Speaker 1: This is Brent Line of Variety Magazine, and I'm joined
Speaker 1: today in our Los Angeles studio with the co founders
Speaker 1: of Gunpowder and Sky, Van Tuffler and Flora's Bauer. In
Speaker 1: a very short period of time, gun Powder and Sky
Speaker 1: has established itself as a major force in the indie space,
Speaker 1: releasing such films as Lords of Chaos, Hearts, Beat Loud,
Speaker 1: and Her Smell. It's my great pleasure to have Van
Speaker 1: in Flora's here and we're gonna talk a little bit
Speaker 1: about some major industry trends and familiarize people with Gunpowder
Speaker 1: and Sky. I think, sort of to start, I'm really
Speaker 1: interested in your take on the theatrical space right now
Speaker 1: because there's been a lot written about sort of this
Speaker 1: box office apocalypse. You know, things don't seem to be working, uh,
Speaker 1: theatrically in the way they once did, and that's been
Speaker 1: sort of focused primarily on the major studio films. What's
Speaker 1: been sort of this scene in the indie space? Are
Speaker 1: are things um connecting theatrically? Is is there some spill
Speaker 1: over from sort of the problems and the larger theatrical space.
Speaker 1: How's that impacting of the indie space right now? I mean,
Speaker 1: from my perspective, the key is flexibility. Uh, and that's
Speaker 1: what we all talk about amongst ourselves and to filmmakers.
Speaker 1: So unlike the major studios, there's a lot of baggage
Speaker 1: around the relationships with the theater owners and distribution UM.
Speaker 1: And I think being open to how long movies stay
Speaker 1: in theaters, how they released, how they're marketed, UM, and
Speaker 1: when they go to t VOD or SAT or other windows.
Speaker 1: We whenever we go into a film, whether we're making
Speaker 1: it or acquiring it, we talked to the filmmaker is
Speaker 1: to say, let's optimize the release. Sometimes that means bypassing
Speaker 1: theatrical altogether. Sometimes that means a hastened window for theatrical,
Speaker 1: but uh, not being precious that it needs a certain
Speaker 1: level of promotion and time in theaters. UM. Now theater
Speaker 1: owners less flexible, but UM, particularly for young people, you
Speaker 1: have to give them a real reason to spend money
Speaker 1: and go to theaters because the experience isn't as wonderful
Speaker 1: as it was for us as kids. It was, first
Speaker 1: of all, is the only time you could see movies.
Speaker 1: But UM, technology is enabled kids to watch stuff on
Speaker 1: demand how they want, when they want. At their freedom. UM,
Speaker 1: So you really have to give them a compelling reason
Speaker 1: of making an event to go to theaters. And that's
Speaker 1: that's a pretty high bar. Um So I think that uh,
Speaker 1: having flexibility, being a smaller independent studio, it enables you
Speaker 1: to do that. Um And the fact of the matter
Speaker 1: is the trending is just not great for movie with you.
Speaker 1: Someone told me, um, and I grew up in New York,
Speaker 1: so that there are twenty plus percent less seats in
Speaker 1: particularly Midtown to downtown then there were a few years ago.
Speaker 1: That doesn't bode well for theatrical revenues. Um. So when
Speaker 1: you're when you're talking about having flexibility, what do you
Speaker 1: mean by that? What sort of Gunpowder and Sky's approach?
Speaker 1: When when you pick up a film, are you doing
Speaker 1: a traditional theatrical window? Are you doing some kind of hybrid?
Speaker 1: Are you going straight to um s bod's avods? How
Speaker 1: do you approach a release of a film? I'll let
Speaker 1: you speak in a second, but all of the above. So, Uh,
Speaker 1: for example, we haven't sort of concluded this definitively, but
Speaker 1: we just acquired a documentary on on this wonderful young
Speaker 1: rapper Little People on fortun Only Die he's a sort
Speaker 1: of emblematic of these young rappers who go from obscurity
Speaker 1: to infamy of via SoundCloud. Um. And unfortunately he overdosed,
Speaker 1: but he has these rabid rabbit fans, rabbid young fans,
Speaker 1: and we are thinking about doing a one night only
Speaker 1: release that may have exclusive music in theaters and then
Speaker 1: it will go to tivon spot, So literally twenty four hours. Um,
Speaker 1: we did this, you know, when I was at MTV
Speaker 1: with Madonna's Truth or Dare to the second movie, we
Speaker 1: had one week in theaters, and so sometimes we do
Speaker 1: ninety days, uh, and then we go to tivon spots.
Speaker 1: Sometimes we'll sell movies right to spots. So the first
Speaker 1: four movies we did, we're with Jason Blum, and we
Speaker 1: sold two of those to Netflix, and two of those
Speaker 1: two HBO and CAM. One in particular on Netflix was
Speaker 1: released over the Thanksgiving holidays and probably more people saw
Speaker 1: that within a week than have seen a lot of
Speaker 1: Jason's films and theaters, which he admitted, Um, So I
Speaker 1: think you just have to figure out what's right for
Speaker 1: each project. And are you finding that that's you know,
Speaker 1: a more profitable model for you? Does it help you
Speaker 1: in terms of your marketing spend, your distribution costs. Are
Speaker 1: you getting more of the revenue from a film release
Speaker 1: by not going, you know, a traditional sort of theatrical
Speaker 1: run for some of these films. Definitely, I think, UM,
Speaker 1: because we don't pre set the distribution strategy and we
Speaker 1: really look at it in a holistic way. How can
Speaker 1: we create maximum awareness UM with efficient spending. UM. We
Speaker 1: look at all the windows, including theatrical very specifically. So
Speaker 1: for us, there's no point over spending theatrical if we
Speaker 1: don't think that is where most of our audiences to
Speaker 1: watch the film. UM. And we always set the distribution
Speaker 1: strategy after testing it and thinking about it a lot internally.
Speaker 1: So probably our biggest windows from a revenue point of view,
Speaker 1: or at least a net revenue point of view, off
Speaker 1: the marketing s bend are our second window, so so HBO, Netflix, TVA.
Speaker 1: And when you're having conversations with with filmmakers, I mean,
Speaker 1: how open are they to this? Because I feel like
Speaker 1: you still read in trade press, you know when there's
Speaker 1: a big bidding war or something like that, that you
Speaker 1: know that that these filmmakers still want that that traditional
Speaker 1: theatrical release. Is that becoming you know, a little bit
Speaker 1: of an anachronism. Or are people more open to two
Speaker 1: novel distribution strategies or do you still have to kind
Speaker 1: of have a kind of a tough conversation with people.
Speaker 1: It depends they're much more open than they used to be.
Speaker 1: You know, if I were to do uh Jack Assid
Speaker 1: Napoleon Dynamite, they may have bypassed theaters altogether. Right, But
Speaker 1: on one in particular, I acquired this movie foot fist
Speaker 1: Way with Will Smith and Adam McKay and Jody Hill,
Speaker 1: who did He's Bounded Down, Who's just a great, wonderful
Speaker 1: young director. Uh. We we felt because I think it
Speaker 1: may have been the second or first worst testing movie
Speaker 1: in Paramounts history, right, And we tried to convince Jody
Speaker 1: to release it on Funnier Die and MTV dot com
Speaker 1: at the time, and he wanted a traditional theatrical window.
Speaker 1: Was his first movie, so we couldn't argue with that.
Speaker 1: But I bet if we had that conversation today, uh,
Speaker 1: he might feel differently because we would market it socially
Speaker 1: and viral e and potentially get more eyeballs than would
Speaker 1: go see that movie and pay ten knowledge to see
Speaker 1: in the movie theaters. And just to add, I think
Speaker 1: a lot of the people and filmmakers were talking to
Speaker 1: ultimately also want a successful release, So it's not only
Speaker 1: about the amount of theaters. They want the release to
Speaker 1: be seen as successful and they want to get into
Speaker 1: the theaters where they think the audience which will most
Speaker 1: likely want to see it is going to see it.
Speaker 1: So it's more quality over quantity, the same as in
Speaker 1: terms of the length of the release. Sometimes I wonder
Speaker 1: when when people talk about, you know, the theatrical experience,
Speaker 1: and they have this sort of reverence for it. Um.
Speaker 1: I mean, do you think consumers feel the same way,
Speaker 1: because I know that that quite frankly, I don't always
Speaker 1: have a wonderful experience when I go to a movie theater.
Speaker 1: Maybe it's dirty, maybe people are talking. I mean, maybe
Speaker 1: I would prefer to just watch something in the home.
Speaker 1: I mean, is that something that that people aren't really
Speaker 1: listening to what consumers are telling them when they sort
Speaker 1: of talk about it in that and that sort of, um,
Speaker 1: almost religious quasi religious way. It's hard. I mean, you
Speaker 1: think about the evolutionary lack of evolution of the in
Speaker 1: theater experience. It hasn't changed that much, right. I mean,
Speaker 1: you've got some Imax theaters, you've got theaters, your reserve
Speaker 1: seats um that are are wonderful, but they're they're more
Speaker 1: of the anomaly. Uh. And so I think you've got
Speaker 1: to make either the movie or the experience exceptional. Having
Speaker 1: a bar and a lot of the movie theaters is good.
Speaker 1: So Alamo is having success with younger movie going audiences
Speaker 1: because it's a better experience, it's a night out. But
Speaker 1: I think that people are not listening enough to the
Speaker 1: consumers saying, you know what, it's not worth me paying
Speaker 1: all this money for that experience. I'd rather stay home
Speaker 1: or wait for the movie to get into a window
Speaker 1: that I can enjoy at home. Yeah, and it's I
Speaker 1: think it's it's it's the cost of the ticket. But
Speaker 1: always deals so driving there and the parking and the X,
Speaker 1: Y and Z, and we were talking a little bit
Speaker 1: about the sort of the filmmakers and and they're growing
Speaker 1: flexibility with some of these distributions strategies. But there's office
Speaker 1: obviously another party involved in that, and that's the theater
Speaker 1: owners themselves. So what are you sort of hearing from
Speaker 1: that end of things? I mean, are they being flexible
Speaker 1: to about letting your movies in. I mean, how how
Speaker 1: is that kind of conversation too? You know, I think
Speaker 1: they've been pretty great to tell you the truth, as
Speaker 1: long as you work with them in terms of release
Speaker 1: dates and and when you have the theaters, they want
Speaker 1: more programming, they want alternative program and clearly Disney students
Speaker 1: still doing really well with four quadrant event movies, but
Speaker 1: they like to have the options. Now that may mean
Speaker 1: you're not in three thousand theaters. You can start in
Speaker 1: fifty and go to a few hundred. But I think
Speaker 1: that the theater owners like alternatives, and I also believe
Speaker 1: they'll maybe movie past and get it right. They're open
Speaker 1: to altern of pricing, particularly at low traffic times a day.
Speaker 1: You mean sort of subscription service kinds of things ees
Speaker 1: or flexible pricing. Um, let's let's go back to kind
Speaker 1: of the formation of Gunpowder and Sky. Um Fan, I
Speaker 1: know that you had a lot of experience. You were
Speaker 1: at Vatcom, you were at MTV films, UM and uh Floriss,
Speaker 1: you were at end them all. How did you guys
Speaker 1: get together and why did you see this as a
Speaker 1: space you you wanted to go into? Well, you know,
Speaker 1: I think separately Floris and I had a similar notion
Speaker 1: of kind of a premium content studio that was sort
Speaker 1: of youth oriented, forward looking, that would create content for
Speaker 1: newer platforms. It just felt like there was a content renaissance.
Speaker 1: There were platforms emerging UM every day, and a lot
Speaker 1: of the content, particularly for young people, was was amateur
Speaker 1: was based on you know, kids were posting videos, so
Speaker 1: there was an opportunity to create more premium content that
Speaker 1: targeted young people. And UM also there was gonna be
Speaker 1: uh sort of a day of reckoning with linear TV
Speaker 1: channels where they were going to have to find alternative
Speaker 1: sources of programming because the audiences were getting smaller. So
Speaker 1: all those things lad each of us separately to uh
Speaker 1: come up with this notion of creating UM a content studio,
Speaker 1: creating brands that could live on O T T platforms
Speaker 1: targeting young people. And we got together primarily through Peter
Speaker 1: Turning and Honor and uh this was when when did
Speaker 1: you guys form the company story? And we were prepared
Speaker 1: for it hobby or something. So the market looks very
Speaker 1: different at that time and what right, well, when we
Speaker 1: when we came up with the notion of the studio.
Speaker 1: We were seeing that audience isn't obviously specifically younger people
Speaker 1: were moving where very quickly from traditional and linear TV
Speaker 1: channels to these new platforms, and on these new platforms
Speaker 1: you had, like what Ben was saying, from cat videos,
Speaker 1: make the totals, etcetera, which are very meaningful in themselves,
Speaker 1: but it's not, as we call it, kind of premium content.
Speaker 1: With the shift, we assumed that at some point when
Speaker 1: the audience moves, as a rule of media, at some
Speaker 1: point um uh, advertising, subscription, etcetera, revenues will follow, and
Speaker 1: because of that, you're able to spend more money on
Speaker 1: the content. And with more money coming into the space,
Speaker 1: more quality, newer creators, newer formats, um etcetera. That what
Speaker 1: we were betting on when we came into the market
Speaker 1: and set up this new studio purely focused on premium
Speaker 1: content for the space. That market was not there right
Speaker 1: it was. Everybody was talking about the digital pennies and
Speaker 1: the m c ns at that stage. UM, So we
Speaker 1: were taking a bet that what we thought what was
Speaker 1: gonna happen was gonna happen. You had some smaller digital
Speaker 1: players who were uh starting to spend some money like
Speaker 1: the the go nineties watchables, et cetera. Um, since then,
Speaker 1: we we we the market has actually shifted way quicker
Speaker 1: than we could have hoped for. With now all these
Speaker 1: new O T T platforms which are looking for differentiated
Speaker 1: content as well as you focused content. So we're having
Speaker 1: the Warners, the Apples, the Netflix, Quimby, come const launching
Speaker 1: news services, the monetization on YouTube becoming better. Um, So
Speaker 1: there is more and more outlets and demands uh for
Speaker 1: premium content, differentiated premium content from both films, series as
Speaker 1: well as brands and channels. So where do you fit
Speaker 1: into all of this? Because you're absolutely right, I feel
Speaker 1: like in the last year and a half, I mean,
Speaker 1: you have such major players coming into this space. Um.
Speaker 1: You know, as you mentioned, Warner just announcing yesterday just
Speaker 1: just you know this week, Uh, their their HBO Max service.
Speaker 1: You have Disney Plus coming in, you have this a
Speaker 1: VOD service that Comcast is launching. Apple. Where do you
Speaker 1: fit into this? Are you going to be a provider
Speaker 1: of content for them? Are you a competitor? How does
Speaker 1: this work? And then you have something like Quimby, which
Speaker 1: is which is a little different with its sort of
Speaker 1: short form content. Well, we're providing content to all those services.
Speaker 1: To tell you the truth, we haven't announced the series,
Speaker 1: but to Warner streaming service with Quimby, we're doing that
Speaker 1: first series, fifty States of Terror. We're doing movies for
Speaker 1: these services. Um, so it's it's a great time to
Speaker 1: make premium content for these different platforms, you know. In
Speaker 1: addition to that, though, we're not sort of randomly um uh,
Speaker 1: kind of picking the categories that we play in. We
Speaker 1: have specific genres that we're doubling down in, so sci fi, horror, music, unscripted, um, comedy.
Speaker 1: And as part of that, we're also creating these sort
Speaker 1: of branded ecosystems that have primarily lived in the AVOD world. So, um,
Speaker 1: we have a channel called Dust, which is a sci
Speaker 1: fi channel, and if you think about it, the next
Speaker 1: Ridley Scott will come out of the digital ecosystem. And
Speaker 1: in fact, we've got over five hundred short films right
Speaker 1: with with name actors. We were acquired George Lucas's first film,
Speaker 1: Robert Semeckis and all these young filmmakers are making these
Speaker 1: sort of thirteen or less minute films that live in
Speaker 1: this world. They're consumed in this world. But then there's
Speaker 1: this i P that we can spin off and sell
Speaker 1: to other platforms, so they're also i P forms as well.
Speaker 1: Um and so these genres we pick, we double down
Speaker 1: on them, We create content if they belong on a
Speaker 1: different platform like quimby or in theaters. Uh, you know
Speaker 1: a movie prospect came out of dust um, and then
Speaker 1: that's where they will live. So it's this combination of
Speaker 1: branded ecosystems that aren't really competing with quib because they're
Speaker 1: living on Facebook and YouTube and roku and they live
Speaker 1: on Apple and Samsung and other platforms. Uh. And then
Speaker 1: we have i P that we kind of sell to
Speaker 1: different platforms and you're making money through advertising or through
Speaker 1: subscribe option or how does that work too? So so
Speaker 1: these these these brands, they do everything as Van mentioned,
Speaker 1: from short form two series, two films to bodcasts, and
Speaker 1: we have around direct to consumer channels which live on
Speaker 1: across a bunch of platforms. On the films and series,
Speaker 1: we make money through books Office, ti vo, UM sales
Speaker 1: to Netflix, HBO. Then the channels we generate revenues through
Speaker 1: programmatic advertising UM, and we will through affiliate fees and
Speaker 1: subscription in the coming period. So I think and and
Speaker 1: coming back to, we think the opportunity is there is
Speaker 1: a big opportunity for for indie studios to create and
Speaker 1: sell grade content, especially if you have differentiated content, targeted content,
Speaker 1: and then creating these larger brands where we want to
Speaker 1: be a trusted cuader and programmer within a specific genre.
Speaker 1: And these brands can live on the bigger platforms like
Speaker 1: Apple and Amazon and Samsung and Comcast, so where instead
Speaker 1: of only selling one off films and series were also
Speaker 1: packaging them in larger propositions. And I think as the
Speaker 1: next um ah he said iteration, I think you're going
Speaker 1: to see a lot of these larger platforms which need
Speaker 1: to become larger and larger and attract more and more people.
Speaker 1: Everybody's focused on originals, original content, which is extremely important,
Speaker 1: but in order for these platforms to ultimately become successful,
Speaker 1: they need more existing brands on their platform to attract
Speaker 1: larger amounts of audience and reduce programming and marketing calls
Speaker 1: and have sticky content on their platforms. So I think
Speaker 1: you're going to see a lot of brands existing and
Speaker 1: new brands come up. Is that because it's almost like
Speaker 1: a sign of quality or something for for a user.
Speaker 1: What why do you think? I think, yeah, I think
Speaker 1: you're seeing a lot of people who are now saying
Speaker 1: I think one which which is I think a mistake
Speaker 1: where people say young people only want v o D content,
Speaker 1: They want to watch it whatever they want, and they
Speaker 1: want to find it themselves. I think ultimately people care
Speaker 1: about brands right people where the same sneakers people want
Speaker 1: to listen to playlists Spotify. You want to be part
Speaker 1: of a brand. You want to know that if you
Speaker 1: go to a trusted brand, you're going to find something
Speaker 1: good and you can talk about it with your friends.
Speaker 1: Um and UM. I think that reduces the amount of
Speaker 1: spend on programming and your it reduces your spend on marketing.
Speaker 1: And I think a lot of people now we've seen
Speaker 1: the issues with for example, Netflix, that sometimes it takes
Speaker 1: you fifteen or thirty minutes to find something you want,
Speaker 1: and I think people are going to start focusing on
Speaker 1: that more and more. Um. It makes a lot of
Speaker 1: sense that that a smaller player, whose nimble could really
Speaker 1: profit from from all this change, because it feels like
Speaker 1: this change is just so accelerated. Things are so different
Speaker 1: and just a matter of months. But I've also recently
Speaker 1: been just sort of going around to traditional studios and
Speaker 1: I see this massive infrastructure, and I wonder what your
Speaker 1: thoughts are, as people who have also you know, worked
Speaker 1: in that space to how do these companies pivot? I mean,
Speaker 1: is it difficult when you have all of this infrastructure,
Speaker 1: these jobs, these all these people who are on your payroll,
Speaker 1: and you know, ways of releasing content to the world
Speaker 1: that are so sort of baked into your business model.
Speaker 1: How how hard is it for these companies to adjust
Speaker 1: to to this you know, new Frontier. It's, um, it's
Speaker 1: really hard. I think that um, you know what was
Speaker 1: his Steve Jobs expression that the people created the last
Speaker 1: invention are probably the last people are going to do
Speaker 1: the next one, because I have to get out of
Speaker 1: their own way. And there's all this sort of baggage
Speaker 1: that and and a lot of it is is good
Speaker 1: or bad baggage. But you know, I think that, UM,
Speaker 1: being at Viacom, uh, it was really important that UM.
Speaker 1: Anybody who stops listening to the consumer first, that's when
Speaker 1: you get into trouble. So MTV was a bit of
Speaker 1: a canary in a coal mine. All these young people
Speaker 1: were watching videos on YouTube. They were consuming content on YouTube,
Speaker 1: but because there were traditional distribution deals where direct TV
Speaker 1: or podcast would pay a billion dollars for the content
Speaker 1: on MTV, MTV couldn't put its content on the platform
Speaker 1: where most consumers were going. And so that was it
Speaker 1: was a nice baggage to have. You got a big
Speaker 1: check for your content, but then you couldn't be flexible
Speaker 1: and put it where people wanted to consume your content.
Speaker 1: When you don't have that baggage and you are small,
Speaker 1: you can follow the consumer. The consumer wants to watch
Speaker 1: a movie you make on Demanding Home and will pay
Speaker 1: the same price, well that's where you should be. Um.
Speaker 1: So I think that that the studios recognized the shift
Speaker 1: in consumer behavior. Look at the decline in linear TV ratings,
Speaker 1: the decline and young people going to movie theaters. It's there,
Speaker 1: but it's really hard when you've got a lot of
Speaker 1: partners involved to say the theater owners, oh, by the way,
Speaker 1: i'm gonna short in your window from ninety days to
Speaker 1: thirty days. You're good with that, right. You've seen the
Speaker 1: reactions that the theater owners have like, hey, come on now,
Speaker 1: so it's it's gonna take a beat. It really is.
Speaker 1: We don't have that baggage. We can just listen to
Speaker 1: the consumer and and the purity of purpose provides us
Speaker 1: a lot of freedom. Yeah, I think, and I think
Speaker 1: there's a lot of smart people at these larger places.
Speaker 1: But I think also the the having to focus on
Speaker 1: keeping your revenues and your profitability up whilst actually in
Speaker 1: order to pivot to the new world, you're gonna have
Speaker 1: to do things which in the short to medium term
Speaker 1: will actually you're focusing on lower profit initiatives and you're
Speaker 1: gonna have to let go of a couple of juicy,
Speaker 1: juicy deals. Um. And for that you need to also
Speaker 1: have shareholders which kind of appreciate you going into that direction.
Speaker 1: I think that that's that's the balance which a lot
Speaker 1: of people are having to con Well, it's interesting you
Speaker 1: say that because I talked sometimes to analysts and I'm
Speaker 1: kind of struck by the fact that they treat a
Speaker 1: lot of these streaming services. They almost see them as
Speaker 1: just additive, that it's just going to add revenues to,
Speaker 1: you know, their overall sort of pie. But they're taking
Speaker 1: content away, you know, they're they're wrapping up licensing deals
Speaker 1: which you're basically and at least in my estimation, pure
Speaker 1: profit for them putting you know, pulling that back, putting
Speaker 1: it on their service, which comes with all kinds of
Speaker 1: attendant costs. So I guess I'm just sort of what
Speaker 1: kind of if you're a publicly traded company, isn't that
Speaker 1: really problematic if you have to do things when you're
Speaker 1: what you If you just look at it from a
Speaker 1: pure number standpoint, you think this is this was a
Speaker 1: terrible quarter, right, I mean, how how do you do that? Explain?
Speaker 1: Like this is gone of costs pix for the next
Speaker 1: ten years. But the opportunity is why, and that's why
Speaker 1: are you going to do it? And for a Netflix
Speaker 1: that's as a premium play coming from the less quote
Speaker 1: unquote digital sign of it, it's an easier thing to
Speaker 1: explain than for a for another big studio legacy revenue.
Speaker 1: It isn't two sided coin because they're getting big license fees,
Speaker 1: but they don't have a direct relationship with their audience,
Speaker 1: and that's the price they pay. And so the pot
Speaker 1: at the end of the rainbow is I'm going to
Speaker 1: get my content back and now I'm gonna know who's
Speaker 1: watching it and so when I release a movie or
Speaker 1: I release something with that actor in it, I can
Speaker 1: talk to them directly. Why do you think, um, that
Speaker 1: that legacy media companies have other than Disney sort of
Speaker 1: And actually I would argue MTV at least at one
Speaker 1: point have that kind of direct relationship with its consumers.
Speaker 1: Is it because they use sort of third party to
Speaker 1: get their content out of the world. Why do they
Speaker 1: have Why have they why have they sort of failed
Speaker 1: to establish that kind of connection. Oh, because there were
Speaker 1: middlemen for the most part, there were cable operators and
Speaker 1: so and there was a really imperfect system Nielsen that
Speaker 1: took a very small sample of the country that only
Speaker 1: took their live viewing for a long time. So the
Speaker 1: way we got information was through emails and phone calls.
Speaker 1: When when they didn't like something, we heard it from
Speaker 1: an email. But it wasn't as if we had this
Speaker 1: direct conversation we knew who was watching it in the
Speaker 1: Midwest or who liked what record or video. Where we
Speaker 1: just had to to beg and borrow and so it
Speaker 1: was just there were middlemen involved. So if you're somebody
Speaker 1: who's sort of entering this space, I mean, where do
Speaker 1: you see sort of the opportunities without giving away uh,
Speaker 1: you know, competitive advantages. You know, a lot of people
Speaker 1: that I talked to seem very anxious about this, this
Speaker 1: new frontier. They're frankly, they're almost depressed about sort of
Speaker 1: how things are changing. You both seem to feel that
Speaker 1: there's a lot of opportunity. What what sort of it's
Speaker 1: exciting to you right now? Well, I think this this
Speaker 1: is part of the show for both of us at
Speaker 1: big companies who did things a certain way, you know,
Speaker 1: and them all make great content, they make great formats.
Speaker 1: They sold it to traditional television networks around the world. Um,
Speaker 1: what's changed is the consumer is in control and that
Speaker 1: is really exciting. They tell you how they want to
Speaker 1: see things. And as a content maker, if you're again,
Speaker 1: if you're not precious about your windowing, then that is
Speaker 1: a huge opportunity. So if you make your movie, maybe
Speaker 1: HBO will buy it, or maybe the new Warner streaming service,
Speaker 1: or maybe Hulu will take your channel and distribute it
Speaker 1: for you, or Roku you know this great a vod
Speaker 1: system will take your channel and they'll sell ads against
Speaker 1: it and they don't charge five dollars a month to
Speaker 1: a consumer. Um, I think as long as you're open
Speaker 1: to the noise of culture and consumption, then that's a
Speaker 1: huge opportunity. But as we talked about, if you're married
Speaker 1: to an old system that pays you a lot of
Speaker 1: money and you have to keep your profit margin a
Speaker 1: certain way, it's tough to pivot and embrace that as
Speaker 1: quickly as new companies can. Yeah, and we we don't
Speaker 1: need the traditional gatekeepers to build our I P and
Speaker 1: our brands, right, so we because we're building these brands
Speaker 1: that if we can go with a series to a
Speaker 1: buyer and see if anyone is interested, or if we
Speaker 1: think it's actually better, or we can do we can
Speaker 1: tell it in a shorter amount of time, we can
Speaker 1: put things on our own channels, and as long as
Speaker 1: an audience agrees with us that it's interesting and they
Speaker 1: love our brands, we're going to continue to grow. It's
Speaker 1: interesting that you were talking about launching in because there
Speaker 1: were a number of other indie studios that launched at
Speaker 1: about the same time. And you know, I'm thinking of
Speaker 1: um Open Road in one of its sort of iterations,
Speaker 1: and and broad Green and Relativity have been there for
Speaker 1: a little while. But st X really high mortality rate.
Speaker 1: When you when you look at those names, where did
Speaker 1: where did they go wrong in your estimation? Because we've
Speaker 1: talked a lot about sort of big traditional media, why
Speaker 1: did some of the smaller players also sort of failed
Speaker 1: to thrive? Well, I mean, I know it's a bit
Speaker 1: of a buzz kill, but but I think they went
Speaker 1: into it relying on traditional windowing. To tell you the truth,
Speaker 1: and and and so um, if you don't keep your
Speaker 1: costs in check, both in the negative costs of making
Speaker 1: a movie and your overhead, then you're gonna get burned
Speaker 1: if the traditional windows don't pay off for you, and
Speaker 1: so one or two failed movies costs you tens of
Speaker 1: millions of dollars. And we, uh, we didn't sort of
Speaker 1: go fall into that trap. Really, and particularly if you're
Speaker 1: targeting young people, you don't have to spend hundreds of
Speaker 1: millions of negative costs. You can just make it fun
Speaker 1: and innovative and novel and they'll try to find it.
Speaker 1: Uh So, if you open the studio and relied on
Speaker 1: traditional windowing and traditional models, then there would be a
Speaker 1: high mortality rate unless you just keep banging out hits. Um.
Speaker 1: We're also about to go into the Toronto Film Festival,
Speaker 1: which I assume you you will both be at this
Speaker 1: year's Sundance. The prices for a lot of content made
Speaker 1: big headlines in a huge sales for things like The
Speaker 1: Report and Runs a marathon and Late Night, which which
Speaker 1: did not do well. Uh do you expect those prices
Speaker 1: to be as high at future festivals? I mean, I
Speaker 1: feel like there's like a a boom and bus cycle
Speaker 1: or something. You know, you have one here where it's
Speaker 1: four was a bit of a bus. So what what
Speaker 1: was it that happened that that goost prices at the
Speaker 1: last Sundance? Will there be a kind of a hangover
Speaker 1: effect at future film festivals? But what's your sort of
Speaker 1: take on that? I mean, I don't know what Flores
Speaker 1: feels about. I think you're right, it is it is
Speaker 1: our peaks and valleys. I think that the last year,
Speaker 1: streamers in particular and particularly Amazon came in with checkbook
Speaker 1: and wanted to say, we're going to buy these sort
Speaker 1: of broader movies. I didn't personally think that Late Night
Speaker 1: belonged in theaters. I thought it was and is a
Speaker 1: perfectly great movie for Amazon. It's a good, really good
Speaker 1: family movie. It's funny, Um, and then who knows, next
Speaker 1: year they may not show up where maybe Netflix comes
Speaker 1: in and pays a lot of money, but the year
Speaker 1: before they kind of sat out right for us. It's
Speaker 1: the great thing about our studio is that's why we
Speaker 1: we don't consider ourselves to be in the studio because
Speaker 1: we do more things. Is that if there are more
Speaker 1: aggressive buyers, it's harder for us to acquire titles. On
Speaker 1: the other hand, it's it's a better market for us
Speaker 1: to develop and sell our our films and series. So
Speaker 1: it's great if if if if there's an again aggressive
Speaker 1: buyers coming into Toronto, it's a good sign for us
Speaker 1: in other parts of our business and on the acquisition side.
Speaker 1: We we don't need to fill pipeline of let's say,
Speaker 1: its films a year because we have output deals or
Speaker 1: because we have an overhead to to to to support.
Speaker 1: So we're very fine to release fifteen films a year.
Speaker 1: We're also very good to release two to five films
Speaker 1: a year because you're not saying I have to hit
Speaker 1: a certain number each year or something like that. Are
Speaker 1: some contractual obligations, right, And also we don't have contractual obligations,
Speaker 1: which is another kind of issue. As you know with
Speaker 1: with with some other studios, you have contractual obligations to
Speaker 1: be in a certain amount of theaters, and then that
Speaker 1: starts hitting your p and a whilst actually you might
Speaker 1: not believe that it should actually be in that many theaters,
Speaker 1: but people are putting them out regardless because they have
Speaker 1: these obligations. It doesn't help anyone. That's a great point
Speaker 1: because when you look at these sales prices, you think, oh,
Speaker 1: it's sport two million dollars, but you don't realize, oh, well,
Speaker 1: there's actually a twenty million dollar acomm that's right. That's right.
Speaker 1: Because the year before we had a movie we produced
Speaker 1: called Summer of eighty four and we were kind of
Speaker 1: like people didn't buy for theatrical release, like oh, and
Speaker 1: then we sold the two shutter and and it was
Speaker 1: one of, if not their most viewed movie at the time,
Speaker 1: and so we sold it around the world. So in
Speaker 1: some ways, the market speaks for itself and and the
Speaker 1: project finds the right home eventually, but being married to
Speaker 1: having to spend all that money to release it theatrically
Speaker 1: and not knowing what the outcome will be, that gets
Speaker 1: to be dangerous at times. So could you tell me
Speaker 1: what what's behind the name? What gunpatern skuy what? What
Speaker 1: does that mean? Absolutely nothing? It is uh, it's I
Speaker 1: don't sleep and it it came to me in a dream.
Speaker 1: That was because when I was developing my own plan,
Speaker 1: I called the studio below the Radar, only to find
Speaker 1: out there were fifteen studios named below the Radar. But um,
Speaker 1: it was and I, uh, this lyric kept coming to me.
Speaker 1: I do not like guns at all, just just to
Speaker 1: be clear, but it it had this infinite possibility. And
Speaker 1: it's from an amy Man song and it is actually
Speaker 1: meant to be ironic because it's the song fourth of
Speaker 1: July gunpowder Sky, what a waste of wait yeah, yeah whatever,
Speaker 1: it's ironic and and but it felt like it had
Speaker 1: this sort of infinite possibility and uh, and I called
Speaker 1: amy Man and she I didn't. I didn't really have to,
Speaker 1: but I called her it just comically it felt like
Speaker 1: I wanted to. And She's like, as long as you
Speaker 1: treat artists fairly, then I will bless it. So we've
Speaker 1: we've tried to live up to that mantra. Well, Van
Speaker 1: and Force, thank you so much for joining us, and
Speaker 1: really appreciate it great. Thanks travelings. This has been another
Speaker 1: episode of Strictly Business. Tune in next week for another
Speaker 1: helping of scintillating conversation with media movers and shakers, and
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