As I looked at the streaming platforms last week, I thought that I would focus on cinema this week. Going through the trades, it is telling that the number of good news stories and excited statements about growing audiences and soaring shares seems to be limited to Netflix at the moment.
Cinema is suffering at the hands of high-quality streaming drama. Last year saw the Australian box office and number of admissions fall and on average Australian films only take around 4% of that box office. In comparison, US studios take 84.5%. This has led to questions on why we are making Aussie films if no one gets to see them. It is increasingly difficult to get a release and for the general public to know what is on due to the high costs of marketing in a crowded marketplace.
However, Australia is not alone. Whilst the UK film production industry continues to grow as it remains a destination for US studio productions due to significant Government support, the local industry is suffering. In July, the BFI launched a report that came up with an action plan to ensure UK films would survive in the long term. Only two months later and the ability of the plan to make a real difference is already being called into doubt. There is also the pending Brexit that threatens to disrupt the entire economy and potentially threaten the production boom.
But it is not only the indie filmmakers that are worried. The studios are also vulnerable. The mega-budget CGI superhero movie bubble has been predicted to burst for a while now, but it is still underwriting the industry with the studios doubling down on their bet. This has been driven by the fact that stable cinema genres that were once guaranteed audiences like rom-coms, have now been stolen by Netflix. Also, films that were aimed at older, “intelligent” movie markets seems to be less predictable. The latest example of that has been the disappointing performance of First Man.
So how are the studios reacting? The mega-merger between Fox and Disney is a good example of the studios trying to find a way to remain profitable through consolidation. However, the outcome might not be as positive as they first hoped as the two companies clash over who will do what and whether synergies can actually be found. There is also China waiting in the wings who could potentially stymy the deal completely. This follows the recent limitations placed on foreign content in China that has restrictions on what can be produced and screened, as well as a drop in Hollywood’s share of box office.
Looking for new international partners for finance has always been high on studio executives to do lists. The Saudi Arabians were emerging as willing partners, but this has been thrown into doubt after the recent, very disturbing Jamal Khashoggi affair. It is one of a number of examples that have shown the willingness of the entertainment industry to take cash from dubious sources. On top of that even billionaires’ children are starting to get cold feet and pulling back from investment.
However, it is not all doom and gloom. The exhibition industry tends to go in cycles. US exhibitors are finding new ways of locking in audiences through subscriptions, new financing entities are still getting established to fund independent production and distribution, A Star Is Born is doing very well and Australian box office income in 2018 is set to overtake 2017’s results. The well respected Megan Brownlow from PwC believes we have a great opportunity in Australia to take advantage of our skills and storytelling talent and has even recently invested in a movie herself.
Therefore, it is vital that we should not give up on what is an important cultural art form that has the power to help us understand who we are and what we want to become. In darkened rooms, we gather to unpick the human condition and shine a light into our own soul. And in this era of instant screen gratification and content overload, it is important to protect those films that have the power to change your perception of both the world and yourself.
And that is why I am involved in the SPA Prism initiative that is looking at ways of continuing to support and promote Australian cinema. Aussie distributors, exhibitors, producers and funders have come together to produce an action plan that looks at a whole of industry solution. I will keep you up to date with how that is progressing.