The European Film Market kicking off this week in Berlin could mark a return to a familiar, old-fashioned balance of power between buyers and sellers. And as the impact of the pandemic retreats, there is cautious optimism that activity levels may now be more sustainable and fairer.

Certainly, leading film sales companies and local distributors have over the past week once again been engaging in a long-established pre-market routine. The former sent out a volley of scripts for new film projects, while the latter fielded the incoming pitches, attempted to read them quickly at home or on airplanes, and positioned themselves to take on-site meetings.

“All the usual suspects have two or three projects. FilmNation’s got a couple, Rocket Science, AGC, WME, Cornerstone, my company. So, there’s a very healthy number and range of projects. Quite a variety,” says David Garrett, CEO of Mister Smith Entertainment. And prospects for dealmaking look good.

“Between the films that are there and the scripts (they’re) reading, this market feels like a real market,” says Scott Shooman, head of acquisitions and production at leading U.S. independent IFC. “Cannes [in May 2022] felt like there was a decent amount of projects, but I think people were out of practice. The AFM [in November] seemed that buyers were only concerned about complaining. Berlin just feels like a really good blend of finished films, promos and scripts.”

While several company delegations may be smaller than in past years, the return of the EFM as an in-person event is broadly welcomed. “The markets are essential,” says George Hamilton, chief commercial officer at Protagonist Pictures, emphatically. The company is representing ex-U.S. rights on Berlin Film Festival opening title, Rebecca Miller’s “She Came to Me.” “Markets are essential for people to meet in person and sustain the core driver of business, which is relationships. [Relationships] can be maintained with Zoom, but they can’t be sustained or grown without in-person meetings.”

Who will be doing the buying and at what prices remains less clear-cut.

Over the last few months, Netflix, Amazon and HBO have been seen to slow their buying activities. (Among the ‘pay one’ streaming platforms, Hulu may be the exception.) That may be a reflection of recalibration of their businesses towards profitability after a dash for growth, bigger slates of their own original productions and growing selectivity about what they need to buy on the open market.

The streamers’ rethink was manifest at Sundance where there were probably only three big deals, with the platforms paying handsomely for what they wanted, and a lot of other transactions being done at prices lower than before.

“As we saw at Sundance, if there are commercial movies, the streamers are going to be willing to pay top dollar for them,” says Dylan Leiner, senior executive VP of acquisitions and production at Sony Pictures Classics. 

The streamers’ increased pickiness may have had a knock-on impact on the acquisition activities of North American independents. The likes of Neon, IFC and Bleeker Street, which usually operate as all-rights buyers, can no longer be sure of the same competitive environment when they are licensing their acquired content to broadcasters and platforms. The “low seven-figure” North American deal, which the sales agents previously considered as a backstop for a commercial movie, is now rarer.

The buyers’ slowdown also comes at a time when production budgets have been driven higher. “One of the challenges right now in the business is that many of these movies are being made for budgets that are challenging for the marketplace. You have the added costs for COVID, union costs and the cost of talent. The marketplace is having a hard time absorbing those high budgets,” says Leiner, who describes the situation as a “stalemate.”

“Prices have held [even if] we’ve gone past the bubble phase. It was just a feeding frenzy because all these [streaming] services were getting up and running. Now I think we’re at a healthy stage,” says Rob Carney, SVP of international sales at FilmNation, who notes that the company generally prefers to “go independent” rather than sell directly to streamers for most movies. “That’s our core business.”

But there are other players who see the current North American rethink as an opportunity.

“What happens is it’s always back and forth. These global media companies squeeze out a local broadcast or a local distributor,” says Kevin Iwashina, SVP of documentary at Fifth Season. “But then when the larger media companies adjust their budgets and take a pause, it creates more opportunity for the local or non-global media companies. Right now, you’ve got a group of hungry buyers who haven’t had the opportunity to access the top tier product.” Transactions have not stopped, but the players may be different.

Nor is the pattern globally homogenous. Some international territories may currently be stronger buyers than North America as returning theatrical audiences (Japan for example had a standout 2022) and the opportunity to spend less on P&A to compete with big studio titles underpin demand.

Demand from Russia for international content is reported to be strong. But not all sellers will be willing to deal with the country so long as the war in Ukraine is raging. FilmNation says it defers to its content producers to make that decision. And other transactions destined for Russia may be re-routed through entities in jurisdictions such as Armenia and Georgia.

So far, China remains absent from the marketplace. Multiple COVID impacts, political tensions and a wobbly economic outlook mean there is little need for Chinese buyers to get on planes before next month’s Hong Kong FilMart or Cannes in May. South Korea, the world’s fourth largest theatrical market as recently as 2019, is still laboring with a backlog of local product, and remains similarly quiet.

Sellers, generally, say that barriers to local content travelling globally have been lowered, throwing up greater opportunities for foreign-language titles or documentary features. But hitting the target of a globalized product is paradoxically getting ever harder.

“The narrative of the bullseye getting smaller for independent film was one that evolved pre pandemic,” says Hamilton. “That bullseye has got even smaller for non-English language films in English-language markets. Partly that’s because they predominantly rely on specialist theatrical.”

Generally, specialty markets — meaning art-house and non-local foreign-language films — remain soft and with prices significantly lower than in the early and mid-2010s. That weakness endures despite the breakout success of individual titles and the TikTok generation’s growing acceptance of subtitles.

“Streamers are prescriptive. They say they’re looking for stuff based on well-known IP, for things with big names, or which are genre-driven. And yet, audiences, I think, are craving something a little bit different,” says Garrett. “Look at the success of things like ‘Everything Everywhere All at Once’ or ‘Triangle of Sadness.’ But you have to realize that you can’t actually prescribe something that is original and fresh original.”

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