Anticipating the future

“There is no terror in the bang, only in the anticipation of it.”—Alfred Hitchcock

Digital DemocratizationIn the early 2000s, through books such as Lasica’s Darknet: Hollywood’s War against the Digital Generation (2005), we were led to believe that the power of the internet would free up content and democratize filmmaking.  These claims were later refuted in books like Levine’s Free Ride: How the Internet is Destroying the Culture Business (2011).  Organizations in publishing, journalism, television and film are struggling or closing down, not because they could not create great content, but because they were unable to make enough money to pay for the high cost of creating such content.

So what about film?  As the cost of high-quality video cameras fell, a whole new generation of innovative and risk-taking auteur filmmakers were expected to be able to build a portfolio without the financial backing needed in the past–and just get it out onto the web. Yes, there are more short films on YouTube and more shorts film festivals.   Yes, the BBC can spend less on training because the digital revolution has made the technology so much cheaper and easier to use.

But, apart from these things, not much seems to have changed.  The same old gatekeepers (in the UK: the big film schools, BBC, Channel 4, and the BFI National Lottery Film Fund) still decide which filmmakers will be developed into feature filmmakers.

More micro-budget films have been made recently, but most of them seem to lack widespread distribution.  The reasons for this are:  1) lack of well-known actors and 2) lack of marketing compared to the studios.   Micro-budget films that have reached a wider audience, like the 2010 horror film Monsters, are often finished or post-produced with a distributor or studio.

So who has benefited from the digital revolution in TV and film?  Not the content creators, certainly. Even the production of DVDs has declined, with Blu-Ray not providing the expected boost to the DVD market.   Mainly, the distributors and existing corporate players have been the beneficiaries of the digital revolution.  It’s the video streaming websites, aggregators and distributors who are making the money.

They are closer to the consumer end of the value chain, especially through advertising, from which the content creator gets only a small cut.  Free content has allowed distributors to pay even less for new content.  Successful digital startups are bought by larger corporations.   Some broadcasters have driven down the broadcaster commission fee by allowing independent TV producers to retain rights, rights that the producers are often not able to exploit.

You could argue that new technology has strengthened the role of old and new gatekeepers in the wide-reaching channels.  Piracy, using new digital technology, has reduced income from DVD sales, thus making film production less profitable.   The power of recognizable stars, long-running movie franchises, and trusted channel brands has not declined, but increased.  YouTube, where new digital filmmakers can get their work “out there,” was bought in 2006 for $1.65 billion by Google.  Google uses it to generate advertising revenue, little of which goes to the content creators.

Convergence and divergence in film delivery

Everyone expected convergence in telecommunications, with one provider offering TV, phone, internet, and eventually film, probably on one device (a TV or computer).  But instead we got divergence, with multiple devices and software interfaces, which has delayed the takeup of VOD (video on demand). VOD didn’t take off until  the arrival of internet downloads and streaming services like Netflix and LoveFilm.

Changes in the film value chain

Niche or back-catalogue films become economically viable as web sales or through internet-based retail aggregators like Amazon or Play.com.  Chris Anderson’s long tail theory, in which niche products become financially attractive, was interpreted to mean that many producers could turn into distributors, although the reverse seems to have happened.  The distributor Revolver Entertainment has become a producer. The grip of aggregators and distributors, together with their large advertising budgets, prevent new entrants and content creators getting a slice of the action.

The value of film and TV libraries, previously overvalued, fell dramatically recently.  MGM’s library was valued at $5 billion in 2004 and only $2 billion in 2010.

Distribution is queen

If “content is king,” then in this filmmaking environment “distribution is queen.” Internet organizations have gotten rich without owning the content they distribute, and for the studios the whole point of making movies is to make money out of distribution.  The question is: how can content producers share in distribution income?

Angus Finney, in his 2010 book The International Film Business, predicts that cinema chains, pay-TV operators and even computer-game operators could become producers.  Many new high-capability devices have appeared to play movies; people on the train watch movies on their phones.

The interface or EPG (electronic program guide) is key to controlling the use or purchase of digital films.   The EPG provider such as ­iTunes and Spotify can influence which products are pushed towards the user.  This may increase consumer choice, but does it also allow larger media companies to push their favoured products, thus reducing the potential for downloads of niche products or products from independent producers?

Changes in the TV production value chain

The value chain for producing TV programmes in the recent past in the UK was relatively simple, with the broadcaster producing and showing its own programs.  Now an organization like the BBC may buy ready-made US programs, be involved in a joint venture with other broadcasters, or commission programs from independent producers.  The commission is not necessarily for a single product, the TV program, but can include iPlayer versions for streaming on the web, interactive competitions, etc., all of which can be produced by different companies.  So there can be multiple suppliers and this fragments the value chain.

In the case of film, the situation is actually less complex.  Although distributed in a variety of ways, the film is still a single product, if you accept that computer games based on films are separate products.  However, this may change, with some types of film being more susceptible to exploitation in other media (thrillers and horror films, perhaps).

Better films and better business, too

Filmmaking is a creative art, firmly based on our human need to tell stories, but it has been affected by new technology from the beginning, starting with Edison and the Lumière brothers.   During our survey of film industry professionals, we were reminded that there is a natural tension between the creative film maker and the business controller, between the conflicting urges for freedom and control.   But these tensions can be part of the creative process.

Interviewees often said each project was different, but time and again common themes were revealed:

  • Creativity depends on motivation, and motivation comes from working with people you trust and respect.  This is summed up as Choose people you trust and trust the people you choose.  Avoid micro-managing creative people!  Leave them to it.
  • Working on something that inspires people is the motivation that makes a project work; ideas can come at any time, not just at a designated time.  Don’t try overpaying named people who are not inspired by the project just to get them on board.  Choosing the right people for the creative team is what counts.
  • Getting a good match with a source of funding that shares your values is important.  For example, accepting money from a distributor who wants to impose its differing values may not work in building up a long-term creative relationship.
  • The challenge of encouraging writers to take risks was a common theme.  If writers are the risk takers, then producers need to evaluate those risks and encourage the whole team to constantly review the value of what they are doing. By doing so, the creative team can  question whether the project is still on track to deliver what it aims to deliver.
  •  Money and creativity are not in opposition to each other.  Famous directors like David Lean and Stanley Kubrick were often well funded and creative.
  • Finally, the value of more formal training or using the latest business techniques should not be feared, but examined for the benefits they can bring to the art of film making.