Letter from the Film Distributors' Association
1. ABOUT FILM
DISTRIBUTORS' ASSOCIATION
1.1 Film Distributors' Association (FDA),
formed in 1915, is the trade body representing the generic interests
of the UK's theatrical film distributors. These are the companies
that release films in cinemas and promote them to audiences, thereby
setting in motion the value chain that propels the film economy
and renews and enhances film culture in the UK.
1.2 FDA's 21 member companies account
for 96% of UK cinemagoing. We are grateful for the opportunity
to contribute to your current call for evidence. Our submission
is restricted to relevant aspects of film, not broadcasting.
2. Your question: What does the UK film industry
currently contribute to the UK economy and British culture, and
how might this contribution be enhanced?
2.1 Distributors, acting under license on
behalf of filmmakers and financers, bring the finished films to
market, launching and sustaining them and delivering the audience
to local cinemas. In connecting films with their audiences, distributors
serve as the Iynchpin of the film business value chain. In 2008,
UK citizens purchased 164.2 million cinema tickets, 1.1%
more than in 2007, equivalent to 2.7 visits per head of population.
2.2 There is an economic multiplier effect
triggered by film distribution, as well as production. UK distributors
invest more than £300 million per annum in releasing
films—approximately one-third of gross box-office receipts,
which amounted to £854.3 million in 2008. Overwhelmingly,
as a result of distributors' campaigns, UK cinemagoers know in
advance which film they want to see. Therefore, the true impact
of film distributors' investment in motivating cinema-going must
also measure the directly related consumer expenditure
in addition to the tickets themselves.
2.3 On average, each cinemagoer spends £7.50 during
a visit in addition to their tickets, including transport, food
and drink inside or outside the cinema. This equates to approximately
£1.3 billion of spending per annum. Furthermore, 15-20%
of DVD/Blu-Ray sales and 8-12% of video rentals are of films which
their purchasers had previously paid to see at the cinema. This
adds a further £350 million of annual expenditure as
a down-stream impact of theatrical distribution, bringing the
overall economic impact of UK film distribution to approximately
£2.4 billion, of which only one-third is cinema ticket
sales.
2.4 The top three films in UK cinemas in
2008 were all UK/US co-productions: Mamma Mia! The
Movie, Quantum of Solace and The Dark Knight,
The first two were made at Pinewood Studios, while all three
had writers, directors and actors from the UK and Europe. In December
2008, five months after its release, Mamma Mia! became
the UK's highest-grossing hit of all time (£69.1 million
box-office receipts, equivalent to approximately 14 million
admissions). An initial theatrical release is a proven model for
generating the largest possible audience overall, propelling consumption
in other formats. In the home entertainment sector, Mamma Mia!
Duly became the UK's best-selling DVD of all time, the first
title ever to sell more than five million copies.
2.5 Inevitably, the most successful films
in the cinema tend to be business franchises with multi-media
outlets. The most watched films broadcast on terrestrial television
in 2008 were all parts of franchises; often their transmission
coincided with a new entry in cinemas. The top four were: Harry
Potter and the Goblet of Fire (7.7 million viewers
on ITV1, Sunday 5 October 2008); Indiana Jones and the
Last Crusade (7.5 million viewers on BBC1 on Sunday
18 May); Pirates of the Caribbean: Dead Man's Chest
(6.9 million viewers on BBC1 on Friday 26 December);
and The Chronicles of Narnia: The Lion, the Witch and
the Wardrobe (6.5 million viewers on BBC1 also on
Friday 26 December).
2.6 But there is much more to the UK cinema
market than UK/US films. In 2008, for example, UK distributors
acquired and released films from at least 43 countries, including
France, Japan, Brazil, China, Canada and Australia. According
to FDA records, approximately 48% of 2008 releases had the
US as their country of origin and 19% the UK. 16% came from elsewhere
in Europe, 16% from Asia, and 1% from other territories.
2.7 The official share of box-office accounted
for by UK productions/co-productions in 2008 was 31%, up
from 28% in 2007. As well as the year's top three releases (noted
above), UK films that performed strongly in 2008 included
The Duchess, The Boy in the Striped Pyjamas and Son of
Rambow. Around 1.5% of UK box-office is accounted for by
Bollywood films, a significant niche segment of the market.
2.8 The UK Film Council has a Prints &
Advertising (P&A) Fund to support the release of "specialised"
films in UK cinemas. It is an important and appreciated fund of
£4 million a year, increased in 2007 from £2 million
a year partly in response to lobbying from FDA. But it remains
a poor relation: we estimate that, since the Film Council's inception,
less than 5% of its expenditure has been directed at supporting
distributors' P&A. And this at a time when digital distribution
is starting to enable the wider releases of niche content. Of
course the Film Council has many priorities, but we feel that
even a modest redressing of the balance in favour of audience
development (distribution), rather than supply (important as that
is), would serve further to raise public awareness of, and interest
in, non-mainstream titles.
2.9 Investing in distribution, when
a completed film's audience potential can be assessed more readily,
is arguably a less risky application of public funds than investing
earlier in the life cycle.
3. Your question: How do current UK arrangements
for the distribution and exhibition of films affect the commercial
success of the film industry?
3.1 Dynamic market: The UK cinema market
is characterised by an abundant, regular supply of new releases
and rapid churn. No fewer than 531 films were released in
2008, compared with 525 in 2007. There has been a significant
increase in supply during the current decade to an average of
more than 10 new entries a week.
3.2 Congested market: Films were distributed
by no fewer than 92 sources in 2008, compared with 73 in
2007. Competition has intensified as a glut of suppliers seeks
to fill or expand the market. This may be facilitated partly by
digital releasing, which can reduce the physical costs of distribution,
though does not necessarily do so.
3.3 Securing release dates and available
screens to afford any film a little breathing space in the market
is extremely tough. It is nevertheless important: as noted, break-out
theatrical success has a positive impact on prospects along the
value chain. In 2008, 130 films achieved a box-office gross
of £1 million or more, while each of the top ten grossed
in excess of £20 million. The top ten accounted for
just over one-third (36.5%) of consumer spending at the box-office.
An impressive opening weekend matters for every single release,
as the softest performers must inevitably make way for new entrants.
3.4 D-cinema: Over the next 5-10 years,
digital distribution will increase. Currently 10% of UK cinema
screens are equipped for digital presentation, succeeding the
long-established industry standard of 35mm projection. Digital
enables much greater flexibility of programming as well as an
image on screen that does not deteriorate due to wear and tear.
3.5 Digital represents a big opportunity
for UK cinema; also a short—to medium-term threat. In the
current transitional phase, distributors may have to pay twice
(35mm print and digital copy) to keep a film in a cinema with
mixed projection across its screens. And although digital copies
are considerably less expensive than 35mm prints, a pre-requisite
digital master can be very costly. Distributors have no interest
in cinemas closing, usually of course quite the reverse; but some
traditional community cinemas in particular may struggle to raise
finance for the transition to digital projection systems that
may be needed for future trading.
3.6 "Digital Britain": Cinemas
provide an important part of the "media and cultural mix"
for UK citizens, although as noted in 3.4 above, 90% of screens
presently remain "analogue" (35mm). Unlike digital switch-over
in UK television, which demands a change of equipment in 21 million
households, digital switch-over in UK cinema would involve just
650 cinema sites—the entire UK infrastructure. With
the prize on offer being pole position as the world's first fully
digital cinema nation, a transition fund that offers specialised
cinemas and distributors a bridge into the digital age would be
welcome and productive.
3.7 Separately, digital technology has made
it much easier to duplicate and disseminate good quality copies
of a stolen film. Industry research indicates that more than half
a billion pounds was lost to the UK's audio-visual industries
last year alone due to film theft. A growing threat to legitimate
business, digital piracy has well-known links with serious, organised
crime. Accepting reasonable responsibility to safeguard intellectual
property, FDA invests substantial resources—both funds and
time—in the efforts to combat theft and instil a wider appreciation
of copyright among UK citizens.
3.8 We seek government intervention here
too: it is imperative that, as in other countries, camcording
is made a criminal offence in the UK, that trading at occasional
markets is regulated in the public interest, and that internet
service providers take appropriate, graduated action against unlawful
file-sharing.
4. Your question: Is the UK Film Council meeting
its objectives and could it do more to assist the UK film industry's
contribution to the UK economy?
4.1 In the last 7-8 years, the UK Film
Council has managed to give a coherent, integrated voice to the
various strands of film activity across the country, and to demonstrate
the place of film—and cinema in particular—as the
most influential of our creative industries.
4.2 However, as a fundamental development
of Film Council policy, we believe that there should be clearer
recognition of public demand, as well as trade supply, and that
distribution as the Iynchpin of the digital film economy merits
greater support. Please see points 2.8 and 2.9 above.
We would be happy to answer any further questions
relating to our submission in due course. I am pleased to enclose
a copy of the FDA Yearbook 2009 which offers more data and
comment on our sector.
17 March 2009
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