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Distribution: fixing a broken system

On-demand services are ready to prove that there is money to be made from independent cinema, even from niche titles.

In a saturated marketplace where only big budget, usually formulaic blockbusters seem to have any shot at success, independent films are increasingly been seen as a high risk investment, and they have fewer spaces to find an audience. Enter on-demand services, delivering those hard-to-find titles directly to people’s homes. One such service is MUBI, offering independent, foreign and classic films to members and subscribers around the world. According to MUBI founder Efe Cakarel, the problem is that the current distribution set up is “broken”, but on-demand platforms are going to help heal the system.
“The problem is not the audience, it’s the current distribution system. Many independent films don’t get picked up by distributors because of the high fixed costs of a theatrical release. Unless they think a film will appeal to a reasonably large audience, distributors just don’t buy it anymore; they can’t make money with only 20,000 or 30,000 people seeing the film,” explained Cakarel.
“However, my cost of distribution is almost zero; I make money when somebody sees a film and there is absolutely no cost in keeping it on our platform. I don’t need two million people to see it; even if just 20,000 in Sydney are interested in seeing a small local film, there is a profit. Everyone starts making money and I can keep it on my platform for a long time. I’ve already started to write meaningful cheques for the distributors of some films.”
In Cakarel’s experience, there are not many producers retaining the online rights, which are still being given to traditional distributors.
“Some producers of smaller films are getting away with doing that, but for the bigger films, the distributors pay a significant minimum guarantee and they require all the rights. However, that shift is going to  happen a little later for all high quality independent films; as you start making more money, the online rights will represent a significant portion that the producer will want to keep, or the distributors will
have to pay so much more for it,” he said.
By early November, MUBI had reached more than 400,000 registered members on its PC platform. It has since been made available directly on TV screens through Sony’s PlayStation. During his visit to launch the service in Australia, Cakarel also finalised a partnership with Hopscotch Films to add its catalogue to MUBI.
“Our deals with the rights owners are always 50/50. Hopscotch was first because (managing director) Troy Lum is a very progressive, sharp guy who totally gets the vision. We’re in discussions with other distributors as well.”

MUBI will also offer titles that haven’t found a distributor, negotiating directly with the producers. However, Cakarel warns that these will be exceptions, and services like MUBI are unlikely to replace traditional distributors.
“Maybe a little gem that nobody wants to pick up and I’ve discovered, that might come directly to me. But if a film wins a Palm d’Or there’s no way I’ll be better at releasing it than an experienced distributor.
“I call myself an exhibitor, not a distributor. I want to focus on building the technology and the platform, and to provide the audience access to these films. Distributors still have a very significant role to play because releasing a film requires a significant know-how. There will be a shift; distributors will still exist, but they will have to figure out how to work with people like me much more effectively to release their films.
But I don’t see myself replacing them; I don’t want to.” Next year, Cakarel will recruit a local team to curate the Australian offering on MUBI.
“I don’t see anybody who’s doing a great job with the user experience, even if they may have the films. The market here is not very fragmented; there are only a few distributors who all own the best films so it’s easy to aggregate the best content. There’s a curious audience, even though the population is small there’s a significant audience that appreciates good cinema,” said Cakarel.
The future – and perhaps even the present – for ndependents, says Cakarel, is audience ‘discovery’ through word of mouth: “Heavily-marketed films will always have a bigger audience, but with these platforms a small film is also going to reach significant heights. The only chance of marketing an independent film is having other people do it for you; here it will get ‘discovered’, go viral and people will talk about it, and many more will know about it than otherwise would have known it. I expect smaller films to achieve higher revenue with on-demand platforms like MUBI.”

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