War of the SVODs World

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Well it’s happening. The SVOD wars have really kicked off.

Apple TV+ debuted in New Zealand on 1 November with 14 original shows. Very much a tortoise approach from Apple, and you don’t have to pay for it for a year if you’ve bought an Apple product recently. Otherwise you’re up for $8.99/month.

Disney+ meanwhile will be off like a hare at the starting gates, launching more than 600 movies and shows from Day 1, being 12 November (19 Nov. in NZ). Expect every household in the country with kids to at least consider adding a subscription at $9.99/month.

NBCUniversal’s Peacock will soft launch in April 2020 with 15,000 hours of programming, while HBO Max comes online in May with more than 10,000 hours of programming.

Netflix is already feeling the heat.

FilmTake reports that Netflix lost subscribers for the first time in the U.S. since they started in 2011. It has likely reached saturation in the market, and we can expect to see the massive international growth of Netflix to slow or halt, or worse for them, decline.

We all thought Netflix was shaking the screen industry to its core, and it has. But it was primarily Google and Facebook that was impacting on New Zealand’s Free-to-Air market, taking advertising dollars away from TV screens.

The initial streaming entities in NZ did contribute to a decline in Free-to-Air viewership, but our Free-to-Air market was still holding up with significant numbers of New Zealanders continuing to watch mainstream TV. But is that going to be the case now with Disney+ and Apple+ in the market, together with Netflix, Amazon Prime, Neon, and Lightbox and with others to come?

You have to imagine that Neon and Lightbox are fretting about their continued existence, unless Neon has done a deal to retain HBO content and possibly keep HBO Max out of the NZ market. Spark-owned Lightbox will most likely be the first casualty unless their strategy has sport and other offerings in the wings. Spark has the All Blacks and cricket afterall. Unlike Peacock, who is mooted to pursue sport, news and live programming, Spark doesn’t have the programming and financial resources of NBC and Unversal to draw upon. It’s rumoured though that Lightbox is for sale. You’d need big cojones to step into that space , or cash+ and programming+. Streamers who don’t have studio majors and/or their parents as backers are really at a disadvantage. With Netflix now paying a premium to license shows because they are losing the content owned by their competitors, you can’t imagine our locally-owned streamers having deep enough pockets to play in the big leagues. And how much longer will our broadcasters be able to access the best of international product?

At TVNZ, Kevin Kendrick is focusing on more NZ content to differentiate its Free-to-Air and OnDemand brands and help to avoid the price wars on the international scene for programming. This is an area they are likely to be able to call their own, as we can’t expect the international SVODs to commission much here unless they are forced to as the Australians are seriously contemplating making them do. With reality TV to undoubtedly feature highly in the offering, is TVNZ really going to be able to keep NZ viewers in good numbers?

What about Three? Only the woman upstairs knows what’s going to happen there. The gossip: it’s going to be bought by… someone.

Kris Faafoi’s decision about what to do with the soon-to-be loss-making TVNZ and with public broadcasting becomes even more critical now.

And just as this is all happening, NZ On Air CEO Jane Wrightson resigns to become the new Retirement Commissioner.

Jane has done a fantastic job navigating NZ On Air through the tumultuous changes that have impacted on broadcasting in the 12 years she’s been at the helm. But has she been prescient?

In this now constantly changing screen industry world, we’ll undoubtedly find out if NZ On Air gets retired before Jane runs her course in her new job. We’ll certainly learn whether or not Netflix will survive. If you are a producer on a multi-year pay down schedule for the content you sold them, you are going to be hoping somebody will buy Netflix out rather than it going under. As of 30 September, Netflix reported US$12.43 billion in debt and they are adding to it to keep the originals and higher-priced acquisitions coming. That US$292 Netflix share price is definitely going to take a hit sooner rather than later.

In the meantime, hunker down and get binge watching. There’s going to be more than enough for everyone with one, two or three SVOD subscriptions… for a very long time.

Tui Ruwhiu
Executive Director

An Answer to NZ’s Broadcasting Industry Dilemma?

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As Minister of Broadcasting Kris Faafoi gets set to decide the New Zealand broadcasting industry’s future with hopefully sound advice that includes a note that the industry is more than just News and Current Affairs, I postulate further on possible answers to our dilemma to stimulate further debate and discussion.

Countries with strong public broadcasters are those with compulsory broadcast licence fees. In Denmark, with a population of just over five million, the licence fee of €332 (NZ$579) generates €4.4 billion (NZ$7,671,308,423). Danish public broadcaster DR operates six TV channels and eight radio channels with this revenue. Norway, which has a similar population to Denmark, has a licence fee of €315. Its public broadaster NRK runs three national TV channels and three national radio channels. Countries that still have licence fees include the U.K., Germany, France, Spain, Ireland, Switzerland, Japan, Italy, the Netherlands and South Korea.

A licence fee in New Zealand of just NZ$125 applied to the estimated 1,765,100 households in the country would generate nearly $220 million dollars annually. This would cover the costs to fund Radio NZ ($35 million) and Māori Television ($45 million), administer the licence fee (est. $20 million) and leave $120 million.

If the $120 million were combined with Radio NZ’s $35 mil., a newly created public broadcaster would have $155 million of muscle. This entity could deliver quality News and Current Affairs (est. $50 mil.) and would have $105 million—almost the same level of funding NZ On Air has after the ring-fenced Radio NZ funding is deducted—to create a Public Broadcaster Fund to make great factual and scripted programming for both domestic use and international sales. To help secure the independent production sector’s future, this broadcaster could be required to outsource for factual and scripted ideas and their production. Sales revenue could go back to the broadcaster and the independents to contribute towards their sustainability.

In an added approach, the Government could continue to fund NZ On Air the annual $115 million it now receives. This NZ On Air Fund could be contestable and exclusively for the commercial channels and platforms, both Free-to-Air and those with paywalls. Once again, independent producers could pitch on this contestable fund with a percentage, say 75%, being ring-fenced for the independent sector.

The commercial channels and platforms could be required to pay a commercially appropriate licence fee for this content that acknowledges the real value that local NZ content would bring to them. After all, they are commercial with the Free-to-Airs able to scoop up any advertising revenue going, while the SVODs would get the subscription revenues. Funding levels would be determined by the quality of the idea, the scale of the proposed production and the audience size.

A means to extract revenues from streamers and international serviced productions coming here would need to be found to decrease and hopefully eventually eliminate Government funding in the NZ On Air Fund.

The Public Broadcaster Fund and the NZ On Air Fund should allow for access to the New Zealand Screen Production Grant (NZSPG) so that producers can more easily pitch and finance shows that have truly global potential. The NZ On Air Fund should retain the current NZSPG requirements of 25% or more of non-NZ production funding and a minimum of 10% market money to ensure the shows have real international appeal. And while we are at it, the NZSPG’s Qualifying New Zealand Production Expenditure (QNZPE) minimum should be reduced from $2.5 million to $500k so that films with lower budgets can access NZSPG. Some thought may well have to be given to the QNZPE for TV as well.

The above could potentially solve a number of issues:

  1. Give us a well funded public broadcaster.
  2. Ensure that the independent production community would still exist and be able to make the most of opportunities both domestically and internationally.
  3. Allow the commercial broadcasters and platforms to live to fight another day with all the advertising revenue available while giving them valuable local content.
  4. Make the streamers and international productions contribute to the growth of local IP and production.

All that’s needed for this to occur would be for the NZ public to buy into the need to pay a licence fee.

I would.

Would you and everyone else?

Tui Ruwhiu
Executive Director

Eye On Asia

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I had the good fortune to attend the Busan International Film Festival (BIFF) for the official launch of the Alliance of Asia-Pacific Audiovisual Writers and Directors (AAPA) last week. Guild president Howard Taylor signed the MOU for DEGNZ’s participation in this alliance in Tokyo in May.

AAPA is dedicated to serving as an independent and impartial advocate on behalf of the audiovisual creators community in the Asia-Pacific region and seeking to strengthen copyright protection.

Already we are benefitting from belonging to this Alliance with considerable support coming from Writers & Directors Worldwide (W & DW) and the International Federation of Societies of Authors and Composers (CISAC), under whose umbrellas the Alliance sits.

Present at BIFF were two guild members with their films: David Stubbs with his feature Daffodils, and Sam Kelly with Savage, which had its world premiere in Busan. It has been a while since a New Zealand feature was selected for BIFF, so it’s quite a coup to have two here. Congratulations to David and Sam for their achievements in getting their features into what is arguably still the most prestigious film festival in Asia.

While there, I took the opportunity to look at the feature film projects being pitched from around the Asian region, both by young emerging filmmakers and those more established. It was interesting to note the similarities and differences between what is happening across Asia and in New Zealand.

One of the first things that struck me was that like many aspiring New Zealand writer/directors, many Asian writer/directors expect to write a script from their treatment and have it move into production within one year. The average time for a film to move from initial idea to completion (if it does get made) in New Zealand and Australia is five to seven years. Case in point is Sam Kelly’s film Savage, which spent over six years in development. I asked Professor Darcy Parquet, who lectures in Korean film at the Busan Asian Film School, if in Asia it was unrealistic to expect such rapid progression. He agreed that it was.

Budgets also vary considerably. In speaking to one Japanese producer, I was told that indie film budgets in Japan typically sit in the range of US$30,000 – 300,000. Korea is a highly commercial market where indie films struggle as they do in Japan. Korean independent films have slightly higher indie budgets than Japan, but nowhere near the typical US$5 million budget a Korean commercial film gets. Elsewhere in Asia, indie film budgets seem to range from US$200,000 to US$600,000 – 750,000. An important consideration to remember is that there is not a lot of government support for film around Asia, unlike in New Zealand and Australia.

We are certainly not alone in wanting to tell dark dramas. In a number of pitches I heard, cancer and suicide featured frequently and there were quite a few tough films wanting to be told. This was balanced by genre or genre hybrid projects—a reflection I believe of the lower budgets, lack of government funding and a need to get returns for investors, as well as a desire to tell more genre stories.

Highly obvious at the Asian Film Market that sits alongside BIFF is the European presence. Many European organisations and producers are seeking to strengthen ties with Asia for co-production, which is the mainstay of the European film industry. There is also a fascination with Asia and its stories. Europeans, who are masters of co-production and have access to a variety of soft-funding sources, are searching out talented Asian filmmakers with strong stories to support. It’s such a pity that co-production in New Zealand and Australia is so limited by both attitudes and resources, as well as isolated by geographic distance. New Zealand has co-production agreements with South Korea, Singapore, China and Taiwan, but these are rarely used.

I’d have to say that I’ve never before met as many film festival programmers from other festivals before as I met here. That can probably be attributed to the fact that it’s a smaller market than others I’ve been lucky enough to attend. I think, however, that it’s another sign of the European interest in the region.

Streamers are having the same impact in Asia as is happening elsewhere, with the future of indie film still very uncertain. SVOD still hasn’t picked up the slack that DVDs used to bring in terms of revenue. That doesn’t seem to have slowed the Asian passion for indie features though. Everyone still seems to be rushing forward. But nobody it would seem is yet sure if it’s towards oblivion or a brighter future.

Tui Ruwhiu
Executive Director

 

To Be or Not to Be? That Was the Question.

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Almost a year ago, the Directors & Editors Guild of NZ membership voted to become a union. At this year’s AGM on Saturday 5 October, DEGNZ will adopt a new constitution that will allow the Guild to formalise its status as a union and affiliate with the Council of Trade Unions.

I thought it worthwhile to provide some background information that will help members to better understand what this change of status is all about.

In trawling the Interweb to find background material to write this op-ed, I came across a two-part article from US entertainment lawyer Christopher Shiller that has essentially done the job for me. Yes, it applies to the US situation for the screen industry but it’s very pertinent to us, particularly with the changes that will come about from the Film Industry Working Group recommendations to Government that DEGNZ was a part of.

Here are the links to that two-part series.

Legally Speaking, It Depends – Guild or Union, Part 1

Legally Speaking, It Depends – Guild or Union, Part 2

At our AGM, the NZ Council of Trade Unions President Richard Wagstaff will give an overview of the CTU and speak to the CTU’s perspective on the work being done by the Film Industry Working Group to address the inequities of the Hobbit Law.

I encourage you all to read the articles from the links, and to attend the AGM — this will be a momentous occasion for DEGNZ in regard to its work to ensure the creative, cultural and financial wellbeing of New Zealand directors and editors. Please RSVP to attend the AGM here.

 

Tui Ruwhiu
Executive DIrector

Just Not Cutting It

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Just over four years ago a group of senior editors were sitting around on a Sunday afternoon in Auckland lamenting the fact that standards just weren’t like they used to be. They questioned each other as to why that was. The answer they came up with was that in the old days, i.e. the days of film, assistant editors worked in the cutting room like apprentices, learning their craft under the tutelage of the cutting editor.
In this way they were learning the technical aspects of their work and:

  • observing the editor at work,
  • getting the chance to cut on the project and have their work critiqued by the editor,
  • and being part of the conversations between the editor and the director, producer, funding body, broadcaster, etc.

All the while they were on the project for essentially the full length of the edit.

With the advent of digital editing, the role of the assistant editor quickly morphed into dealing much more with the technical preparation of material for editing, often on opposite shifts from the editor. This was usually done in a cost-saving exercise by the producer so that one edit setup could be used across 24 hours, rather than having to hire two to work in parallel. Additionally, the assistant editor’s time working on the project was reduced, because producers could see that once the technical work was finished there was a way to further lower costs.

All this meant that the chance to observe, cut and receive critique was often curtailed unless the editor made a considered effort to ensure their assistant got the opportunities. For the editor it meant working unsupported through post, dealing with the increased digital complexities of an edit on top of doing their job.

The impact this had became obvious when senior editors were being brought onto projects to ‘fix’ them because less experienced editors were being held responsible for not delivering a satisfactory cut.

At the same time, the technical nature of the work was becoming more complex and assistant editors were often required to figure it all out by themselves without significant guidance from the editor who was too busy doing what they were hired to do.

With the financial support of the NZ Film Commission, DEGNZ began to offer Assistant Editor Workshops in late 2018 to seek to formalise and standardise the technical aspects of the assistant editor’s role in a two-level training programme, which also recognises the Technical Assistant Editor as a career path in itself.

DEGNZ, again with NZFC support, introduced Feature Film Editing Attachments, so that junior editors seeking to work in features could get back into the room with the editor for the creative aspects they are often missing out on.

A third issue arising from digital editing and productions is digital workflow. Again, many are being left to figure it out for themselves with the result that a digital mess is being delivered to professional post production houses who have to waste precious time and resources sorting it out. This of course costs money that could be used to better effect on the creative side of post-production.

DEGNZ approached the Screen Production and Development Association (SPADA) with the issue. As a result, inaugural Post Production Workflow Workshops will be run by SPADA with DEGNZ in Auckland and Wellington next week, primarily targeted at producers who are the ones most likely to suffer when post doesn’t go well.

A bigger picture issue that DEGNZ is currently working on with a number of post houses nationally is to develop Best Practice Standards for post-production. We hope that the initiatives we have put in place and others we want to introduce over time will deliver greater creative outcomes and make the technical side more efficient and cost effective for everyone.

Tui Ruwhiu
Executive Director