Blueprint 22: Who's Still Buying at Cannes?

Reid MercerWelcome back to Blueprint. I'm Reid Mercer, joined, as always, by Grant. And, okay, we have a genuinely weird one for you today.

GrantWeird is underselling it.

Reid MercerSo here's the setup. Variety is reporting the 2026 Cannes Marché drew a record 16,000 participants from more than 140 countries. Record.

GrantWow.

Reid MercerBiggest ever.

GrantAnd the deals?

Reid MercerDeadpan. Hollywood Reporter basically said the hallways were packed and the closing rooms were... were quiet.

GrantMore spectators than buyers.

Reid MercerThat's the whole episode, honestly. We're going to dig into why that paradox exists and what it actually means.

GrantSo we've got a lot of ground to cover. The Paramount-WBD merger is sitting right in the middle of this. Two major studio buyers collapsing into one, right as indie pre-sales are already drying up.

Reid MercerYeah, yeah, and then there's Gulf Capital. Saudi Arabia just raised its film production rebate to 60%. Sixty per cent. sixty! We'll ask whether that money has strings attached or whether it's genuinely bankable.

GrantOh, and Japan!

Reid MercerJapan!

GrantThree Japanese directors competing for the Palme d'Or, and simultaneously Japan is running a commercial IP pitch market on a catamaran in the harbor. I am not making that up.

Reid MercerIt's a lot, and we'll close by asking who finances the next Succession as a stand alone indie, because nobody has a clean answer to that yet.

GrantWe'll push on it anyway.

Reid MercerThat's what we do. All right, segment one, we set the scene. Can 2026 record attendance, buyer shortage, and what it tells you about where this industry actually is? Let's get into it. Okay, so get this. The 2026 Marché du Film just wrapped and the headline number is record-breaking. 16,000 participants from 140-plus countries.

Grant16,000 people on the Croisette sounds like the healthiest market in years.

Reid MercerThat's exactly what they want you to think. Variety confirmed the record attendance, 1,700 buyers, 600 exhibiting companies, hallways packed, screening rooms full. But the closing rooms? Deadpan quiet. Ah! says the very well attended ghost town; kinda, yeah. Hollywood Reporter described it as a buyer's market without enough buyers; films that would have sparked bidding wars a few years ago; polite attention, noncommittal follow up meetings.

GrantI mean, to be fair, record attendance could just mean more spectators. That's not the same as more deal making.

Reid MercerRight, right. And Steven Follows, who tracked the market all week, put it really plainly: more spectators not a healthier market. His word for this year was strategic, which is just risk mitigation with better branding. Oh, very strategic.

GrantLove that for everyone.

Reid MercerJapan was a genuine bright spot, though. Country of Honour this year, attendance up nearly 50%. But the big Hollywood action packages, the 50 million plus anchors that used to drive the whole market, gone. Emphatically, largely gone. Sellers are pushing leaner projects. Sharp with theatrical identities, Hollywood Reporter's hot list piece had Park Chan-wook's Western budgeted around $70 million, Jason Statham's John Doe at $80 million, but those are the exceptions,

GrantWow.

Reid Mercerand even those aren't moving fast.

GrantSo you've got a room full of buyers who aren't buying. That's a structural problem, not a vibe problem.

Reid MercerThat's the diagnosis. Attendance tells you the industry still needs cans. Everyone shows up because they can't afford it. Can't afford not to, but the deals aren't closing because the buyer pool itself has shrunk.

GrantRight, which means the question isn't really about the market, it's about who's left to write the check.

Reid MercerExactly, and the reason the check-writers have disappeared, that's a story about consolidation, and one specific financial instrument that basically vanished and took a whole tier of buyers with it.

GrantYeah, and once you see that thread, the whole market makes a lot more sense.

Speaker 3Tchau.

Reid MercerSo here's the thing that ties it all together. Paramount just swallowed Warner Bros. Discovery whole. One $110 billion deal announced February 27th. Two of the indie market's most important buyers are now one door.

GrantOne door. And that's not a metaphor, Reid Mercer. When Paramount and WBD merge, you lose independent acquisition budgets, competing mandates, competing taste. The competitive tension that used to drive pre-sale prices up, gone.

Reid MercerAnd according to the SEC filings, Paramount values WBD at $110 billion at 7.5x synergized EBITDA. That synergy math almost always means fewer people writing fewer checks.

GrantExactly. And here's what makes this really wild. Netflix was in the running. They had a deal at 82.7 billion. Seven billion dollars for WBD studio and streaming assets. WBD's board actually preferred that deal initially. So Netflix had the keys in hand, had them. Paramount bid harder. Larry Ellison backstopped the equity. Netflix walked away. But think about what a Netflix-WBD combo looks like for the indie market.

Reid MercerOh, that's a darker scenario, honestly. Netflix already negotiates their own deals directly. They don't... They don't pre-sell through traditional windows. You combine that with HBO's library and the Warner Studio machine, the remaining specialty buyers don't even get a seat at the table.

GrantRight, right. So in some weird way, Paramount winning might actually be less bad for the indie film than Netflix winning would have been.

Reid MercerCold comfort when you're a seller in Cannes right now.

GrantYeah. Hey, it could have been worse is not a green light conversation.

Reid MercerAnd FilmTake.com flagged this directly. Fewer buyers means weaker minimum guarantees, narrower release pipelines, greater dependence on a handful of specialty companies.

GrantThe Hollywood Reporter had the clearest framing on why the pre-sale market breaks down: without the "pay one" window, distributors won't pre-buy at the high end unless the project is an obvious mainstream theatrical play with bankable stars.

Reid MercerThe kind of films that are few and far between at Cannes this year.

GrantRight; so you lose the buyer, you lose the financial instrument, and now every seller who walks into a room is negotiating against gravity.

Reid MercerAnd I keep coming back to this question: does consolidation force a discipline the market needed, or does it permanently hollow out the middle?

GrantHmm. I'm genuinely on both sides of that one. The discipline argument is real. But the middle class filmmaker argument is also real.

Reid MercerWe'll keep arguing that one. What's interesting, though, is who stepped into the gap left by

Speaker 4this great exodus.

Reid Mercerby those vanishing checks; and some of that money has a very specific return address. So here's where the money actually came from. Three Gulf sovereign wealth funds, Saudi PIF, Qatar Investment Authority, and Abu Dhabi's Limad Holding, committed close to $24 billion to backstop the Paramount-WBD deal. Saudi PIF alone is taking roughly a $10 billion stake.

Grant$10 billion from one sovereign wealth fund into a Hollywood merger.

Reid MercerRight; and the combined entity will be roughly thirty eight point five per cent owned by Middle Eastern capital when this closes. That's not a footnote; that's a controlling interest in the cultural conversation.

GrantHmm. And look, I've seen this pattern before, not in film but in markets. Capital that shows up as rescue money has a way of quietly reshaping the asset. You don't always see the strings attached until year three.

Reid MercerThat's the thing, though, Grant, because this Gulf capital story has has two chapters. Chapter one is the merger, the big structural play. Chapter two is actually more interesting for producers on the ground right now: the rebate. Exactly, the rebate. Saudi Arabia just announced at the Marche du Film (Hollywood Reporter had it) they've raised their production cash rebate from 40% to 60%. The Hollywood Reporter called it among the most generous in the world.

Grant60%. So a $10 million film shot partly in South In Saudi, you're potentially getting $6 million back,

Reid Mercerwhich completely changes your presale math. You're not just location scouting anymore, you're restructuring your entire budget.

GrantOkay, but here's where I push back a little. That rebate was at 40% for years, and producers complained it was nearly impossible to actually navigate. The Saudi Film Commission CEO literally told Variety it wasn't user-friendly. So it's 60% meaningful if the bureaucracy still eats you alive. Live.

Reid MercerFair. And The Hollywood Reporter flagged that the Saudi Film Commission hasn't disclosed any annual cap on the program, so nobody knows how bankable it actually is at scale.

GrantThat's the question I'll be asking in every negotiation room right now, show me the cap. Until you see the cap, it's marketing.

Reid MercerAnd the timing is not coincidental. The Iran conflict has wrecked Gulf tourism. Deadline reported its battered air travel and inbound tourism accruing. them across the gulf. Film investment is a deliberate counterplay. So is rescue capital on two levels simultaneously rescue capital for the merger, rescue capital for their own economy. Two expressions of the same money, which is wild when you zoom out.

GrantAnd speaking of capital flowing in from unexpected directions, Japan's got a whole different answer to the same supply problem. That story's worth its own chapter.

Reid MercerOh, you're going to want to hear this one. Are switching gears here, Japan showing up at the one market Western studios are pulling back from, there is a genuine irony there. Right; and then in a nostalgic, artsy way, this is a full commercial push. So get this-Variety reporter Japan had a nearly fifty percent surge in Marche participants year over year, fifth by country attendance; and for the first time since nineteen ninety one, three Japanese directors are simultaneously in competition. Competition-Hamaguchi, Kore-eda, and Fukada, three at once; that hasn't happened in twenty five years! But here's the thing-the artsy side and the commercial side are running on completely parallel tracks at this festival.

GrantTotally; because while those auteurs are chasing the Palme, Japan also ran the IP market on the Art Explora catamaran, May fifteenth through seventeenth, co-organized with TIFFCOM: Kadokawa, Toei, Nippon Animation, Shochiku. All in the room pitching manga and graphic novel adaptations to international buyers.

Reid MercerAnd the only Piece executive producer was literally there making the case. Tetsu Fujimura presented 45 years of box office data showing IP-based films went from maybe 10 to 20 percent of the global top 30 in the 1970s and 80s to over 80 percent today, according to Variety.

GrantOkay, so that's the supply side argument. Every title in the 2024 worldwide top 10 in was IP-based—hard

Reid Mercerto wow.

Grantargue with that.

Reid MercerBut here's my question: is that actually what Western buyers need right now, or is Japan answering a supply problem when the real issue is demand?

GrantThat's where I pump the brakes a little. The buyers showing up at Cannes aren't short on IP to adapt, they're short on budgets and green light confidence. Selling them more manga libraries doesn't fix that.

Reid MercerYeah, yeah, and there's a deeper reason Japan is pushing so hard overseas. Geez. the domestic market is basically flat. Deadline covered this: the anime industry hit twenty five billion dollars in twenty twenty four,

Speaker 3Right.

Reid Mercerbut overseas revenues were fifty six percent of that total. Domestic growth? Under three percent.

GrantSo Japan has no choice but to seek overseas markets. You've got demographic contraction at home, and a content economy that's already more global than local.

Reid MercerCountry of Honour at the exact moment Western studios are retu After retreating from the market, the timing is almost too perfect.

GrantOr is just the next supply side answer looking for a demand side buyer that hasn't shown up yet.

Reid MercerWhich is exactly the problem the Marche itself is trying to solve, and that's where the investors' circle comes in. So the investor's circle is where this whole conversation lands for me. The Marche just ran its fourth edition, invitation only, eight projects, budgets from 1 million euros to over 12 million, and the names pitching to private money, Juho Kuosmanen, Magnus von Horn, these aren't undiscovered voices.

GrantRight. Kore-eda won the Cannes Grand Prix for Compartment No. 6. Von Horn had The Girl with the Needle in competition in 2024. Four, these are not first-time festival guys pitching code.

Reid MercerExactly. And according to Cineuropa, the fourth-year program is explicitly emphasizing private equity readiness alongside creative positioning. That's the tell.

GrantHmm, so that's your healthy correction read.

Reid MercerI mean, yeah, the market was always pricing films imperfectly. Having Kuosmanen sit across from a private equity firm and make the case for his project. object. That's honest, it's direct.

GrantOkay, but hear me out. Private equity wants returns; they have a fiduciary obligation

Speaker 5Right.

Grantto the people whose money they're managing. So the filter they apply is not Fleabag, it's yield.

Reid MercerThe Marche director actually said projects need clear market potential with strong creative positioning.

GrantRight, and when those two things conflict, which one wins?

Reid MercerI mean, probably not the experimental mid-budget drama. Exactly.

GrantThat's my concern. The inner circle is a real mechanism.

Reid MercerMechanism is conducting outcomes." Deadline reports Gentle Monster and Poeta Chileno got investors through it last year. But it's also a filter, and it's selecting for what private capital considers legible.

GrantSo the marché is becoming a place where Cannes confirms capital already assembled, not where films find it fresh.

Reid MercerThat's the structural shift. The old model, you show up on the Croisette and you build your financing. The new model, you arrive with your stack mostly built. And Cannes is the validation step. The pre-sales close faster because everyone already talked, which is fine if you're structured for it. If you're cool with some money with a pedigree and a package ready, it works. If you show up with only creative ambition and no pre-arranged capital, you're at a disadvantage before you sit down.

GrantThis is where it gets good, Grant, because the market's now split into two distinct lanes and they're not competing against each other. They're just running different games. games.

Reid MercerAnd some producers haven't figured out which game they're actually playing yet.

GrantAnd there are two very different playbooks that have emerged from that split, one built around community, one built around names. Both work, and both tell you exactly what the market wants right now. So two playbooks walked out of the Croisette these year. The question is, which one you're actually running?

Reid MercerYeah, and they couldn't look more different. Watermelon Pictures built their entire operation around deeply engaged, underserved audiences. Palestinian-focused films, community screenings, Oscar shortlist. No pre-sale structure, just an audience they knew was there.

GrantAnd it worked. According to Hollywood Reporter, Palestine 36 made the Oscar International Film Festival. Functional feature short list. Voice of Hind Rajab got a Venice Grand Jury Prize. That's not charity bookings. That's a functioning business model.

Reid MercerRight. But here's my issue with calling it a model. That works if you have a deeply committed community behind the film. You need that built-in base or the whole thing collapses. Most producers don't have that.

GrantOkay, fair. So then look at the opposite end. Deadline reported Warner Bros. Clockwork label just closed a North American deal for the... For the Brigands of Rattlecreek out of Cannes, Park Chan-wook directing, McConaughey, Pedro Pascal, Austin Butler; sales handled by one ninety three.

Reid MercerWow!

GrantDeal pegged in the mid teen millions.

Reid MercerSo the Cannes jury president was simultaneously selling the hottest package on the Croisette. You can't make that up.

GrantThe man was gaveling competition films by day and closing a bidding war by night. But that's the point: that package worked because every layer reduced buyer risk. Risk before anyone sat down to negotiate; auteur credibility, recognizable cast, genre clarity. And that's not accessible to most producers either: you need a Park Chan-wook track record, a McConaughey, a script by Zahler that's been in development for twenty years. That's not a template; that's a constellation. Okay, fair. So then here's where I land: the market isn't choosing between these two models, it's self sorting community-driven niche or or fully packaged auteur prestige-both found buyers. Everything in the middle?

Reid MercerThat's what's going," and I keep coming back to the same question: If Succession had been packaged as an independent project in twenty twenty six with no IP, no existing brand, no streaming home pre attached, who writes that check?

GrantI don't have a good answer for that.

Reid MercerNeither does anyone else at the Marche, and that's the honest place to leave it.

GrantOkay, so that's a wrap on Cannes 2026, and what a weird one it was.

Reid MercerShocking. Record 16,000 participants at the Marche per Variety. Hallways absolutely packed. Closing rooms? Not so much.

GrantThat's the line that stuck with me the whole episode. Grant called it a structural buyer problem, not a bad vibe problem, and I think that framing matters a lot.

Reid MercerYeah, and the Paramount-WBD deal is the clearest version of that—two buyers collapsing into one door for the indie market. That's not temporary.

GrantTakeaway for this week? The advertiser layer, the merger consolidation, the Gulf capital with strings we can't fully read yet-those aren't individual news items, they're the same story.

Reid MercerBuild for it or work around it, but don't pretend it isn't there.

GrantExactly. Hey, if this helped you see the business differently, tell a colleague. New episodes every Tuesday.

Reid MercerEmail us at Blueprint at heymetal.com.

GrantOr tag us on social. We actually read those. Thanks for being here. We'll see you next week.