Today on the show we have Jonathan Wolf, the managing director of the American Film Market or AFM as it’s known. The AFM has gone through many changes over the years. In recent years the world of film distribution has been turned upside down and AFM has been changing along with it. I have the honor to be moderating a panel on Micro-Budget Filmmaking at this year’s AFM. The times they are a-changing. I sit down to talking about Netflix, streaming, OTT, self-distribution, and how you can screen your film to hundreds of potential buyers at the AFM.
Jonathan Wolf is Executive Vice President of the Independent Film & Television Alliance (IFTA®) and Managing Director of the American Film Market® (AFM®). The Independent Film & Television Alliance is the global trade association of independent producers and distributors of motion picture and television programming. Headquartered in Los Angeles, the organization represents and provides significant entertainment industry services to 125 member companies from 20 countries.
Since his appointment in 1998, Mr. Wolf has guided the growth and repositioning of the American Film Market (AFM), the world’s largest film market. A pivotal destination for independent filmmakers and business people from all over the world, the AFM is a global marketplace where more than $1 billion in motion picture production and distribution deals are closed each year.
The eight-day Market hosts more than 8,000 industry professionals and screens more than 306feature films. Participants come from over 80 countries and include acquisition and development executives, agents, attorneys, directors, distributors, financiers, film commissioners, producers, writers, the world’s press, and all those who provide services to the motion picture industry.
If you want to sell your film then get ready to take some notes. Enjoy my conversation with Johnathan Wolf from the American Film Market.
Alex Ferrari 0:32
Now guys, today is r a f m episode our American film market episode and today's guest is the managing partner of the AFM. Jonathan wolf. Now Jonathan was on the show a few years ago, but things have changed a lot in the film distribution business, as you guys well know. So I wanted to bring Jonathan back on the show to talk more about the new world of distribution streaming services. Ott's the impact of AVOD and SVOD in distribution and how independent filmmakers can actually screen their films in front of hundreds of buyers at the AFM. So we go into a lot of things that we did not go over in our prior episode. So if you guys really want to get into what you can do at the AFM which by the way, guys, the AFM is a very powerful film market is a place where over a billion dollars of business is done. Every year of buying and selling movies in production, or finished product, it is still a very powerful force in the filmmaking distribution marketplace without question. And if you've never been, you should definitely go it's an education to go there just to see how movies are bought and sold and what people are looking for really testing the marketplace. It's a really, really great education. And speaking of education, you might have mentioned this on the show before but on Tuesday, November 12. I will be moderating a panel at the AFM. I'm very honored to have been invited. It is a big honor to be invited to speak on the stage at AFM. And I am humbled to say the least. It will be November 12. Tuesday at 2:30pm. The AFM also puts on an education conference. So there's tons of panels, tons of talks that go on throughout the market, which is really, really invaluable. If anything, it's worth it just to go for that alone. And of course, I will be doing some sort of meet up with all of the tribe, including filmmakers that have had dealings with the stribber, we're going to sit down we're going to talk we're going to share ideas and notes and see how we can continue to help that situation out. But we'll also just be well I'll be walking around. So if you're there, reach out to me, you can email me at [email protected]. And I'll see when we can get together I'll be there most weekdays not every weekday, but most weekdays so it's going to be pretty amazing. But without any further ado, let's get to today's guest, Jonathan Wolf from the American Film market. I'd like to welcome back to the show returning champion Jonathan Wolf, how you doing, sir?
Jonathan Wolf 4:53
Great. Glad to be here.
Alex Ferrari 4:54
Thank you so much for coming back on the show to talk all things AFM. So before we get Started I know a lot of people might not even know what the AFM is they haven't heard your, your all the other interviews. So can you just explain to everybody what the AFM is, in general,
Jonathan Wolf 5:08
AFM is a film market. It's primarily where production and distribution companies license their films to territorial buyers from around the world where they find the access to the marketplace. And it's also where producers and writers and those with packages come to this marketplace to find production companies interested in participating in that film. It's it's a mecca of business.
Alex Ferrari 5:35
Yeah. And that's, that's a real big point here business, as opposed to, you know, as opposed to film festivals and things like that what I wanted to ask you, you've, you've come out publicly and said that, you know, filmmakers really shouldn't submit to film festivals if they're trying to sell their movie, why shouldn't filmmakers submit to film festivals if they're trying to actually make money with their film?
Jonathan Wolf 5:57
Well, I think back up for a minute, we talked first about the difference between the market and festival. Okay, and I think once we talked earlier, once festivals are cultural events for their community, the festival director is sort of like a museum curator, bringing works of art to the community for a short period of time that the community wouldn't otherwise get to see film markets or trade shows. This is where film is bought and sold and licensed and financed and and eventually gets into the marketplace. And what happens when you bring a film into a film festival. that's never been seen before. You risk one reviews, the decision of when a film should be reviewed is something that's strategic, it's made by the those involved in marketing. And sometimes it's the review is from a curated audience, if you have a horror film, you want to make sure that you don't have an audience of over 70 at the Palm Springs Film Festival, watching it at eight o'clock or 10 o'clock in the morning, before they've had their first Mimosa. You're not going to get a good review. So you not only decide who win, but you also decide who's going to be in the audience. When you when you put a film at a festival, you lose control, you don't decide when it plays, as I said before, you don't decide who's in the audience. And then let's say in a festival, you you get an award some notoriety, Best Actor best something and you're at a regional Film Festival. And then you start to use that buzz for promotion. The word buzz is something that we all know about. But we don't understand it so much in the wholesale side of the world. And the retail side, when there's buzz on a film, that buzz is built to a crescendo by a skilled marketing team, the times that peak of buzz right to end the film is going to be released on the business to business side. Buzz also burns out over a period of time. So you have to decide when it's going to peak. If you're going to get peak buzz from being in a festival, you better be ready the day after the screening to capitalize on that. And what happens is someone screens a film at a festival, there are no buyers, there's there. They're no production companies there to acquire the film and the audio in the audience. And a few months later, they start knocking on doors. They're going to companies looking for distribution. And they said hey, we got a lot of bugs we got a lot of feedback on this film was all positive won an award. And the person who sees the film doesn't know why three months after the buzz there is still being pitched where others in the audience and turn it down Are they the last person that's ever seeing the film to to get a film sold, you want to create an auction environment, you want to create urgency. And this is usually done at a market. Now there are a few festivals where business is done. There's some business done at Sundance, they'll more the deals there are closed before the festival than after we've talked about that later. But some deals in Toronto for us theatrical distribution, and a couple others here and there. But for the most part, it's not where businesses die. When you go to a film market. And you say here is a film that has never been seen at a festival before we are premiering at the market. You got a full audience of buyers and when I say a full audience, if you have 50 buyers in in a screening at the AFM, you've got a huge audience. Our average audience is 26 or 27. Here at a festival have 50 people you'd be crying. But this is the difference between a market and a festival. It's all about the business. It's all about the licensing of film, and ultimately getting as much dough for the producer as possible.
Alex Ferrari 9:24
Yeah, this I really rail against this whole lottery ticket mentality that so many filmmakers have where their distribution plan is to submit to Sundance and and hope that they win the lottery. And you as well as I know, you know winning Sundance does help but doesn't guarantee doesn't guarantee sales doesn't guarantee the number that they're looking for and so on. But it does look it does help getting into Sundance, obviously is a nice little thing. But that's such a rare lottery ticket thing where this is much more business oriented. This is more strategic and the way you approach filmmaking as you kind of should depending on You know what kind of film it is now and I've been to AFM multiple times now, you know, there are certain kinds of films that are sold that AFM rather than you know, if the arthouse film sold there is that black and white, French New Wave film that was shot on our DSLR
Jonathan Wolf 10:14
Absolutely. And it Okay, are those films are sold, mostly a lot of them come out of France, okay. You know, they call the American Film market, but there's still films from about 30 or 40 countries, their screen and sold at the market. And there seems to be more art films as we would describe them coming out of Europe than there are the US partially because they get funding. See, when we look at how an independent film is funded, there's equity if you're lucky, there's soft money if you're lucky, meaning tax tax, rebates and, and supports like that. There's pre sales, meaning you've sold the film before it's made and gone to a bank and borrowed against it. And there's different pieces you put you put together like this. There's also some government fundings and grants. And in Europe, there's more access to grants to the public funding. And this allows more creativity, frankly, and more risk taking on behalf of on, you know, the director. In the US, when you say we have no money, we have to rely on the presale market, we've got to sell that film before it's made. You've got to work within certain narrow genres, where the buyer isn't worried about the risk of execution, whether it's horror, whether it's erotic thriller, action adventure, if you come up and say I have a coming of age story of an American teenager, and I want you to buy the film before it's made. Most buyers will say there's just too much risk in the execution. But the similar kind of story could be made in France, or Germany or Spain, where there are public supports for that. And so, you know, the art house world is alive from a, from a funding standpoint, they're still having trouble, in some ways reaching the theatrical audience, and we just don't seem to see enough of those films in theaters. Now, you
Alex Ferrari 12:04
kind of hint in regards to some films at Sundance are sold before the festival even ever happens. Can you talk a little bit about that? Because I think I know what you mean. But I don't know that the audience does.
Jonathan Wolf 12:15
Well, here, the lottery ticket is actually being accepted to Sundance, because every distributor wants to see every film that's going into Sundance before Sundance, when you hear about a deal being done at Sundance, I promise you with all the lawyers involved in the complexities of cutting deals, they didn't do it at two o'clock in the morning, they celebrated a deal that was already done. After the screening, they went to dinner and said we have a deal. Not so what happens is the distribution companies frantically want to know what films are in Sundance and the producers along with their PR team or wherever it's assisting them. As soon as they get that Sundance submission, acceptance. They've contacted every distributor, they know this is going to be in Sundance, do you want to see it? Nobody says no to that kind of screening. And it's pretty easy set up a couple screenings in a mid morning, you know, in LA and and everybody's seen it. So those deals are cut way in advance. Now, some may wait to the end we were going to paper but we want to see the audience reaction but really for the most part, those are gone. And the end that kind of myth was kind of started in the early 90s. In the the Miramax we won't use his name, but then the Miramax days, where you know, Steven Soderbergh literally showed in 89, sex lies and videotape and deals were made by you know, at a coffee table at in Park City. And that's the thing where the myths came from. Correct. You know, and I don't know in any specific film, whether the deal was after the screening or the deal was three weeks before, but that kind of excitement about, you know, the champagne flowing at five o'clock in the morning, and everybody thrilled and it's like the white pearly staircase came down from the clouds. It's great. But then when we look at film markets, like the AFM and same thing of canon Berlin, we have dozens and dozens of producers with with packages ready to go part of the financing. They need to sell certain countries to to rap out to get the rest of the dough to make the film. And they don't know if they have a green light coming into the FMX. And they have one coming out. And they're down at the bar at the end of the market celebrating not that they got into a festival, but they lock their funding. And there are dozens of films that come into the AFM without funding completed that walk out with it. And so each of these events is different festivals very different from markets. And I'm just sort of highlighting one of those differences.
Alex Ferrari 14:41
Now, can you explain to people how films are actually sold at the AFM? Like what is the process for people who are unfamiliar with the process as best you can?
Jonathan Wolf 14:49
Yeah, it's about as complicated as writing a screenplay. There really if we can break it into two pieces, there are films that haven't started shooting what I mentioned before is because Pre sales, where the sales company, along with the producer have got a viable enough package that they're ready to present it to buyers from around the world. Now primarily the top 10 or 12 companies, countries, the largest UK, France, Germany, Australia, Japan, Korea, they're ready to present it. Now. When they're ready to present, it means they've got a director, they've got the cast. Clearly the screenplay is done, because the finished screenplay becomes part of the contract that you're guaranteeing delivery of that screenplay with only minor minor adjustments. And there may be other attributes to the package, possibly some funding, it's very difficult today to get 100% of your funding from pre sales. But they've got enough of the package, that they're ready to bring it to the market to pre sell. And they're pre selling for a variety of reasons, sometimes, because they need the financing. Sometimes, because the investors want marketplace pre acceptance. If they take it to the market, and everybody goes thumbs down, the equity investor may say it didn't work, let's all walk away and cut our losses. So I want to see a certain number of countries sold to not only mitigate risk, but also to know that the marketplace actually wants that particular film. And so that's one set of deals that happen. Then the other side is on finished films, where they were able to make the film before selling it, or maybe they only sold a handful of countries to wrap up the financing. And then they're bringing the finished film to the market to show it to the territorial buyers. And and so it's it's constant pitching, it's constant selling those sales agents. I may have said this to you once before one of our discussions, those sales companies are the best pitchers in the world. If you can imagine every 20 minutes you have a new meeting to pitch one of three or four or five films you're representing to someone who hasn't seen the film and it's possibly hasn't even been made. And that's where you make your living is pitching unmade films. And when we hear about a producer, who hopes every two or three years to pitch a film and get it made, and then we talked about the sales agent that's pitching three or four films at a time, nonstop every day, and that's what they do. They are the best in the world.
Alex Ferrari 17:15
And when I remember so vividly of my first time at AFM, I'll never forget this movie. I've not seen it, but I never forgot it because it was so perfect. Was Steven Seagal versus mike tyson? And it was just, it was just a big poster of it. And I'm not even sure if the movie was finished yet. It might have been a pre sale situation, I don't know. But I saw that I was like, this is this is amazing.
Jonathan Wolf 17:40
The first time I went to Cannes and sorry, this dates me a little bit. But very early in my career, I saw a big sign on the Carlton terrace. And all it was was two characters, a T and a two. It just was T two 919 90 or 91 and 91. Yes, I'm like that. And that's all it was. And and Carol Coe was pre selling Terminator two. And that's all they did was just T two. And they sat under the sign and took orders. Sometimes that happens.
Alex Ferrari 18:14
Yeah, yeah. And now But that said, What is the health of pre sales nowadays because it isn't like the olden days, where you could walk in and you could arguably fund your almost your entire film with pre sales is pre sales as predominant as it is it was years ago,
Jonathan Wolf 18:30
I began with sort of a two part answer. Budgets are bifurcated budgets are either getting bigger or smaller. 10 years ago, you could have made a $3 million horror film gone straight to blu ray, and eventually gotten your dough out of it. Now if you make that film for more than a million, you're you're in trouble. On the flip side. I don't know if monster could be made today. That you really need to have bigger budgets and then bigger profile to get out there and reach a broad audience. So budgets are getting bigger and smaller. On the bigger budget side. presale is a very, very important component of getting the film made. Absolutely. In almost every case.
Alex Ferrari 19:10
When you say bigger budget, can you kind of give you a range,
Jonathan Wolf 19:12
I would say in English language 15 to 20 million and up. It starts when you're producing and I cannot English language is different because the business models from Argentina to France are very, very different in terms of both their cost structure and guaranteed distribution in country. But if we're talking about American or British films gets very difficult to produce between two or 3,000,010 to 12 million, do you because as soon as you cross a certain number, you've you've got to go out theatrically. Unless you're doing this, let's say as a project for Netflix, where they have pre bought the film and essentially to Netflix production. We can talk about the the the platform separately but if we look at the at the markets, it's not easy to Pre sell a $300,000 film, the buyer can look at that and simply say, there are lots of them coming forward. I'm not risking my company by waiting for the film to be done. When you're a theatrical distributor, and you come to the AFM and there's six or seven or 830 million dollar films for sale and you walk home with none, you might have empty slots in your distribution Schedule A year later. So you need certain films, and you need to take the risk of acquiring them early. When you look at a $300,000 film, you're it's almost exclusively for online platforms, you know, as, as a distributor, you'll have enough content, so you prefer not to risk or go through the hassle of the pre buy, you'll wait for the films to be done, see what they look like, and then buy what you want.
Alex Ferrari 20:47
So this year, I think you just said off air that we you starting a new kind of program allowing filmmakers to screen their films directly at the AFM. Is that correct?
Jonathan Wolf 20:58
Yes, you know, canon has done this for a while we've somewhat resisted partially because of limited screening time, partially because we didn't want to mislead the producer. The biggest mistake a producer can make is saying I'm going to come to the AFM screen my film, and then sell it myself to territorial buyers. It's like putting a sign from your house, it says for sale by owner, it's almost always a disaster. Producers don't know how to affect the full delivery, they don't know where the values are. sales agents truly do add value. And they don't quite get the urgency of you can't sell China this year. And then next year, sell Argentina, you've got to get the world sold very quickly. piracy and just global media awareness diminishes the value of film too quickly once it gets released. And so we were I was concerned that producers would come in and try and do this themselves. And what we've seen over the last five to 10 years is fortunately a greater sophistication and those who are making films and a greater understanding of where they fall in, in the in the in the food chain, if you will, it used to be a producer would come to me and say so let me understand this, all the buyers have offices, right, because they simply have a script and they look at any production companies a buyer. But of course the terms in our industry is a buyer is someone is a territorial distributor, coming to the FM to acquire packages. We see the producers more sophisticated now and and are slowly we've opened the gate if you will, to allow them to screen. But the purpose of their screening is to reach the sales companies is to screen later in the market. When the 300 or so sales companies their business activity slows down a little bit, they can send someone to a screening. Now sometimes it's for fun, frankly, it's cast and crew and they just want to be there. You know, half of the screenings in camp at the cannon market are just producers saying I screened in camp. And they don't mind spending $1,000 to see I've got a canned screening, the AFM doesn't have the same brand. Because when you say candy don't necessarily differentiate between market and festival. And you're talking anyways, the market and festival clearly know how to differentiate, but others may. So we've opened this up, I think we'll have 15 or 20 films, screening. And you know, we'll we'll sort of take the temperature of the producers afterwards to see how it how it worked for them to make sure they got the audience or the return on their screening investment that that they wanted. But we did open up a few years ago to a screening that they have ever expensive. They're about 15 $100 for a single screening at a time when between 20 and 28. Other films will be screening at the same time. We've got 29 Cinema auditoriums, we don't quite fill them all, every two hours, there's a lot of competition. And the work that the producer would have is getting people into that room who are valuable prospects for them. But what we've been doing for a number of years, four or five years is we have AFM on demand, which is an online platform for those who have come to the market to see film both before and after the market. And we've allowed producers to screen on demand for a number of years and more 60 or 70 took advantage of that, I think last year, that's only $400. And the advantage of that is it runs for about six months. You can define who sees your film, let's say you only want sales companies or something like that. And it's it's really a prank, frankly, a better value unless you've got a big expensive film. If you've got a $300,000 film, it's headed straight to a platform. You shouldn't spend, you know so much on a theatrical screen at DFM, you should put it on demand and tell the sales companies the week after the market, they can come see it and your work the market by just going around to the offices, letting everybody know it's there and following up afterwards encouraging them to go online. We just find it to be a better sales tool for most producers.
Alex Ferrari 24:55
Now I've read also somewhere that I think is on your website might be mistaken that filmmakers could kind of piggyback on other exhibitors, like you know, if you if I, if I call an exhibitor there and go, Hey, can I screen through your exhibition pass? That that is it that is a practice that is done if you feel like it, because what is the actual process to get your film screened? If you're if I'm gonna have a I have my I have a film. What do I do?
Jonathan Wolf 25:21
Well, if if, if it was last year or the years before, this is what some producers did, because only the sales companies, the exhibitors, the show could screen this year, because anybody with a badge to the market can screen their film, they actually don't matter the price, the cost is the same. They don't go through the exhibitors, and the exhibitor really doesn't want the hassle unless they're actually selling the film. And so they just simply go online, they get a credential and it says screen your film, you click here and just follow the instructions. And there's a process. And we don't make it difficult because we you know, we want people to do it if it's right for them.
Alex Ferrari 25:58
Okay. All right. Great. So then, so you would advise, I mean, is it a specific kind of genre you're looking at for those kinds of films? I mean, I mean, obviously, historically, and please correct me um, and you know, much better than I do, but action adventure, erotic thrillers, thrillers in general, and whore. And then a family films, like anything that has a dog saving Christmas will do very well. And family films, those are kind of the big giant pillars. And then there's, of course, faith based and other other genres as well.
Jonathan Wolf 26:28
Well, let me say that they were okay. The industry is moving quickly. If we had this conversation six or seven years ago, I'd say that that is the center of the market, then you have larger emila. More than half of the Academy Award winners for best picture in the last 40 years have been licensed or screened at the AFM. So the AFM is about everything from shark, NATO and Toxic Avenger, you know, to greenbook you know, it's just everything in between. But that middle tranche that you mentioned, really defined what worked in the presale marketplace in the middle budget, where the buyer who comes in is usually taking on a pre buy two risks. One did they guess, right for what their audience wants, like, like buying sweaters for for, you know, a department store? Did I pick the right color order too many. But the other risk they're taking is that the filmmakers will actually make the film they promised, Was it good? Was the acting right, the director do what they need to do. They're taking two risks. And as I mentioned before, there's more risk of execution on serious dramas or talky comedies, and less risk of execution in specific genres like action adventure and horror and thriller. And so producers who don't have a lot of equity, are having problems raising money elsewhere and needed to rely on the presale marketplace for most of their funding. We're forced just by the nature of the marketplace to stick with genres that they could pre sell. If they could pre sell Brokeback Mountain, if they could pre sell greenback, a Green Book, you know, we'd have a lot more of those kinds of films. But they're just too risky. The buyer wants to see the film first. So the genres you've mentioned, are have slowly slowly melting a bit or the budgets are getting so small that that that the presale isn't isn't a piece of that. Now, if you look at Expendables, I don't know what what, which one obvious on is Expendables 44, or something, but but this is clearly you just say it's Expendables, here's the cast, and I'll show you the script. When the film is done. And it's bought, you don't care about the execution, you know, it's got a wide berth, and they're going to execute within that. And within a level the audience will accept. Come up with a talky drama, it's different. And so there's still some of that, but the budgets have either gone up, or they've gone down. And have you seen, you know,
Alex Ferrari 29:05
I'm going to be doing a panel at the AFM about micro budget. And, you know, do you have you seen the, I mean, as you were saying, they either have gotten really much more expensive or have come down, down, down. And I work with independent filmmakers on a daily basis. And I've seen budgets from $3,000 for a full feature that gets sold to streaming services into when I meet the filmmaker. You can meet him right here. I made a movie. I made my first feature for $5,000. I had I had a beautiful cast of friends here in LA who were all big, it was a dramedy, and we got a licensing deal with Hulu as well as sold it self distributed as well. So it's doable, but yes, but so that you've seen those budgets, but then I see the budgets of three, four or 500,000 as well. So how have you seen the budgets really change? And what is that sweet spot for certain movies to actually have success at the AFM
Jonathan Wolf 30:00
I'm only going to give you a partial answer to this frontlines really no. Yeah, the fact is, first and foremost, if the film isn't going to resonate with its target audience, it doesn't matter how cheaply you made it. It's all about the audience.
Alex Ferrari 30:17
We'll be right back after a word from our sponsor. And now back to the show.
Jonathan Wolf 30:28
And, and if you're looking at the film business, with the emphasis on the word business, the first thing you do is is face your audience. You know, I mentioned before buying sweaters for a department store, if if Bloomingdale's the buyer just happens to like green, and puts a whole bunch of green sweaters on there, and nobody else likes it. It didn't work. Those that succeed are facing the audience understanding they want what they want. And, and I don't know specifically, which genres which budgets, you know how things connect. And this is really where the filmmaker has much more skill than I do, where the sales company, and in keeping their ear to the ground and understanding where the values are. Just what the marketplace is, is responding to it. It's moving much more quickly now than it might have 10 or 15 years ago.
Alex Ferrari 31:19
Yeah, I mean, that's the thing. I always tell people as well as filmmakers, like what was what was true, like, last month, is no longer true today. I mean, we have and we're going to talk about streaming services and more. But now coming up in the new year, we've got four or five monster streaming services being brought out Disney plus and NBC Universal all these things. How is that going to change the marketplace? How is you know, it's everything is changing so rapidly. And I can imagine someone like you who's been working with the AFM. I mean, I remember the times where the if you know, where movies, you know, even just an industry was much slower, it took time for things to change. Now, it's, it's changing almost on a monthly standpoint, how, you know, how do you how have you seen the industry change? How is it affecting and how is it affecting the AFM?
Jonathan Wolf 32:03
Well, okay, well, we have about three or four hours for for this one. Of course, the streaming services are having are creating a tectonic shift in the industry. And everybody knows this, what I'm saying is a new, but maybe I can add some interesting perspective. They're doing a few things. First of all, this is a Renaissance period. For actors, for writers, for everybody who works in production from cinematographers to set designers. There, there are more hours of film both narrative and and not being made today than than ever before. Everybody is working, that makes it an exciting time. It's also somewhat of a bubble. Many of these streaming services are losing money, all of them are talking. I read today that that that Disney is going to be spending 15 million an episode on this show 10 million an episode on that show. In the days of network television, when there were only three networks, even at today's dollars, 2 million an episode would have been a lot to reach 30 million people a night. Now they're spending huge amounts of money. And and I'll talk for a minute about why that can actually work for them. But it's still a bit of a bubble, because they're all going to be losing money for a while. And eventually, some some common sense will come in either shareholder driven or marketplace, and production will pull back a bit. But in the meantime, it's creating a renaissance environment for everyone, except producers. And here's why. If you are a Motion Picture producer, and your goal is to build a library, and, you know, actors, writers, directors, they get residuals, their film plays forever, they've got a participation in that, you know, for a long period of time to cover the lean years or the lean months, producers don't. When you go to a platform, like Netflix, they write a check, they buy you out, you see nothing It has worked for hire for you beyond that. Now Netflix will say due to their credit, we're going to pay that producer more than the average film might earn not blockbuster, but not losing money, or, you know, as well, we're going to assume it does sort of Okay, and that's what we're they're gonna get paid. And it's gonna be better than most, but they have no back end. They have no participation. Now, they're just told Good luck, go find something else. We're not providing development funding. We're not you know, paying your rent for your home while you're trying to find the next next package, where a producer who can build a company through a library really has a way to help fund a future film. And the big question mark for me is where are those creators going to find those new exciting ideas? the creative process works best in small pockets. This is why even the studios when they're producing, you know 1012 pictures a year or one a month is about all you can do without creating another studio and another set of decisions. makers. It's why the music labels have offices all around the world, not because the music is different in Nashville versus Seattle, but you can only just put out, there's only so much creativity that can come out of one group. And what's happening now is they're slowly strangling those who fund and take the risk the entrepreneurs, it is the it is it is slowly driving the entrepreneurs to extinction. Because these are the people who take risks. And this is the part it's not gonna happen in the near term. A lot of those entrepreneurs are, are happy getting their fees from Netflix. But I know multiple people who've had series of Netflix, for example, and they've done the first year. And Netflix says the only way we go forward with a second year is if we own it, we're buying you out, you have no participation, or there's no second year. It's all about owning the copyright. We've seen that some of the I think Disney is slowly moving towards this not having to deal with a profit participation definition, but rewarding based on certain milestones. This is worrisome for the producer. And I'm not trying to wave a big red flag and maybe I'll be surprised in the marketplace, or the creative producers will find a different model that keeps them healthy. But that's what worries me.
Alex Ferrari 36:21
The the other things The interesting thing about Netflix because obviously Netflix was the the the catalyst of all this, they they're the first streaming service, they're the ones that really kind of changed. Basically the way business is done in Hollywood at this point. I always I always say that the difference between them and like someone like Disney plus, is that Disney plus, or Disney is a very diversified company. Netflix is not their entire multiple, the only revenue stream that they have the blue jority of it other than a few t shirts for Stranger Things that they might sell is subscriptions. So Disney can take that hit and can lose money on Disney plus for years. Because they have so many other ancillary product lines and things and they'll make more money on the T shirts off of those shows that $50 million an episode show than they will off the show itself. So they have a different business model. I agree with you, I think there is a bubble I think what sooner or later, there's going to be one of these giants. That's just going to it's just gonna pop it's just gonna fall.
Jonathan Wolf 37:23
Well, let me let me add a perspective to this. First of all, Disney has said by 2020 they're going to lose about $4 billion in revenue that they would have otherwise collected had they not started Disney plus. So they they have to move quickly. And they have to scale quickly and they likely will. They've got the only brand. Disney is a brand Warner Brothers is not a brand. Nobody says I can't wait to go see a warner brothers film. Right Pixar film a Disney film, a Lucasfilm their management. Yes, Marvel did manage, they understand that brands actually sell just like paying Tom Cruise a big number to be on a film because because he sells he can drive tickets. Those brands sell the other brands you don't rush off to a paramount film. But there's something that Netflix understands that magazine publishers have understood for almost a century about the subscription model. And that is with the magazines. The average consumer would retain their subscription, if there were two sections in the publication that they wanted to get every week or every month, however, often came out, not for the whole book. But for two sections. If there are two parts of that that you want to see, usually the subscription was low enough that you would always retain it because you didn't want to do that. Netflix has followed that exact model, which is they want to have just enough of what you want, what I want and what every single person around the world wants to say yes, for my $10 a month, I don't want to move, Li Li lose that slice. Adam Sandler gets a port for a picture deal. And a lot of people in Hollywood roll their eyes and laugh. Netflix knows exactly what they're doing. There's an audience for everything and their goal. They're not going to buy every dock. But they're going to buy enough dock that if docks are important to you, you will never give up your Netflix subscription. And so it doesn't matter that Netflix doesn't have the Disney brand because they are doing something different. Disney is saying here's ESPN, here's Lucas, here's here's Marvel, here's our various pieces of content. And we think that most of the public wants at least one of them. Netflix is much broader, in the sense of Disney pluses and going out with 100 docks every year. Netflix would be and so they're taking the big book 300 page magazine, publishers approach which is we're gonna have just enough of everything. Now. They also know That, and that it's what's new that keeps people engaged as well. Very few of their series go more than two years, partially partially because the costs go up. Partially because they know they don't lose subscribers when they cancel series, one day at a time, you know,
Alex Ferrari 40:20
Great show, I love that show.
Jonathan Wolf 40:22
Outcry, oh, great didn't matter two years, they're done. You know, they'll go on and on. But if they have the next new thing, it gives them something to market to drive new subscriptions, their churn rate is low. And it's gonna be interesting when we want, you know, a company owned by at&t, that used to in its cell phones, used to have like a one and a half percent churn per per month, an 18 to 20% churn per year. If you had that at HBO, if you had that at Netflix, they'd be doomed. And so it's going to be interesting to see how those those cultures work with each other. But I wouldn't sell Netflix short. Now, I don't mean, you should go buy the stock, because I have no clue where values are on something like that. But those who say Netflix are is losing all of its content, and nobody will want them anymore. They're missing the subscription model. And really what is at the core of it that Netflix does understand.
Alex Ferrari 41:17
Now, I mean, obviously I remember last year when I was walking the halls, all I kept hearing was this this term Ott Ott, Ott, Ott streaming, it's everywhere. It is just it's just rampid. It's like a virus that has infiltrated the AFM. Everyone's talking about it. But yet a lot of people aren't figuring out like you were saying, how to make money with it. Because DVDs was like you, like you said you made a $3 million horror movie, you threw it up on DVD and blu ray, you made your money back, it was just the market. Streaming is not like that the profit margins aren't as as big there had.
Jonathan Wolf 41:52
And there isn't the cost. Sorry, go ahead. No, no, there isn't the competition. So if you were selling a blu ray, and you were going, looking at I was an action adventure, and you were looking at Japan, there might be six 810 15 distributors, who you could show it to what's happened. And this is what I think a lot of the creative industry misses is the growth of the platforms has really been about consolidation, and consolidation of channels to the consumer and consolidation of potential buyers. Now, who do you go to when when the blu ray player, blu ray excusing, buyers have gone and you look at a streaming platform, and a number one streaming platform is Netflix and there are two others and that's it. In a country, suddenly, you don't have the the ability to create an auction for your film, suddenly three companies are interested, you're just out of luck. Now maybe you go to an A VOD platform, hope you can, you know, get a little bit of dough as their ads playing against against your film. But the scary part for the independent filmmaker is the consolidation that's happening. And while people would look at the AFM 10 years ago, 15 years ago and say, Who are all these people, they're the frankly the ones that were funding the 1000s of independent films that were made, because they were they knew how to find their audience and what I'm hoping for, and we're doing a session at the AFM called the rise of a VOD, what we're hoping for is that they're actually become what I'll loosely call independent platforms. When we push aside Netflix and Disney and peacock and some of the others who is out there saying we don't need 50 million subscribers, we need 5 million. And we're going to pick up the films that others don't want. And we have a marketplace. And I think ultimately, what we'll start to see is a slow growth of independent platforms. And what I'm most hoping for is that some technology provider, maybe it's Apple, maybe it's someone else comes up with the over the top app, which allows you to say, Here are my subscription subscriptions that I have got Disney plus I have Netflix, whatever it is, and it organizes everything for you in one place. The consumer needs simplicity, we have so many examples of that. You know, we we all listen to music digitally. But a CD has much better quality. We'd all prefer to stream films. But a blu ray has much better quality. We actually prefer convenience, and we're willing to give up some things for that to be answered. It's somewhere there needs to be that that app on your on your television that allows you to access everything you have rights to in one one spot. The reason I mentioned this is then that small app that small distributor has a place there can that can be found along with everything else.
Alex Ferrari 44:54
It was just funny you say that the small niche kind of over the top streaming series services are going to start popping up. I myself have a streaming service that's dedicated to filmmakers and screenwriters, and it shows movies about screenwriting and filmmaking, it shows you no other kind of content that's aimed at that demographic. And it's a full blown streaming, you know, Apple TV, everything. And I keep saying the same thing is like, you know, one of the main core things I teach is to filmmakers is to understand your audience and to niche down not to go broad, they can't compete with a studio budget, they can't compete with 20, you know, $20 million in PNA. But they can make I always say, make the vegan chef movie, you know, make that movie that is a romantic comedy about a vegan chef who meets a meat eater at a barbecue competition. And you make that movie for $150,000. You know, you put a couple stars in it or your company, but you can sell that that movie to that niche audience, would you agree that not only is it the niching down of your projects, a beneficial thing at selling at the AFM, but also for these companies in these streaming services like cozy flexes, for example, or what's that there's a faith based one as well, something else flicks, you know that they're, they're literally like, I don't need to go after everybody. I'm just gonna go after my niche audience.
Jonathan Wolf 46:11
And that's important. If you compare it to the real estate industry, some people big build big mansions in Beverly Hills, and some build, you know, apartments and one bedroom condos. And but they when they start production, they start building, they understand the marketplace, they know how to reach the marketplace, before they start. Too often we find with the creative producer, they make what's in their head, and then afterwards say now what do I do with it?
Alex Ferrari 46:37
You mean most of you mean most filmmakers, basically what you're saying.
Jonathan Wolf 46:41
And this is one of the things that differentiates the studios, the studios are distribution companies, they only produce so they can have something to distribute, sort of like the oil companies, they're all refiners if you said to Exxon Mobil that that will give you a steady supply of crude from now till eternity, you don't have to explore, they'd be cheering great, we're just going to keep filling our refineries. The only reason they do that is so they can continue to refine and retail. If you said to Disney, we're just gonna feed you, you know, a Star Wars every month forever, they'd shut down production, because it's all about, it's all about the distribution. And so, the independent and I'm exaggerating, of course, but but the end of the independent producer frequently is focused on the production side here, there are two kinds for me. And there two kinds of companies, some companies, there are distributors there, excuse me, there are companies that produce so they can continue to distribute, and their companies that distribute so they can continue to produce. And those that distribute only so that they can continue to produce are usually following the the the owner the principal's vision of production, and in very few cases, do they succeed long term. Most production companies just don't have a long lifespan like the studios. And it's not because they aren't big. It's because our ultimate mission was still to produce.
Alex Ferrari 48:04
Now, do you have any tips on how to work the AFM for a filmmaker? If you if you're trying to either do a pre sale or sell a project? What do you have to walk in? How do you walk in or if you have a finished film what you should do as far as just literally working to work in the AFM.
Jonathan Wolf 48:20
The first thing to do is to start ahead the worst experiences are someone to pick up the credential, walk in the door and say, Okay, now what do I do? There is no follow the dots there is no roadmap. It isn't curated for you. This is a jungle. And so you have to be prepared for it. You have to understand what your mission is. And there are a few I even start at the producer or writer who doesn't have a script has nothing. Their reason for walking the market. And I'm not suggesting that all should do this. But I've met many who have. The reason for walking the market is to know what's working in the marketplace. To be able to go door to door, you can walk in the office of Lionsgate then you walk in the office of every single company that's there, the door is open, they may or may not have time for you at that moment. But you can absolutely see what's coming. You can see what budgets they were working. And it's so refreshing when someone walks into one of these companies, instead of pitching turns around and says, What are you working on? What budget cut ranges you in? What language what genre? What works? What after, you know, just asking questions, it's a wealth of information. These companies all face the marketplace. The first and foremost is to make sure that any minute you have to have me spent learning and frequently going door to door and understanding what companies do. Because they're you know, ultimately you want to make a film that sells not a film that you show to family and friends, and then pull it out once a year to show it again. And so then the next group I look at sort of the process is a producer that has a package. Writers with scripts have a challenge. They can find out who's interested in a weapon. Nobody's going to read a script in a market. So pitching a script at a market just going door to door and saying, buy my script, you know, doesn't work for a producer with that script, who has some elements to it may have some equity may have somebody attached, you know, may know where they're going to shoot with some soft money coming for they had even even just the embryo of a package beyond a script, they have an opportunity to create interest because the companies there are constantly looking for new films. And they have to do their homework in advance, though, you know, one of the things all salesmen know is that they want to qualify their prospect, the last thing we want to do is waste their time pitching somebody who isn't qualified. You know, you're pitching a French company, an English language film, and they only make French language films. you're pitching an art film to a company that only handles you know, certain genres. The key is to do the homework in advance and actually know who you want to meet with no lots of resources on our site. Every every sales company has a page on our companion website, the film catalog, which has their profile shows all the films they've handled, and shows where all their ex who all their executives are. So you know who to write to, to set up a meeting. And the other important thing that again, the professional salesman knows is the purpose of every contact, whether that contact is an email, a phone call, or a meeting, is to get to the next contact, just get to the next step and baby steps, the purpose of the email is maybe to get a phone call to pobres, the phone call is just to get a 10 minute meeting during a busy market, the purpose of the tenant meeting is then to get the follow up meeting or to have them read the script. It's all done on little steps. And and and those who trying to overreach usually just get the door shut because people don't have time for the commitment they're asking for. And so it's asking for very little, and being happy with that very little as you move to the next step. So those with packages or loose packages, planning ahead, contacting the companies trying to set up meetings, finding out who's head of acquisitions, those with finish films, the goal is to get the film seen. Now one way could be a screening of the market another way could be having it on FM online. In those cases, you know, we we frequently recommend that someone put together a three to five minute reel. And I say that it's not a consumer edited trailer. As a filmmaker, you're not telling the distributor how he or she should market to the consumer, you're not showing how you would sell the movie. It's taking, I don't know selected scenes, half a dozen scenes that would show the best of the film, you're already either sending a script in the know the story or the synopsis, you don't have to show beginning, middle and act. Here are five great scenes show the skill of the actor, the skill of the director, the production values, whatever shows the film in its best light, you put it on a password protected site, and you basically say, here's here's a synopsis, here's some selected scenes, please take a look for three minutes, click here, love to meet with you at the market. It's a finished film, suddenly finished film has less risk for the person you're pitching. Because you're not asking for dough. You're asking for their time. You're asking them simply to look at the film and see if it's a good fit for them. So the pitch is is is very, very different.
Alex Ferrari 53:19
And you wouldn't suggest a screenwriter walking in with a screenplay going Hey guys, I've got a movie. Can you fund me?
Jonathan Wolf 53:25
No. But there are more than 1000 producers at the AFM. Most of them actually aren't in offices. They're doing the things that we've just talked about. So if you're a writer, and just from a networking standpoint, in the restaurants, at the receptions in the hallways, wherever it is in the filmmakers lounge, just talking to people, what do you do? Well, I'm a producer, I, you know, mostly stick with horror. I'm a horror writer and I just finished three scripts, you know, that kind of connection, somebody that that doesn't have a big enough shingle that they would have known to pitch them or write to them and advanced finding partners. This is a collaborative art form. If you're if you played in the grunge world, you know, a decade half ago, you were in Seattle, you had to go there, you know if if you know you have to go if you're playing country music, you need to be in Nashville. If you're an independent film, and you want to connect and and find collaborators, you need to be at major events, whether it's here, it could be at Sundance, you know it could be at other events, but you have to get out and connect.
Alex Ferrari 54:36
And what any other final do's and don'ts that you would recommend for the AFM intercurrent because I know before you could, I know it's been slowly kind of being closed off before you could walk the pool. Now the coolest clothes off before you should be able to walk the lobby without a pass now that's closed up. So for people who are not aware what are the do's and don'ts now that you can recommend for people coming to the first time AFM
Jonathan Wolf 55:00
Well, those haven't been there that the big FM held is held in the low Santa Monica Beach Hotel. It's a 350 room hotel, we close the hotel for a week and a half. You can't walk in the hotels, you've said until after sundown, usually around 630. Now you can't walk in the hotel without a badge. But it's no different than going to any other market, whether it's the LA and Cannes or the Martin Gropius Valley in Berlin can't walk in the building without a badge we used to keep the lobby open. But as the markets grown, we've found people who paid dearly to travel from around the world, flown for 10 hours gone through the indignities of Li x. And then they're standing in the lobby, because you know, a handful of actors came over with a bottle of water and an Uber and are occupying all the couches. And it just my empathy was for the person who traveled a great expense who came to the market, we have a business mission, rather than locals who are already here in Hollywood, they're already here, they can already go knocking on the door, they can meet people everywhere. My my empathy was for those who traveled and so we just decided we needed to restrict access to the hotel to those who have a credential. And so if you're coming to the market, first and foremost, do your homework, you know, decide who it is when to meet with this is an appointment show half the connections are made by appointments. For those that are in the offices. Don't pitch somebody without qualifying them. My best example is we ever walked onto a car dealers a lot the salesman comes out, you know, under the lot and starts right out you have the perfect car for you. It's red, it's a four door. It's a it's a stick shift, it gets low mileage, it's absolutely the best car for you, without ever asking who you are, what you're interested in, when's your budget? When do you tend to buy? That's the difference between someone who doesn't pitch for a living and someone who does you qualify? your prospect is the most valuable thing you have at the FM is your time. Invariably, I hear from people who are really angry because they pitch someone for five minutes, then ask that person, what do you do? And I said, I'm the intern, I'm here for a week taking messages and booking meetings. And they felt it was the interns responsibility to interrupt their pitch, right and say you shouldn't be pitching me. the blame game. Your pit, you're a professional salesman, you know, sales is the highest paid profession in the world, more than more than lawyers and doctors. But it's it's business to business sales that most of us never experienced and definitely don't know how to do. And this is what selling film is. It's totally different than selling sweaters or Bloomingdale's. And but we think of it many people think of when they're pitching a film, I'm pitching it like a sweater. This fits on you. It looks great on you. Here's the big smile. Don't you want it? Yeah. The business the business salesperson is explaining to the buyer how they will make money on the film. Not how good the film is. I was once walking with a producer whose name I guess I won't say in case he gets pissed off. We're walking in Cannes, it was an hour years ago, I said, What are you working on now and he said I just another piece of shit was on GLAAD. You knew john Claude Van Damme. He didn't care who was going to make money. The the distributors, the production companies that what they're most interested in is how this is going to be a profitable experience for them. First and foremost, the film being good is secondary.
Alex Ferrari 58:23
It's it's business. It is it's about the business side of the business that you most filmmakers think about the show only. And never think about the business.
Jonathan Wolf 58:33
If I can use one analogy, if you're if you're a painter, you and your do this for a living professional, you visit art galleries, you find out what are people buying? What do they like? I could paint anything. But I'd rather paint something that people actually want to buy. If I don't, it's a hobby. And what you have to separate is, is this my hobby and my passion? Or is this what I'm doing for business? If I'm successful at it at a business standpoint, I'm going to have lots of time and resources for my hobby. But if I only pursue my hobby, ultimately I'm going to be having to find a different shade day job. And professional painters know this filmmakers need to follow the same the same path.
Alex Ferrari 59:18
Now where can people go to sign up for badge or any any information about the FMX?
Jonathan Wolf 59:23
Sure American film market.com it's easy enough to read the information is there. We have a page, how to work the AFM if you just Google, how to work, the AFM that that page will pop up it'll have a lot of the things that that I've just talked about.
Alex Ferrari 59:38
Very good. Jonathan, thank you so much for being on the show again and dropping knowledge by dropping knowledge bombs on our on our tribe today. So I appreciate it and I'll definitely see you and I'll definitely see you at the AFM.
Jonathan Wolf 59:49
Looking forward to it. Thanks for moderating that session. I'm looking forward to it.
Alex Ferrari 59:53
I want to thank Jonathan for coming on the show and dropping those knowledge bombs on the tribe today. If you haven't been to the AFM and You are in California or you can get here. It is worth your time going guys, it is an education, to say the least. If you want to get links to anything we talked about in this episode, including Jonathan's prior interview, head over to indiefilmhustle.com/361 for the show notes. And before we go guys, I want to ask everybody for a favor. If you have read shooting for the mob, and you enjoyed shooting for the mob, please take five minutes, three minutes out of your day, go to Amazon and leave a review for the book. It really really helps me out a lot It helps out with the ranking of the book getting more people to read that book. It really does help a lot so please head over to shootingforthemob.com and click on Amazon and you'll be able to go right there and leave a review so I truly appreciate it if you haven't read shooting for the mob oh my god what are you waiting for? It is an amazing book has 29 I think rating right now five star ratings already and it was already a Amazon best seller. You know guys don't hate the player hate the game. always gotta be hustling. You know it is. Thank you guys for listening. As always keep that also going. Keep that dream alive. I hope to see you at the AFM and I'll speak to you soon.
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