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How Do You Solve A Problem Like The Australian Film Industry?

Australia's failure to compete with Hollywood is not the fault of our actors, writers and production teams. The problem is distribution.

‘Weak scripts, depressing subject matter, art-house films.’ That’s the stereotype of an Australian film, right? For years, we’ve been told that Australian filmmakers’ obsession with failed comedies and “miserable, suicidal, preaching tragedies” — in which, say, a housing commission resident in Redfern gets an abortion, goes on methadone, and converts to Islam — is the problem with our film industry. We’ve repeated this mantra to ourselves and to each other, and read it in countless op-eds to the point where it’s barely questioned.

In our attempt to lift revenues and audience numbers up for our beleaguered film industry, we’ve asked how we can increase production budgets and tell more entertaining, mini-Hollywood-style films. But we’re asking the wrong questions. The problem with Australian film is not about the quality of our content. Great films fail financially all the time, and terrible films make stacks of cash. After all, can you really say that Save Your Legs! – one of this year’s Australian box office crashes – was really worse than the ex-Borat director Dan Mozer’s God-awful rom-com I Give It A Year?

It is all very well for films to tell a spell-binding story, to feature exceptional performances or extraordinary cinematography, but to make an impact, they have to be seen — and for that to happen, they have to be effectively distributed. That’s where we’ve gone wrong. Australian films aren’t worse than other films. It’s just that theatrical releases don’t work for them.

Though it didn’t rate in the Top 10 of  last week’s box office figuresTim Winton’s The Turning has successfully pursued an alternative distribution strategy of touring special events, which have made more than $625,000 (an incredible figure given how few screens the film played on, and a great base from which to launch the DVD), and expanded its presence across the country. But our outdated audience measurement system doesn’t recognise that film’s very successful approach to distribution – by focusing just on ticket sales, it falsely pits a small but culturally relevant film like The Turning against a hyper-marketed behemoth likeGravity, and renders thousands of highly engaged cinema-goers and lovers of local films invisible.

For too long, Australian films have been zombied through cinematic releases. The focus until now has been on generating Australian content, not about making that content accessible to where audiences are at: online and outside the cinema.

Beyond The Cinema: The Movies Move Online

Get this: only one in ten first-release films are now viewed at the cinema. 65% are viewed on video-on-demand and DVD/Blu-Ray. Audience behaviour is changing. While physical space for cinema screens is scarcer than ever, online paths to distributing and sharing films continue to open up. The internet has opened the floodgates to inexpensive film production: anyone with enough talent can now make a movie. But how to screen it? What can digital distribution do for Australian films?

If we don’t catch up soon, Australian films will continue to be released stillborn into a theatrical system that is not designed for them, damaging their ability to compete. Small releases in art-house cinemas send the message that local films are old-fashioned and lack broad appeal. And in the other newer viewing sites like video-on-demand, to which audiences are gravitating, new and old Australian film is massively under-represented. The cinema system is dominated by the six major international studios; it is almost impossible to get local films booked at multiplexes, where the bulk of viewers flock.

What’s more, at the cinema, even economically successful films are actually ‘loss leaders’, which break even only later in their post-theatrical afterlives. The largest film distributors are in fact vertically integrated subsidiaries of media companies that produce movies’ extra-theatrical appendages — games, music, sequels, Happy Meals. A film is not just a film: it’s a loss leader designed to sell paraphernalia way down the cinema line. Hollywood knows that. Yet these further products are usually absent from or else under-exploited by Australian movies, which are effectively stand-alone productions with DVD and television licenses. Only very rarely do local titles benefit from the spin-off merchandise, product placement, soundtracks, international sales and other ancillary products that make films profitable. That’s not just because Australia’s local market is smaller; it’s because the cinema system is designed for different kinds of movies than the ones we have the budgets and integrated media companies to produce. It’s designed for Hollywood super-movies.

For too long we’ve been trying to compete in a film system that wasn’t made for us. So, let’s make our own.

Who Is Doing It Right?

A few enterprising filmmakers have experimented with lo-fi release tactics and made them work: setting up their own distribution systems, targeting their market, keeping budgets low and retaining control of the profits. Digital distribution allows them to do it. Carlo Ledesma’s cult horror thriller The Tunnel was crowdfunded, then released in 2011 primarily on torrent sites: it profited from being given away freely. The filmmakers used the BitTorrent giveaway as free, viral, word-of-mouth publicity to sell tickets to special screenings, DVDs and merchandise. That’s a pretty different story to the one we’ve been hearing: piracy can be good?! Rather than fearing piracy, The Tunnel filmmakers commandeered file-sharing to effectively reach their identified audience and drive interest in ancillary products. They reached over four million viewers, sold over 25,000 DVDs, over 800 000streams, and also released their film as an iPad app – a much more effective and expansive model than the traditional box office route. How else can we hijack peer-to-peer systems for the benefit of our industry?

Webisodes are being used by filmmakers to attract audiences and self-generate a portfolio to help them get more work. Directed by Alyssa McClelland, One Step Closer to Home is a low-budget, high intelligence, first-rate comedy about the culture-less oddity of Australian, middle-class suburbia. It’s funny as hell and really well-written. It’s also easy to view, because it’s broadcast on YouTube. That’s where we, as audiences, are all at, right?

Increasingly, filmmakers are able to share advertising revenue with YouTube and other online broadcasters. Audiences need to commit to supporting the local artists who they adore — and when given inexpensive, easily available online payment options (whether through soliciting donations or crowdfunding), they very often do.

What Can We Do?

I don’t have all the answers to these questions, but they need to be asked: by filmmakers, audiences and policymakers. Think about it: when and where was the last time you viewed an Australian film, and how did you pay for it — as a download, on television, or at the cinema? And how did you find it — was it recommended by a friend, shared on your newsfeed, the result of a good review?

Knowing more about how we consume will help us lift up the industry and support filmmakers. The box office is not where audiences are heading for local content; online and post-cinema markets are the real markets. We are wasting public funds on production if films, no matter how good they are, never reach an audience for lack of effective distribution support.

Lauren Carroll Harris is a writer and artist. She does research at UNSW on the Australian film industry and distribution. Her forthcoming publication, ‘Not at a Cinema Near You: Australia’s Film Distribution Problem’, is out through Currency House on November 1.

Comments

Comments

  1. Martin Walsh says:

    Hi Lauren,

    Mostly a good article and hopefully it stimulates more discussion.

    I did the opening sessions of SPAA back in 2009 with Gordon Paddison from Stradella Road and Stephanie Bohn from Warner Bros. Gordon did all the new media marketing for the LORD OF THE RINGS films, DISTRICT 9 and THE HOBBIT and Stephanie headed up Digital Distribution at Warners. We talked about these alternate distribution channels and strategies and I have been constantly spruiking them since. There’s been lots of great examples and case studies on day and date releases and more.

    I wrote these two blog posts specifically about this prior to those SPAA sessions to stimulate discussion. It also includes a detailed case study on PARANORMAL ACTIVITY:

    Can Australian Films Make Money? – http://bit.ly/eHK2DT
    The Future of Filmmaking: Seizing back control of the Six
    Pillars of Cinema – http://http://bit.ly/f1oDQ2

    First of all there is a major flaw underlying this article. What constitutes success? You haven’t defined it and you imply the same criteria to every film. However if you compared the same commercial criteria to every film then even those Australian films claimed as successes like Mao’s Last Dancer weren’t and films like The Turning are a long way off and probably will never ‘make money’.

    I’m not sure how you can use $625k at the Australian box office for The Turning as an example of being successful no matter how few screens it has been released on?

    I know Enzo and the guys behind The Tunnel and the success they had was not from a financial perspective, it was from a marketing perspective and establishing themselves as artists and furthering their careers. A fantastic outcome for them and a brilliant strategy!

    I’m not sure where the idea of ‘loss leader’ came from but it’s not relevant to the film industry and not a good analogy.

    Yes, only 19% of a films earnings come from the box office and the rest comes from downstream windows like sell through (DVD, Blu-ray) and Cable, Free To Air etc. Success or failure theatrically can make or break the downstream success of a film but it’s not as simple as release in the cinema and DVD and or VOD at the same time. Only superhero and toy related films make money off ‘merchandise’ and these are few and far between as a percentage of all ‘major’ films.

    The other issue is really understanding the economics of a film property. If a film takes $1 at the box office, the cinema (exhibitor) takes 55-60%. The remaining $0.40 goes to the distributor. The distributor takes a 30% fee and then recoups all marketing, advertising and distribution expenses. Whatever is left goes to the production company. The same happens for DVD, Video on Demand, Blu-Ray, TV, Cable etc. The distributor takes 25-30% and recoups all marketing, advertising and distribution expenses. Whatever net ‘income’ comes back to the production company after all this has to repay the original budget of the film. So if a film takes $15m at the Australian Box Office (deemed a success) and it’s budget was $15m it is highly unlikely to make any money.

    If a film like Mao’s Last Dancer which took around $15m at the Australian Box Office and about the same on sell-through, total $30m, would have generated about $12m in net income for the producers / production company which would not have covered the original production budget of $25m. Cable/Pay TV + Free to Air + VOD would have generated only about another $1.5m gross and about $1m net income, still some $12m short of recouping the budget.

    One of the key issues is that not all stories scale to the big screen. The vast majority of Australian films fit into this category and should never have been made for a theatrical release. This is not to say that there aren’t important stories and creative adaptations which should be made for the screen – but which screen and whose money?

    Dr Karen Pearlman Head of Screen Studies at AFTRS said a few years ago, ‘not all stories scale to the big screen’ and ‘we should be creating our own myths not telling our own stories’ and ‘cinema is KINE, it is movement, it is the transition between light and dark, good and evil’ and lots of other great things. All of which are true but rarely understood or taught to film makers.

    The other huge issue in Australia is that Australian distributors for the most part are stuck using 1990’s marketing and distribution strategies. I’ve spent considerable time and energy talking about this and educating parts of the industry where I can – I am a producer and 20 year marketing / digital marketing executive – but not much has changed in the past 8 years.

    So, we have ended up in this endless cycle of making dramatic angst films because; we can only raise small budgets, the vast majority of these films are not what cinemagoers want to pay see, there’s usually no marketing dollars and an outdated marketing & distribution plan attached = ‘commercial’ failure.

    I also take issue with your closing comments that “The box office is not where audiences are heading…” I disagree with this premise as Australian’s do go to the cinema to see good Australian films which have been marketer and distributed successfully. The issue is that the industry does not understand what content Australian audiences will pay to see whether that is at the cinema, on DVD or Blu-ray, on TV or PAY TV, on Free to Air TV or on their PC, tablet or mobile phone. In addition to this, we do not have the strategic distribution and marketing skills here to properly support the projects which should be made and which would appeal to wide audiences across many screens.

    I hope these comments and the links to my blog posts ironically written 4 years ago keep the debate going!

    Regards,
    Martin

  2. rachel612 says:

    “A film is not just a film: it’s a loss leader designed to sell paraphernalia way down the cinema line. Hollywood knows that.”

    It’s probably worth pointing out that Hollywood is currently utterly paranoid about the downstream. DVD and BluRay sales are evaporating, and streaming doesn’t generate enough revenue to make up for that (although fortunately for the studios, it shifts the costs of distribution to the seller, e.g JB HiFI, BigPond Movies etc).

    As for merchandising, it only works for tentpole pictures. Ever seen a “Shine” Geoffrey Rush action figure?

    If you’ve followed the stories in Variety and THR this year, you’ll have observed that US studios now know they can’t sell more than 7 big-budget tentpoles in a summer. So they won’t. This marks a historic shift for Hollywood for the first time since Jaws came out. Because the US industry is interested in making a profit, the studios will adapt their strategies.

    The Australian single-door Mosfilm-style funding model doesn’t lend itself to that way of thinking, so it will be a cold day in hell before Australian movies are financed another way than presales.

    I agree that distribution is the key to sorting this out. But that’s been true of Australian film since the 1930s. Same as it ever was.

  3. jmalkovich says:

    “Australian films will continue to be released stillborn into a theatrical system that is not designed for them, damaging their ability to compete”

    What is that supposed to mean? Movies are made to be seen by a larger audience. Why are Australian films suddenly supposed to be seen outside the context of the theatre system. Australian films don’t do well because they don’t connect with mainstream audiences. Simple.

    And then this:

    “A film is not just a film: it’s a loss leader designed to sell paraphernalia way down the cinema line. Hollywood knows that. Yet these further products are usually absent from or else under-exploited by Australian movies”

    Really? You sound like you have no grasp on the how film industry works. Yes there are movies that are based around franchises (good or bad is subjective opinion) but those stories and concepts are designed that way. You can’t just churn out a franchise from any given movie. If Australian filmmakers wanted to, they should be writing and making high concept movies that support a franchise.

    There is so much nonsense in this article. Australian films can get it right and when that happens people go to the cinemas to watch these movies. We just don’t do it that often. The reason for that is Australian filmmakers continue to make self-indulgent movies that fail to grasp the fact that at the end of the day a movie should be about engaging with an audience.

    Sydney Pollack summarised it perfectly: Who gives a shit? Nobody wants to pay twenty dollars to watch people living next to chemical waste! They can see that in New Jersey!

  4. Nigel-63 says:

    … bang on the money! (well, y’know, the pittance that’s left after the Hollywood megatrawler has passed through)…  

    … obscurity is death,
    and that vapid nonsense about ‘pirates’ may well be spoken by dear old Australian lovelies, but the wonderful irony is that it’s scripted by the very Americans (inc. MPAA) that have, in the past, explicitly stated that they don’t want an Australian film industry existing, arguing again and again for 100% of Australian Box Office revenue (and not the measly 96+% it currently takes)…   … however, the point may well be moot when (not if) Tony Abbott gives away Australia’s sovereign rights with the signing of the TPP (the Trans-Pacific Partnership Agreement)… elements of Corporate America don’t like the emerging e-distribution pathways, because it cuts across their traditional profit streams… these same elements have repeatedly pushed for a tightening of access to the Internet and criminilisation of currently legitimate structures – eg. the torrent format… once the TPP is signed, the e-distribution of Australian film product may well breach American Law and thus the Australians, small fish that they are, can be sued by American Corporations even though no law has been broken here…  

    … I think this article is excellent – but then, it may well be the Aussie Film Industry counterpart to Neville Chamberlain happily waving a little piece of paper that says “Profit in our time!”

  5. joe velikovsky says:

    Hi Lauren

    Enjoyed this article. All good points.

    Best

    JT

    http://storyality.wordpress.com/

  6. Karl says:

    Incredibly terrible and pretentious article that lacks research and facts.

    The turning budget was over around $5 mill per director x 17 = $85 million. It will NEVER make any money.

    and if that is an example of a successful webseries…..

  7. Lauren Carroll Harris says:

    Hi Martin. Great points. Keen to see how your distribution strategy with Danger Close goes. I absolutely agree with you that “Australian distributors for the most part are stuck using 1990’s marketing and distribution strategies”. But I stand by the idea that film is in fact a ‘loss leader’ for sales on downstream platforms and that Australian viewers watch Australian films more on tv and DVD than at the cinema and the statistics from Screen Australia and numerous film business theorists back that up. My book on distribution comes out on Friday and it may interest you: http://www.currencyhouse.org.au/node/301
    I agree with you about the importance of ‘mythmaking’ but I still see distribution as a majorly and systematically overlooked issue that is preventing wider audiences from engaging with film, and that the current theatrical set-up is blocking local films – therefore, we need to create our own alternatives. You can create the most lush myths but if you cant distribute your film effectively, it’ll make no splash in film or popular culture.

  8. Lauren Carroll Harris says:

    Thanks for your thoughts, Rachel. You are right that ” merchandising, it only works for tentpole pictures” – my point is that the existing cinema framework is designed to support tentpole films, not the kinds of films Australia’s industry can (or should) produce, hence the need for alternative release strategies like Robert Connolly’s The Turning. I’m not so interested in whether my ideas about distribution are new, I’m interested in whether they’re needed: distribution has indeed been an issue since the early/mid 1900s, but it remains one that has not been addressed. At the level of state policy, film funding policy and regulation, there are deeply-rooted problems that continue to be replicated and should be pointed out until they’re remedied.

    The discussion is continuing over here, FYI: http://if.com.au/2013/10/23/article/The-case-for-a-new-distribution-model/EQWJNPRHZI.html

  9. rachel612 says:

    In your response to Martin Walsh you say: “But I stand by the idea that film is in fact a ‘loss leader’ for sales on downstream platforms and that Australian viewers watch Australian films more on tv and DVD than at the cinema and the statistics from Screen Australia and numerous film business theorists back that up.”

    I’m not sure how that point actually relates to the Australian screen industry. What, exactly, do you see film being a loss leader for?The term “loss leader” indicates that it leads somewhere. But in Australia, after you’ve exhausted theatrical (and you will, inevitably, have presold television), you may have a small DVD release, and … as they said in Dude, Where’s My Car?… “And then?”

    Put simply, there are no returns beyond theatrical and television. And those are almost always presold. Good luck surviving on returns if you’re relying on DVD or streaming. There is no merch in Australia, and nor is there ever likely to be.

    So, um… if film is always a “loss leader” but there are no downstream platforms worth a damn, what then? All we have is the “loss” part. Is your idea that we should just lose the money on different films?

    I’m struggling to work out where you think a change in distribution will lead to the solution to this problem.