There was great news out of the Sundance Film Festival last week with the record-breaking purchase of the film “CODA” by Apple Studios for $25m, as reported here by Variety.
This is fantastic for a number of reasons, not least because it proves that, even in these uncertain pandemic times, distributors are still willing to splash the cash when the right product comes along with which they believe their audiences will connect.
Apple and its streaming platform Apple TV+ will also hope that it helps them to attract new subscribers who will see this as a signpost of their artistic intent. If Apple is willing to take a chance on a film such as “CODA”, they will surely be likely to release similar fare in the future, and find ample room in their programming for artistic and independent material alongside the more commercial content that one would likely expect from them.
But it’s pretty significant that, of all the potential buyers vying for the title, it was a streaming platform that snapped it up, with its fellow streamers Netflix and Amazon identified as Apple’s main rivals in the deal.
This is partly because those are all extremely well-funded companies, whose fortunes have enjoyed a significant upturn in the past year with cinemas largely closed, and with people forced to stay at home and consume as much online content as they could find. The traditional buyers who rely at least partly on a theatrical release simply can’t risk spending these amounts right now without knowing when cinemas will re-open, or whether audiences will immediately rush back even when they do.
However, it’s also a significant deal when you look at the overall package of the film.
Centered around a deaf family and its reliance on a single hearing member, the story certainly reads more arthouse than commercial. It wouldn’t generally appeal to all audience demographics in the way that a traditional “four-quadrant” theatrical title would usually need to when purchased for such a high sum.
There aren’t any powerhouse commercial names in front of or behind the camera either. Director Sian Heder is best-known for the excellent “Tallulah” in 2016, but isn’t a name that most mainstream audiences would recognize. Likewise, Academy Award-winner Marlee Matlin is a wonderful actor who offers a good dose of credibility to the project, but isn’t a name that can open a movie on its own.
However, one interesting name that “CODA” does boast is Eugenio Derbez. While he is not universally known among certain demographics, he is wildly popular among Spanish-speaking audiences both in the US and in Latin America, who helped make his 2013 film “Instructions Not Included” a record-breaking success, whilst installing Derbez himself as one of the most influential Hispanic stars in the world.
While Derbez alone probably couldn’t open a wide theatrical release across the US, his casting can be extremely effective as part of a package for an online streamer. It’s become clear that films are packaged and marketed differently when premiering on an online platform, and audiences are more likely to take a chance on content that appears via a subscription that they have already paid for or might get additional value from, even though they might not be willing to pay $15 or $20 to go and see that same title at the theater.
After all, if they watch the film on Apple and don’t like it after ten minutes, they can always switch to something else without feeling like they have wasted their money. As we explored in a previous post, this allows the streamers to take more risks with their content than the theaters.
This is a really important distinction, and undoubtedly explains in part why none of the theatrical distributors were in the final running to acquire “CODA”, even with the expected re-opening of cinemas later this year. This title is perfect for an online release, and is far more likely to discover a dedicated audience on a streaming platform such as Apple than via a wide theatrical release, and all the huge P&A spend that this would necessitate to make financial sense.
There’s no doubt that the presence of Derbez also contributes a meaningful international appeal to the project. This very likely inspired some of the international pre-sales that, according to the Variety article, helped to get the film financed. This is a classic example of independent film financing, where the producers were able to piece their budget together using, among other things, pre-sale distribution contracts, as we’ve discussed before.
And while “CODA” might be the most high-profile recent case of using debt financing to put together a film, this is precisely how thousands of films and TV shows are financed and produced each year. For any filmmakers, producers, and investors out there who might be wondering how content gets made, this is a wonderful example of a success story.
The article also states that Apple "is now in the process of buying out" those pre-sold territories - a disappointing outcome for the distributors who had been hoping to release "CODA" in their territories, but who will no doubt be well-compensated for the pre-buy risks that they took.
It’s a unique Sundance Film Festival in the middle of a crazy year. Whether or not deals such as this signal a long-term shift for the future of distribution - and of cinema itself - remains to be seen, both at this edition of the festival and those of the next few years.
But this deal does signify a real statement from Apple to become a serious player on the content landscape, and only serves to up the ante in the fascinating streaming wars that we are all watching play out before our eyes. One thing is for sure: it’s a great time to be a film lover!
Ricky Margolis has over 15 years' experience in the entertainment industry, and has been involved in the finance, development, production, and/or distribution of over 30 titles.
To learn more about how the Sales & Distribution process works, and how you can use it to get your next project financed and produced, check out our book "How The Hell... Do I Get My Film Financed? Book Two: Sales & Distribution". Still want to know more about film & TV financing and production? You can find the other books in the series by clicking here.
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