LINE ITEMS

VOD: Where are the Numbers?

Alicia Van Couvering on the mysteries of VOD reporting.

ny producer who has received a quarterly statement from a distributor knows the exquisite confusion: What are these VOD numbers? You just get a piece of paper with a few numbers on it, says producer Jacob Jaffke of the most recent VOD report he examined. You see the number of transactions, but you dont know how it breaks down or even if its up to date. Word of VOD hits kept coming this year Bachelorette, All Good Things, Margin Call, Arbitrage but confusion followed in its wake. Sure, those were big hits, but compared to what? And wasnt there some horror movie that made $2 million that no one had ever heard of? Im putting together a small comedy right now, producer David Kaplan says. And I think we have the cast to ensure that it will make its money back on VOD. There are similar movies out there that I know are good comps, but because the data isnt public, I cant prove that to investors. I just have to say, trust me someone told me. Right now the only numbers you hear about are the high-end performers, like when Lionsgate says Arbitrage did $11 million on VOD, or when we say that Bachelorette reached $7 million, says Tom Quinn of The Weinstein Companys VOD-centric offshoot, Radius. Were all guilty of it, but I would argue theres value in being transparent about all the numbers. How did Get the Gringo do as a satellite VOD exclusive? How did About Cherry do across all platforms, not just cable VOD? Thats extremely useful information, because even within our own industry, there are huge misconceptions about the potential of a multiplatform film, both high and low. It all leads to a big question: Why cant these numbers be publically reported?

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ITS CONFUSING. Unlike theatrical box office, which simply counts up the money collected by movie theaters, the term Video On Demand is often used as a catchall for a wildly diverse universe of viewing options. Theres electronic sell-thru and rental (i.e. Netflix, which often pays once, like a TV sale), home video (physical DVDs), Internet VOD (iTunes, Xbox, Amazon), international Internet VOD, and cable and satellite VOD, which refers to cable-provider operated pay-per-view purchases. Each of those platforms offer films for different prices, different lengths of time and with different revenue splits with the distributor. Their payment schedules and reporting methods also vary across platforms. There just isnt a definitive number right away, says Eamonn Bowles, president of Magnolia Pictures. [Reporting] has a lag of a few days, and not every cable system is listed. People used to have to spend their weekends counting up faxes from theater owners to collect the grosses, remembers Quinn. Relative to that, were pretty far along.

tell the world how much money youve made. But theyre not going to tell you that the fifth sequel to Smokey and the Bandit only made $1,000 in Biloxi, Miss. Theres no reason to tell anyone that.

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ITS BAD FOR BUSINESS. The history of this is that nobody publically reported theatrical box office until The Godfather and Jaws, says Dustin Smith of Roadside Attractions, the company that released Margin Call. (In an article at Moviefone, filmmaker Mike Kaplan argues that it was obsessive genius Stanley Kubrick who worked out the system for gathering long-term box office statistics that Variety would later adopt.) Those movies were so huge that everyone wanted to publicize [their success]. But the studios regretted it, because now you cant hide your failures. Overall, publicizing the numbers does not help the cause, Bowles says. [It] has not been helpful to complex and interesting films. Firstly, he says, box-office grosses are out of context; a movie making huge amounts of money is probably also spending huge amounts of money on marketing and so may be losing huge amounts of money while appearing to be a big hit. Oscar bait movies with their princely sums spent on monthslong campaigns are notorious loss-leaders. Its incredibly reductive to put out those numbers without context, Bowles says. And its to the detriment of independent film.

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ITS IN THE FINE PRINT. One oft-cited thread in the shroud of secrets draped over VOD is contractual confidentiality agreements. Movie theaters are not like homes, says Jonathan Sehring, president of Sundance Selects and IFC Films. We have to stay confidential on all sides with filmmakers and with Rentrak. Well tell filmmakers whatever they want to know about their own film, but we have to be sticklers about public reporting. Rentrak is the tracking system that collects and analyzes business data for the entertainment business; its Rentraks numbers that you see in Variety each week. The companys chief research officer, Bruce Goerlich, says that, indeed, there may well be confidentiality clauses between his company, cable operators, networks and studios. But he points out that distributors are free to publicize their earnings. Anyone can go out and

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ITS V-O-D, NOT G-O-D. The real dream of VOD is that every single film has an audience somewhere, and digital releasing will emerge as a democratic way to connect the two. But the democratic part of that dream seems to be crumbling. Lots of movies languish unseen on digital platforms. Witness the striking number of desperately renamed A and B titles on the alphabetical On Demand scroll, or the fact that Netflix has declined to renew many of its independent

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film streaming licenses. The idea of the long tail was: If everything is available, you can sell one of everything, and the world will be monetized, Smith says. But they found that it wasnt true. It wasnt worth the manpower, and the vast array of options overwhelms consumers so much that they dont engage at all. Now cable operators are asking for fewer and bigger movies. It took a decade to build the financial models for DVD and home video numbers, and the digital models change constantly, Quinn says. Something might start to work, like titles with A or B names, but then its working against you on another platform. Since VOD revenue information is not publicly available, many filmmakers rely on their prior films performances to make decisions about future projects. Reached two weeks into the VOD release of his superhero comedy Alter Egos, director Jordan Galland had just gotten an exciting, if unofficial, phone call from distributor Phase 4. Apparently its the No. 1 seller of all their films out right now, which is amazing given that the others have such big casts. Galland had only been told his transaction numbers, not the resulting revenue figures, but he was cautiously optimistic that the film would be profitable. Galland had learned a lot from the release of his last film, Rosencrantz and Guildenstern are Undead. VOD had been an afterthought. We focused all our energy on the festival premiere, where it got all this press, had our cast out there but it took almost two years from our festival premiere for the film to become available. We had the trailer online for two-and-a-half years before anyone could even see it. For Alter Egos, the strategy was reversed: A modest festival premiere, a small theatrical release and a highly focused, one-month online publicity blitz, featuring exclusive Web materials Galland had created well in advance. Everything was designed to drive eyeballs to online buys. Galland, who leads the band Dopo Yume, says his experience in the music business helped him develop a feel for the phantom audience reached by online promotion. I think Alter Egos has already made in two weeks on VOD what Rosencrantz has to this day.

Bachelorette

vision business is advertising based, he explains. As remote or post-facto viewing takes over the market, agencies will likely require a new level of transparency to justify VOD ad buys. But the movie business is not advertiser supported; its based on consumer transactions with studios. Financials are disclosed on a need-to-know basis. The studios know how their films did, and how the other guys did. Whos campaigning to get that information that doesnt already have it? (Independent producers, unfortunately, are not yet a particularly powerful lobbying group.) Ill be blunt about why we dont make our figures more public, Bowles says. It wouldnt help the movies. It just gives other companies a mark to say theyve done better than us. And people are not completely on the up and up in their public statements about their films performance.

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WOULD IT CHANGE ANYTHING? Would investors and filmmakers make different de-

cisions if they had access to these numbers? Paul Bernon, a producer and financier considering a number of new projects, says he would take VOD numbers as seriously as he takes box office records, with a pound of salt, not a grain of it. He sees the same list of hits on every financial prospectus he gets. Youd have to see net profits, not gross revenue, but that will never happen. Twelve raunchy female comedies will fail in the wake of Bachelorette, says Kaplan. The big successes always come from unpredictable new things, but investments are always based on past performance. So as great as it would be to have a predictive model, everyone is always going to throw stuff against the wall to see what sticks. You could make the argument that opacity helps, Smith says, because you can still live the dream for investors. You can say, Im confident. Ive been told there are great numbers out there if only these distributors would publish them. So maybe its a lie that helps both sides.

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NOBODY IS ASKING FOR IT. Bruce Goerlich of Rentrak says that he expects to see television VOD numbers publicized very soon but probably not those of movies. The teleFILMMAKER WINTER 2013 99