What you say is very true and makes total sense. Indie is a matter of audience appeal, but also available budget of course. The two elements play into the equation. However, the success of various indie films every year shows that indie films also can turn out to have mass appeal; and sometimes the filmmaker wants mass appeal even when he makes an indie film; he just hasn't been able to float a big budget. Then as soon as he gets box office success, he gets a bigger budget and the whole "indie" facade falls away. Other directors stick to being personal even when they become famous, but then the distinction between big budget and indie disintegrates, because they may be indie at heart, but they are getting big bucks and more and more people are seeing their films. Neil LaBute's Possession suggests that he has ceased being an indie director, whereas his previous film, Nurse Betty, was a transition.
I like it when the distinction isn't clear, and maybe that's why I liked Nurse Betty, which was much more watchable and fun than LaBute's earlier films, but still had a quirky edge.
What the actual size of the audience will be isn't always a foregone conclusion. Donnie Darko seems to be gathering more and more of an audience, though it didn't do so well when it first came out. It is being released now in England, and it is being promoted more heavily there than it was here, so it will probably be bigger there than it was originally in this U.S. By word of mouth it is getting a reputation over here, and people are watching it on video a lot here for the first time. This whole process with Donnie Darko is helped by the fact that Jake Gyllenhaal has become more and more famous since it came out, and is very visible since Moonlight Mile appeared.
Indie and big budget are not hard and fast categories. There is lots of crossover and there is a continuum because indie directors and indie films can morph into big budget over time. But there is a large area of movies that the mass audience likes, that cost a lot of money if only to promote, and that a more sophisticated or selective audience isn't interested in. And there is a very small area of indie films that appeal only to a small audience, and that incidentally cost very little to make and had very little spent to promote them.
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