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The Future of the Cinema

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It is now 8 weeks since the UK went into Lockdown. Conversations have changed incredibly during this time-from `Why are there no trains at Waterloo this evening?’ to ‘Where can I get hold of some flour?`

For many office-based workers conversations speculate whether the five day commute will become a distant memory. It is fair to say that technology came just in time!

Another game-changer is the future of cinemas. We are already seeing major strategic changes.

‘Trolls World Tour’ was released online in April by Universal Pictures. It has created a promising future from the cinema chains, AMC and Cineworld, but I can see that these and other chains are going to be forced to adapt and/or compromise. More frighteningly some may not survive. This is the fallout whenever an industry is disrupted. The revenue generated ‘Trolls World Tour’ was $95m in its first three weeks, down from the $125m earned from the previous Trolls movie.  But.. and it’s a big but……Universal do not have to share its earnings with the theatres.

Even as the USA comes out of lockdown cinema attendance will be low with social distancing rules. Meanwhile, streaming companies are hungry for content to keep subscriber numbers on an upward trend. This year the Oscars will admit films that have gone straight to streaming (without the prerequisite of a theatrical release). The Academy says this is a one-off, but I wonder!

All is not lost for the cinema. This is the natural habitat for the big tent pole movies, the likes of ‘Fast and Furious’ and ‘The Avengers’. Interestingly the top 10 Movies last year at the box office were remakes or part of a franchise. How different is that to when I started to go to the Cinema? Let’s not go there!

However, cinema needs new ideas and actors need dynamics which will not necessarily be catered by the Hollywood blockbusters, I see these projects particularly being made for streaming

Whatever happens over the next few months, I can’t see how there won’t be a seismic sea change in the industry.

We are all streaming now – the impact of the pandemic on the media sector

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Coronavirus is creating havoc worldwide. The health implications remain uncertain and challenging whilst it is causing havoc for the global economy.

However, consistent with all economic cycles, whilst many businesses fail, for others the cataclysmic conditions offer opportunity. One of the big winners at present in the Media sector are the Streamers. At a time when cinemas are closed and we see the awful plight of Cineworld, caught up with a debt mountain and no business coming through the foyers, the likes of Netflix, Disney and Hulu are booming.

Talk to almost anyone on Zoom, Teams or Houseparty and the conversation will turn to how they have discovered the of the joys of say Money Heist or they are catching up at long last with ‘The Sopranos.’ This TV drama centred on an American-Italian family is, in my opinion, the greatest TV box set, so don’t miss the opportunity to catch it.

Disney is now already up to 50m plus subscribers, well you have to keep the kids happy during the lock down; whilst Netflix is seeing a huge increase in subscriber numbers and let’s face, you do get great value for money.

And now here’s the question. The world no doubt will look different when we come out of this crisis in many many ways, will this apply to cinema and the way we access and view content?

Mickey Mouse is ready to roar

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Disney launches its new strategy service in the UK on 24th March. There is a pre-launch offer of £49.99 for the first year, the equivalent of £4.17 a month.  After then standard charge will be £5.99 a month. This is similar to the basic Netflix fee and compares to £7.99 per month to Amazon Prime. The channel will probably initially appeal to a younger audience.

The Marvel and Star Wars products will feature heavily, whilst there will be a Star Wars spin off- Rogue One. Further Marvel products will include The Falcon and The Winter Soldier, due to be released in August.

There seems little content for an older audience being made or shown initially. Although there is an interesting offbeat series, The World According to Jeff Goldblum where he pontificates on various random everyday objects such as trains, ice cream or coffee.

Knowing Disney’s past successes, the channel will be a winner, especially when shows that are currently licensed to other streamers are made available to Disney.

Greetings from Berlin

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David Gibbs, Alliotts Media Partner, has spent the last three days in Berlin holding non-stop meetings with UK and overseas producers at the European Film Market.

The appetite for producing in the UK is unabated. Producers are reassured that there is no indication that the new government will change the tax breaks in the UK at the next Budget on 11 Mach. What concerns producers a little more is the impact of immigration rates in the future, but we cannot see any dramatic impact at present.

The Berlinale International Jury president, Jeremy Irons wowed the press at the opening day with a hilarious speech on his past perceived transgressions.

On the film front, ‘Hillary’, the epic documentary about the life and career of past presidential candidate and former first lady Hillary Clinton looks to be engrossing viewing and is sure to receive a lot of attention. The total running time in Berlin was 252 minutes but it is due to be broken down for TV into 4 episodes. And yes- the Lewinsky affair is mentioned.

 

 

No room at the inn?  Well not for film producers!

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The economic boom of the film and TV sector in the UK is putting immense pressure on the availability of studio space.

Netflix, which last year spent over £400m making films and TV series in the UK, has signed a long term lease with Shepperton Studios. Disney has all but taken over Pinewood Studios.  If a producer wants to book a studio shoot and/or a take a studio base in the UK, space is at a premium.

Showing terrific entrepreneurial flair, several of our clients have, or are considering, converting various properties, such as warehouses and barns, into studios.

This week Blackhall Studios based in Atlanta USA, announced it is building a £150m major production complex in Reading, Berkshire.  The studio, which will become the third largest in the UK, will create 1500 jobs and support a further 3000 jobs. Blackhall has been involved in blockbusters including Jumanji: The Next Level, Godzilla and Venom.

The UK remains highly attractive to production companies as it encompasses, a generous tax incentive in the form of UK film tax credits; an enviable array of filmmaking talent; a generally comfortable social culture; and a stable economic environment.

The Rise of the Filmtrepreneur

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Filmtrepreneur is a moniker used by filmmaker Alex Ferrari in his podcasts and his book where he explains how to make money from making indie Films.

There is a phenomenal growth in content consumption with new providers entering the market weekly. According to BFI statistics 2019 was the second biggest year for revenue received from the Box office with £1.254 Billion coming through the doors. The market share of independent UK Films in the box office increased slightly in 2019, there was a much larger increase if you include studio backed UK Films. With this wonderful news coming out of the sector why are Filmmakers often having to choose between making films or making ends meet?

The UK Business Angels Association (UKBAA) recently hosted an event on Investing in Innovation and Creativity where I got to talk with people who were considering investing in the industry, many of them had a portfolio of investments but none in the creativity industry. It was a revelation to hear several production companies pitch to them.

There was something different going on, these weren’t the kind of pitches I was used to hearing from producers. Not one of them mentioned an individual project or a slate.

These pitches were full of forecast statements and cash flows. Producers were talking about investing in their companies to allow them to hire staff and bring more of the filmmaking process in-house, which would make films cheaper and quicker to make. These pitches were very similar to those you hear from a Tech company during a funding round.

These investors were looking for long term success, they wanted to know the teams behind the businesses. They weren’t interested in investing in a single project, they wanted to hear how you planned to make 4, 5 or 6 projects over the long term. The goal posts have moved and investors in the industry expect more from those they are investing in.

I often hear producers talk about raising money for a single project. This way of raising funds has been made much harder since HMRC changed the rules and have now virtually stopped giving EIS and SEIS advance assurances to production companies. This is backed up by a report on ‘The State of Independent British Film’* published by the BFI in 2018 which concluded ‘the traditional business model for independent film is no longer fit for purpose’.

Long term thinking and building a sustainable profitable company is now essential to a filmmaker’s long-term success.

Creating amazing commercial projects will always be important, but it is now evermore important that you join that with running a company like a true Filmtrepreneur.

 

*Report by the BFI https://www.bfi.org.uk/sites/bfi.org.uk/files/downloads/bfi-commission-on-uk-independent-film-2018-07-18.pdf

The TV and film sector come to the rescue of the UK economy

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It was just like a cliff hanger scene in a film. Britain was on the brink of an ‘official recession,’ which is defined by two consecutive quarters of negative growth. It shrank by 0.2 percent in the second quarter and was expected by most leading economists to shrink in the third quarter. And then…the film and TV industry came to the rescue.

Output rose by 0.3 percent in the third quarter due to the film and TV industry outperforming the broader service sector. Furthermore, the film and TV industry has been outperforming other services for over two years and is making the single largest contribution to growth.

From 2010 to 2017 the size of Britain’s creative industries grew by 53% – twice as fast as the overall economy. There are numerous reasons for this incredible success story. The major streaming services and studios, who have what seems unlimited deep pockets, have ploughed investment into the UK. Netflix has effectively taken over Shepperton and Disney has struck a 10-year deal with Pinewood. Meanwhile, Warner continues to expand at Leavesden.

Apart from having the simple advantage of being an English-speaking nation, the language most in demand for film and TV, there are generous tax incentives for producers. A qualifying eligible UK production will attract a tax refund (yes- cash in hand) of up to 20% of the total budget. That is a generous by all international standards.

So why the big investment into film and TV? Well, it’s simple, people have more time to view content and can view on the go by using mobile devices such as phones and iPads.

In 1870 the average full time working week in Britain was 60 hours. If that sounds tough, just think about the Americans who were working 66 hours a week, whilst the Germans, perhaps not unexpectedly, worked even longer weeks 70hours. Today, the Chartered Institute of Personnel and Development calculate the average UK working week to be 40 hours.

Back to the film and TV industry, it is of note to observe that the industry contributes £1 in every £8 of the UK’s exports and employs two million Britons of which 87% are reckoned to be robot proof. The Times leader on 11th October noted that machines might replace train drivers, accountants, and even reporters but they cannot replace Patrick Melrose.

Well done you creatives! Let the show run and run.

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