Overview of International Film Markets and Theatrical Distribution
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Author: Andrew Cripps President and COO, United International Pictures
Overview of the Domestic (North American) Market
In 2002 there were 1.64 billion admissions to North American cinemas, an increase of 19% over the previous year, generating gross Box office receipts of $9.5 billion, approximately $3.5 billion of which went back to the major studios in film rentals. The total Box Office figure represents growth of almost 400% since 1978. The average number of times that each person in North America went to the cinema in 2002 was 5.7, double the frequency of attendance in the UK. 98% of this audience was for American films or co–productions, with the majors taking 95% market share (if their classics and specialist subsidiary labels are included; 73% excluding these quasi–independent labels).
The number of cinema screens in North America in 2002 was 35,000, down from a peak of 37,000 in 2000. This reflects the effects of some consolidation of ownership in this market following a difficult period for the exhibition sector when many companies sought Section 11 protection against bankruptcy. Greater consolidation within this sector could effect the balance of power in the market, with exhibitors possibly able to negotiate better terms from the distributors.
Overview of the International Market
In 2002, there were a total of 2 billion admissions in the rest of the world (excluding India and China which, while huge markets, show mainly domestic films and are not key territories for exploitation for the majors). Although this headline figure is some 20% higher than total attendances in the Domestic market, the net revenues remitted to the studios from International sales were $3.1 billion, more than 10% lower than their Domestic revenues. However, this take did represent an increase of 28% on the previous year, so the increasing importance of the International market is clear.
Studios split the International market into three main areas:
Between 25 and 30% of their total Worldwide business is done in Europe, where (in order of admission numbers) the major markets are France, UK, Germany and Spain. Per capita attendance in Europe is much lower than in North America, with an average of just 2 visits per person in 2002.
The major markets in the Far East sector are Japan and Australia, with South Korea growing fast. In Latin America, the two main markets are Mexico and Brazil.
The Distribution Process
Distributors will consider their strategies from (at least) four perspectives:
Global: where will the film work?
Within each of these perspectives, the distributor will consider their films' prospects by taking into account some or all of the following factors:
Should the film be released in this market at all?
After assessing all of these factors, the distributor will prepare a Territory Contribution Report identifying the revenue estimates for each market. The views of senior studio bosses and regional and local managers will also be sought, with screenings held as early as possible to help build up a picture of the film's estimated International performance.
For most films, almost 40% of total Box Office will be taken in the first week, with the majority of that arriving in the first weekend. Takings tend to fall to about 5% of the total by the sixth week of release (if the film has lasted that long). Oscar winning films have tended recently to gross more Internationally than at the Domestic Box Office, partly because the release pattern means that their Academy Award success can be used in the International marketing campaigns.
Campaigns for each title are planned well in advance, taking into account such factors as:
US release dates
These factors are also taken into account in developing the detailed release strategy for each film. The strategy and timing of the release will also take into account:
censorship issues – when and how must the film be submitted for classification?
An important decision for the distributor is how many screens to open the movie on. This depends largely on the results expected for the film but may also be influenced by the wish to attract as big an audience in the first week as possible to help the film retain its screens for subsequent weeks. (Conversely, a higher screen average from fewer screens can also help to persuade exhibitors to keep a film in play even if its overall Box Office is not as high as some competitors). The different types of release that might be considered are:
(Approx. no. of Screens (in UK))
Some Current Issues Facing the Distributors Market
a) Digital Delivery
There is little doubt that at some point in the future, films will be distributed and screened digitally. The big question is when this revolution will take place. The digital roll–out will involve a huge capital investment and, although the benefits will be enjoyed by both exhibitors and distributors, it is not yet clear who will pay for the necessary investment. There are also still issues to be resolved over security – with piracy an increasing problem, the transmission mechanism for the digital output will need to be 100% secure. The different methods of transmission available – satellite, cable and data file – will have to be assessed against this criterion but also for their ease of delivery and relative costs.
b) Day and Date Distribution
With the various exploitation windows closing, there is an increasing trend towards films being released internationally on the same day as (or close to) their North American release. This has the advantages of reducing the opportunities for piracy; enabling marketing campaigns from the US to roll over into other territories; and allowing earlier exploitation of other windows. On the other hand, day and date releasing requires new prints and means that marketing spend must be committed internationally before the studio knows how the film has played in the US. It also reduces the time that the distributors have for sorting out dubbing, classification and other issues in each territory and makes it less likely that the talent will be available to promote it in as many markets. In practice, decisions on release pattern will continue to be taken on a film by film basis, with release dates generally moving closer to the initial US release.
- Every market is different – marketing has to be tailored to each territory.
- In Hollywood, everything is US–focussed – which makes marketing films in the Rest of the World more difficult.
- Advance planning is the key to a successful release.
- Screen the film within the company as early and often as possible to find out what people think and to build up awareness of, and commitment to the project.
- Digital cinema will arrive – one day. But it is still not clear who will be prepared to pick up the bill for the capital investment.
- In the future, more films will be released Internationally closer to the US release date, but timings will still be determined on a film by film basis.