Can Indie Movies Survive? - Hollywood economist - Gawker

Can Indie Movies Survive?

"Since the cash flows from indie films tends to be erratic, these smaller distributors had come to rely on advance output deals with three pay TV channels - HBO, Showtime, and Starz - to pay their overhead. In return, the pay channels got the exclusive rights to show their new movies. In 2008, for example, the $80 million that New Line Cinema received from HBO paid its annual overhead and development costs. Bob Weinstein, the co-chairman of the Weinstein Company, not only described output deals as 'the bedrock of the business,' but said in 2008 'not one company in this business could survive and succeed without one.'

His words soon proved prophetic. When the pay channels found they needed fewer movie titles to retain subscribers, and began cutting back on their output deals in 2008, the 'bedrock' crumbled within a matter of months. By 2010, most of these indie distributors and mini-majors were effectively out of business."