Memorandum submitted by Mr Stewart Till
CBE, United International Pictures (UIP)
I will shortly have the honour of giving evidence
to the Select Committee for Culture, Media and Sport in three
capacities. I am Vice-Chairman of the Film Council, Vice-Chairman
of Skillset but most importantly am Chairman and CEO of United
International Pictures, which is generally known as UIP. This
paper therefore focuses specifically on the importance of international
distribution to a viable film industry.
UIP is an international joint venture owned
equally by two of the Hollywood studios, Paramount and Universal.
As well as distributing the films of our two owners we also, through
Universal, receive the films of DreamWorks. It is unique not just
for being the largest film distributor in the world—we have
offices in nearly forty countries worldwide—but also for
being the only US studio international distribution operation
effectively run from the UK. The other important part of UIP's
business is the acquisition and distribution of product from independent
and other third party producers.
I know that this is something that you have
heard from previous witnesses and I want to endorse it: distribution
is absolutely fundamental to a successful film industry. The distributor
acts as the producer's liaison point in two important areas. It
is responsible for sales to exhibitors, and equally importantly
responsible for marketing the film to the general public. The
distributor's job is to work with the studio and the film's producers
to devise a marketing strategy and a plan to release the film
so as to attract the interest and reach as many of the public
as possible.
It is an expensive and extremely risky business.
As well as fairly high fixed overhead costs ( the costs are mostly
for personnel, who are often very specialised) it can cost anywhere
up to £3 million to release a single film in the UK. Release
costs (sometimes called "P&A costs" which stands
for prints and advertising) have tended to rise well ahead of
inflation.
This is driven by a number of factors. For example,
as more multiplex screens have been built, more prints (which
can cost not much short of £1,000 each) are needed; as media
outlets like television channels have multiplied, so has the coverage
required to gain the attention of the general public.
The distributor acts for the producer in the
market-place, using its local expertise to inform and guide fundamental
decisions such as whether to release a film and if so when. Timing
is a crucial factor in a film's success or failure. Many factors
have to be taken into account, not just obvious ones such as school
holidays or competing attractions like a big football competition
but also other films which may compete for the same audience or
occupy the optimum screens. The distributor will also shape the
marketing campaign and determine the release pattern in terms
of which exhibitors will be offered a print and when, all with
the objective of maximising revenues from each print of the film.
All of this can be very complicated to achieve
successfully even in one country. As I mentioned before theatrical
distribution (that is distribution of films to cinemas) is an
incredibly high risk business; anywhere up to eight films out
of ten can lose money in their theatrical release, and this has
to be compensated for by those that do make a profit. However,
as some of your other witnesses have noted, it is impossible these
days to build a model for a sustainable film industry based only
on revenues from one market. As a result, for a film to succeed
theatrically the distributor must achieve a profitable release
in a large number of markets across the world, often more or less
simultaneously. And if a film does not succeed theatrically, it
is most unlikely ever to succeed in later windows such as DVD
or television, the revenues for which are often geared directly
or, if not, almost always indirectly from the film's theatrical
performance.
Of course it is possible to distribute a film
in many different countries by using a different distributor in
each market. But there are enormous benefits in being able to
access distribution on a multi-national basis. A single distribution
structure, obviously with local expertise in every country, can
achieve the economies of scale necessary to assemble the required
marketing know-how, can work with the film makers to shape the
audience profile and can maximise the pan-national benefits of
advertising hype and publicity generated by the film and its stars.
There are only a small number of genuinely international
distribution companies, and as I'm sure you are already aware,
they are all, like UIP, related to one or other of the Hollywood
studios. This situation gives rise to a large number of conspiracy
theories, cultural or otherwise, but it should not. Like any other
industry, the film industry is interested in profits and it does
not care whether the films which help produce them come from the
United States, the United Kingdom or anywhere else. You will already
have heard from the most eloquent example of this, Working Title,
whose British made films have achieved international success through
their affiliation with Universal and thus UIP, which has distributed
films of theirs such as Bridget Jones's Diary, Billy Elliot,
About A Boy and most recently Johnny English.
Working Title are the best example of how the
British film industry can use international distribution, but
far from the only one. UIP has distributed British pictures like
Shakespeare in Love, Sliding Doors and until recently
all of the James Bond films, as well as films like Saving Private
Ryan and Tomb Raider, which were substantially made
here. And we are very pleased to be working with Nik Powell on
the international distribution of his latest film, Leo.
The Select Committee's brief is to examine whether
there is a British film industry and if so what shape it is in.
The answer, in my view, is that there is an industry which in
many respects is thriving, but also that there is much to be done.
It is vital that any changes concentrate not just on production
but also on distribution. UIP is happy to continue playing an
important role in this process.
6 June 2003
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