The main reason one gets into indie film distribution is to find small, under-appreciated films and help them reach a wide audience. It’s the same for those who work in independent horror cinema, especially the critics who founded and write for this site (which highlights "little movies that leave a big impression” as its mission statement). The desire to champion indie film, horror and otherwise, is almost certainly why Letterboxd announced – first over the summer at Cannes, then again this month – that they were getting into indie film distribution and launching what they call a “video store”.
Here's their latest announcement:
At Letterboxd, our biggest mission is film discovery — but discovery is only half the battle. It’s frustrating to add a movie to your watchlist and then realize you can’t actually watch it! That’s why we’re trying something new and opening the doors to the Letterboxd Video Store, our own curated rental spot.
This is awesome on face value! After all, indie distributors are already using Letterboxd at film festivals to track how movies — both their own and movies they are looking to acquire — are being received. You can look at the ratings, how many people watched, how many people reviewed, and how they rated the film; this will give you a means of comparing it to other films both historically and at the same festival. The higher these metrics, the more likely a film is to find a big audience.
While it's not surprising when films from established directors, producers, and movie stars are popular, you can still play a little Moneyball and look for unknown, smaller films that are flying under the radar and could have significant demand — especially in horror, where the genre is the star. This is why Letterboxd's first bullet point promises to carry “festival standouts that are yet to be distributed“ in their video store. This was certainly one part of the new initiative that received a lot of attention on social media.
Letterboxd appears to have really hit on something! They are a tool indie distributors are already using to find films, so why not take the natural next step and do it themselves? However, I have some concerns about Letterboxd and the fact they are only getting into one aspect of indie distribution. If Letterboxd is becoming a distribution platform rather than a full indie distributor, they are only going to be able to exploit one revenue stream — transactional VOD — and not the other main revenue streams like theatrical and subscription VOD like Netflix.
Why would this be a problem at all? There’s a few reasons. First and foremost, the transactional market has been in decline for several years now. There was a hope that DVD sales and rentals would be able to completely translate over to digital in the mid 2000s – and for a while, that looked like it was happening. At first, it was even better than DVD, as some indie distributors like Magnolia and IFC were making money by collapsing the theatrical and transactional windows and releasing films in theaters and at home all at once. This model was a boon to indie cinema as movies could do well in theaters and also on VOD. Indie movies traditionally do their best in urban markets, especially LA and NY, and this model made the film available to everyone.
However, the transactional market has been greatly impacted by the rise of subscription VOD: if we look at the numbers from 2024, the digital rental market was down 3% while digital sales were down 10% and subscription VOD was up 25%. In other words: this market has not been able to replace DVDs, and Letterboxd is getting into a declining business. It's also a business that is becoming more and more driven by Amazon. During my last distribution gig, around 75% of our overall transactional VOD revenue was coming from Amazon over places like Apple TV, Fandango and Google Play. While Amazon doesn’t break out the TVOD revenue, their overall revenue in this space grew in 2024 to $13.5m.
While both these points don’t mean it is a guarantee Letterboxd won’t be successful, it just means that A) they are getting into a declining business that B) is increasingly dominated by Amazon. The advantage Letterboxd has is that they want to find films that are not getting distributed and support those, and they have the means of directly telling their user base that a film they have watchlisted is now available on their platform. In theory, they will only be picking films that have a lot of users who are eager to watch, and have a lot of users watchlisting these films. My worry is that I don’t think that will be enough for most of their movies, especially indie horror. Letterboxd doesn't make their watchlisted numbers public, so we don’t know if these movies will have hundreds of users waiting to see these films or thousands.
And if filmmakers give Letterboxd the rights to exploit their film, they are giving up the ability to have any distributor doing a full rights deal for their film. That means they will likely have to self-distribute the film to exploit theatrical rights and/or subscription VOD. In order to earn significant revenue, they will need Letterboxd to generate tens of thousands of transactions for them to have any hope of recouping their production budget. Considering the marketplace these days, this seems very unlikely. Some films could break out, but it won’t be most films, and it's likely to be an 80/20 thing (where 80% of the total revenue being earned on Letterboxd is coming from 20% of the films they have these rights for). It could even be more top heavy with one or two percent driving 99% or 98% of the revenue. That's not ideal for most films.
Letterboxd will need to do more than just focus on alerting the users who have watchlisted a specific horror film. They will need to promote these films and their availability on Letterboxd using traditional indie film marketing: emails, paid social media ads, and PR. These things cost money, so it seems unlikely again that Letterboxd will be willing to spend to widely promote these films because they are hoping their own ecosystem will be enough.
It’s possible the solution is to work with indie distributors and help show distributors their watchlisted numbers. It's potentially even a service they can sell to distributors. As I mentioned earlier, Letterboxd is already a resource for indie distributors looking for films that might have slipped through the cracks, so why not formalize this process? I could also see a scenario where Letterboxd prepares all their data on the front end of major festivals for distributors to look at and then works with the same distributors during the festivals so they can activate a film’s market in real time. This would be a boon for everyone who wants to help great horror movies get to the widest audience possible. Letterboxd can work with the distributor to fully activate their user base who is interested in the film and the film can receive an all rights deal to fully monetize their film and recoup their production budget.
Having said all this, I still think this is a good idea in terms of motive. Undervalued films — horror films and non-horror films alike — deserve and need champions, and it's likely these films have been passed on by indie distribution already. My worry is simply whether the platform being on Letterboxd will be enough, especially knowing being on Letterboxd will prevent them from ever receiving an all rights deal. We shall certainly see.
