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Today’s Film Market: A Story of Winners and Losers

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We are in the midst of a huge sea change in the way that people view Movies and TV programmes.

The big winners since the outbreak of the pandemic are the streamers. One of the biggest winners is Netflix who have just released their first quarter financial results. As at 31st March subscriber numbered 183m, up 23% from the previous year. This resulted in the first Quarter’s Profit of $709m, up from $344m the previous year. The major growth for Netflix is outside USA; there was an extra 7m subscribers in Europe and the Middle East, 2.9m extra subscribers in Latin America and 3.6m extra subscribers in Asia.

Disney are also surging ahead with their streaming channel. Disney+ launched last October with 10m subscribers, by January this year that was up to 28.6m, and the current number is thought to be in the region of 80m.

In the UK the number of people subscribing to the major streamers, (including Netflix, Disney and Amazon Prime) now exceeds the number of people watching Pay TV.

And sadly, the major loser is the theatrical cinema. Last week in my blog ‘The Last Picture Show – The State of Cinema‘,  I highlighted the financial challenge facing AMC, I can report that it has not got better. It is now believed that AMC will have to file very shortly for Chapter 11 bankruptcy. Pre-Covid the group made several acquisitions financed by cheap debt, which looked manageable at the time. Now, with over 700 theatres closed and with no revenue coming in, the group is in dire need of a cash stimulus.

So, while theatres are closed and movies including ‘Dune’, ‘Wonder Woman 1984’ and ‘Black Widow’ are firmly sealed in cans at present, streamers such as Netflix are premiering great movies such as ‘The Trial of The Chicago 7’ an amazing new film written and directed by Aaron Sorkin.

The Film and TV Production Restart Scheme goes live

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With a pent up demand for product and the industry’s struggles getting productions underway, the announcement that the UK’s long-awaited £500 million Film and TV Production Restart Scheme has officially gone live after securing state aid approval from the European Union, is great news.

From today (October 16), productions can receive compensation from the scheme for future coronavirus-related losses including filming delays from illness amongst the cast and crew.

The scheme has been accepting early applications for two weeks, with productions set to be onboarded within days.

The deadline for productions to register and start shooting has also been extended from December 2020 until February 28 2021.

The funding will be available to all productions made by companies where at least half of the production budget is spent in the UK. The scheme is expected to support well over 40,000 jobs across the UK’s creative sectors.

The launch follows months of campaigning by the sector to secure insurance that will effectively underwrite the cost of filming, if productions are forced to shut down due to a second lockdown.

Number 9 Films’ ‘Mothering Sunday’, starring Josh O’Connor, Odessa Young, Ṣọpẹ́ Dìrísù, Olivia Colman and Colin Firth, is among the productions to have already applied to the scheme.

Oliver Dowden, the UK culture secretary, said:

‘Our film and TV production sector is respected the world over, filled with talented people. I am delighted that this half a billion pound scheme will get cast and crews back to doing what they do best. This move will help support tens of thousands of jobs, provide work for creative freelancers and get cameras rolling across the country.’

This is the shot in the arm that the industry needs to be able to support its talent and to generate much needed product.

Major Change in US Theatre Ownership

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I guess it comes as no surprise following the decline of the major cinema chains, AMC and Cineworld which I mentioned in my recent blog ‘The Last Picture Show – The State of Cinema‘, to hear that a major sea change to the distribution of films in the US has been announced.

Up until 1948, the major studios owned the cinema chains across America. So guess which films got shown on those cinemas? Their own naturally, and films produced outside of the major studios were effectively pushed out. In other words, Hollywood held a huge monopoly over the industry. The studios produced, distributed and exhibited their own movies. Governments throughout the western world are always worried when this type of monopoly arises, it is effectively Vertical Integration that restricts fair play and the loser is Joe Public who only has one source to go to for their product or service.

Well, things are about to change. Recently a judge in New York ended the decree that studios cannot own theatres, ‘Judge Decrees Studios Can Own Theatre Chains for First Time in 71 Years – What Lies Ahead?‘.

As noted in my previous blog the theatres are at present starved of product from the studios who are delaying just about all their major features including the new Bond film, ‘Dune’, ‘Wonder Woman 1984’ and ‘Godzilla v King Kong’. The only major film to be released into cinemas in the past few month was ‘Tenet’ which allegedly took a paltry $45m.

Sadly, both AMC and Cineworld look ripe for opportunistic takeovers and there is already a rumour that Amazon are looking at AMC.

So, as ever in these times, the rules books are being ripped up. On a final note I would say that this decision in the US does not look good for the independent theatres.

The Last Picture Show – The State of Cinema

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Two great movies, ‘The Last Picture Show’  and ‘Cinema Paradiso’ highlight the iconic role the cinema had in local communities. Over the years most people will be able to benchmark various landmarks in their lives by referencing cinema visits; ranging from going to see films with their families and friends; to what for many is a memorable occasion, the first date.

However, sadly the world of cinema has drastically changed post Covid 19 and I wonder if and when it will return to its former glory.

Today, cinemas face the greatest challenge they have ever experienced. In March most cinemas closed and despite re-opening in the Summer, they have simply failed to become economically viable as fewer people attend and the major studios pull back on product.

The world`s second largest chain, Cineworld has shut 536 cinemas in the US and a further 127 in the UK. This has resulted in putting around 45,000 jobs at risk. The CEO of Cineworld, Mooky Greidinger observed that without new films it was like `being a grocery store with no meat or food.` Perhaps the key driver for this action by Cineworld is the postponement of the new Bond film, ‘No Time to Die` to Spring 2021.

AMC, the world`s largest cinema chain will cut opening hours at various cinemas across the UK with immediate effect.

Covid 19 has come at an awful time for both groups. Cineworld is carrying $8bn of debt and AMC has debt of about $10bn. Whilst both groups have negotiated low interest rates for their Debt Mountains, it still represents around 6 to 7 times operating profit for both groups; a high multiple that certainly does not help their credit rating.

Apart from the Bond movie push back Disney, Universal, Warner Bros, Paramount and Sony have all held back on opening films that would have been released this year. These include ‘Black Widow’, ‘Wonder Woman 1984’, ‘Ghostbusters’, ‘Godzilla v King Kong’ and ‘Dune’.

If cinemas do not open to mass audiences what is the economic viability of producing tent pole films with budgets of c. $200bn? Sure, there is a pent up demand for product by the streamers but not at this cost. So, are we going to see a shift towards smaller Budget films? One can only say ‘Who knows?’ In these strange and uncertain times the world’s landscape is changing at a pace and in a direction that has wrong footed just about everyone including Politicians, Economists, and last but perhaps not least, Film Producers.

Meanwhile, take comfort and indulge yourself. Turn the lights down low, switch the phone off and play the lovely, wonderful ‘Cinema Paradiso’. I guarantee you will feel better afterwards

Film Industry: £30m Culture Recovery Fund

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The announcement of a £30m Culture Recovery Fund is another welcome boost for the film industry.  This follows on from last week’s news, the introduction of an insurance fund to help independent TV and film production companies in the UK protect themselves from possible losses due to Covid-19.

The Culture Recovery fund, which comes from the Government’s £1.57billion support package for arts and culture, will be administered by the BFI and is open to applications Monday 10th August.

The funding is aimed at independent and non-profit cinema venues and there are two types of grant available:

  1. Safety grants – (capped at £10,000 per cinema) aimed at helping venues deal with the upfront health and safety costs of making venues compliant with government guidelines before re-opening
  2. Business sustainability grants (capped at £200,000 per organisation) to ensure companies are able to operate in the restricted conditions required by social distancing measures once they have re-opened

To be eligible for the funding, an organisation must demonstrate that it meets the following conditions:

  • The venue must be involved in showcasing films all year round, which means festivals and other seasonal events are not eligible
  • Venues must be building-based
  • Applicants will be required to demonstrate a commitment to increasing their organisational diversity and the diversity of their audiences. As well as this, organisations must demonstrate that they are of cultural importance and actively engaged in their community. Special consideration is being given to venues which are involved in levelling up their region.

More details are available on the BFI website, which can be reached via the following link: www.bfi.org.uk/Culturerecoveryfund.

At a time when the easing of lockdown is difficult to navigate, this continued support is welcomed. We hope these initiatives will contribute to the long-term health and sustainability of the sector.

You may also be interested in our ‘in conversation with’  series

Insurance Guarantee Fund Helps Kickstart Film and TV production.

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On Tuesday, the UK’s film and TV industry received a very welcome windfall from the UK government. Chancellor Rishi Sunak and Culture Secretary Oliver Dowden have announced a fund worth £500 million earmarked specifically to help those domestic TV and film productions struggling to get adequate insurance cover for Covid-19.

This announcement has been followed by months of work, with the BFI’s Screen Sector Task Force working closely with the government to advise on the needs and specific issues facing the industry.

As lockdown has continued to tentatively ease and we have slowly crept back towards some semblance of normal life, there has until now been no movement forward on this significant barrier. Whilst a lot of industries more adversely affected, such as hospitality, have been able to start opening up to the public with clear guidance in place on exactly what they need to do and the acceptable levels of safety and risks they can incur – this is much more difficult to summarise for film production companies. The nature of the industry demands travel, working away from home and close proximity to colleagues and co-stars, with different and varied levels of risk depending on the nature of a production. This welcome announcement should help the industry begin to come back from the limbo of uncertainty it has been left in since lockdown easing began.

Industry bosses welcomed the news, with the Chair of the Production Guild Alex Bowden commenting, “The introduction of an insurance guarantee fund is the boost that the UK Film and TV industries have been hoping for and will enable a green light for the many productions that have been waiting to start up.”

John McVay, the chief executive of the Producers Alliance for Cinema and Television said: “This very welcome news shows that the UK Government has listened to one of our key industries and has taken unprecedented steps to support our highly successful indigenous film and TV production and broadcasting industry to get back to what we love most – making TV programmes and films enjoyed by UK audiences and many more millions around the globe.”

The scheme officially launches today and the key features noted at this point regarding the nature of the fund and how it will be accessed are as follows:

  • Films or shows commencing before the end of the year through to June 2021 will be eligible for cover, as long as half the production budget has been spent in the UK.
  • Companies will be able to back-date claims to the scheme if they have now resumed production.
  • For delays caused by Covid-19 – companies could be compensated up to 20% of the production budget.
  • For abandonments caused by Covid-19 – companies could be compensated up to 70% of their production budget.
  • Claims are capped at £5million per production
  • Companies must pay an appropriate excess and fee to join the scheme
  • Companies will need to ensure they purchase normal insurance alongside to cover all other risk factors unrelated to Covid-19

We will continue to provide updated as more details emerge, hopefully this heralds the beginning of a much-needed resurgence in film and TV production.

If you have questions about this, or any media related matter our specialist media team are here to help. Please contact us if you need assistance.

The ‘Post-Covid’ Film Sector. What Next?

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While production has been stalled due to the Coronavirus outbreak, the film industry is starting to open up again, albeit tentatively. In this video, Sam Ampah from Alliotts Media discusses the post-covid environment for the film sector, with Richard Whelan who is an Assistant Director and Producer.

[video run time: 23:36]

It’s Cannes, but not as we know it

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At this time of year, our media team would usually be reminiscing about busy days networking and nights spent exploring the cinematic delights on offer at the Cannes Film Festival.

Not this year. Like many other events in 2020, the Covid-19 pandemic has resulted in the Cannes Film Festival being cancelled for only the second time in its 72-year history. As with many creative industries, the pandemic has dealt the film industry a disproportionately severe blow. Events like this are the lifeblood of the industry, letting film-makers finally showcase the results of months of hard work and letting people network and forge connections which may result in exciting new ventures. It was a bleak prospect to miss this altogether.

However, the spirit of Cannes would not be that easily beaten and an online alternative was set up. A full selection of films was selected for 2020, and attendees could sign up, view the selection, join a wide selection of seminars and network with other industry professionals, all through online channels.

This leads to the big question – did it work? The effort was commendable, and no doubt difficult to pull together when events of this kind have never had to deal with anything like this before. There were some technical difficulties and obviously sending messages out to organise potential meetings is never going to be the same as the organic spontaneity of meeting people face to face and engaging with each other at the festival.

Despite this, the Alliotts team had some interesting meetings with producers and film-makers who have not let the pandemic dampen their enthusiasm and their visions. Once the world can return to normal, there will certainly be some exciting projects in the pipeline for 2021. There was of course the added bonus of much more streamlined and productive meetings without the distractions of fine food, wine, beaches and sunshine!

Online versions will never be a preferable alternative to events like Cannes, which has become such an iconic event that many in the industry look forward to all year. The effort however, to keep the energy, the enthusiasm and the pace alive was greatly appreciated by many. Hopefully next year will see a return to the festival we all know so well.

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