June 2012
Building sustainable film businesses:
the challenges for industry
and government
An independent research report
from Olsberg
•
SPI
sponsored by Film i Väst,
PACT and the
Swedish Film Institute
© 2012 Olsberg•SPI
For further information please contact:
Jonathan Olsberg
Olsberg • SPI
Suite 36, Pall Mall Deposit Studios
124–128 Barlby Road
London W10 6BL
United Kingdom
t +44 (0)20 3176 4844
e jonathan@o-spi.com
www.o-spi.com
This report was prepared by the UK-based
international strategy consultancy
Building sustainable film businesses:
the challenges for industry and government
3
Building sustainable
film businesses:
the challenges for industry
and government
An independent research report
from Olsberg
•
SPI
sponsored by Film i Väst,
PACT and the
Swedish Film Institute
Building sustainable film businesses:
the challenges for industry and government
4
Foreword from
the sponsors
The challenge of creating sustainability in the
independent film sector is an issue for every
country, not just Sweden and the United Kingdom.
The structure and economics of film production
are not particularly well suited to building
sustainable companies wherever one is situated
around the world. Although this is a problem easily
recognised, it is far from clear how to address it let
alone devise solutions, whether for the companies
themselves or those public sector agencies which
support the film industry.
So when we were approached by Jonathan Olsberg
with the request to sponsor a new, thorough study
into the topic we immediately saw an opportunity.
Not just to get the report written, but also to
stimulate a discussion on a much wider platform
both within Sweden and the UK and around
the globe.
We hope that you, the reader, find the report to be
a useful contribution to the debate. We certainly do
and we are eager to engage in that debate with you.
Section 10 of the report contains information about
our organisations and how to contact us and we
look forward to seeing the dialogue expand.
Tomas Eskilsson
Chief Executive
Film i Väst
John McVay
Chief Executive
Producers Alliance for Cinema and Television
Charlotta Denward
Director of Production and Promotion
Swedish Film Institute
Introduction from
Jonathan Olsberg
Ever since we opened our doors in 1992 the
question of how to find the elusive solution to
creating viable, sustainable, independent film
businesses involved in feature film development
and production has been constantly on our minds.
Is the idea of a healthy, vibrant, independent film
sector a holy grail that can never be achieved? How
do film companies become successful, wherever
they are situated around the world? And how can
governments adapt their policies to achieve greater
sustainability in the light of uncertainties over
financial realities and digital change?
We wanted to take a fresh look at these issues and
provide our own thoughts and hopefully some
solutions, hence this report.
We are hugely grateful to our three sponsors, Film
i Väst, PACT and the Swedish Film Institute for their
interest in the topic and willingness to make this
report possible, although we take full responsibility
for its contents. We thank them for permitting us
to express our own opinions and perspectives and
hope they are pleased that they did so. Do they
endorse all of our views – you’ll have to ask them!
SPI has been examining the issue of sustainability
for many years on behalf of its clients wherever they
are around the world. This has involved advising
individual companies on their plans for growth and
helping public agencies support independent film
businesses without making them totally dependent
on public subsidy.
The problem is a perennial one, and will not be easy
to solve, particularly in the current financial climate.
However, it is the tough economic environment
itself which has led us to believe that now is
absolutely the right time to look afresh at the issue
of sustainability. The global financial crisis has led to
very deep cuts, in many countries, in public funding.
So perhaps now it is even more relevant to stimulate
renewed efforts to help the film industry establish a
refreshed business model; a model which will enable
successful companies to leverage investment from
the private sector and therefore lessen dependency
on the public purse.
Building sustainable film businesses:
the challenges for industry and government
5
Contents
Section 1.0
Executive summary
8
1.1 Introduction
8
1.2 Research and information
provided in the report
8
Section 2.0
Building sustainable
film businesses
9
2.1 What is a sustainable film
business?
9
2.2 Definitions of sustainability
9
Section 3.0
Success factors for building
sustainable film businesses
10
3.1 Sharing in downstream
revenues generated by
successful content
10
3.2 Achieving diversified
revenue streams
11
3.3 On-going relationships with
successful talent
11
3.4 Strong, dynamic leadership 12
3.5 International and corporate
business relationships
12
3.6 A supportive and consistent
public policy environment
13
3.7 Having more than a fair share
of luck!
13
Section 4.0
Why Governments invest
in the film sector
15
4.1 Production spend:
the ‘Multiplier Effect’
15
4.2 Employment generation
16
4.3 Skills and talent development 16
4.4 Direct investment return
17
4.5 Export earnings
17
4.6 Increased tourism
18
4.7 National brand building
18
4.8 Film as a driver of the
creative economy
18
Section 5.0
Public support for film
19
5.1 Current trends in incentive
‘rivalry’
19
5.2 Tendency to focus on projects
over companies
20
5.3 European Competition Policy
(State Aid)
21
Section 6.0
Success factors for public systems 22
6.1 A holistic range of initiatives with
consistent levels of support 22
6.2 Project-based support that
motivates activity by
rewarding success
23
6.3 Where broadcasters are
mandated to invest in
independent content
25
6.4 Uses of levies and quotas
25
6.5 Systems that combine well
with those in other countries 26
Section 7.0
State of the markets
27
7.1 Understanding today’s
audiences for film
27
7.2 Global markets meta-analysis 28
7.3 Distribution trends
28
7.4 Production trends
28
7.5 Public source funding
30
Section 8.0
How digital innovations are
changing the film business
31
8.1 Understanding fast-moving
changes in consumer
behaviour
31
8.2 New opportunities to create
relationships with brands
and the advertising world
32
8.3 Evolving patterns in windows,
formats and other forms of
‘distribution’
33
8.4 Breakthroughs in digital
production
34
Section 9.0
Where do we go from here?
35
9.1 Achieving ‘investment
readiness’
35
9.2 Think company not project
35
Section 10.0
About the sponsors
36
Section 11.0
About Olsberg
•
SPI.
37
Section 12.0
Appendices
39
10.1 Australia
39
10.2 Brazil
41
10.3 France
43
10.4 Germany
45
10.5 Singapore
46
10.6 Sweden
48
10.7 United Kingdom
50
Thanks
54
Building sustainable film businesses:
the challenges for industry and government
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