Examination of Witnesses (Questions 600
- 610)
TUESDAY 7 NOVEMBER 2006
UK FILM COUNCIL
Q600 Alan Keen: You talked in the
submission about going from cinema to DVD, pay TV, free TV and
you said that might go down to just two. I know you are hoping
deeply that it is cinema and then, I presume, video on demand
or films on demand?
Mr Till: Yes, I am sure you are
aware the current cycle is cinema, four months to DVD, 12 months
to pay television, and then another 12 to 15 months to free television.
Then obviously there is catalogue and syndicated cable value.
With video on demand it will get much, much more complicated.
I personally think—and this is a personal point of view,
the Film Council has not got an official point of view yet, we
are still debating it—it is also worth stressing that it
is not today's issue, it is tomorrow's and the day after's issue
because video on demand is not widely available at this point
in time. It is coming, but it is tomorrow and the day after. I
would hope that you would launch theatrical and you would keep
that whole value of the cinema and then the three to four month
window seems appropriate to differentiate it and then you go video
on demand. At the same time it is available on DVD because the
consumer still, as the music industry has found, in large numbers
wants a finished package or product to own. Even then, there will
still be a value for pay television because people still want
movie channels, a lot less than now because of video on demand,
but, after Sky, video rental still existed in this country and
there will still be some value on free television. The broadcasters
in this country absolutely have a critical part to play going
forward. We must learn from mistakes with Sky on pay television.
I think it is very significant at the moment that in the last
12 months we have had very good conversations with the BBC who
said they appreciate in this changing landscape the value of film
to their schedules as a broadcaster, and they have dramatically
increased several-fold their commitment, subject to a satisfactory
licence fee agreement, going forward to British film. I would
like to think we are in the middle of a dialogue with Channel
4, the other public service broadcaster, and we have said to them,
"Look, you particularly have always been very film aware.
You have taken your pay film channels and free channels and in
many parts you are a broadcast entity in your own right, but as
a window into video on demand we believe that you Channel 4 as
a public service broadcaster have to get much more supportive
of British film," and we are a little frustrated at a time
when they are saying they do not agree with us that they are doing
a 250 million deal with News Corporation Twentieth Century Fox
for American films. One of the Film Council's priorities over
the next few months is to encourage and persuade Channel 4 to
be much more supportive of British film in this changing landscape.
Q601 Alan Keen: We have gone from
very large screens to tiny screens. We saw in South Korea live
TV on mobile phones from satellite and people on trains getting
their own service. Have you any thoughts of film going out at
that level? It is new media we are looking at in this inquiry.
Mr Till: What we have found in
the last 20 years in this country is the consumer really enjoys
film as an entertainment medium as much as anything else and they
will absorb it wherever they can. Obviously the telephone screen
is not suited necessarily to the production values of a huge film,
but I think the consumer has such loyalty to film they will still
embrace it on telephones. Also the mobile telephone is an incredibly
valuable marketing tool to market films, so at the very least
it is a fantastic market medium.
Q602 Helen Southworth: What impact
are high-definition television and plasma screens having now and
what impact are they going to have in terms of film?
Mr Till: Predictably because film
is a medium which usually has higher production values, by definition
it will benefit more than most from the quality of the viewing.
The DVD player and the high-definition television and these big
home screens are tailor-made for film.
Q603 Helen Southworth: Is it increasing
the market at the moment?
Mr Woodward: If behind your question
is a suggestion that the availability of big plasma screens in
the home means possibly people will not go out to the cinema in
future, we do not believe that.
Q604 Helen Southworth: No, what I
was actually asking was will they also be wanting to see things
fast at home?
Mr Woodward: Yes.
Mr Till: Fast?
Q605 Helen Southworth: Rather than
waiting 12 months?
Mr Till: That is video on demand,
that is why personally I think three to four months on the back
of theatrical, as I said before, is the optimum window. They will
not wait 12 months for a pay television channel, but I believe
they will wait three to four months and then very much enjoy the
experience, going back to the point earlier about how you can
have a two or threefold increase in the video rental marketplace
which in itself is pretty buoyant.
Q606 Paul Farrelly: Could you just
remind me how cinema attendance figures are stacking up at the
moment compared to, say, five or 10 years ago?
Mr Till: This year there has been
a little blip in the UK and they will probably be down—obviously
we do not yet know—5% to 10%, but in the previous four years
there has been growth.
Q607 Paul Farrelly: So there is no
downturn trend?
Mr Till: Not at all. What has
been really interesting is we have found throughout Europe that
there has been a pretty steady growth over the last five years,
with peaks in years where the country does very well with its
local films, so some of the bigger European markets had a soft
2005 because there were not many successful local Italian films
in Italy and German films in Germany, but this year it is the
other way round so Europe has had a very good 2006. The UK just
from a timing point of view has had a slightly softer 2006 with
British films, although the Bond film may single-handedly change
that, compared to 2005. As long as local films are strong, which
is obviously very important for the British film industry, there
is an increase in cinema admissions throughout the UK and Europe.
Q608 Paul Farrelly: I asked the question
because I have got one of the excellent briefs from the Clerks
here which talks about video on demand, which we have touched
on, and then goes on to the catch-all question very gloomily:
"What will cinemas need to do to survive?" It is not
immediately clear to me that video on demand as a new medium through
either cable or satellite or streaming through the internet will
necessarily eat into cinema attendances rather than other formats
such as DVDs. The industry has gone through a number of formats.
I will take my son and daughter to watch a film and afterwards
you would not buy them the video but you will buy them the DVD
because the little blighters will pester you because they want
the interactive Thunderbirds games to play, so that has lifted
the income to the film industry. I am not quite clear, are there
competitive pressures inherent in media such as video on demand
that will push producers and distributors to release everything
at the same time?
Mr Woodward: I think you are at
the core of the issue here. If you own a cinema you only have
one way of making money. Well, you have two because you can sell
popcorn and run concessions, which is an important part of the
business. But leave that to one side and you only really have
one way of making money, which is for the limited period of time
in which the film is available only in cinemas, you hoover up
as much money as you can by bringing as many customers in through
the door. Once the film is out on any other medium, be it DVD,
video on demand or television, your audience will drift away.
So if you are a rights' holder as opposed to a cinema owner you
have more choices and more options and you are able to say, "In
order to maximise my revenue, how long do I want to put it in
the cinema for and create a massive marketing campaign and, while
there is still a halo effect around all the advertising money
I have spent, how quickly do I want to take the product out on
to DVD now and video on demand in the future?" That is the
crux of the issue because the danger the cinema owners will say
that they are facing potentially is that their window of exclusivity
is being squeezed by rights' holders who want to get the product
out to other media as quickly as possible, and that takes us to
the question of what is the flexibility, where is that balance?
Q609 Paul Farrelly: Their share of
the profit is going to be under even more tremendous pressure
as a cinema owner?
Mr Woodward: That is correct and
the fundamental point about the UK is, unlike countries like France,
there is no regulation or any legislation around these window
period times. It is entirely a matter for the market to decide
in negotiation between the rights' holders who own the films and
the cinema owners.
Q610 Chairman: Can I thank you very
much.
Mr Till: Thank you.
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