PARK CITY, UTAH (TheStreet) -- It might be the sun swept snow or the well-dressed crowds impatiently filing into theaters, but almost every year at the Sundance Film Festival a well-known distributor gets a case of "mountain fever" and spends millions of dollars on a film that all but flops.
This year may be different.
Coming out of the 2013 festival, Fox Searchlight paid almost $10 million for The Way, Way Back, a coming of age film starring Sam Rockwell that looked to be a charmer, possibly even the next Little Miss Sunshine. Fox Searchlight, the independent distribution arm of 21st Century Fox (FOXA), struck gold with Little Miss Sunshine, the hit of the 2006 Sundance Festival and was looking for a repeat performance.
But by the end of the year, The Way, Way Back had failed to catch fire. Box-office sales totaled just $23 million, according to Nash Information Services, a modest sum for a company like Fox even when accounting for television distribution and video-on-demand revenue.
"Little Miss Sunshine obviously paid off handsomely for everyone," John Sloss, an entertainment lawyer and founder of Cinetic Media who represented the movie's creators in its deal with Fox Searchlight, said in a phone interview. "Since then, there are a lot of people trying to capture that same lightning in a bottle, and maybe Searchlight thought they had that with Way, Way Back."
Relativity Media also made headlines a year ago when the film distributor agreed to pay $4 million for Don Jon in addition to $25 million to guarantee a wide theatrical release. Yet box-office sales for Don Jon, starring Joseph Gordon-Levitt, Scarlett Johansson and Julianne Moore, were $26 million as of mid-January. Similarly, Sony Pictures Worldwide paid between $4 million and $5 million for Austenland, a film that has generated a mere $2.1 million at the box-office, according to Nash.
For distributors such as Open Road Films, The Weinstein Company and Focus Features, a division of Comcast (CMCSA), the temptation to overspend at Sundance can be irresistible. Teams of executives from New York and Los Angeles arrive at this resort town in Utah's dramatic Wasatch Mountains with layers of assistants, poised to buy the rights to a movie that may already be attracting lots of buzz.
A first-class Sundance badge that affords its owner the convenience of skipping lines, costs $3,500. A more standard all-film pass is priced at $1,500. Housing, whether a group in a condo or at one of Park City's boutique hotels, can easily exceed $400 per person per night. Then there are the meals, the drinks and the car rentals.
With all that money being spent, there's pressure to justify all those expenses. Heightening the pressure is the knowledge that making the right acquisition can make or break a career.
"The smartest film executives can get carried away by the scene,'" said Jason Resnick, a movie industry consultant attending the festival. "They go out and see something and think 'this is going to be the breakout hit of the festival,' and spend a lot of money. Sometimes they win but sometimes they get 'mountain fever' and miss badly."
Part of the problem may come in the contrasting perspectives of the Festival's organizers, led by the actor Robert Redford, who trumpet Sundance, now in its 30th year, as a place that pushes cinema regardless of its potential commercial appeal, and the distributors, who are keenly focused on making a profit.
"There's a real dichotomy between what the festival was set up to do and what it's become," Resnick said. "On one hand, Robert Redford wanted an environment where filmmakers could create something artistic and not be beholden to the studios, and then on the other hand, you have all these industry people who are trying to make money."
So far, this year's Sundance Festival, which ends Sunday, has seen a handful of modest deals but nothing approaching Don Jon. Sony Pictures Worldwide agreed to spend $2.5 million to $3 million for the international rights to Whiplash, the directorial debut of 28-year-old Damien Chazelle about a young drumming student and his ruthless music school instructor.
The film Laggies, about a college graduate not particularly eager to move out of her parent's home starring Keira Knightley, went to the New York based independent distributor A-24, for about $2 million while Focus Features acquired Zach Braff's Kickstarter-funded Wish I Was Here for around $2.7 million, Variety reported. The Weinstein's Radius-TWC acquired Charlie McDowell's One I Love for about $2 million, according to Deadline Hollywood.
The absence of a large acquisition deal may be due to a crop of films that lacked a genuine breakout hit, or possibly to the realization among film executives that their industry is still making its way through an historic transition to video-on-demand away from theaters, and treading lightly is the best course.
"It's not surprising that the number of blockbuster deals has receded, that's just the new reality," Sloss said. "But there's no reason for me to believe that if the right film appeared this year that it wouldn't spark the same response. It's easy to say that people have learned, but I'm not sure if they ever learn."
At Sundance, "mountain fever" can strike at anytime.