Building sustainable film businesses: the challenges for industry

We did not want to write a report about sustainable 

film businesses without taking a look of some of the 

key trends that might affect companies’ ability to 

become sustainable. Most of these are to do with 

trends observed in the various markets for  

film product.

7.1

Understanding today’s audiences  

for film

If the old mantra was ‘content is king’, then today’s 

world sees the consumer as queen. The explosion in 

social media has had a huge levelling effect on the 

way people see, use and absorb film. By 2015, 380 

million people globally will view online video via 

connected devices such as TVs, games consoles or 

set-top boxes

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 . This new flattened media world is 

affecting the traditional film industry too. 

Simply put, it is the consumer who will determine 

how the industry will grow rather than the industry 

pushing change on the consumer. 

This shift can be especially seen in the exhibition 

business, where cinemas can no longer rely on 

repeat business. With so many screens competing 

for people’s attention, cinema chains have innovated 

to retain customers. 

With an ageing population, chains such as Curzon 

in Britain, Village in Australia and Folkets Hus 

och Parker in Sweden have innovated to attract 

older patrons. Curzon, which operates a chain 

of upmarket cinemas across London, has talked 

about positioning itself as a niche premium brand. 

Australian chain Village runs sophisticated Gold 

Class Cinemas within its multiplexes. Rivals Hoyts 

and Event Cinemas have their own versions of 

the upmarket cinema screen concept with better 

seating and waiter service. In Sweden, Folkets 

Hus och Parker broadcasts live opera and ballet 

from venues including the Metropolitan Opera in         

New York. Incumbent Swedish multiplex operator 

SF Bio has targeted the opposite demographic, 

creating baby and toddler-friendly screens with 

softer sound and frequent breaks in the film for 

taking care of children’s needs. 

According to the World Health Organisation, 10 per 

cent of this ageing population will be aged over 

65 by 2025. This ageing population is affecting 

the kinds of films that are being made. In Britain 

in particular, the success of The King’s Speech has 

encouraged one sub-genre: films aged at filmgoers 

aged over 50. Distributors are chasing after the 

‘silver pound’. Tim Bevan, co-chairman of Working 

Title (Tinker Tailor Soldier Spy) believes this older 

audience is far more reliable than a younger one 

more interested in computer games

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. 

The changes going on in the global film industry 

are not only about encouraging consumers to get 

out of the home and into the cinema. This would be 

a subject for a whole separate report – consumer 

choice – in terms of formats and delivery systems, 

let alone the challenge to the industry of piracy 

and illegal download. Some related issues are 

addressed in following sections. But suffice it to 

say, film producers have the opportunity as well as 

the need to move closer to the ultimate consumer, 

and understanding (and predicting) consumer 

behaviour has become increasingly important for  

all forms of digital media content.

State of the markets 

Section 7.0

Building sustainable film businesses:

the challenges for industry and government

27

9.

 Cottle, Giles ‘OTT TV viewers to outnumber IPTV viewers in 2013’ 

Informa Telecoms & Media, March 22 2011.

10.

 Tim Bevan interview, October 31 2011. 

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7.2

Global markets meta-analysis

Despite deep recession in many countries, film 

has continued to demonstrate its strength as 

a consumer product. PricewaterhouseCoopers 

predicts that global entertainment and media 

spending will reach $1.9 trillion in 2015. Admissions 

in all major markets have recovered from a small 

slump in 2007-8, and gross box office has continued 

to grow year on year. 

As to which countries will experience the greatest 

growth over the next few years, the BRIC countries 

will, unsurprisingly, lead the pack. China is expected 

to experience the fastest growth. The Chinese filmed 

entertainment sector will grow by 217.6% between 

2010 and 2015, reaching $6.25 billion; India will be 

the second fastest growing sector, with revenue 

increasing by 66.8% to $3.1 billion; and Russia will 

be in third place with 66.1% growth to reach $2.55 

billion

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. Brazil meanwhile will see growth increase 

by 51.3% to $2.1 billion. 

7.3

Distribution trends

Distributors have benefited financially from the 

growth of Subscription Video on Demand (SVOD) 

services competing for new subscribers, pushing 

up prices paid for film rights. The prospect of SVOD 

services offering film buffs any film from catalogues 

running into thousands of titles is enticing greater 

viewership. 

In 2011 SVOD became more popular than free-

to-view/catch-up TV in the USA. Screen Digest 

estimates there will be 3.3 billion SVOD movie views 

in the USA this year, outstripping the number of 

physical rentals and DVD purchases combined

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. 

No wonder US streaming service Netflix was so keen 

to launch its UK online video service in January. 

However, Netflix faces stiff competition from 

incumbents Sky and LoveFilm, which has well over 

1 million customers alone. Informa predicts that by 

2015, 27 million people in the UK will be watching 

Over-the-Top (OTT) TV services, which also include 

the BBC’s iPlayer and YouTube

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. 

Independent producers will be hoping that these 

new SVOD platforms will give a lease of life to older 

library titles, generating additional income for them. 

Many, however, are likely to be disappointed. A 

recent Harvard Business Review study of Quickflix 

(Australia’s version of Netflix) found that the top 

10 movies accounted for 48 per cent of rentals. If 

anything the tyranny of the blockbuster could be 

getting worse.

7.4

Production trends

The sums involved in making Hollywood 

blockbusters are so astronomical (according to the 

Motion Picture Association of America, the average 

studio movie cost $106.6 million to produce and 

market in 2007, the most recent year for which 

figures are available) the six Hollywood studios 

have become ever more risk averse. That is why so 

many of today’s blockbusters are based on existing 

properties recognised by audiences. The audience 

does not have to be sold an original concept. 

Eighteen of the top 20 highest-grossing movies 

of 2011 were based on pre-existing intellectual 

property – either books, previous movies or, in the 

case of Pirates of the Caribbean 4, previous movies 

based on a fairground attraction. Only two movies, 

Bridesmaids and Rio, were written directly for  

the screen. 

The independent sector too has realised the value 

of films based on pre-existing properties. For 

example, Sweden’s Yellow Bird has mined the work 

of Scandinavian crime writers including Jo Nesbo 

(Headhunters), Steig Larsson (The Girl With the 

Dragon Tattoo) and Henning Mankel’s Wallander 

to adapt into films and TV series. These shows have 

been so successful that Yellow Bird has also co-

produced US English-language remakes of some 

of  the same properties. Independent producers 

mining existing properties (television, books) for 

film adaptation will be an increasing trend. 

Section 7.0  

l

  State of the markets 

Building sustainable film businesses:

the challenges for industry and government

28

11.

 PricewaterhouseCoopers Global Entertainment and Media Outlook 

2011-2015. 

12.

 Hooper, Richard ‘Latest Industry Trends’ Screen Digest/BSAC Film 

Conference 2012.

13.

 Cottle, Giles ‘OTT Viewers to Outnumber IPTV Viewers by 2013’ 

Informa Telecoms & Media, March 22 2011. 

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