Hollywood Studio Built for Digital Era Breaks New Ground

Michael Arrieta, CEO, Big Air Studios

Michael Arrieta, CEO, Big Air Studios

November 7, 2011 – Big Air Studios, a new kind of movie production house, is betting on an open-ended multi-platform distribution strategy that gets past the theatrical-or-bust mentality of traditional filmmaking. In this interview Big Air CEO Michael Arrieta describes how the studio built audiences for its first releases as well as his vision for success with this new approach to moviemaking.
ScreenPlays – You were with Sony Pictures for a long time in the digital domain from the ground floor. You went through all the early struggles – when’s this going to happen, how’s it going to happen. Now all of a sudden it’s blossomed. How would you describe the market significance of all these other outlets that have emerged through broadband and mobile as opposed to the traditional way content has been distributed through the theaters, through DVDs and through television?

Michael Arrieta – These are really exciting times. When we started the digital division back in the 1999- 2000 time frame at Sony, none of this was reality. Broadband penetration was sub-10 percent. There were no connected devices. But we had a vision of how the world was going to evolve. We got a lot of that vision from seeing what was going on in the Sony Labs, which gave us really interesting insight into what was going to happen in technology.

You fast forward to today, and so many things are just commonplace to us. We kind of expect high-speed connectivity, which enables all sorts of distribution that never existed before. You look at new devices coming into people’s homes with IP connected TVs or Wi-Fi enabled tablets or 3G-connected tablets and smartphones and every kind of over-the-top video service coming from all sorts of great new retailers. These things make it a really exciting time to make movies,

But I think even more exciting is that fact it’s a really great time to be a consumer. You’ve got the age of the empowered consumer now. Consumers can actually demand their media in all new ways. People still love the theater screen; people still love DVDs. But what we’re seeing is an emergence of all new ways to get content directly into consumers’ lives. And that is actually driving increased demand for content. When people buy more devices they’re getting more content.

It’s great from a content supply perspective, and what we’re trying to do at Big Air is capitalize on all those trends and bring the content to all those devices through all these new networks and basically be a really smart distributor of high-quality and even mid-quality and low-quality entertainment to any device.

SP – It’s also a new life for the producers of content because they’ve been living with this shrinking bottleneck. Certainly the theatrical release venues have shrunk over the years. The independent producers have really struggled. Often great films aren’t available at all in chain-dominated cities. With that change in consumer demand and all the devices and outlets that have emerged, is this a moment of financial opportunity and true revenue growth for those people who are producing content that’s not necessarily getting top-tier exposure?

Arrieta – I think it is. It’s absolutely becoming the new golden age of film. The problem we’ve had inthe industry was lack of capacity. It’s difficult to do a theatrical distribution plan, because there are only so many screens and because there are some limitations on that system. The theatrical experience is still a wonderful one, but it’s hard to access for an independent filmmaker in particular. With connected distribution on these emerging platforms, a lot of the barriers to entry are going down. It doesn’t cost as much to distribute through digital means. And you can still get a high-quality experience directly into consumers’ homes.

SP – How do you deal, then, with the barriers to exposure that come with diving into the infinite pool of content?

Arrieta –You can look at it a couple of ways. But what I really think is, we do subscribe to the long-tail phenomenon and the concept that [Wired editor] Chris Anderson put forth about the long tail. We believe there’s an audience for every product.

The issue with the past has been it was almost impossible for obscure titles, smaller titles to find their audience, because the cost benefit wasn’t there, based on the fixed plant and other things that were going on. With connected distribution and things you can use the Web for and what you can use social marketing and digital marketing for, you can actually find audiences. The audience may be large, it may be small, but you can almost costlessly deliver to the intended audience, which opens up whole new revenue streams for a producer.

SP – At Big Air, one of your primary roles is to facilitate that marketing. How do you do that? What are some of the things you’re using to get exposure to a relatively obscure film or piece of content?

Arrieta – The thing we look at with every film is there’s some reason the film was made. Either the cast or the theme always has an intended audience. What we try to break down is what is that intended audience and how can we leverage near-costless marketing to source the intended audience.

For instance, our first film was a teen suicide drama called “Archie’s Final Project.” So at the core it has this essence of teen suicide, a real problem in society, but not a real broad mainstream theme. Certainly it’s not a broad romantic comedy with big stars in it. But what it has is a really interesting theme that touches a lot of people.

So we used the social Web in particular and ran campaigns off of Facebook and other online means to basically crowd source like-minded people who might be pre-disposed to wanting to see a film in that genre. We ran a campaign on Facebook, the “I am Archie” campaign. Archie is the lead as an angst-ridden teen who has suicidal tendencies. We brought in celebrities. Great celebrities like Adrian Grenier helped us by posting into the “I am Archie” campaign, and what we did was create a groundswell of thousands of fans who were identifying with the main character.

SP – How did they have access at that point, because it wasn’t in theaters?

Arrieta – It wasn’t in theaters, but we disseminated clips, we disseminated videos and trailers, and we put a platform out for them to discuss among the most like-minded people, including teens and tweens.

SP – How did they get their first exposure to the full feature film?

Arrieta – We did a series of sneaks at various places to get the word of mouth going, which led toward the actual theatrical release, which we did on September 23.

SP – So you built this whole market through viral discovery of who’s interested in this topic and created a groundswell before it went into theatrical. There’s a lot of that going on with more and more mainstream feature films. People are beginning to get hip to the fact that this pre-market effort is pretty significant. But in your case, I guess this might be described as an anomaly, because a lot of the stuff you’re going to be releasing is never going to get into theaters, right?

Arrieta – Well, no, we try to have as many films make it to all screens as much as possible. Not every film deserves or has the cost benefit of being a theatrical release. Our first film did. Our second film, which releases November 11 called “11-11-11,” by Darren Bousman, who did the “Saw” series – that will also be a theatrical release. In that instance we actually partnered with AMC theaters, and so we’re having an exclusive relationship with them to go out in the first 15 cities and then an expansion thereafter. Now not every film will get into the theaters.

SP – What I was getting to was, were these not theatrical releases, after you get that marketing front end going, how would people get access to that content? Would that be available primarily online, through some outlets like maybe the CE manufacturers’ connected TV platforms or Apple TV that kind of thing? Would it be exclusive to specific outlets? How do you look at doing that?

Arrieta – We have building blocks for distribution. We start off with titles that are a little less economically viable as compared to a major studio 4,000-screen release – let’s say a little independent film that might otherwise not get the light of day. Through our system we release them primarily on the digital platforms – the iTunes of the world, those kinds of connected platforms where the distribution is largely PC based, tablet based, phone based, etc. so there’s no physical plant involved pressing a DVD or putting a print in a theater screen. The marketing campaign that goes along side that is mostly digital marketing, always trying to tie into key elements of the film.

SP – And you’re still doing the same things in terms of finding a market for it? You’re not just putting it out there in the vast swim. You’re identifying who might be interested in it.

Arrieta – Absolutely. We create Web, mobile sites, social media campaigns for every one of our films, and we tie into the vastness of the connected platforms.

SP – Does Big Air become a front-end brand that tells people, watch for what’s coming from Big Air, or is it more the independent pieces of content and how you deal with them individually that generates the buzz?

Arrieta – Well, ultimately we want Big Air to be a household name. Who doesn’t want that? We want to be seen as a provider of quality entertainment across all genre types, and we do actually want to be a brand that people identify with. We don’t want to be just a faceless company that happens to have films. We want to do things for our consumers that they identify with and invite them into the creative process and invite them into the distribution process, really let them behind the velvet rope of Hollywood and give them a little bit more of a taste of what the excitement of Hollywood is.

As an example, on our first film we actually ran a campaign on Facebook and invited fans of the movie to come to the premier. They came to the premier; they walked the red carpet. They came to the after party; they met the talent. They got to hang out the whole night inside the Hollywood party scene, which was very exciting for a lot of the fans to get the feel and taste and talk with all the talent. Then they go off in the blogosphere and talk about how great Big Air is. Obviously we appreciate our fans; we really want them to identify with us and have a relationship with them in ways that others really haven’t done in the past.

SP – You’re acquiring content, obviously, but are you bankrolling some original creation?

Arrieta – Yeah, we will be. We started off the company building the distribution network. That was first and foremost in getting all our distribution partners in place. And then we went off into the world and acquired our first few films to put through the system. We’ve got a couple of our own projects about ready to go. We have some casting offers out and what not. So we’ll be making announcements on those relatively soon. We’ll be financing those, but for the most part we’re in acquisition mode right now. The next phase of the company will be producing and acquiring, all the while leveraging the distribution system we have in place to take the movies out to the broadest possible audiences.

SP – What you’re creating is fairly unique. It’s exploiting the digital distribution, but it’s looking at theatrical as an important element of what you do. So it’s not just assuming that nothing’s going to get into theatrical. It’s basically playing it as widely as you can with independent productions and that sort of thing. As you look at this evolve, where do you see the money coming from as you go forward?

Arrieta – What we’re trying to be at the core is an end-to-end distributor, so every screen is important to us. We think there’s an opportunity to be particularly strong at the emerging platforms, the connected platforms, and we’ve put a pretty robust technology stack in place that we think will drive incremental value out of the emerging platforms.

Part of it is focus. We’re less focused on any one screen in particular. We’re not driven by box office numbers, not dependent on DVD. We’re really dependent on the consumer telling us where they want to see the film. And what they’re doing right now is increasingly looking for the connected platforms. The amount of Netflix streams are up, the amount of iTunes buys are up. So what we hope to be is the best digital distributor in the world, but still have the capability of being a full end-to-end distributor.

SP – Do you see an opportunity around doing exclusive deals where a film is only viewable on Vudu or something? Is that in the plan?

Arrieta – Yeah. I think what you’re starting to see now, every distributor starts off wanting to get access to broad amounts of time and over time they’re starting to look for exclusives. So Netflix made a big announcement with the Kevin Spacey project on an exclusive basis. You’re seeing YouTube come out with some exclusive channels. There was the Blockbuster Direct program which debuted exclusive films.

Every time we look at a film we look at our various distribution partners, and we look for who might be apt to be an exclusive partner on that particular film. In some cases it could be a hardware provider. It could be embedded on a CE device. It could be one of our retail partners. We have those conversations all the time.

We haven’t launched any on an exclusive basis yet, other than the exception that our first two films are in exclusive theatrical distribution with AMC. Then they go broad with all the other retailers from a Best Buy or a Walmart or an iTunes or whoever they’re after. We do think it will be a very significant business opportunity to do some exclusive windows with some exclusive retailers.

SP – Given what’s happening in the consumer market and the fact there are these communities forming around subjects and what have you, do you see this starting to influence the creative community to where there’s now more product being developed for those audiences?

Arrieta – Absolutely. The key is access to consumers. If you can have a passion group and you can create around a particular passion group, knowing you can get connected to them in some way shape or form, you can take a lot of the marketing, distribution costs out of the equation and do a profitable release. Our film that releases in November, “11-11-11,” is from Darren Bousman. Darren, who did the “Saw 2, 3 and 4” movies, has a very passionate audience. The “11-11” phenomenon is dealing with end of days, Satan coming and claiming souls. It’s a great title, a really great film.

All the creative was done around capturing that phenomenon, the kind of interest that already existed online and marrying that up with Darren’s audience, which is an incredibly passionate group. So the film was actually constructed at the core to capitalize and triangulate on the “11-11” phenomenon, the emergence of distribution and Darren’s audience.

SP – One of the results of all this should be a lot more interesting variety in mainstream distribution, because some of those films that get targeted to a specific audience, for example, like “Archie’s Final Project,” might ultimately get such buzz that everybody wants to see them. Think three or four years down the road how much more variety we might end up seeing in theaters as a result of this phenomenon where people are able to create around their passions and go to people who have those passions.

Arrieta – The connected platforms and the ways you can reach audiences today are really changing the types of films you can make and how you can get in front of audiences. As a Sony Pictures executive I loved when we’d have our big four-quadrant films, as we called them, the “Spider Man’s” of the world, where the audiences are so vast they’re almost businesses unto themselves. The distribution and marketing is a little bit easier because you don’t have to be as select in who you reach.

But the smaller the film gets the less the traditional tactics work. They don’t have the same level of ROI as the blockbusters. Those become a little more difficult to select how you market and how you market cost effectively. With the use of digital technology and getting down to understanding consumers and distributing on more of a direct basis, you really change the cost equation. We’re trying to capitalize on those trends, and, to your point, you’ll actually see more targeted specific levels of creative that can be brought forth profitably because the marketing becomes more efficient.

SP – Maybe you’re right that there’s a golden age looming here. It’s been pretty dry lately. Good to know it’s going to happen this way. Michael, thanks so much for the time.

Arrieta – Thank you. I appreciate the time as well.