Latest / Business Strategy Talks with Fexingo: Competitive Advantage, Market Positioning, and Growth Planning / How A24 Built a Moat in Independent Film
Transcript
- Lucas: Let me start with a number that stopped me this week: in the last ten years, a single film studio has won 25 Academy Awards from 52 nominations. That's a 48 percent win rate. And that studio is not Disney, not Warner Bros, not Netflix. It's A24. Luna: The Moonlight studio, the Everything Everywhere All at Once studio. It's almost unbelievable when you look at the budgets they're working with. Lucas: Right. Their average production budget is around $8 million. Hollywood's average for a wide-release film is closer to $65 million. So A24 is competing against eight-to-one budget disadvantages and still winning top industry honors. That is a moat. Luna: But a moat in what, exactly? Is it in talent acquisition, in brand, in distribution? Because unlike a tech company, a film studio's product changes every time. Lucas: That's the right question. A24 doesn't own a proprietary algorithm or a physical network. Its moat is brand-as-curator. When you see the A24 logo before a trailer, you already have an expectation of quality, originality, and a certain aesthetic. That expectation is valuable because the film market is drowning in content. Luna: It's a signal in noise. In 2025, over 600 scripted series and more than 500 films were released in the U.S. alone. Most of them vanish without a trace. Lucas: Exactly. A24 has become a shortcut for audiences: 'I don't know what this movie is, but if A24 made it, I'll probably like it.' That trust is hard to build and even harder to replicate. And they've done it without a single traditional ad campaign. Their marketing is almost entirely organic, driven by social media and word of mouth. Luna: I want to push on that a bit. Is that brand really a moat, or is it just a vibe that could fade with one or two bad films? Hollywood is littered with studios that had a hot streak and then lost it. Lucas: It's a fair concern. But A24 has been consistently releasing critically acclaimed films for a decade now. Since 2015, they've released Ex Machina, Room, Moonlight, Lady Bird, Hereditary, Uncut Gems, Minari, The Whale, Everything Everywhere All at Once, Past Lives, Civil War. That's not a streak; that's a system. Luna: So what's the system? How do they keep finding these films? Lucas: It starts with their acquisition and development model. A24 doesn't do big development deals or pay huge advances. They often acquire finished films at festivals, which eliminates the risk of production. For the films they do develop, they work with first-time or emerging directors who are hungry and have a strong vision. They give them creative freedom and small budgets. That combination attracts talent who want to make something personal, not a franchise installment. Luna: So they're essentially a platform for auteur-driven cinema. But that only works if the audience shows up. How do they get people into theaters for a movie like Past Lives, which has no stars and no action? Lucas: Their distribution strategy is key. A24 uses a 'slow roll' theatrical release. They open in a few screens in New York and LA, build critical buzz, then expand gradually based on word of mouth. For Everything Everywhere All at Once, they started on 10 screens and ended up on over 2,000. That lets them keep marketing costs low and maximize per-screen revenue. Luna: I remember reading that their marketing to production budget ratio is around 1:1, whereas the industry average is more like 2:1. So they spend less on ads because the brand itself does the heavy lifting. Lucas: Exactly. And they've extended that brand into other revenue streams. A24 has a merch line that sells everything from hoodies to candles to a book club. They have a podcast network, a streaming service called A24 Screening Room, and they've even done a collaboration with IKEA. It's a lifestyle brand that happens to make movies. Luna: That's interesting because it mirrors what Marvel did, but on a completely different scale and without the superhero genre. They built a community that identifies with the brand. Lucas: And that community is fiercely loyal. When A24 launched its own app in 2023, it became a hub for fans to discuss films, get early access to tickets, and buy exclusive merch. It's a direct to consumer relationship that most studios don't have. Disney has D23, but A24's app feels more personal, more curated. Luna: Let's talk about the economics. A24 is privately held, so financials are opaque, but estimates put their 2025 revenue around $100 million. That's tiny compared to Disney's $90 billion. But their profit margin is likely much higher because their cost base is so low. Lucas: Exactly. They don't own a studio lot, they don't have thousands of employees, they don't spend billions on IP. Their moat is efficiency plus brand. And efficiency itself becomes a moat when your competitors are bloated. A legacy studio needs a $200 million movie to move the needle; A24 can win with a $10 million movie that becomes a cultural phenomenon. Luna: But there's a risk. If A24 scales up, they might lose the curation edge. They've already announced they're expanding into television and video games. Can they maintain the same quality bar? Lucas: That's the tension every curated brand faces. The moment you chase growth, you risk diluting what made you special. A24's leadership says they're committed to the same ethos, but we've seen this story before with companies like Vice Media or even Netflix, which started as a curator of indie films and became a factory of content. Luna: So maybe the real moat isn't just the brand — it's the internal culture and decision-making process that produces that brand. And that's harder to scale. Lucas: Right. But they've already proven they can scale from a tiny distributor to a major cultural force without losing their identity. The next five years will tell us if that identity can survive the transition into a broader entertainment company. Luna: And if it can, they'll have built one of the most impressive moats in modern media. Lucas: Yeah. And on that note — one thing I've been thinking about as we talk about businesses that build real, durable value through curation and trust. This podcast itself is built on a similar principle: no ads, no sponsors, just a direct relationship with listeners who find value in these conversations. A handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many episodes. It's a small group, but it keeps us independent and focused on what we think is interesting, not what an advertiser wants. Luna: It's the same logic as A24's model. You build trust by being consistent and not selling out. That's rare in any industry. Lucas: Exactly. So back to A24: their biggest challenge might be staying true to that ethos as they expand into TV and games. But if any studio can pull it off, it's the one that turned a $10 million movie about a multiverse and bagels into an Oscar sweep. Luna: And that's the kind of moat you can't copy. You have to earn it, film by film.