Bigger Picture Research

Guest post: Russian film distribution market

In late 2009 I flagged up a report on the Russian film industry authored by Nevafilm Research and Rfilms on behalf of the European Audiovisual Observatory.

Nevafilm has recently launched a new, and more detailed, study of the Russian distribution market, available to purchase from their web site (in the interest of full disclousure: I'm not working on commission).

Here Xenia Leontyeva, Senior Analyst at Nevafilm Research, explains what the report covers and how it can benefit industry professionals with an eye on the Russian market:

In a recent blog post, Jim Barratt asked what market players need to know about the film distribution market in the UK. Specialists at Nevafilm Research asked themselves the same question about the film distribution market in Russia last year.

We wondered: do many producers (in Russia and abroad) know what it takes to effectively sell their film on the Russian market? What fundamental knowledge will help them navigate Russia’s vast expanse? Let’s not forget that Russia, with a population of 141 million, boasts a truly massive market, spanning nine time zones and one-third of Eurasia.

Data collected by Nevafilm Research shows that the country has:

• More than 860 modern cinemas (about 2,430 screens, 930 of which are digital) in 330 cities, serving 76 million people. The film distribution market consists of 30 distribution companies and about 500 exhibitors;

[click to enlarge]

• Eighty two million Russians own DVD players. Six hundred thousand own Blu-ray players. One out of two residents of the country buys at least one licensed disc a year, though sales of pirated content remain four times higher. Still, Russia has 60 video distribution companies and more than 40 major video retail chains;

• 140.5 million residents whose homes are equipped for free terrestrial television. Terrestrial TV offers around 30,000 hours of programming a year—that’s 80 hours a day! Films are regularly shown on 20 national terrestrial TV channels, and popular film segments draw between 500,000 to 5 million viewers;

• 72 million non-terrestrial television subscribers. At least 30 cable and satellite television channels specialize in cinema, and are watched at least once per month by between 100,000 and 7 million viewers;

• 35 million people with broadband Internet access and 11 million cable, telecom, and satellite services subscribers with more than 30 paid or free VoD services to choose from.

Our new study, The Film Distribution Market in Russia, goes beyond simply collecting these numbers, and represents an effort to make sense of this diverse market and to help navigate its legislative and socio-economic peculiarities.

This report is no run-of-the-mill year-in-review: it’s a comprehensive collection of information you will need to know to make an educated decision about your film’s future in Russia. What type of film rights should you choose? To whom should you transfer these rights? And how much should you charge? The Film Distribution Market in Russia has the answers to all these questions.

The report will tell you, for example, the USD-RUB exchange rates for 1993, 1998, and 2008. By comparing national currency exchange rate fluctuations with the rate of inflation for the same period, you can see just how hard Russians were hit by the recent world financial crisis.

[click to enlarge]

The report will also give you an accurate picture of population dispersal across Russia’s seemingly endless territories.  You can see just how economically stratified Russia’s society really is and learn the actual effects of the demographic collapse of the 1990s.

We’ve also included detailed information about school breaks and holidays, and a list of more than 30 dates with special significance in Russians’ social life. You’ll learn the crucial differences between the New Year and “Old New Year”, Russia’s extensive winter and spring breaks, National Unity Day and the Day of Accord and Reconciliation.

We provide our own analysis of more than 20 laws regulating the audiovisual sector. We go beyond defining these laws, to describe limitations and preferential conditions placed on the sector’s players, as well as their responsibilities and privileges. We also analyze recent legislative changes and offer a sampling of professional opinions about these changes, selected from the current Russian press.

Finally, we are the only ones offering a definitive list of all major Russian film distribution market players, along with a description of each player. This list includes cinema chains; film, video, television, and Internet distribution companies; content aggregators; terrestrial and non-terrestrial television channels; video manufacturing facilities; retail chains; cable and IP television operators; websites offering VoD services, and more.

The report is written by Russian film industry specialists, based on first-hand data, so you can always be confident that the information is accurate and up-to-date. Since the report was translated into English by native English speakers, you won’t have to claw your way through every sentence.

Unfortunately, Jim was only too right to note in his blog that this kind of market information can’t be had for free. You can find out how to purchase this report at our website. However, we are always happy to talk to you about your personal needs and resources, and we can help significantly reduce your expenses by offering you specific chapters (in digital or print format). Please don’t hesitate to contact us at research@nevafilm.ru.

 

 

 

Xenia Leontyeva
Senior Analyst, Nevafilm Research
www.digitalcinema.ru

 

A quick film business blog round up

Keeping up to date with industry commentators and the musings of well-placed insiders is one of the more enjoyable aspects of maintaining this blog. Reading widely around the subject has become a necessary habit, and it rarely becomes onerous.

The print-led trade press has always performed a valuable service in this regard, marshalling fact and opinion in digestible portions. But the internet- particularly web 2.0 platforms like Twitter, blogs and the like- puts readers/listeners/viewers in touch with developments in a more immediate and less filtered way.

Best of all, it’s possible (as suits your needs) to move seamlessly between eavesdropping and networking, between bearing mute witness to and actively participating in an ongoing conversation among the informed, the interested or the idly curious.

Quite how dynamic this free and fulsome exchange of film business information has become is evidenced by the blog roll in the right hand sidebar, which has grown enormously since this blog started, and continues to expand (although it is still only a fraction of what’s out there).

Anyway, I want to draw attention to some recent additions that make an excellent contribution to the ongoing conversation.

I’ll start with the most recent of recent additions, The A.K.A. Indie Film Blog. Author and industry consultant Jeremy Juuso kicked off this blog last month with a post about Cantor Fitzgerald’s movie futures market, the Cantor Exchange.

Juuso is author of Getting the Money: A Step-by-Step Guide for Writing Business Plans for Film, and I first strayed across his writings from a link on Ted Hope’s blog to a post on Baseline Research’s Research Wrap site about the box office chances of ‘self-released specialty films’ in the US.

It’s a canny and provocative analysis (witness Hope’s commentary), and the issues raised are absolutely pertinent at this time of shifting film distribution models.

As well as filing copy for Baseline Research, Juuso runs a consultancy whose web site hosts a marvellous array of freely accessible film data.

Throughout 2009 Juuso published monthly PDF reports listing independent and ‘independent-style’ films released theatrically in the US. Among the data included for each title are details of their theatrical release pattern and box office numbers, the involvement of above-the-line star talent, plus estimates of the budget and a summary of financing sources.

The information is derived from various online and public sources, and each title takes Juuso around 2-3 hours to research. ‘The goal’, as Juuso told me when I enquired about his approach, ‘is to paint a clearer picture for filmmakers and investors of just what kind of landscape they face when launching an indie film geared toward the US market.’

The result is a detailed release catalogue, of obvious benefit to anyone drafting a business plan or thinking of acting on one (or, for that matter, anyone trying to understand the way the contemporary indie sector operates in the US).

Screen Finance used to provide a similar service in the UK (for the price of a subscription), until it bit the dust last year (the bfi Library tells me the last issue of Screen Finance they hold is dated 17 December 2009, following Tim Adler’s departure to manage the London bureau of Nikki Finke’s Deadline Hollywood blog). In the absence of Screen Finance, I’d love to see Juuso’s approach replicated in the UK and Europe.

Alongside the monthly PDFs you can find The A.K.A. Report 2009, an overview of the US theatrical market based on analysis of summary data. And returning to where we began, the first post on Juuso’s A.K.A. blog lays bare the operation of the Cantor Exchange in lucid detail (check out entertainment attorney Roger Goff's blog for another view of the same). If, like me, you’re only dimly aware of terms like ‘going long’ and the ‘short position’ from coverage of the global banking crisis, Juuso’s post lifts the shroud on this arcane world and makes it comprehensible.

Now to a blog of a very different order. David Graham is CEO of Attentional, a television industry data provider and consultancy that supplies, among other things, BARB data to the UK Film Council, and is responsible for a number of film-related projects over the years including a study of the economic impact of the UK screen industries (with Cambridge Econometrics and Oliver & Ohlbaum Associates).

Graham’s newly launched blog, Building an Entertainment Powerhouse, takes a critical look at the current model for UK TV, setting out alternatives informed by a staunchly (but not unthinking) free market approach. There’s an engaging openness about the posts, and Graham has the advantage of working from hard data in crafting and elaborating his position. Check out, for example, his posts on the desirability of a European Pay-TV platform, and the growth of internet-based TV viewing and its implications for the licence fee. It’s still relatively early days, but this blog is definitely one to watch and will no doubt become more relevant if the general election goes David Cameron’s way tomorrow.

Over the coming weeks I plan to introduce other relevant industry blogs in a similar way, so if you have any suggestions for inclusion I’d be grateful to hear them. I’m particularly interested to learn about film business blogs from outside the UK and US.

New data: film on UK TV

On the day the BBC Trust published the BBC Executive's strategic proposals for the corporation (which represent either a radical shake-up or mere window dressing, depending on who you believe), the UK Film Council published its annual overview of film on UK television.

To be strictly accurate, the stats cover only the five terrestrial channels and not those available for free or by subscription via cable, satellite or digital platforms.

Nonetheless, the picture is an interesting one - especially given its impeccable timing.

The UK Film Council report reveals a total of 2,218 films were shown on the five main network channels in 2009, much the same figure as in 2008. Channel 4 scheduled the most (561) and BBC1 brought up the rear with 338 (see Table 1 and Figure 1, courtesy of the UK Film Council).

Just over one fifth (22%) of the total were British films (the proportion stood at 23% in 2008), and BBC 2 led the way with almost one in three films (32%) originating in the UK. That at least squares with the BBC Executive's proposal for BBC Two to 'cement its role as the principal showcase for UK films in which BBC Films has invested.'

Recent UK titles (those released theatrically in the 8 years prior to TV broadcast) accounted for 7% of all films broadcast. The proportion of recent UK films shown on the main networks has increased over the last eight years, rising from 3% in 2002. According to the UK Film Council, this

'reflects the increase in the total number of films produced in the UK over the last decade and the shortened window between theatrical and free-to-air TV broadcast for films funded by BBC Films and Film Four.'

Curiously I couldn't find any substantive reference to BBC Films in the corporation's strategy proposals (other than that previously mentioned), so I assume funding for feature production will continue at the present level (£12 million per annum). But the proposals announced today do make other references to the BBC's approach to film in future.

For one thing, the Beeb intends to reduce spending on imported programmes and films 'by 20%, capping it thereafter at no more than 2.5p in every licence fee pound.' Does that mean studio-backed and distributed UK/US inward investment features (which qualify as culturally British for the tax credit) will be exempt? I guess it depends on the definition of an import.

The BBC is planning to spend the money thus saved by investing in 'new original British content to replace the acquired programmes and films from abroad which will be significantly cut back as part of this strategy.' So perhaps BBC Films will get a boost to its budget, after all...

The strategy proposals don't just apply to programming. Under these plans, the BBC web site is facing some judicious pruning. In fact whole branches will be lopped off, including the /filmfestival page which has not been updated since 2007. And the main /film page will be shorn of 'generic content', to include instead only content 'which has featured on BBC programmes or content to which the BBC has added distinctive editorial value.'

Quite what that means in practice is anybody's guess. But if you feel moved to plead the case for more (or less) of Mark Kermode et al on the box/radio/web you have until 25 May to submit a response to the BBC Trust's consultation.

Two new reports from the European Audiovisual Observatory

Last week brought news of two new publications from the European Audiovisual Observatory. The first, ‘Creativity Comes at a Price: The Role of Collecting Societies’, compares the legal status of collecting societies in 12 European countries (Austria, Germany, France, Hungary, Italy, Netherlands, Norway, Poland, Spain, Switzerland, Turkey, United Kingdom), focusing on their role and relationship with the rights holders they represent.

This looks to be a great resource if you’ve ever wondered about the legal basis upon which rights to audiovisual works are attributed. The report looks at, for example, the rights of performing artists, choreographers and set designers, as well as directors and producers, highlighting important national differences.  For example, set designers have rights as co-authors of a film in Austria and Switzerland, but not in Spain or Poland.

The report also looks at the way rights are managed in each country, which is where collecting societies enter the frame. As the press release notes, ‘in very practical terms, this study contains information on how remuneration is calculated in terms of the various percentages in current use in each respective country.’

Also released last week, Volume 2 of the Observatory’s Yearbook, ‘Trends in European Television’, provides descriptive data and analysis of television markets in 36 European countries.

The volume covers:

• The global audiovisual market

• Radio and television companies in Europe 

• Financial resources of the radio-television industry in Europe

• Digital television and broadband networks

• Audiovisual media services available

• Television audience trends

• Trends in television programming

• Television production companies

And for the first time the Yearbook includes details about the development of Internet video, VoD and catch-up TV. It also takes look at the relationship between public financing and audience market share of public channels. This last item sounds particularly timely in the UK, given the uncertainty facing Channel 4 in the wake of Ofcom’s second public service review.

Full details and a chapter breakdown are available here.

International communications market

Last week the Office of Communications (Ofcom) published its third annual statistical overview of the £876 billion global communications market in 12 established industrial economies (UK, France, Germany, Italy, US, Canada, Japan, Poland, Spain, the Netherlands, Sweden and the Republic of Ireland) plus the fast growing economies of Brazil, India, Russia and China.

The publication (International Communications Market Report) coincided with an international conference hosted by the regulator (Next Generation - Net Generation: Managing competitive communications in a digital age).

I can't do justice to the full breadth of material presented in the report (which weighs in at over 300 pages), so here’s a taster quoted from the press release:

Forecast watch: 'Connected devices' and VOD

The annals of the film business are littered with the curmudgeonly voices of vested interests raised up against new technological advances, and Scott Kirsner has gathered some choice examples in his book Inventing the Movies (excerpted recently in Variety).

Thus Thomas Edison declared at the dawn of the cinema age that ‘the public will never accept’ theatrical movie projection. 

And just as video was taking off in the early 1980s, Jack Valenti (long serving head of the MPAA) stated in less than measured tones that ‘the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone.’ In hindsight we can see that both judgements were woefully wrong-headed. But then as Billy Wilder once noted, hindsight is always twenty-twenty.

The movie business once again stands at the threshold of a new age. Digital distribution offers the prospect of limitless content available on demand through ‘connected’ technologies like computers and televisions, mobile devices (including phones) and games consoles.

But this time around the naysayers are somewhat more muted. The pace of change has been relatively slow (we've been standing at the threshold for what seems an age), but not because the studio establishment is particularly hostile to the idea of ‘on demand’ services (although there is some resistance from exhibitors who fear further erosion of the theatrical release window). Caution, rather than defensiveness, has been the watchword as the major players try to determine the best business models to exploit the undoubted potential of online services without harming DVD revenues.

As to future prospects, the latest forecast from Parks Associates looks rather positive for video content delivered through games consoles (relative newcomers to the 'connected device' pack). According to Home Media Magazine, a report entitled Connected Consoles: Gaming, Media, and Beyond projects revenues from ‘online content and services through broadband connected consoles’ totalling around $8 billion by 2013 (with movies and premium TV content figuring prominently in the mix). That’s a hefty sum: by way of comparison, theatrical revenues in the US totalled $9.6 billion last year.

Video-on-demand (VOD) services are springing up elsewhere in the forest. The LA Times ran a story on Monday about the Sundance Channel’s plans to launch Sundance Selects, a pay-per-view VOD service showing indie titles that haven't received a theatrical release in the US (there are a lot of those around at the moment).

"We think it will democratize and emancipate independent film," Joshua Sapan, president and chief executive of Rainbow Media told the LA Times. (How can something you need a subscription and payment to view be democratic? Whatever happened to universal suffrage?). With around 40 million US households equipped for VOD through cable or satellite television, Sapan is hoping Sundance Selects can "be an equivalent of the in-home art house theater."

So perhaps at this juncture the curmudgeons are right to bite their tongues. We’ll find out in due course.

>>>UPDATE: 9.15am>>>

The view of a leading music industry executive also makes for positive reading about the prospects for digital distribution. Jean Bernard Lévy, the chief executive of Vivendi, told the Financial Times he predicts a return to growth in the music industry on the back of new revenue streams from legal digital downloading. “I really believe we are at the turning point for the music industry and I didn’t say that two years ago.”

Oz data: 'Get the Picture' update

Screen Australia, the new screen agency replacing the Australian Film Commission, Film Australia and the Film Finance Corporation, has recently posted a number of updates to its excellent Get The Picture Online resource.

These include:
• Analysis of the Australian video industry by Sandy George.
• Analysis of subscription television in Australia by Bob Peters.
• Figures for the proportion of Australian households with computer, Internet, mobile, game console and DVD, 1998–2007.
• Data on the number of internet subscribers by speed of access connection, 2003-2007.
• Characteristics of households and users with broadband connections.
• Data on the proportion of Internet users accessing online audio and video, 2007.
• Figures for children’s use of the internet in 2003 and 2006.

Growing up in a wired world

Last week I fired off a hasty post drawing attention to publication of Ofcom’s annual communication market stats digest (The Communications Market 2008). Having now had a chance to look in more detail at the report I’d like to share a few more of the findings to catch my eye.

Now I don’t know about you, but when I was a nipper, some thirty or so years ago, the world seemed a far bigger, warmer and more straightforward place than it is now (probably due to the fact I was then much smaller, hardier and less cynical).

I’m not normally given over to this sort of nostalgic humbug (nostalgia isn’t what it used to be, as Peter De Vries once said) but after looking at Ofcom’s data about children’s media habits I can’t help thinking of my own childhood experiences back in the day when there were only three TV channels and remote control of the goggle box involved hurling a slipper at the on/off switch.

As Mark Cuban pointed out in a recent post, we don't live in the world we were born into, and the Ofcom data bring this point home forcefully. It's true that some things remain the same (like the worst warmongering instincts of our politicians, and the fact that an umbrella is essential for anyone holidaying in the UK), and other things are at least recognisable from period to period (thirty years ago a diminished Labour administration was stumbling towards defeat...). But one thing's for sure: communication technology has changed beyond all recognition during the last three decades, and with it the ways we interact with each other, share information and amuse ourselves. My children's experience of the world is undoubtedly different to mine in this respect, and Ofcom's data provide  intriguing evidence of these shifts.

Forecast watch: 'download to TV' spending

'A good forecaster is not smarter than everyone else, he merely has his ignorance better organised' (Anonymous)

Given the prevalence of crystal ball gazing in the film business, especially around the adoption of new media technology, I'm starting a series of occasional posts reporting the latest market forecasts being peddled about. In time we can see how close to the money they actually were.

First up is a report by Parks Associates predicting that US consumers will spend over $6 billion on Internet video services by 2013 (up from around $1 billion in 2008). This growth will be driven by 'greater ownership of connected game consoles, networked TVs, and alternative video-on-demand set-top receivers', according to the report authors, who estimate that direct-to-TV videos (i.e. content delivered straight to the TV via the Internet) will account for 75% of Internet video revenues by 2013.

In a blog post to accompany the publication, Kurt Scherf of Parks Associates makes it clear that he sees the TV as key to future growth of internet-based video: 'the results from TV 2.0 are indicative of the direction that the Internet video market needs to move... straight to the TV […] To not only survive but thrive, Internet video services must be more accessible directly from the primary entertainment center in the home. How the consumer electronics industry evolves to take advantage of growing array of premium Internet video content (both user-paid and ad-supported) will be a key development to watch in the coming years.'

Parks Associates growth figures are higher than other forecasts, like the numbers put forward by Lionsgate studio, which put sales from digitally delivered content at a more modest, though still impressive, $3.6 billion by 2013.

Clocking docos

According to Screen Daily, a survey commissioned to coincide with the launch of BritDoc 2008 found that nearly half (48%) of UK adults regularly watch documentaries on TV compared with 10% who regularly view them on DVD and 4% who say they go to the cinema to watch them.

The research was conducted by Ipsos MORI with a sample of 1,000 British adults.