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Box Office Wars: The New Frontier

January 4, 2021 by Ian Gibbon

Hollywood has held a near monopoly over global box office cinema revenues for almost the entire history of cinema.  Well, that is until now!  And, as the wise ‘prophet’ Bob Dylan forecast: ‘the times they are a-changing’.

There have been two major changes to box office revenues.  From a dominant domestic US market until around the turn of the century, world box office receipts have since caught up and subsequently overtaken the American share. And the second change is happening now: The Chinese Box Office Phenomenon.

Until around the start of the 1990s, US ticket sales dominated global cinema ticket revenues; the huge markets of China and India were either closed or in their infancy. The UK, and the rest of Europe, were making great, critically acclaimed films throughout the twentieth century, ‘Battleship Potemkin’; ‘Brief Encounter’; ‘La Dolce Vita’; ‘Les Enfants du Paradis’; ‘Belle de Jour’; ‘The Rules of the Game’; ‘The Red Shoes’;  ‘Le Mépris’; the list is endless, but these films did not break the bank at the US box office. There were exceptions of course – notably the Bond franchise – but it’s fair to say that until the 1970s/1980s, the domestic US box office was where Hollywood looked to recoup its costs.

The shift towards the importance of the international market can be readily seen with the Star Wars numbers.   The first Star Wars film, released in 1977, earned the same revenue, $307k, outside the US as it did domestically.  The second Star Wars movie released in 1990, earned more in revenue outside the US, and this trend has continued. By 2000, the year of ‘Mission: Impossible 2,’ the US box office accounted for only 39% of this movie’s receipts.

And now a new challenge or economic dynamic has entered the discussion, in the shape of China. In the past 15 years, the box office revenue in China has increased 35 fold. In 2019, the Chinese box office amounted to $9.7bn, not far behind the USA box office of $11.1bn. In 2020, the Chinese box office finally overtook the USA.

This is due, in no small measure, to the Covid fallout.  China’s effective containment of Covid has enabled it to reopen its film market much quicker; their box office revenues up to November 2020 were $1.988bn compared to £1.938bn in the USA. The world’s greatest hit in 2020 was ‘The Eight Hundred’ which took $461k; not heard of it?  Well, it’s a Chinese movie with only limited foreign distribution.

In 2005 China had 4000 theatre screens, only slightly more than the UK. By last year there were 70,000 which is equal to the combined number of theatre screens in whole of Europe and the USA. During the last 10 or 20 years, local Chinese filmmakers have learnt and enhanced their craft by working on Hollywood films shot partly in China. Today, Chinese producers are making films such as ‘The Eight Hundred’, a war movie, and sci-fi productions such as ‘The Wandering Earth’ which took $700m last year.  These films are popular with Chinese audiences, particularly those outside Beijing, Shanghai and other big cities.

Ultimately the decline of the US box office in this new world is perhaps not all bad news. Film takings at the theatre are often eclipsed by the income generated by television rights, merchandising, video game licensing and so on. It could be considered a sound business strategy for Hollywood to make films that go straight to streaming, for instance Disney with Mulan.  For Disney, a film is the driver for a far bigger economic dynamic. Whereas in China the box office tills keep ringing and receipt revenues keep growing.

Filed Under: Business, Film News Tagged With: box office, China, streaming

Cinema: The Smallest Show on Earth?

December 15, 2020 by Ian Gibbon

The announcement by Warner Bros that it would release its entire 2021 film slate through HBO Max it’s new streaming platform, and simultaneously to theatres reminded me of a delightful British comedy film made in 1957, ‘The Smallest Show on Earth.’

Virginia McKenna and Bill Travers play a married couple (they were married to one another in real life) who inherit a Cinema, The Bijou. They are dismayed to discover on arrival at the Cinema that it is…(sorry, I can’t put this any other way)…..a fleapit. Worse still it is competing with The Grand, a nearby large Cinema that has all the mod cons of the era; luxury seats, a large screen and a projector that doesn’t break down, so unlike theirs. The Bijou’s receptionist is played by Margaret Rutherford, and a heavily disguised Peter Sellers plays the projectionist. The big question is how can they compete with the changing landscape?  One method they employ is when their movie is showing a desert scene in scorching heat, they turn up the heating. At the interval the patrons are left gasping for refreshments. On that note I will not add anything further other than to say if you have not seen it, check it out.

The challenge of theatres today is not dissimilar. Since March audiences have luxuriated in their homes with Media Centres and various devices receiving fabulous content at a comparative low cost all without the hassle of braving the elements, travelling, parking etc.

The decision by Warner`s really is disastrous for Cinemas. In fact the share values of several chains including AMC have subsequently fallen. It means that you can watch ‘Wonder Woman 1984’, ‘Suicide Squad’, ‘Dune’ and ‘Godzilla vs. Kong’ in the comfort of your own home as soon as they are released. There has been widespread dismay in the industry about this decision. A very vocal opponent has been Christopher Nolan; all of his films have been made by Warners since 2002.

I was privileged to hear Virginia Mc Kenna speak at the Media Lunch Club run by Gareth Owen last year. She remembered ‘The Smallest Show on Earth’ fondly and listening to her thoughts was like going back to another time.

Will we feel that way about Cinema in an even shorter time scale? I certainly hope not.

Filed Under: Film News

Netflix sure likes the UK

December 9, 2020 by Ian Gibbon

Hearing about the latest investment by Netflix into the UK Film & TV sector reminded me of a pleasant film made 60 years ago ‘The Grass is Greener.‘

You may have never heard of the film and I doubt whether it has made onto any Top 100 All Time Favourite Films rankings. ‘The Grass is Greener’ stars Cary Grant and Deborah Kerr in the roles of an Earl and a Countess who open up their stately home to visitors due to financial troubles. Along comes Robert Mitcham (what a great cast; it also includes Jean Simmons), an American with pots of money who woos (yes, it is an old film) Deborah Kerr.

Anyhow, its only similarity to the current Netflix investment is the theme of the injection of money into the UK. The similarity ends there; Mitcham does not succeed in his ‘wishes’, whilst the same can’t be said for Netflix, which is certainly achieving success.

Last year Netflix funded productions in the UK totalling £500m, and have just announced they are increasing this to a £750m annual spend.  In the past year Netflix made 50 television shows and films in the UK.  That is employment for a significant number of people.

Netflix are opening new 100,000sq ft. headquarters in London and employing 269 people.  Additionally, they have a ten year deal with Shepperton Studios giving them the capacity to handle their vast scale of productions. In the past year, top-end successful productions by Netflix made in the UK have included The Crown, Sex Education and The Witches.

Overall, Netflix has a production budget of $17 bn; compared to the BBC’s budget of £2.3bn. That’s a big divide.

The change in viewing habits has created a huge boost for Netflix and other streamers. Although new Netflix paid subscribers in the third quarter this year plateaued at 2.2m; this follows a surge in the previous two quarters, creating a total subscriber base of around 195m worldwide.  That’s 195m individual subscriptions coming in every month!

The investment and commitment by Netflix into UK productions is another confirmation of how attractive the UK is for TV and film production. Apart from its generous film and high-end tax credit reliefs, it has a solid financial and legal infrastructure, plus an experienced, skilled labour-force for productions to tap into to ensure top quality workmanship.

Filed Under: Business

UK Film Industry: No Stopping Batman

November 26, 2020 by Ian Gibbon

Despite two lockdowns and unprecedented issues for film and TV productions, I am delighted and not a little amazed to be reporting that 85 per cent of all productions in the UK, including inward studio productions are currently up and running.  These include the new Batman and Harry Potter movies.

This is a very rosy picture compared to back in March when £1bn worth of productions were closed down.  The success of getting productions up and running is down to the hard work by all the constituent film bodies in the UK including the Government, led by the British Film Institute (BFI).  A newly created task force of around 100 people set up new protocols and guidance for film making.

These protocols include exemptions for talent and key crew to isolate when arriving in the UK.  The productions that they are working on must be certified by the BFI for tax relief.  When arriving in the UK, the talent and key crew are restricted to being based at their home or accommodation and the shooting location during quarantine.  They cannot travel anywhere else.  The above exemption has put a strain on BFI to pass the cultural test for productions to be able to go ahead.  Anna Mansi, Head of Certification at BFI related an interesting story during a seminar at this month’s American Film Market.  She told of an urgent request for certification to allow an actor to arrive in the UK – the request was submitted two hours before the plane was due to land! It goes without saying that they did it in time.

So much of the leisure and hospitality sector has been disrupted this year.  It is a testament to the outstanding achievement of the industry’s leading regulatory bodies that the majority of the media’s working people are doing what they do best – making great Films and TV Productions

Filed Under: Film News Tagged With: BFI, film, uk film tax relief

Working with Future Film City: Why co productions and cloud accounting could help your project

November 23, 2020 by Sam Ampah

I’ve been lucky enough to have worked with the people at Future Film City on two recent occasions. Future Film City is a Scottish based organisation that aims to increase growth for Scotland’s Screen Sector.

The first time I worked with Future Film City was to deliver a webinar to their members on the UK’s Creative Tax Incentive Scheme.

What I saw during this webinar was a real desire by many to collaborate with other producers to get their project out there. This promotion of co-productions and joint ventures is one that I have always felt passionately about, so it was refreshing to see a craving to promote such ventures.

The complexities and the need to establish a trusted working relationship with people you may know very little about is an added stress. This can deter producers from going down the co-production route.  If thought through and approached sensibly I have seen how a co-production can tangibly add to a production and lower the overall production cost.

More recently I hosted a Finance Bootcamp for Future Film City for a dozen or so of their members. I spoke about the importance of keeping on top of your business finances. I explained the importance of cash-flows, regular bookkeeping and how to prepare a VAT return, amongst other things.

From my experience of working with production companies, the regular finance management of their company is often left to last minute, or outsourced. I get why this is the case, running a production company is not like running any other business. When producing a film, TV show, documentary, or any other media the number of different players involved in the one production all being managed centrally from the one production company, is very time consuming and can be overwhelming. It is easy to forget to file your VAT return when you just spent six weeks on set managing a 100 person crew. This will not stop HMRC from issuing a surcharge notice or fines for failure to file.

What I tried to emphasise during this Finance Bootcamp, is something a friend once told me and a mantra I try to live by ‘It doesn’t have to be stress’. I showed how cloud accounting solutions such as Xero and Fluidly can help save them time and are easy to use. I explained how good record management can save them money in the long term. Most importantly when approaching an investor, the need to demonstrate good finance management could go a long way to securing the finance needed to green light their new project.

I really enjoyed the experience of working with Future Film City. I often hear people say that power and money needs to be devolved from London and spread across the UK. After my experience I understand why this is extremely important, there are great stories that need to be told across the UK.

Speaking to producers during my time with Future Film City there’s an understanding that it takes more than a great script to get a project green lighted, but there’s also a determined and entrepreneurial mindset!

Filed Under: Business

Show Me The Money: Finance for Independent Films

November 19, 2020 by Ian Gibbon

Filmmakers are creative people who have a passion for cinema.  Whether their holy grail is another ‘Citizen Kane’, ‘Raiders of the Last Ark’ or ‘Parasite’, their dream is to make great films.  Nothing wrong in that!  But, in order to be able to make the film and then to share in whatever financial upsides arise, it is an integral necessity that they understand and get a grip on the ‘money-side’ of filmmaking.

The only exception to this golden rule is if they have a partner who handles the financial side of things.  Alas, many filmmakers, especially in their early careers do not appreciate this.  I also question whether film schools make this a high enough priority.

Here are just a few key finance strategies:

  1. Preparation and Development are key. It is no use having a great script and pitching for a ballpark £1m investment (or whatever figure you decide to plump for) if you can’t back it up.  You need:
  • A budget – drawn up by someone who is competent and experienced
  • Accurate costings

You need to be prepared for whatever questions an investor will ask you.  You need to speak in the language of the investor and not in ‘film school’ jargon.

  1. The higher the budget, the more important talent is.  Talent will be essential in marketing the film.  A truism about filmmaking is ‘getting the money is not the hard part –  getting it back is the hard part!’ Talent is particularly important when selling the film internationally.

And, here’s the rub – you are not going to be able to go out and get Tom Hanks or Jennifer Lawrence; major talent do not, except in perhaps some exceptional circumstances, want to do indie films.  They have done them, moved on and now have the pick of the best films.  Another age-old problem is ‘you need money to attract talent, but you need talent to attract money!’  A way around this is to have four or five suggested actors, pitch for investment and put this in escrow with say, a lawyer and then pitch to talent showing the money is in place.

  1. Film Distribution. This is where we hear horror stories time after time.  There are many great reputable distributors, but there are also many who only look for short-term gains for themselves, and leave the distribution of the film hanging after they have got their upfront fees or marketing recouped. A filmmaker must carry out robust due diligence on the distributor. They must read the contract carefully and work with someone who has empathy with their film and someone they trust. Furthermore, they should speak to other filmmakers who have worked with the distributor.

 Filmmakers will tell you that their films are their babies.  Well treat your film like you would your baby; look after its welfare in every aspect; the way it looks and feels may be down to genes (in this case a good story and a great script and the director’s ability to transfer it to film) but its long-term health and welfare, the ability to go out into the world successfully and confidently is down to a sound fiscal education, leadership and vision – that’s your job!

If you’d like to talk about your indie film project to someone who understands

Filed Under: Business Tagged With: finance, independent films, investment

How Covid is changing the Film World

November 13, 2020 by Ian Gibbon

Well, as already has been said, the most obvious change can be seen at your local Odeon, Everyman or cinema of any other name. They are closed. And, to counter this we are all watching masses of films and programmes from streaming services.

Guilty secret: I am getting hooked on ‘Schitt’s Creek’!  I wasn’t sure at first but it is catching hold of me.

Confessions aside, here are some of the key changes that Covid has made to film and TV productions:

Production Time

Production time is money, so all productions want to minimise their shooting schedules. These days, according to most producers I’ve spoken, shoots are taking on average 25-30% longer.  There are lengthy procedures to ensure film sets are compliant with Covid regulations.  Every time you move on a set, or move a lot, rigorous procedures need to be activated, and everything has to be sanitised.

Film Festivals and Markets

This is really bad, sad news, they are now all virtual.  Well, to be honest, it’s not all bad news.  No more awful waits at airports or eye watering costs travelling to, and staying at film festivals. Of course in a virtual world you can attend more, and far flung, festivals, those beyond your reach or budget pre-Covid.  But I did so much miss Cannes this year.  La Croisette, the networking events, the premieres, the food (especially the morning croissants), the wine (of course), but alright, not the rain!

Talent

A lot of older (only by age) talent has to be careful, and many of these actors are avoiding working where possible.  Also, I understand many of ‘A-listers’ who can afford to put their feet up and stay based in one place for a change, are taking this opportunity to take time out.  It’s worth noting that while the crew can undertake their work fully protected, that’s not possible for actors in front of the camera.

Independent Films

The push back from the major studios and big productions has no doubt opened up opportunities for the independent sector.  There is clear evidence of pent up demand for product. Some independent productions now have a greater opportunity to sell their films for wider release and get them shown in mediums that previously they would have struggled to break into.

On the whole the industry has proven its resilience. With welcome news of a vaccine what will the impact be, will everything revert, or will some changes stay in place? Watch this space…

Filed Under: Film News

Ronnie’s. Once Upon a Time in Soho

October 29, 2020 by Ian Gibbon

Together with another member of our media team Flora Windebank I attended the premiere of ‘Ronnie’s’ last week. Produced by Goldfinch ‘Ronnie’s,’ is a documentary telling the story of the world famous music venue Ronnie Scotts. It features archive footage and interviews, chronicling 60 years of the iconic Soho jazz club, from its beginnings through to the present day.

We enjoyed vintage footage of some of the greatest musicians to have graced any club in the past 70 or so years and the journey of the club from its original site in Gerrard Street to its current location in Frith Street. The human side of the story told the trials and tribulations of the club’s owners, Ronnie Scott and Pete King.

Ronnie Scott was the front man and public persona of the club whilst Pete King looked after the business side. The financial dynamics of running a club in Soho were far from smooth. In one interview Ronnie Scott tells the story of how a local gangster gave him a magnum of champagne and told him to open it when he had no more debt. He then proceeds to hold up the bottle covered in dust and says ‘It’s still here`

Ronnie Scott comes over as a lovely man, obsessed with music. One observer claims Ronnie ‘flew close to the sun.`

The film is written and directed by Oliver Murray. It’s packed with fabulous music segments from the likes of Ella Fitzgerald, Cleo Laine, Sonny Rollins, Sarah Vaughan and Miles Davis to name but a few. There are simply majestic interludes from Buddy Rich and Van Morrison performing with a frail Chet Baker. It also shows Jimi Hendrix at the club on the night of his untimely death.

Murray has done a tremendous job. He includes interviews with many family members, musicians and an over-arching narrative telling the story of Scott and King. The backdrop is the changing face of London and in particular its heart, Soho.

On a personal level I am privileged to have visited Ronnie Scotts many times. But watching the film a feeling of nostalgia made me wish I had spent even more time there.

In these difficult times it was a thrill to get back to London and watch a film in a public place, controlled in a safe, socially distanced environment at the marvellous Everyman Cinema.

If you enjoy good music, if you love London, if you want to see a great film-go hunt out Ronnie’s. I loved it.

 

Filed Under: Film News Tagged With: cinema, film, Ronnies

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