The Vestron Test

An article titled The Vestron Test, written by Anne Thompson, was published by the LA Weekly newspaper on July 2, 1987 -- about seven weeks before the movie Dirty Dancing opened in theaters.

Article in LA Weekly, July 1987

The article's text:

The biggest news in the film industry right now is the impending Directors Guild strike, which has everything to do with the radical shifts in the film business caused by home video. Now that ancillary revenues have outstripped theatrical box office, the producers want directors to take their money up front and give up residuals -- which, of course, the directors are refusing to do.

The expanding video market has created many changes in the industry. Largely due to video dollars, more independent movies (277) were produced over the past year than in any year since 1977, accounting for 66 percent of the year's 419 total. "A lot of marginal projects, mostly video-driven, are getting made," says one studio acquisitions executive. "A lot of art movies, and a lot of trash."

Two kinds of movies regularly sell in video: full-fledged hits and widely promoted flops. Companies such a New World and Cannon account for 25 percent of the pictures, mostly action and horror features that that receive saturation theatrical release for one or two weeks, then go right into the cassette racks. Wanted Dead or Alive, starring Rutger Hauer, is the perfect New World success: dead at the box office, alive on video.

Video giant Vestron Inc.'s recent entry into film production and distribution underscores this revolution in the movie business. Vestron boasts a line of super-low-budget exploitation fare, along with higher-budgeted ($2 million to $6 million) movies, which are riskier to produce.

"There is an area between the majors and the classics divisions," says Vestron Pictures president William Quigley, "where there's room for more English-language, quality-oriented product that can stand broader distribution. We can learn from people at Orion Classics and from studios like Warners and Paramount."

It has become clear to all the independents that they can't compete with big-budget studio B-genre pictures like Lethal Weapon and Predator. "We have to do something else," says Atlantic Releasing president Jonathan Dana. "In the aftermath of Room With a View, Platoon and Nothing in Common, we're making pictures targeting a certain adult audience."

So is Vestron, which has been investing (often too much) in movies for years putting up from 35 percent to 50 percent of a film's budget (as with the Taviani brothers' Good Morning, Babylon) in exchange for video rights. Video dollars are increasingly more important to independent producers, who might not be able to make marginal (read, "adult") audience films without them.

"The advent of video is like an insurance policy," says Island production chief Jesse Beaton. "Without home video, we couldn't do what we're doing."

Filmmakers such as Paul Bartel (Eating Raoul) describe a radical shift in who calls the production shots: "Video represents such a large part of any film now. As an independent filmmaker, if I go to one of the smaller theatrical companies, one of their first concerns will be 'Can we sell foreign?' and 'Will our video people like this?' The decision of what pictures are mad is increasingly influenced by the people who are in charge of video sales."

This doesn't mean that companies like Vestron aren't producing and acquiring good movies. Vestron's roster is promising, with Good Morning, Babylon (a specialized July release); such fully financed features as Abel Ferrara's $4-million China Girl, a West Side story set in New York's Little Italy and Chinatown, and John Huston's adaptation of James Joyce's story The Dead; plus such acquisitions as Anna, an All About Eve story, and the overtly commercial horror film The Unholy.

Many analysts think Vestron faces a very tough road ahead. The risks of production, even at low-budget level, are high. And the upcoming boom in independent features competing for a limited adult audience necessitates sophisticated marketing and distribution finesse. Although Vestron has hired an experienced and talented staff, a full-fledged distribution mechanism still takes time to evolve.

"Can they and will they support a long theatrical run?" asks analyst A.D. Murphy. "They may be able to make a film for less, but the media and print costs are the same as for a major."

Although a recent survey by Paul Kagan and Associates shows that a whopping 68 percent of all films budgeted under $5 million are profitable, Cannon's troubles demonstrate the theatrical success is the only way to survive. Video and other ancillaries can pay back the costs of making a picture, but they don't always cover overhead and distribution costs ($2 million to $5 million in prints and advertising). Only theatrical success can do that.

This is Vestron's real test. Small-scale specialty films are difficult enough to distribute, but pushing moderately budgeted crossover films into the broader marketplace is even tougher. The rapid expansion in theater screens and the success of movies like Kiss of the Spider Woman have helped independents find play dates, but a wider release still requires obtaining key theaters in the most important markets. That's where clout and reliable pipeline of product comes in. Many exhibitors mistrust video-driven companies that may not support their films over the long haul. (Vestron insists that they will use the same six-to-nine-month video window as the majors do.)

Vestron recently pushed back the planned release of its $6 million dance romance Dirty Dancing from July 24 to August 21, possibly because it wasn't able to obtain the kinds of theaters it was looking for.

"Dirty Dancing's wide release may be foolhardy," admits Quigley. "We're playing with our own money. This is serious stuff. If it doesn't work, it will be very hard to ramp up another one."

======

I found this article on Newspapers.com