Building sustainable film businesses: the challenges for industry

List of tables

Figure 1: 

 Company strategies  

- success factors 

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Figure 2: 

 

A comparison of selected rebate 

incentives targeting international 

mobile productions 

19

Figure 3: 

Support systems success factors  

- project based support 

24

Figure 4: 

US box office gross 

29

Figure 5: 

 

Filmed entertainment revenues by 

country/region 2010-2015 

30

Figure 6: 

 

Distribution windows  

(months after theatrical) 

33

Building sustainable film businesses:

the challenges for industry and government

7

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Executive summary

Section 1.0

1.1 

Introduction

This report presents a case for a renewed effort, 

by film production businesses in tandem with the 

screen agencies that support their activities, to focus 

policy on building sustainable film businesses. Such 

focus is already evident in a few such organisations 

and indeed (in our view) the sponsors of this report 

are among those that recognise the benefits of 

helping companies achieve long term success and 

develop robust, sustainable business models.

Regrettably, we cannot offer the reader one chapter 

which neatly summarises all the answers. This is 

because there is no ‘one size fits all’ solution. So 

it may be necessary to dig around a little to find 

indicators of solutions that could apply in the 

particular country or region in which the reader  

is based.

Some common themes do emerge however and 

they are analysed more deeply in the following 

chapters, such as:

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  The suggestion that owner/managers of film 

businesses might in future think of themselves 

not as people who make great films, but as 

people who run businesses that make great films

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  The fact that there is much talk about 

sustainability without necessarily defining what is 

meant by it – two different definitions are offered 

in this report; the Investment Ready definition 

and the Maintained Stability definition

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  The fact that there are consistently recognisable 

factors common to film businesses that have 

reached a regular level of success

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  And there are also a number of consistent 

factors that can be discerned in public support 

systems around the world that also contribute  

to this success.

1.2 

Research and information provided  

in the report

In addition to the chapters which address those 

themes mentioned above, the report also contains 

some research and other information about subjects 

that are relevant to the core goal of company 

sustainability. This additional research we hope will 

be helpful as background to the main findings of 

this report.

They include:

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  A discussion and explanation of the many 

benefits that accrue to governments as a result  

of having a thriving film sector

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  A brief examination of current trends that can be 

observed in public policies aimed at the sector

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  A high level analysis of the state of the global 

markets for film and some of the developments 

that are occurring

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  A look at how digital innovations are continuing 

to change the film producer’s options and 

opportunities, and finally

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  An examination of conditions in seven countries 

where we have observed some of the most 

interesting policy and business tendencies: 

Australia, Brazil, France, Germany, Singapore, 

Sweden and the United Kingdom.

As our kind sponsors make clear in their foreword,  

all of us involved with this report are keen to see  

the debate expanded so that the notion of company 

development, in order to reach sustainability, 

becomes closer to centre stage in policy discussions 

and strategy formulations, wherever one is located 

around the world.

Building sustainable film businesses:

the challenges for industry and government

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Building sustainable  

film businesses

Section 2.0

2.1 

What is a sustainable film business?

It has been understood for some time that much of 

the independent film sector operates on a broken 

business model. The dominance of the US majors 

means that independent film struggles for market 

share, is highly risky and delivers relatively low 

rewards. Access to production finance is difficult for 

independents. Highly complex multi-party funding 

structures are required, and producers are forced to 

surrender most or all of their intellectual property 

rights to investors and trade partners in order to get 

a film made. This leaves them with little -- if any-- 

access to revenues generated from the distribution 

of the film, and prevents them from building on 

prior success since they are left with no equity to 

invest in future projects.

In order to address this problem, SPI has been 

conducting fresh research into factors that 

contribute to the success of those independent film 

businesses which have achieved sustainability in 

some form. 

For the purposes of this report a ‘film business’ is 

defined as an independent company undertaking 

feature film production as its core – but not 

necessarily only – activity. 

2.2

Definitions of sustainability

SPI has developed two possible broad definitions of 

the term ‘sustainable’ in relation to film businesses. 

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  ‘Investment Ready’ One generic indicator of a 

successful business is when a company can be 

considered to be ‘investment ready’. This market-

driven definition could be applied to any growing 

small to medium sized enterprise in any sector, 

not just in film, if it meets the criteria.

Investment readiness depends on an examination of 

the financial strength of a business, as indicated by 

its financial statements including revenue forecasts. 

Where a company can show a robust financial track 

record and growth potential sufficient to attract 

private corporate finance (whether debt or equity), it 

can be considered to be ‘sustainable’. 

Nevertheless, there are film businesses which are 

considered both sustainable and successful  

without meeting this very commercial definition.  

An additional, alternative definition of sustainability 

is therefore required.

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  ‘Maintained Stability’  ‘Maintained stability’ 

describes the kind of sustainability seen in 

companies that do not have the financials to 

meet the ‘investment ready’ definition. However, 

they are able to produce high-quality films 

on a regular basis, by relying on some level of 

consistent public subsidy support. 

These businesses have demonstrated that they 

are able to continue to supply films to the market 

over a sustained period, in countries where public 

subsidy of production is an important part of the 

film ecology. Their reliance on public assistance is 

therefore more a result of the system in which they 

are operating rather than any financial or corporate 

weakness. 

The key indicator of this kind of sustainability is  

that the films being produced meet a market 

niche. This is to say that there is a proven audience 

for them, and the production company clearly 

understands its market and consistently produces 

films that meet these audiences’ needs, although 

the commercial returns might not be substantial. 

This definition would therefore include companies 

producing films which may be considered to be 

more ‘cultural’ than ‘mainstream’. 

Building sustainable film businesses:

the challenges for industry and government

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