The film industry has been changing dramatically. The heydays of starting out with a platform release or booking a typical independent film into a few hundred theaters has been vanishing, as exhibitors step up with drastic modifications of the cinematic experience with multiplexes and cashing in on the fading 3-D craze.

Thankfully for independent films, a new lifeline is becoming available allowing even the smallest indie films available for widespread distribution. And you don’t even have to drive to a movie theater.

The development and innovation of emerging ancillary markets are become a crucial factor in recoupment and profits for independent producers and this has had a major impact on approaches to theatrical distribution. Several independent film distribution companies including IFC, Magnolia Pictures and Roadside Attractions have been taking advantage of the emerging platforms, particularly the growth in video-on-demand (VOD) and recognizing and cultivating the interrelationships between the various markets. This new prospect of maximizing profits in ancillary markets is slowly becoming a “win-win” for all sides of the equation being the producer, investor and the buyer.

In recent years, the studio systems have been shutting the doors of the classic and independent divisions such as Warner Independent Pictures (Warner Bros.) and Miramax (formerly owned by Disney) as they found difficulties in strategically empowering independent films into the theatrical arena. Moreover, exhibitors have been challenging the studios which have been distributing films to theaters and releasing them on-demand at the same time, because it is causing losses in theatrical sales.

It has always been difficult to move an independent film into theatrical distribution. The cost of prints and advertising have imposed incredible hardships on independent producers that have been having to contribute their own funds for P&A expense, as distributors have tried to reduce risks on expenditures in the last few years. Furthermore, even if a film that may have cost $10 million, may end up getting sold for $1 million from a buyer at film festivals, thus losing $9 million of the investment, plus the costs of P&A expense that the distributor puts up to market the film when it opens into theaters. An area that most independent producers are confused by is usually the box office receipts. For example if this same $10 million film earns $30 million in domestic release, the box office sales are typically shared 50% between the distributor and exhibitor. The distributor then recoups the P&A expense, plus a standard 25% distribution fee, with remaining payments paid to the producer. But usually the producer is losing money, because the cost and fees associated with the distribution and marketing of the film are so enormous.

With VOD becoming a major platform in independent film distribution, the marketing costs are largely reduced and distributors and producers can take closer to 60% to 70% of the film’s profits from VOD release. So it is possible for independent filmmakers to produce films with low-budgets and obtaining high output to reach a wider audience through on-demand and securing licensing deals with Netflix, iTunes and Amazon on Demand, while the theatrical marketplace continues as a high loss for independent producers and a higher profit center for the studio systems.

Every film will have its unique set of challenges, especially the audience demographic. Recent independent films such as “Black Swan” have higher audience appeal and are able to obtain a larger theatrical release. Other independent films such as “Frozen” which was very a very well done thriller, had been given a rather limited theatrical release, but fared well in secondary ancillary markets. Obviously, these new digital platforms are becoming “windows of opportunities” for producers who feel discouraged by the lack of film festival exposure and lack of success in securing a mainstream distribution deal.

With Film Regions International entering the industry at a time when the stakes are high and the business is rapidly changing, we feel these emerging markets will open up opportunity and enthusiasm for the independent film world. If all companies had “Twilight” under the banner, then you’re able to score a touch-down. But this doesn’t happen. Independent production companies don’t produce films such as “Twilight” and we cannot run a business planning on it.

John Blythe is President and Chief Executive Officer of Film Regions International, Inc. (FRI)

Film Regions International, Inc. (FRI) held its annual stockholders meeting on November 19th to discuss the company’s year in progress and to elect a new slate of Board Members. In the previous year, the company has been extremely busy in finishing its up coming and anticipated documentary “My Amityville Horror”. Into the 2012 year, the company will begin work on moving forward with implementing its business plan and future operations including developing future film productions, raising capital and offering services.

As per a majority vote on September 30th, the stockholders voted in favor to increase the seats on the Board of Directors to five members and elected: John Blythe, Eric Walter, Matthew LaCurts and a new member, Bryan Bossard. One seat on the board is currently vacant. In addition, Blythe will resume his responsibilities as President after being reappointed by the board for another year.

Jason McQuarrie’s new horror short film, “Wretched”.

Perhaps one of the most anticipated independent films for 2011 has to be “Hobo with a Shotgun” which stars the legendary Rutger Hauer in the title role and was directed by Jason Eisener and produced by Rob Cotterill, who both have supporting roles in emerging director Sean Grady’s upcoming mockumentary comedy film “Operation Mongoose” which was produced by Film Regions International.

“Hobo” was filmed in Halifax, Nova Scotia and was initially the basis of a fake trailer featured in Quentin Tarantino’s “Grindhouse”. Once the film was completed, it was given a world premiere screening at the 2011 Sundance Film Festival.

The film’s early theatrical release in Canada was surprisingly well received and high praise was given to Hauer for his chilling, yet rather humorous role as the Hobo.

Since then, Eisener has been busy promoting “Hobo”, shooting its way into theaters this month in the United States. I’d recommend general movie fans, as well as buffs of the grindhouse and exploitation genre to see the film if its at a theater near you. The film is certainly something of fresh air, compared to the usual studio remakes that have been churned out every year!

- John Blythe

Film Regions International announced that it is proud to support emerging director A.D. Barker’s critically acclaimed film “A Reckoning” starring Leslie Simpson (Dog Soldiers, The Descent).

There is an old saying “the more things change, the more they stay the same”. Today, everyone seems to be planning for the future and the entertainment industry is planning as well. In recent years, the industry has gone through significant technological developments, with the birth of new media and inventions, while jumping onto the moving train for a share of the entertainment market place.

Generally speaking, theatrical exhibition has commonly been called the “heart” of the business in terms of revenue. Unfortunately, this is not the case anymore. Most of the revenue can be found from ancillary markets such as DVD sales, video on demand and cable television. As it is, on average between 90% to 95% of the films released to theaters each year tend to loose money. The answer is always the same. The cost of an average studio film is around $70 million, and $30-$40 million will go to P&A requirements.

How does a film that grosses $150 million expect to make a profit? It is impossible. 50% of the box office revenues are generically speaking, split between the distributor and exhibitor, and then reimbursement of the negative cost of the film, plus P&A expenses. And what the hell do you do when your brand name star receives percentage based on box office gross…?

Independent filmmakers face the opposite problem, because while independent films are typically below $12 million or less, independent producers fail to control the P&A cost.

So what is one to do in finding a suitable way to make money from distribution? Which one is the best route? Theatrical, DVD, VOD, the internet?

Well, people still enjoy going to a dark room with a huge screen and surround sound to get the most out of an enjoyable movie experience, and now, multiplexes are beginning to convert their theaters into an “all night experience” adding restaurants, bars, and accommodations for conferences, clubs and live events.

However the idea of having a theatrical experience right in the comfort of your own home has been the talk of the industry recently, both as a stream for revenue and satisfying consumer needs. In the last few months, a new distribution window is tentatively going to be added, which is called the ‘In Home Theater’ window. This is where you will actually watch a movie that is in theatrical release, but in the comfort of your own home.

This is not to say that theatrical exhibition will vanish, however the rise in ticket prices have impacted average movie goers. According to the MPAA, in 2010, while domestic box office sales remained the same at $10.6 billion as it was in 2009, admissions declined 5%, and this has led to the possibilities of looking into alternatives forms of revenue both in terms of satisfying consumers and creating competition.

So this brings us to the next point: do we stay behind or move forward? In other words, does the industry continue to operate in the same manner of doing things or do we take advantage of developing opportunities?

Studios are now beginning to realize that the years of outrageous costs of producing multi-million films will have to be reduced. The standard industry business model of using other people’s money to produce viable properties to sell across distribution platforms seems to be in decline. One way or another, the studio system should have looked at the trends and asked themselves how long would investors continue to finance a film on high paid talent with large post-production expense without earning the investment back?

As for independent producers, well, this is taking a much different approach. After years of getting the door slammed in their face by major studios and distributors, newly created ancillary distribution platforms such through Netflix, ITunes, and Video on Demand may be the “new home” for independent producers and a new way to generate revenue, versus the outrageous costs of P&A expense for a major theatrical release. Certainly mini-major distributors including Magnolia Pictures and Cinedigm (founded by former Overture Films CEO Chris McGurk) have found a way to actually make money off of $100,000 budgeted films.

Theatrical exhibition will move forward as well, as they begin to replace their old 35MM print projectors in favor of more standard state of the art digital projectors where a film can be played via a hard-drive. In fact, new developments like this may even help independent producers and distributors handle the screening of their films in a more cost efficient manner.

So where does that leave a start-up entertainment production company like Film Regions International? Well, indeed the more things change, the more they WILL NOT stay the same. As consumer demand changes, so will the industry’s business model. It will have to change. Otherwise, those that choose not to change their models will remain behind at the station, while the new emerging companies, will be riding the train.

Film Regions International is intending to ride this exciting train. We’re closely researching and developing our own model as we plan for the future. We want to take advantage of the technological developments to produce films at reasonable budget levels and finding ways to distribute them into the market place. Some people have said this is the worse time to be in the industry, but it is the best time if you’re just starting out.

Of course, an independent production company simply does not produce an “Avatar” and we cannot run a business depending on it. But as we grow our operations in the future, we’ll be able to offer something for just about everyone I’m sure.

- John Blythe
Co-Chairman and Chief Executive Officer
Film Regions International

FourColours Films, based in Jakarta Indonesia, has announced plans to resume filming its forthcoming feature “Rumah dan Musim Hujan” (English title: “Someday when the Rains Falls”) this May, under its acclaimed award winning director Ifa Isfansyah.  The film had been primarily financed as a recipient of the 2008 Hubert Bals Fund from the International Film Festival Rotterdam and then conceived as a co-production through Film Regions International in 2009 for the North American film festivals and markets.

http://fourcoloursfilms.com/en/line-up-reelone-2010-2012

Film Regions International, Inc. held its first board meeting of the new year last Thursday to conclude on 2010 year end reports and for the forth quarter’s financial results, which had a $917 net loss, but its balance sheet had been improved due to the unamortized film costs associated with previous years.

Film business wise, FRI is awaiting formal acceptance from film festivals including Los Angeles, Toronto Independent and Chicago Underground on the mockumentary/adventure film “Operation Mongoose”; the U.K. co-production “Despair”, facing difficulties getting horror veteran David Hess to commit to a reduced acting fee has left the filmmakers to think about possibly getting Doug Bradley, who plays Pinhead in the ‘Hellraiser’ films; and the documentary “My Amityville Horror” has received additional financing which will allow the producers to head back to New York to shoot additional footage.

In the meantime, I’ve been working with a former FRI associate, Myron Ward, on finding ways to raise future capital so the company can move forward on its corporate goals and operations.

Our next board meeting will be held in April.

- John Blythe, president

New poster artwork for FRI’s upcoming comedy/mockumentary, “Operation Mongoose”.

One year since its official incorporation date, Film Regions International, Inc. (FRI) announced to its principal shareholders, and meeting of the Board of Directors about the progress it has made in the last year with relation to film, and the difficulties operating as a start-up entertainment production company.

Thankfully, the company has made some progress especially in the realm of social networking in the 2010 year with relation to promoting its current films. The documentary feature, “My Amityville Horror” which is presently in production, has insofar garnered a great deal of following on Facebook and Twitter; and the Candian independent film “Operation Mongoose” was entered into several upcoming film festivals including Sundance, Slamdance and Hollywood, and part of Relativity Media’s independent film distribution contest.

The company has been considering selling additional shares of its one class common stock because it has been considering looking for additional capital funds to finance additional software, office space, editing and camera equipment which could be used as a rental and ancillary service to produce future revenues.

Taking into consideration the challenges of the economic conditions however, the Board seemed to be in agreement to hold off on its future financing plans until its current work in progress plans are more completed. Blythe added however, that he has an action plan in place for the 2011 year, and will focus on attempting to implement the future goals and objectives that the company hopes to achieve further down the road.

During the annual election portion of the meeting, the company’s principal shareholders re-elected Eric Walter and Matthew LaCurts to seats on the board, with Blythe continuing management as president and CEO.

FRI holds its regular board meetings each quarter, and will hold its next meeting in October.

Film Regions International, Inc. (FRI) is an independent entertainment film production company specializing in the financing and production of motion pictures to be marketed to international distributors.