release makes for better economics.

Indie film distributors are pinning their hopes on a “digital marketing discount” — relying more on low-cost online marketing such as plumbing email lists to mount a narrow focus on slices of audience demographics. That’s less expensive than costly and broader traditional media, such as TV advertising, which the major distributors continue to employ for the wide-release movies.

A Variety trade newspaper story by the author of business/academic book “Marketing to Moviegoers,” Robert Marich, lays out the economic hurdle, which is high marketing expenses for theatrical release.

In 2019, the most recent normalized year amid the pandemic, S&P Global Market Intelligence’s Kagan research estimates that major distributors spent an average of $43.7 million per release on domestic theatrical marketing costs. Indies spend one-third less or even much less per film. But it’s still a huge economic hurdle, given marketing costs to support theatrical release come on top of expense of making films in the always cash-strapped indie sector. Theatrical marketing costs have spiraled, from just $30.3 million per film in 2008, again just for the major distributors.

Says the Variety story: “According to TV ad measurement/attribution outfit iSpot.tv, independent distributors spent $338 million in ‘media value’ in 2019 (the most recent normalized year) in marketing costs to support indie theatrical releases. On the other hand, the major studios shelled out $1.122 billion in comparable media value for their movies the same year, providing greater marketing muscle.”

My Big Fat Greek Weddin
“My Big Fat Greek Wedding” is a landmark indie blockbuster with $241.4 million in 2002 domestic boxoffice.

Movie theaters want to keep indie movies because some do become boxoffice hits. For example. Japan animation-import “Demon Slayer: Mugen Train” grossing $47.7 million in domestic box office for FUNmation Entertainment earlier this year despite the pandemic closures. Going back to 2002, “My Big Fat Greek Wedding” grossed a gigantic $241.4 million domestically for IFC Films, after opening with a smallish $597,362 at just 108 theaters its first weekend.

The Variety story notes that a raft of startup independent distributors seems to be positioned to keep product flowing to cinemas. The articles says: “These include A24 (“Uncut Gems”); Eros STX Global (“Hustlers”); Byron Allen’s Entertainment Studios Motion Pictures (“47 Meters Down”); Greenwich Entertainment (Oscar-winner “Free Solo”); Neon (Oscar-winner “Parasite” and “I, Tonya”); Saban Films (backed by a billionaire); and Solstice Studios (“Unhinged”).

Corporate credit financial analyst Naveen Sarma says video streamers such as Netflix have an economic advantage because their movie releases don’t require big marketing outlays. “You are seeing a price inflation for these festival films because of increased competition from streamers,” Sarma tells Variety. He is media and entertainment sector lead at S&P Global Ratings.

The tug-of-war over indie films between cinemas and streamers will be a hot topic at the movie industry confab CinemaCon on Aug. 23-26 at Caesars Palace in Las Vegas. CinemaCon is sponsored by trade group the National Association of Theatre Owners.

Related content:

  • Variety: Cinemas, Streamers Battle for Indie Films
  • Marketing Movies: Marketing Costs Handicap Biggest Indie

Filed Under: cinema distribution, independents, news Tagged With: affinity groups, economics, expenses

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