Inside Cannes 2024: Adapting to Struggles and Shifts in the Independent Film Market

Despite the outward optimism at Cannes this year, a sense of weariness lingers among buyers shaken by increasing asking prices while theatrical demand plummets.

Several prominent presale packages found buyers. The most notable from a non-streamer was Ruben Östlund’s “The Entertainment System Is Down,” with Keanu Reeves and Kirsten Dunst, for which A24 acquired the US rights for over $10 million.

Next week, FilmTake will release a comprehensive analysis of the Cannes market, including hundreds of distribution deals signed over the past two weeks.

Cash-Rich Streamers Seize the Moment

Netflix and other streamers are still investing in select titles, but not at previous levels and typically exclusively for worldwide rights, taking away popular titles from traditional international distributors.

Streaming giants Amazon Prime Video, Netflix, and Apple capitalized on the most audience-centric presale packages. Amazon secured multiple territories for several star-driven projects in pre-production and post-production. 

Apple outbid all others with a reportedly $40 million worldwide presale acquisition deal for “Tenzing.” Netflix made a strong return with a $34 million presale deal for “Monsanto,” to star Glen Powell and Laura Dern.

These direct-to-streaming acquisitions deprive independent domestic distributors of the opportunity to rejuvenate the independent cinema market. These deals also highlight streamers’ aggressive tactics in expanding their content libraries with high-profile projects, underscoring their ongoing efforts to attract and retain subscribers in a changing digital landscape.

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Buyers and Sellers Clash Over Sky-High Asking Prices

High asking prices for distribution rights remain a significant hurdle for buyers. The end of the Hollywood strikes and the return to production have driven talent costs up, compelling independents to pay premiums to retain star attachments. 

Minimum guarantees have recently increased across most territories, which is unusual given the substantial decline in demand for independent films. These increases are even more perplexing, considering revenue from home entertainment (EST and VOD) is almost entirely absent. And while SVOD remains robust for popular titles, television revenue is mainly missing from the equation. Distributors must rely on massive box office receipts to recoup distribution advances, but admissions haven’t recovered after the 2020-21 lockdowns.

Financing arrangements made during stronger buying periods and rising inflation further complicate the pricing landscape. Buyers without solid Pay-1 deals struggle to meet these high costs, indicating a need for strategic financial planning and negotiations in the current market.

The strain is especially severe with A-list market packages. Independent producers, battling to attract and keep talent in a post-strike environment, are battling exorbitant fees for talent offered by studios and streamers. This intense competition has forced sales agents to hike territorial distribution minimum guarantees to recover investment capital. Sales estimates set in a pre-strike time, when streamers were more actively spending, coupled with inflation, have only worsened the situation.

Festival selections with significant buyer interest have also seen aggressive pricing. Many mid-market projects now demand up to $1 million for territories like Italy, Spain, and Scandinavia, which was unthinkable not long ago.

Recent acquisitions for North American rights reflect ongoing caution among US buyers, who lack robust Pay-1 deals to support sizable minimum guarantees. This void also has a cascading effect on international distribution. These shifts underscore the evolving and increasingly competitive landscape of the post-lockdown film market.

Domestic Buyers Mostly Missing from Cannes

US buyers largely stayed on the sidelines during Cannes, reflecting a cautious stance amidst market uncertainties. Neon continues to glow after securing its fifth consecutive Palme d’Or win with “Anora” taking the top prize at Cannes, joining A24 as active market buyers.

Debt-laden studios and their independent distribution labels are navigating a tumultuous transition in the evolving streaming landscape, resulting in a lack of domestic deals. This void exerts downward pressure on international distribution. Films without a US distributor face deteriorating values over time, making it increasingly challenging to recoup production budgets.

More traditional independent distributors previously active in the US market are absent altogether, waiting to see if theatrical audiences return.

Despite these hurdles, there has been a rise in worldwide rights deals, particularly with streaming platforms. These deals are fostering new financing models and opportunities. However, buyers are predominantly interested in films featuring solid casts that can guarantee audiences. 

Distributors seek the assurance of marketable names that audiences will recognize, leaving many mid-market and specialty producers and distributors struggling to secure these lucrative deals. This focus on top talent effectively sidelines a significant portion of the independent market.

Deal Delays: A Sign of Cautious International Buyers

In the French Riviera sun, enthusiasm burns bright, but after traveling back to the office, the allure of film packages can fade fast, leading to extended closing periods and cancellations.

Amid the outward positivity of this year’s Marché du Cannes, the underlying atmosphere was one of caution. Buyers meticulously evaluated opportunities over days before making offers or walking away. Many festival titles that generated buzz initially with significant interest faded by mid-market and challenged to draw meaningful distributor attention. Such hesitancy indicates a selective buying trend, focusing on high-potential titles while others await further scrutiny.

FilmTake Away: An Evolving (Devolving) Independent Landscape

The industry remains cautiously optimistic as the dust settles on another year at Cannes. The lessons learned from EFM and Sundance are being applied, but the challenges faced at AFM still loom large. The evolving landscape of film distribution, influenced by streaming dynamics, high costs, and shifts in viewing habits, or lack thereof, presents both opportunities and uncertainties. 

Cannes is a critical barometer for the industry’s fortune for the rest of the year. As the market navigates these changes, the question remains: how will the independent film sector adapt in this new reality?