If distribution was the problem, wouldn't this be taken care of by having a huge group of indie filmmakers banded together.
This is a good point. As I said, I'd really like some indie filmaker to come and answer this. But do consider that I usually have few problems with those guys:
1. No sequels, or they take really long to come.
2. All the copyright crap is still there.
3. Difficult to judge quality _before_ watching the movie.
4. Too many people to tip. You want your money to go to 1 guy that makes good movies. Not to 100 filmmakers.
I'm feeling very naïve about the movie industry here – is what we're describing simply a movie studio?
Well, I guess that's where we ended up. Again, somebody with an insight view might help. On HN they were talking of the Nigerian movie industry that seems to be doing profits. I think is all about how you model revenues and cost (yes, abstract, but that's how I think about it).
Distribution isn't so much the problem as marketing is.
There are all kinds of ways to make your film available now, but getting people to even know that it's available, much less that they want to watch, isn't much easier than it was in the past.
Even with super-low budget films you still need to spend hundreds of thousands at a bare minimum to get people to see them. More often that figure is in the millions for theatrical releases.
I've spent a fair amount of time trying to think of a way a startup could work around this problem and promote films reliably and successfully without money. I'm not sure there is a way.
I think it's possible for select groups of filmmakers to do it. If you have a group of 4 or 5 that could turn out high quality work reliably, I think the reputation could build. But now really, you just have two problems. Marketing and finding/managing that group.
Yes, I think you are right. In fact, I mentioned that the "real" problem would be to reach out the audience (I am 100% convinced there is an audience out there for _any_ movie).
However, I see this strictly related to what you invest in the movie. If you invested 25 k and you could get 1$ in average per customer view, you need to reach out 50 k people to make a 50% "gross" margin (of course there are other costs such as the website hosting, but still).
Then you build an audience day by day, film by film.
Another thing to consider is that there is a lot of "free" marketing that could come from taking bold steps. For example, how many articles on followed blogs/journals could a movie with a permissive copyright licence get? Consider a soundtrack distributed a la Jamendo too.
I'm feeling very naïve about the movie industry here – is what we're describing simply a movie studio?