Size of independent films market nosedives in corona year

The independent film industry is set to take a major financial hit from the Covid-19 pandemic, as social distancing has limited attendances when cinemas have not been closed altogether. While independent films took a share of around 11% of the global box office in 2019, the pandemic could see that share fall by around $3 billion according to estimates by Consultancy.uk in collaboration with Indy Film Library.

Independent films are short or feature-length movies which are produced outside the major film studio system. Often – though not unconditionally – independent films are made with considerably lower budgets than major studio films, meaning they require a high level of ingenuity to deliver an end product which can capture the imaginations of a larger audience.

Like any other industry, just how much the independent film market is worth is a matter of intense debate. As with consultancy, technically anyone can become a filmmaker, and as advanced filming and editing technology becomes more accessible than ever before, while digital platforms which can enable them to sell their end-product, theoretically anyone can produce and distribute a film of their own Indy Film.

One of the more traditional ways of weighing the size of the Indy Film market is the global box office – a gross revenue generated from the sale of tickets for cinema attendance. In 2019, the global box office for all films in cinemas was worth a total of $42.5 billion – with ticket revenues having grown consistently over the last decade.

While exact figures for most of the world’s markets are extremely vague on the market share won by independent films, in the US the Motion Picture Association of America and a number of other sources estimate that in the country’s domestic market – which is the largest in the world – independents make up 10% to 13% of box office revenues.

If the figures of the world’s largest film market are taken as representative of the global picture, then as of 2019, the independent film industry was likely worth around $4.8 billion in annual box office receipts. That figure is likely to have tumbled dramatically over the course of 2020.

Covid-19’s impact

The global film industry will have taken a massive knock at the box office by the end of the year, no matter what happens for the rest of 2020. The only question which really remains is how bad it will be. Various estimates have been bandied around between 40% and 50%, but one of the most recent anticipations from research firm Statista is that revenue will be 61% lower than last year – totalling around $16.3 billion.

While this is a disaster for the studio system, however, the world’s wealthiest film companies will likely bounce back in the near future – and the same cannot necessarily be said for the independent scene. According to research from industry platform Indy Film Library, if the highest grossing independent films of the year are treated as a weather vane, the broader Indy Film segment could see revenue fall by an even larger 72%.

If the performance of the top selling independent films of each year is taken as representative of the industry’s health, the situation could be dire. The growth of the top 10 has been nothing short of prolific since 2017, where after a two-year dip, revenues rose by 249% to pass $600 million for the 10 largest Indy Film hits of 2019.

Even when cinemas have opened this year, however, it has been with reduced capacity, and the even further diminished attendance this has caused has proven to be a blight on top Indy Film, which largely relies on word-of-mouth recommendation to win box office share. As a result, the top 10 best grossing independent films of the year have only managed to bring in a combined $145.7 million for the week starting November 10th. Presuming the final weeks of the year continue at the same pace, the total haul of the 10 best performing Indy Films in 2020 will come in at an estimated $168.4 million.

If this forecast 72% drop in revenues is applied to the global independent film market, then while the segment may have grown proportionally alongside studio films, it is likely to decline in a much more serious manner. Global independent box office revenues could drop as low as $1.4 billion by the end of 2020 – seeing Indy Film lose around 2% of its previous market share.

Beyond box office revenues

However, it is important to note that these forecasts only focus on box office revenues. Digital platforms were already breathing down the necks of traditional cinemas before the coronavirus lockdown. Across a host of other industries, the lockdown has already forged a number of apparently long-term behavioural changes among consumers – making them wary of public gatherings and physical contact, among other things – and companies spanning retail, banking and more are having to adapt to avoid losing out on their custom.

In recent years, online streaming platforms including Netflix, Amazon Prime, Mubi, Hulu and Shudder have all given a home to a growing number of independent films – both short and long. The subscription models of these platforms allow them to focus on finding more niche content that can help pick up new customers, unlike cinemas with physical locations, who are eternally weighing up the risk of putting off potential seat-fillers with content they may be uncomfortable with.

With independent productions generally costing less to create, films sold to platforms like these are more capable of profiting from the business model than Hollywood blockbusters, who may struggle to recoup their hundred-million-dollar budgets as easily without individual ticket revenues. Taking this into account, it may be premature to say that independent film is facing a crisis over the coronavirus. In another sense, 2020 being spent in lockdown may be presenting the segment with a golden opportunity going forward.