The New Indie Film Arthouse: Is It Moving Online?

For independent film, online distribution is becoming as important — if not more so — than theaters

Welcome to the most exciting new independent films and documentaries … coming soon to a computer near you.

As theater owners stew in Las Vegas over the major studios' plans to shorten their exclusive windows, a quiet revolution is taking place for smaller films, where theatrical distribution can be at best a brief stopover on the way to life in a big online arthouse.

Companies like Magnolia and IFC offer release strategies that often bypass theatrical in favor of video-on-demand for independent films — and with those films showing up online on services like Comcast's Xfinity TV (which has its own "Indie Film Club"), it's become far easier to find even recent small movies on the computer than in theaters. 

The Kirsten Dunst/Ryan Gosling drama "All Good Things," for example, was available online and on VOD a month before its theatrical release last December. The Oscar-nominated documentary "Exit Through the Gift Shop" hit VOD and iTunes three weeks before it was released on DVD. 

In May, the Tribeca Film Festival will make several of its films available for streaming at the same time as their festival debuts.

And at the recent South by Southwest Film Festival, the documentary "Conan O'Brien Can't Stop" (left) was sold in a multi-platform deal that put more emphasis on its VOD, streaming and mobile components than on its theatrical one, which it simply characterized as "special theatrical 'event' screenings" in the press release announcing the deal.

Its post-SXSW debut will come not in movie theaters, but streamed in a special preview for AT&T's U-verse customers.

The message is clear: for some movies theatrical is for show, but on-demand and streaming is just as important.

"It's more  important," corrected Gavin Polone, O'Brien's manager and the co-producer of "Conan O'Brien Can't Stop." "With a movie that's not 'Avatar,' particularly documentaries and smaller films that may never come to a theater near you, those other avenues become more important than theatrical."

Rick Allen, the CEO of Snagfilms, which offers pay-to-view and free-streaming opportunities for independent documentaries, agrees.

"The Conan movie is a terrific film, and I think it'll get the broadest audience going out in VOD and free-streamed windows," he told TheWrap. "It seems entirely possible that for a film like that, the transaction window and the ad-supported second window will net them more than the theatrical."

The transaction window  he referred to is usually the first step in the online and VOD world: it includes pay-to-view opportunities on services like iTunes, Amazon and Hulu Plus. The second window generally includes free streaming (as on services like the regular Hulu), supported by advertisements.

"Those two windows all make up big opportunities for revenue for a filmmaker," said Allen. "As more films go out in more ways, we're all learning about the size of the market — and we believe very strongly in that market as it exists outside of traditional theatrical release."

Mark Cuban, the technology, sports and entertainment entrepreneur who owns Magnolia Pictures, cautions that talk of the computer as a new arthouse may shortchange the importance of traditional video-on-demand, which can take place on computers but is more often handled on television cable and satellite systems.

"I think movie producers always follow the money," Cuban said in an email to TheWrap. "What has changed is that more money is coming from non-traditional areas like streaming and smart companies like AT&T are looking to take advantage of it.  

"But it won't replace theatrical, nor will it be more important than VOD. In reality, for most independent movies, VOD will be far and away the largest source of revenue in the future. More than theatrical and far more than streaming. But streaming is here to stay."

Some indie filmmakers have long resisted the idea of placing more emphasis on streaming than theatrical release. “I don’t know a filmmaker who doesn’t want his movie to play in a movie theater,” said Jonathan Sehring, the president of IFC Entertainment, which handles both theatrical and VOD releases. “But because of the economics it doesn’t always make sense for a distribution company or filmmaker to have his movie released on a big screen.”

But Sehring told TheWrap last year that attitudes are changing with technology that makes streaming easier for small movies, and Gavin Polone argues that filmmakers should not get hung up on traditional routes of distribution.

Exit Through the Gift Shop"It's more exciting to do it this way, and it gives you much more control over the release," he told TheWrap. "I think it's becoming necessary to do it in a different way, where you're not dealing with a studio that has all these set processes that you can't manipulate in a way that's specific to your movie."

The O'Brien deal does include a theatrical release — those "event screenings" — through Abramorama, the company that also released "Anvil! The Story of Anvil" and "Exit Through the Gift Shop" (above). But it also shifts the emphasis to unconventional partners like AT&T — which he lauds for its "deep Internet assets to promote the movie" — and bypasses the traditional theater-home video-pay cable model.

"Deals can work in a lot of different directions now," he said. "It's much better for filmmakers, and much better for the business in general."

And if filmmakers still hold out dreams of showing at the arthouse down the street rather than the arthouse inside the computer, independent film and digital media consultant Mark Lipsky offered some cautionary words to TheWrap last year.

"Unless your film has been fully acquired by a well-capitalized distributor," he said, "then you’re not only kidding yourself about the value of traditional theatrical but you’re contributing to the delay in establishing a sensible, vital and self-sustaining film ‘nursery’ online where everyone gets a chance at life and the cream naturally rises to the top.

"Once that begins to happen, no one will ever remember wanting to scratch and claw and mortgage their way into brick and mortar cinemas."

When asked on Thursday if he felt that a true online "film nursery" was any closer, Lipsky told TheWrap that it was, but that progress  been slow because industry leaders like Netflix and Amazon have not been forward-thinking enough. True innovation, he said, is "clearly not going to come from any of the existing players.

"But it will come," he said. "Later than sooner, perhaps, but yes, closer every day."