Schuyler Moore has a thought-provoking post up at Forbes about the future of the international pre-sales-as-financing model. For the uninitiated, the vast majority of independent films with recognizable actors are financed (in part or in whole) by pre-selling their foreign distribution rights to various international territories. Since the production companies are able to make these sales before the film has even been shot, they're then able to take the revenues from the sales and use them to finance the film's production. It won't help an indie filmmaker making a micro-budget film with no name talent, but for an enormous amount of filmmakers making indies over $2 million or so, it's extremely helpful.
Netflix might end up becoming, essentially, another movie studio, just as they've basically become another TV network.
Moore believes all that may be coming to an end. His article - worthwhile reading - suggests that the increasing availability of Netflix in international territories, combined with the increasing frequency by which films are released day-and-date (not only to be made available on Netflix but on many other platforms as well) might mean that those pre-sale deals will dry up, because consumers will be watching theatrically released films, increasingly, on Netflix (if they are available via that platform day-and-date) as opposed to in theaters or on cable or DVD.
Like HBO, Netflix seems more interested in building a generally well-respected brand - a quality brand which entices subscribers - than in turning everything they do into a mass-market superstar.
What does this augur for the future? Moore believes it will lead to financing films through pre-sales to Netflix itself, which may indeed be the case. Netflix might end up becoming, essentially, another movie studio, just as they've basically become another TV network. I think this could be beneficial to consumers (and filmmakers) insofar as the studios would have a competitor with the economic reach to compete with them whose business model would be rather different. Since, like its competitor HBO, Netflix doesn't rely on a pay-for-individual-titles model like the studios do (though DVD sales can certainly generate significant revenue for a particular title), Netflix might be less concerned with trying to engineer each of their films to be a giant tentpole success in the manner that the studios are currently obsessed with operating. Like HBO, Netflix seems more interested in building a generally well-respected brand - a quality brand which entices subscribers - than in turning everything they do into a mass-market superstar. The result could be relatively bigger-budget sophisticated adult dramas, the sorts of films that Hollywood made in the '60s and '70s, which are so conspicuously absent from the market today. Effectively, Netflix as a movie studio could become to the big studios what HBO is to the major broadcast networks. Wouldn't that be an incredible development?