Why Hollywood is Not Investing in Independent Films

The independent filmmaking business is clearly far from the potential of merchandisable CGI spectacles the way "Star Wars" and "Avatar" became their own times' legendary movie franchises. More often than not, even the most successful indie movie wouldn't compare to the financial potential of commercial epics gracing the big screen. While this is quite clear, there are more reasons why Hollywood is not keen at investing much in independent films compared to their mainstream counterparts.

Niche Market vs. Pop Culture Market

Independent films are geared towards niche markets and alternative ways of distributing and exhibiting motion picture projects. Unlike mainstream movies, they don't get as much distribution power from companies and even the theaters who would understandably favor commercial blockbusters for profit. Also, in Hollywood, studios only have limited number of slots for its movie releases. This means that for them to maximize their films' revenue potential, they have to generate as much money as they can. This brings even the greatest independent films behind the shadows of big-budget Hollywood flicks catering to the pop culture market.

Potential for Sequels, Merchandise Items, and Other Profit Sources

High-value movies are Hollywood's top priority because of their potential as cashcow franchises. The branding of these mainstream releases typically results to sequels, merchandise tie-ins, toy licensing, and even theme park rides. While there are some rare instances that an independent film can also offer merchandise items and other additional profit sources, the independent film industry doesn't get in par with the extent of what commercial movies can offer to the mainstream audience -- who actually dominate movie theater attendance.

Star Power and Distribution Potential

Except for an exceptional few, the type of star power and distribution potential of independent films are not very appealing to major Hollywood studios. Because indie films work on tight budgets, filmmakers typically rely on sponsorships, loans, and personal finances to keep up with finances. Actors and actresses involved in such projects are also primarily considered for their talent, how much they fit the characters, and their arrangement with their professional fees. Although there are also many A-listers usually accepting promising indie projects, most of them rarely make it due to the often conflicting schedules. Thus, the general public tends not to provide that much interest in independent movies without known actors and actresses and directors, or those that don't have any form of buzz to make people more curious about such projects.

Closing Down of Independent Film Companies

Smaller distributors specializing in independent film releases have been affected by the recent financial setbacks of the U.S. economy. And so, many companies are really focusing on making films with hedge funds that will give them a much larger return. Most independent film arms of even top Hollywood studios are not very active, if not closed down. The niche specialty film business saw the shutting down of the likes of Warner Independent Pictures, Picturehouse, Paramount Vantage, and Fox Atomic. For a couple of years since the recession, there has also been a significant drop on the projects produced and/or distributed by top companies specializing in indie films including Miramax, Fox Searchlight, Fine Line Features, Focus Features, Sony Pictures Classics, The Weinstein Company, Lionsgate, and Summit Entertainment.