Sundance Film Festival Director Geoffrey Gilmore addressed our program at a joint session with NYU’s Stern School of Business (which offers a combined MBA / MFA program that attracts many aspiring movie moguls).
Founded by Robert Redford, the annual Sundance Film Festival in Utah primarily showcases new work from aspiring American filmmakers. Mr. Gilmore became director of the festival in 1990 after having headed the programming department of the UCLA Film and Television Archive. His duties at Sundance included overseeing the festival (curating the film selection and providing artistic direction) and acting as a programming consultant to the Sundance TV Channel. Under his leadership, films like Reservoir Dogs, Hoop Dreams, and Little Miss Sunshine rose to fame, enabling Sundance to become the most important festival in America.
The UPenn alum and UCLA professor outlined some realities of the current film industry:
- Average cost of an American studio-backed flick: $100 Million
- Budget breakdown for the average blockbuster: 60% for production, 30% for marketing (Half the production budget!)
- Average cost of an American independent film: $4-8 Million (!)
- Average number of films a filmgoer sees annually: 5 in the US, 2.6 in Australia, 2.4 in the UK (Marketing to these two countries alone can help a film double its US gross)
- Every year, 1/10 movies made gets picked up by a studio for distribution; 1/8 of them make money; only 2% get international distribution
The escalating expenses associated with bringing modern movies to the table, coupled with the low odds of success for their releases, has resulted in:
The search for alternative sources of funding
Studios were increasingly less willing to take risks (i.e., gamble away a large budget on movies that may or may not recoup their initial investment) and wanted a steady stream of income instead. (This explained the rise in tentpole films and sequels in recent years – see the infographic below.)
While some studios had independent arms (e.g., Fox Searchlight Pictures), this was typically part of a strategy to invest in a spectrum of work to diversify the risk away. Some studios had also turned to hedge funds to finance big budget films.
More and more indie films were actually receiving private equity funding from Europe – apparently, there was list of billionaires looking to invest their extra cash. Films, like tech start-ups, were a very sexy investment – with high risk came potentially high reward.
To minimize production expenses, several Hollywood films have shot in foreign locations such as Canada, Ireland, and New Zealand. In recent years, cash-strapped states have tried to provide financial incentives to lure filmmakers back to the US to boost their local economies.
Gilmore brought up Louisiana as an example of a state that had offered tax breaks. The state, which was in the process of rebuilding itself post-Hurricane Katrina, hoped to appeal to studios’ wallets and their sense of patriotism (shooting films in Louisiana = supporting the rebuilding efforts).
The rise of alternative distribution models
Gilmore discuss YouTube’s impact on the business briefly. Based on his comments, I sensed that the major studios were in the midst of defining how to deal with it. Piracy issues notwithstanding, it was also a promotional tool and potential alternative distribution channel for their movies. (Some studios and independent directors have experimented with releasing films directly to YouTube and other online video sites instead of in theaters.)
Taking a page from YouTube’s book, the Sundance Festival had also considered experimenting with online video for its future festival offerings. Cinephiles who wished to attend but could not be physically present at the screenings might be given the opportunity to buy “passes” that would grant them a la carte access to live streams of film debuts (and possibly on-demand viewing of movies that had already premiered).
The importance of film festivals
Having helped establish one of the most famous film festivals in the world, what purpose did Mr. Gilmore think that these events served?
Echoing ICM head Jeff Berg’s sentiments, he explained that festivals were both launch and discovery vehicles, a place for putting films into the marketplace as well as sourcing new talent. In the same vein, there was a need for them to be cultural events in addition to just business events.
Producers and audiences demanded international stars now, and these festivals were the perfect place to find future marquee names who would sell tickets worldwide. He cited the unprecedented five-picture deal signed by directors Alfonso Cuaron, Alejandro Gonzalez Innaritu, and Pedro Almodovar as a sign of the industry’s global shift. 
He referenced the pecking order among prominent festivals like Cannes, Sundance, Toronto, and Berlin. While there was competition among these different festivals, they could also coexist due to their different functions and positioning. Cannes was the biggest festival and the biggest global marketplace (Le Marché) for movies, a place where studios could buy films from creators. In contrast, Sundance had international reach but served primarily to discover American talent, with no pre-sale (for films yet to be produced). There was room for both festivals, especially in the service of quality films that would not otherwise be seen by the public.
Credits: Gilmore, Geoffrey. Cannes. May 20, 2007.
Fast forward six years…
Geoffrey Gilmore is now Creative Director of Tribeca Enterprises, a company that includes the Tribeca Film Festival. He took this new role in 2009 after 19 years as the Director of the Sundance Film Festival. He continues to give talks about independent filmmaking and distribution around the world.
 I learned in another class that Merill Lynch – pre-2008 financial meltdown – had a fund devoted to financing films. This huge opportunity for the studios came with tighter controls, since most of the money was backed by insurance. Stars with a history of addiction or substance abuse were often deemed “uninsurable” because their ability to finish shooting a movie was called into a question. This explains why stars like Lindsay Lohan and pre-Iron Man Robert Downey Jr. could not get work for a long time, even with directors vouching for them. No insurance money, no funding.
More on film financing here:
- How Equity Crowdfunding Just Might Upend Film Financing
- The Skinny on Film Financing: Investors Pull Back the Curtain
 At the festival itself, I noticed that the flow of money across borders to fund films posed an interesting dilemma regarding how to geographically categorize the finished product. The Cannes 2007 festival opener, Wong Kar-Wai’s My Blueberry Nights (starring Natalie Portman, Jude Law, Norah Jones, and Rachel Weisz), practically defied classification. One reviewer finally described it exactly as it was – a Chinese-directed movie financed with French money that featured British and American actors.
It was interesting to see quintessentially American cultural objects through a foreign filmmaker’s eyes (e.g. the Heartland, NYC, Vegas, cowboys, jazz). Some images (e.g. letters torn up on the street, a man staring after his wife as she walks away from him) remained universal to all cultures, though. Art transcended language through the sheer power of visual communication.
About the Cannes Diaries
In the summer of 2007, I did a study abroad program with my university’s Cinema Studies department at the 60th Cannes Film Festival. (Probably my favorite elective of all time, and the least painful A that I ever attained in college…)
While we snapped photos of celebs on the red carpet at several blockbuster premieres, our professors encouraged us to diversify our viewing beyond mainstream American flicks. To ensure that we watched a variety of films, course requirements included watching and writing about: 4 documentaries, 4 films that wouldn’t open theatrically in the US, 4 films from 3 countries from which we had never seen films before, 4 films by notable non-American directors, 4 debut features by American directors, 4 films directed by women, 3 retrospectives/classic films — one of which had to be a silent film… and a par-tri-idge in a pear tree. (I joke about it, but I’m glad we had to watch such an eclectic selection. It changed my whole perspective on movie-going.)
Apart from going to screenings, we attended a series of talks with various guest speakers from the entertainment community. I recorded notes from those talks and thoughts about the festival experience as a whole in my mandatory trip journal. While some entries are better-written than others (depending on how much energy I had left in me to write that day), they reflect the artsier, indie side of the festival not captured in my (star-struck) photo albums. Bon spectacle!