How Indie Distributor Vertical Went From “VOD Expert” To A Respected Theatrical Player

If you’ve been keeping up with distribution news recently, there’s been one name you’ll have seen pop up again and again: Vertical.

Since the pandemic, the bottom has fallen out of the film business, with more quality indie packages hitting the marketplace than there are distributors willing to take them on. Stepping up, in the years since, to offer many of them a home, is this indie distributor, which appears to be in the midst of its biggest year yet.

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Founded in 2012 by Rich Goldberg and Mitch Budin, Vertical comes from humble beginnings, according to partner Peter Jarowey, who notes that the team at one point operated out of “a literal broom closet.” Initially working to establish itself as a resource in securing ancillary revenue for indies, the company has of late has become a theatrical player in its own right. Aspiring from the beginning to be a purveyor of “commercial, high production value, cast-driven content,” Jarowey says, this year it is unfurling its biggest slate yet of starry theatrical product — titles including Chris Pine’s directorial debut Poolman, the Russell Crowe starrer The Exorcism from Miramax, and the 2023 Cannes opener Jeanne du Barry starring Johnny Depp.

Most recently, the company snagged the sci-fi thriller Elevation, starring Anthony Mackie and Morena Baccarin; Justin Kurzel’s true-crime thriller The Order, starring Jude Law; Scott Free’s thriller A Sacrifice with Eric Bana; and Susanna Fogel’s acclaimed Sundance pic Winner. But it took years of relationship building to get to the point where they’d be entrusted with films of this level of pedigree.

Before establishing itself in theatrical in a real way, Vertical built its business on its reputation as a “VOD expert,” a go-to “pivot” player that was “direct with all the major accounts,” as both a buyer and a seller of quality features. One of the big breakthrough moments for Vertical that began cultivating an awareness of the company in the town came when it picked up a couple films from Sony in 2014, including the thriller The Calling starring Susan Sarandon, Topher Grace and Donald Sutherland. After hitting these releases “out of the park,” Jarowey says, business began to build. “We were flying to Philly to meet with Comcast and then going up to New York to meet with Time Warner,” recalls the executive. “We were really taking the care and the effort and making sure we were bringing to the accounts what they wanted.”

Marking another turning point was Other People, Chris Kelly’s acclaimed dramedy starring Jesse Plemons and Molly Shannon, which world premiered at Sundance in 2016. Upon licensing the film to Netflix for its SVOD window, WME Independent’s Deborah McIntosh says she wound up in talks with Vertical for “wraparound rights” and found their approach as partners in the film’s release to be far from “plug and play.” After helping to secure it enough visibility, both in theaters and on TVOD, to garner numerous Independent Spirit Award nominations, “they spent money when Molly Shannon was nominated to make sure that everybody got to go to the awards and be part of that process,” McIntosh says, “and it was a great result,” with Shannon winning the prize for Best Supporting Female.

Moments like this established Vertical as a company that will go to the mat for the films it believes in.

Aspiring to be an inclusive and transparent partner, when it comes to everything from the marketing of a film to its financial performance, the company prides itself on being “a customer service business first, a distributor second,” says Jarowey. And while this isn’t to say that they’ve “pleased everybody,” their way of working hasn’t gone unnoticed, winning them favor with top talent and their teams.

Rebecca Miller and Damon Cardasis, the director and producer of the Berlin-premiering rom-com She Came to Me starring Peter Dinklage, Anne Hathaway and Marisa Tomei, share that they found the company to be “extremely open to collaborating,” with The Exorcism‘s Joshua John Miller saluting its hustle, an “indie ‘can do’ spirit” reminiscent of the early ‘90s. Pine and producer Ian Gotler, the duo behind the recently released Poolman, also weighed in to acknowledge how “refreshing” its relationship of “trust and transparency” with Vertical has been.

“I think there’s a big stigma when it comes to distribution and creative accounting and ‘where’s my money?’ So we’ve tried to be an alternative for that and be a bit of a mom-and-pop,” Jarowey explains. “Our reputation is the only thing that we have in this business. Because dollar for dollar, if the offer is the same from some other competitor, that’s going to be hopefully the thing that puts us over the edge.”

Jarowey admits that Vertical was perhaps “way out of [its] league” with Other People, crediting its results with the film as much to the quality of the storytelling, and to luck, as anything else. Still, this would mark the beginning of its presence in the major awards races, which could only help the brand. Award-nominated and -winning titles that have followed include the addiction drama Four Good Days, the Aubrey Plaza thriller Emily the Criminal (co-distributed with Roadside Attractions) and She Came to Me, all of which helped elevate Vertical in the eyes of the industry, from a small operation focused on B- and C-level movies to something else entirely.

Multiple Big 3 agents we spoke with observed that Vertical now serves a vital purpose in an ever-shifting and consolidating industry. One notes that while “the cream of the crop, the top 1%, 5% of films, will always have a home,” where Vertical has been able to step in and shine has been with “the titles that exist in the middle and below,” which are in jeopardy of being lost in the shuffle despite being “the meat and potatoes of the industry.” While indies easily can lose focus in an industry more focused on huge returns, they nonetheless can generate strong business, the agent argues, both in theaters and in other markets, given “a real entrepreneurial attitude — a knowledge of where value is, and the resources to extract it.

“In a moment of consolidation across a lot of the distribution marketplace, they are one of the few that has been opportunistic,” the agent adds. “Where other distributors are maybe a little gun-shy and holding the purse strings a little bit tighter, Vertical is taking the swings.”

Given that digital remains Vertical’s primary “first-window value,” Jarowey says, what’s crucial for the company in navigating film’s challenging current landscape is to take on projects with assured “standalone value,” on VOD. Still, the exec shares, the company is currently giving a major theatrical push to 10-15 of the 50 titles it puts out each year and is “committed to getting into that space in a more meaningful way.”

Supporting the company with some of its potential breakthrough titles — like the war photographer drama Lee, starring Kate Winslet, out this fall — is Roadside, whose distribution experience, far surpassing that of Vertical, makes it a valuable partner. “You look at the ecosystem we have and how difficult it is, and collaboration is what’s going to get us out of this,” Jarowey observes. “I feel like sometimes there’s an interest in walled gardens; that term did not serve us very well during the pandemic, it feels like.”

Rather than try to go it alone and put the company in a position for “some really big misses over not really understanding certain aspects of what we’re doing,” Jarowey says what’s best in some cases has been to “collaborate and make a little bit less,” in concert with knowledgeable and honest partners of the sort.

A David to the Goliath of the major studios — with a team of less than 30, most of whom work out of Santa Monica — Vertical’s theatrical success has, in some respects, come down to adaptability amidst constantly shifting release dates. While Jarowey has seen windows of theatrical opportunity for the right indie in recent months, with less studio product in theaters following Hollywood’s double strike, last year brought “a massive logjam” of tentpoles that “crushed the indies” from April through May. And the exec expects another logjam is soon to come.

“We’re going to have to be very nimble in picking the right dates for films because we do firmly believe that they have theatrical opportunity. But if there’s eight wide releases on a weekend, you don’t have enough screens,” Jarowey acknowledges. “If those screens are all coming from the studios, you’re not the first call. The thing I’ve noticed in the past two years, after we’ve been more involved in the space, is you have to be unbelievably creative and nimble on your dating.”

Indeed, according to the agents we spoke with, it’s the nimbleness of Vertical that’s proven to be the company’s greatest asset. “I think they are good at riding the wave when the business shifts in their favor and finding ways to use that momentum to grow and become an even better and bigger player,” says McIntosh of WME Independent.

While the definition of success with titles put out by Vertical is highly variable, says another agent, what’s most important in the end is “having an intelligent distribution strategy, marketing strategy and wringing every single rock dry.” Not every film will break even, but “just because a distributor steps in and maybe doesn’t recoup” production costs, “just because that’s what it’s made for doesn’t mean that’s what it’s worth.”

During the past couple of years, Vertical has expanded beyond distribution into film financing, taking on such a project maybe once a month, though that slowed here and there amid 2023’s double strike. Jarowey describes the company as “a financial partner” in this respect, rather than “capital-P producers,” noting that they’ve come aboard as a partner even on films they don’t intend to distribute.

“We see the value in a material way of finding creative ways to get in early because it helps our pipeline and it helps us get into bigger films,” explains the exec. “We’re heavily involved in the process and try to help as much as we can, whether it’s using vendor relationships to get over some issue that comes in post-production, or if there’s a little bit more money that’s needed, being helpful there with problems that arise.”

Vertical’s efforts to expand in this sense, and with a theatrical slate representing more “calculated risk,” have been supported by the company’s 2020 acquisition by The Forest Road Company, a diversified investment fund serving, in Jarowey’s words, as a “more financially savvy big brother.”

“I think we’ve got a good handle on it, but the business is getting bigger than we ever anticipated, and I think we need smart people surrounding us,” Jarowey says. “Certainly, Zach Tarica and his team over there have been instrumental in helping find new ways to grow the business, looking at opportunities that are more corporate-level, rather than film or relationship opportunities.”

While business was really booming for Vertical during the early days of Covid, the company began feeling a contraction in the industry by 2021 and has adjusted to the marketplace since then, Jarowey says, “trying to be a bit smarter about making speculative decisions on acquisitions” following the strikes. Still, like an agency source who spoke to business “thawing,” the Vertical partner is cautiously optimistic about the near-term health of the film business.

“I think slowly but surely it’s going to get better because there are more buyers coming back in the pay-television market, but there are still layoffs occurring and restructuring occurring every week, and you’ve just got to put your head down,” Jarowey says. “Unless you want to go do something else with your life, you’ve just got to work hard, pick your head up and see where you’ve got to. Because especially as an independent, we’re at the whims of a lot of those businesses and what goes on. You have to take what the market gives you, and I think we’ve done a pretty good job of staying ahead of that curve.”

As he looks ahead to the next five years, Jarowey hopes for a payoff to the theatrical bets Vertical is taking this year, which would pave the way to continue taking on bigger films, both finished projects and those at early stages. “Then, we just keep doing what we’ve been doing on those movies,” he says, “which is try to treat people well and be responsive, and go about our business knowing that our reputation is the only thing that we can hold onto. The one thing if I ever walked away from this business that I want to make sure is intact is that.”

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