Independents

What are independents and majors?

Besides the large studios like Warner, Fox, Paramount etc. (majors), there is a variety of independent producers (independents). While the majors each have their own worldwide branch network for the sales of their motion pictures, the independent has to sell his products - usually country per country - to independent distribution companies, mostly medium-sized companies. However, since the last few years it happens more and more frequently that major distribution companies acquire the independent producer’s rights to his film and consequently run the independent local distribution companies short of inflow of products.

The distribution company has to raise two investments: On the one hand the purchase price for the rights exclusive the rights of the producer’s commission (the so-called minimum guarantee) and on the other hand the theatrical release costs described at the beginning, which can considerably exceed the purchase price for the rights. For the entire chain of exploitation the quality of the initial theatrical marketing is crucial, because it is here where the awareness level of a motion picture results from, which even after years has a considerable influence both on the sales of DVDs and the audience rating on TV.     

The financing of rights thereby is unequally simpler than the financing of P&A (at least in Germany and in Europe). Finally the rights of a well-known and good motion picture represent a valid balance sheet position. The independent normally must present its own resources, and these are mostly limited. Instruments for P&A have not existed in Germany up to now – whereas in the USA P&A funds have firmly been established since a long time. In the USA there is a clearly more colorful and multifaceted scene of independent film production and distribution than in Germany, which would be unimaginable without such P&A instruments. Therefore this P&A concept also enhances the German independent scene.   

What are independent pictures?

While the production costs of the large studio productions have been constantly rising over the last years and exceed the 100 -million-dollar-limit more and more constantly, the independent producers tend to focus on smaller and medium budgets. As regards contents the majors focus on “the well tried”. The independent production always has been the source of innovations and has been quicker in recognising and picking up new trends.

Nevertheless it would be wrong to equate the independent film with low-budget-productions. Eventually large-scale productions like “Titanic” or “Lord of the Rings” were independent productions. However, it can be observed: The independent producer takes a higher risk with the selection of his themes - yet he also has a considerably greater chance of a high return rate. panda GmbH & Co. KG however only conditionally participates in the risk of selection of themes. The market entry does not take place until the motion picture has been completed, and therefore the first audience reactions through press screenings, festival– and film market screenings are observable. Furthermore, normally the first box office results in the country of origin, usually the USA, are already known. This at least presents a scope, within which the audience attendance in Germany could range. Thus with limited risk, via its share of the overages stemming from theatrical release panda GmbH & Co. KG nevertheless participates in the high opportunities. Furthermore additional safeguarding exists through DVD/video receipts.