I’m willing to bet that the future of film won’t be decided in the US or Europe, even if that’s the framework most of us begin with (us being my readers and me, most of whom are in the West). I think we’ll be learning a lot from China, where the business is booming, like everything else. I was speaking with some people well-versed in the Chinese film business lately, and they told me something interesting.
Piracy is rampant in China, so much so that the majority of their profits come from theatrical, because soon after it opens, the film is on every pirate network so there’s no ancillary business to speak of. This is the opposite of the US, for example, where the box office is largely a loss-leader for the ancillary revenues (its marketing).
This is a big concern to all of the producers here trying to crack the market there, but my friends told me it isn’t such a concern for the producers in China – they’ve come up with a model that uses piracy to their advantage – product placement. As much as 30% of their budget will often now be made up from product placement by brands who just want to have their product seen by consumers. The brands don’t care if the film is seen legally, or via piracy, because they just want eyeballs. Win, win for everyone.
I know a bit about the arguments against branding, consumerism and yadda yadda, but I think this is a business model we should start following more closely.
We do a lot of stupid things in the film business to keep our old business models working, but to my mind lately, the dumbest one is the continuance of territorial licensing and geo-restricting. I know the reasons why these persist, and I also know that right now, we’re in a time where we can’t completely change the system overnight, but…
I recently went to Tel Aviv to be on the DocAviv Jury and give a masterclass. In advance of the workshop, the organizer sent me a stack of Israeli Docs to watch on DVD, ones that he received legally from the rights-holders by asking them if he could get them and send them to me. Ninety (90) percent of them wouldn’t play in my DVD player here in the US. I had recently traded my region-free player for a gifted Blu-Ray and didn’t think to check about the region encoding, but I shouldn’t have to do this. About half of the discs that wouldn’t play in my DVD player, would play in my Mac (oddly, I usually got an error message saying they couldn’t be played, but then they started up five seconds later).
This is insanity. I should be able to buy a DVD anywhere and play it anywhere. The inability to do so drives piracy, of course, because all of the films could be found on pirate networks with no hassle. I could go on and on about the idiocy of this system, but luckily someone else already has – over at his excellent Transmediator blog, David Wilson has summed up the problems nicely. I recommend reading the entire post, especially as to how this is now creeping into digital downloads and streaming (lesson learned???). What is his solution? Pretty simple, but I doubt we’ll see much progress anytime soon. From David:
“Here’s the mantra again: anything, anytime, anywhere.
If you don’t give people what they want, they will find an easier way. And, I’m sorry to say, pirated content is by far the easiest way. It’s easy to find with search. It’s one-click. It’s generally pre-formatted to the widest common denominator. It doesn’t have licensing restrictions. And, it’s free.
I don’t want movies to be free. But, it makes me angry to see them so difficult to get my hands on. Why can’t I simply Google a film that I’m interested in, click ‘rent’ or ‘buy’ and – boom – watch it straight away on any device I own? Why is that beyond comprehension?
I get angry when I think about this – not least of all because of all the time I wasted with region-restricted content – but because of all the money that the industry is losing to piracy when it’s within their control to do something about it. Studios are actually CONTRIBUTING to the problem. Their inability to collect revenue results in a shortfall to filmmakers. That makes me mad. It should make us all very mad, indeed. We are being shortchanged by their shortsightedness.
If we want to stop piracy, we’ve got to make it easy to get, easy to use and offered at an attractive price. Nothing else is going to work.”
Agreed.
