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The world of film continues to be shaken up both at home and abroad. The only thing that’s clear is that streaming is here to stay and picking up steam.

Disney is just undertaking an entire reorganisation of its business to put streaming front and centre with content leading the way. The Mulan experiment as a Premium Video On Demand (PVOD) release possibly helped decide their future direction. Even with the need to subscribe to Disney+ just to get the ability to pay the premium price, punters made Mulan the fifth most-streamed SVOD title in the US in September, as tracked by measurement company Park7 Data.

Disney’s move follows WarnerMedia’s refocusing on content after the tepid response to the launch of HBO Max. Over at NBCUniversal, they too have reorganised along with the introduction of their streaming service Peacock.

So where does that leave the theatrical exhibitors?

Just two months ago, the world biggest theatrical exhibitor AMC and NBCUniversal paved the way for PVOD to become a Hollywood fixture when they overcame a bitter windowing disagreement to do a deal. Showing how quickly the old model is now becoming defunct primarily due to COVID, attendance numbers are nearly 85% down on what remains of AMC’s just under 500 theatres still open in America. Even worse, AMC predicts it will run out of cash to operate by the end of the year.

The second largest theatrical distributor on the planet, Britain’s Cineworld, has just announced it will shutter nearly 700 theatres in the UK and the US, threatening nearly 45,000 jobs. It doesn’t know when it will reopen them.

All of this comes amidst the moving feast of tentpole film releases. Christopher Nolan managed to convince Warners to put Tenet into theatres this year, but Cate Shortland’s Black Widow, Denis Villeneuve’s Dune, Cary Joji Fukunaga’s Bond film No Time to Die and Christopher McQuarie’s Mission Impossible 7 are just some of the films pushed back to 2021. All this does is put more pressure on the exhibitors.

Theatres are crying out for tentpole films to help generate revenue, even with social distancing measures in place. They just can’t get them. The situation is so dire directors James Cameron, Clint Eastwood and Steve McQueen amongst others signed a letter to the US Government that said without additional support, 69% of small and mid-sized cinemas in the US would likely go bankrupt or close.

In New Zealand however, NZ films are having a bit of a dream run with no tent poles and not a lot else to compete against.

DEGNZ member director Sam Kelly’s Savage hit a million dollars at the box office, David White’s This Town has done just over $700k. Paul Murphy’s Low Down Dirty Criminals is still in theatres at Week 7. In the old normal it would likely be gone by now, pushed aside by new releases.

Meanwhile, the New Zealand Film Commission just extended for a further six months its COVID-19 Policy regarding its Terms of Trade. This means for films up to $2.5 million, you no longer need to have both a distributor and a sales agent. You only need one or the other. Or, in a major change, a recognised VOD platform can replace the sales agent or distributor.

Frankly, I believe the mandatory need to have any of them for films up to $2.5 million is an old and broken model. If you have a good script and package and they believe in the project, then a sales agent, distributor or platform will come in.

And if they don’t and you make a good film, you will just as likely find them when the film’s ready to show. The supposed financial commitment they make through a Minimum Guarantee (MG) can sometimes be a sham anyway, so why have it as a mandatory requirement for the finance plan? If you have a finished film and more than one sales agent or distributor wants it, it puts you in a stronger negotiating position.

Guaranteed distribution on the public broadcaster’s OnDemand service would deliver the potential for eyeballs with marketing the key to getting people to watch, guaranteeing a viewing avenue for the NZ public.

Theatrical exhibition then becomes the nice-to-have, not the must-have, while still offering the box office revenue opportunity. Window the theatrical first as is still being done and you protect the box office from pillaging by the OnDemand.

Over the Tasman, Screen Australia has already done away with the need for Australasian distribution. A positive amongst the carnage that’s been wrought there in film and television. The big ‘If’ there is whether or not the streamers will pick up the slack as the Australian Government hopes they will. Not levying streamers to produce local content in the expectation that they will take Aussie content anyway is a bet Australian production companies don’t like the odds of.

Meanwhile, here we sit, basking in the glow of the setting sun of the old film industry, hoping like hell that the Golden Age of television is going to save us.

We shall see.

 

Tui Ruwhiu
Executive Director

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We are in the midst of election turmoil both here and in the United States.

Pork barrel politics are in full swing here with promises from all sides intended to sway voters.

We are fortunate, though, that the Arts has already received funding from Government due to COVID in the $8 million-dollar Cultural Capability allocation over two years ($2 million each) to New Zealand On Air, the NZFC, the NZ Music Commission and Creative New Zealand.

Additionally, from the total $150 million allocation it’s managing for the Government’s COVID 19 Sector Regeneration Fund for Arts, Culture and Heritage, the Ministry of Culture and Heritage (MCH) is sorting out now how to best spend the other $12 million in Cultural Capability funding. A number of us in the screen sector and from other Creative and Arts-related organisations have been in focus groups with MCH to discuss this.

Participating in these focus groups has made me very aware of how fortunate the screen sector is in comparison to other Arts sectors. There are many creative organisations and individual artists who are barely hanging on in the COVID environment. It was particularly poignant to hear of suicides in the music sector.

Another very clear reminder of the screen sector’s difference for me in these meetings was the fundamental blending of art and commerce that is central to our sector. Our art comes about as the result of tens or hundreds of thousands, or millions of dollars in investment to generate a work. The annual budgets of NZ On Air at $150 million, NZFC at $26.4 million and with a New Zealand Screen Production Grant Budget in the hundreds of millions of dollars exhibit this.

In television, there’s no real tension between art and commerce. It’s a business. Everybody knows it. That’s not the case in film. Film still remains the domain of the auteur director, whether they are making an art house film or a Hollywood blockbuster.

Director Christopher Nolan has been given the authorial right by Warner Brothers to bet the bank on a cinema release with the $200 million film Tenet. Why?

Nolan exhibited his artistic talent with his first film Following. His second feature, Memento, on a $9 million-dollar budget grossed $40 million worldwide. His Batman trilogy, Man of Steel, and Interstellar have generated billions. That’s why. Nolan is now an established blockbuster auteur.

Nolan’s debut feature Following was made on a budget of £3,000. Most of the cast and crew were friends of the director, and shooting took place on weekends over the course of a year.

Of course, not everybody who’s a director has the talent or will take the path of Christopher Nolan. But we should celebrate every New Zealand film that gets made whether its self-funded or the beneficiary of NZFC financing.

Sam Kelly and Guy Pigden, two of the latest DEGNZ members to finish films, took different paths to the same result.

Sam’s NZFC funded Savage is knocking it out of the park at the moment, having taken over a million dollars at the box office in two weeks. Guy’s film Older, funded through Pledge Me, had its official premiere last weekend, and is available to stream on Prime Video. Streamer reviews are looking good too.

As well, we have DEGNZ member directors Armagan Ballantyne in production on her sophomore feature Nude Tuesday, Michelle Saville on debut feature Millie Lies Low restarting after a COVID shutdown, Linda Nicol wrapping up on her debut Poppy, and Leanne Pooley with feature documentary Girl On A Bridge, which has finished its cinema run and is now available online.

Even amidst these COVID-created tough times, we have much to celebrate with the success of our members in the feature film arena and the funding our sector’s received.

 

Tui Ruwhiu
Executive Director

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There are a few key unresolved issues in our sector and we are sitting on our hands waiting for action. The transformation of TVNZ into a proper public broadcaster is one. Then there’s the Screen Industry Worker Bill that will allow contractors to engage in collective bargaining. Another, the underwriting insurance needed to get the domestic film industry up again.

I know there is an election on, but we are still some ways away from the transformational change needed to get going properly, as well as grasp the opportunities on offer in the new world we are in.

In the UK, the new Director General of the BBC is moving rapidly to address the challenges there. Amongst them the COVID-19 pandemic, lack of diverse representation, political pressure, pay disparity, technological disruption, the emergence of competing news outlets, a battle to maintain relevance and the threat to the licence fee. A number of his changes will undoubtedly prove unpopular as he drives the organisation to be leaner and more commercial as well.

Yet here we sit still waiting for the Government to address the public broadcaster issue. It was December last year when Broadcasting Minister Kris Faafoi proposed merging TVNZ and RNZ. In January, he presented a revised plan and was asked for a business case due last month. Meanwhile, streamers have become the new global studios, YouTube has become the most popular source of video content in New Zealand, and TVNZ continues to lose money. The only wait that’s been blessedly terminated is what’s happening to TV3. The good news is Discovery’s acquisition of some of Mediaworks assets including the network—perhaps the first time in the channel’s history that it’s going to have real money in the bank to draw on.

Starting in 2018, the Film Industry Working Group toiled for months to unanimously come up with recommendations to help shape the Screen Industry Worker Bill. This extended process together with the time to draft the Bill, the Select Committee submissions and the interruptions caused by COVID mean we have to accept there will be no passage of the bill into law prior to the election. We are now faced with its fate hanging on the election result. Even after all the Select Committee submissions were predominantly in support of the Bill, National continue to oppose it. They will throw it out if they come into power. Accepting the rejection of the Hobbit Law they were responsible for putting in place would obviously be too much for them.

Perhaps the biggest stumbling block for the industry right now is the lack of commitment from our Government to underwriting the local film industry, replacing the insurance companies who won’t insure for COVID. In June, the Australian Government put in place an AUD$50 million fund to provide financial guarantees because insurance companies are not providing coverage for COVID-19. In July the British government launched an emergency £500M (US$646M) film and TV coronavirus production insurance fund. NZFC and SPADA have already made representations to Government to underwrite local production. Nearly two months later and we still haven’t heard an answer.

I know that the New Zealand screen sector has received monies to address the impact of COVID. We are all thankful for that. But this underwriting is necessary if any new New Zealand films are going to get made. Here’s hoping we don’t have to wait too much longer to find out.

 

Tui Ruwhiu
Executive Director

 

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2020 is a watershed year in time for the screen industry because of COVID and the Level 4 lockdown we endured.

New Zealand On Air’s latest ‘Where Are The Audiences’ research was conducted during May and June, when we had come out of Level 4 and were in Levels 2 and 1.

Although potentially skewed because of COVID and possibly having an irreversible effect when it comes to content viewership that’s too early to truly gauge, the results make interesting reading, and potentially signal the writing is on the wall for free-to-air TV2 with its target audience of 18 – 49-year-olds.

Two’s popularity with all New Zealanders 15+ showed a continued decline from 27% in 2014 to 14% in 2020. More telling is that from 2018 when the survey was last conducted to now, The channel’s popularity declined by 7%, its biggest drop for the two-year periods across which the surveys have been conducted since 2014.

The research indicates that 2020 is the crossover point between traditional media and digital media for attracting the biggest daily audiences of New Zealanders overall with YouTube video now the most popular site, station or channel. But for 15 – 39-year-olds, a large part of Two’s audience, that crossover point occurred in 2018 or earlier.

Exacerbating the problem for Two is the increased adoption of digital media by those aged 40 – 59, containing the remaining chunk of the channel’s audience. This 40 – 59 age group is moving away from free-to-air TV and towards SVOD, OnDemand, and other digital options.

2020 would seem to be the cross over point for the 40 – 59 year-old shift from traditional to digital media.

On the bright side for TVNZ, OnDemand popularity is increasing, rising from 7% in 2014 to 21% in 2020.

Coincidentally, the percentage increase in popularity of OnDemand is essentially the same as the decrease in popularity of TV2 at 6 – 7%.

The younger demographics are digital natives or early digital adopters and as time passes the older age groups are utilising digital more on more. While free-to-air viewing remains stable, you’ve got to wonder how much more of a decline Two can take with its core demographic before it becomes unsustainable for TVNZ, who are contributing to Two’s audience cannibalisation with TVNZ OnDemand.

We’ll likely know come the next survey results in 2022.

 

Tui Ruwhiu
Executive Director

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I’ve had occasion to review the New Zealand Film Commission Act, more so recently. To understand the New Zealand Film Commission’s (NZFC) role, it’s really the source document to read. And from it, we can then see how they interpret it.

Taking a look at it here, the first thing you will notice is that there are more clauses that are repealed than there are clauses that comprise it. In comparison to the Broadcasting Act that governs New Zealand On Air, the NZFC gets off awfully lightly.

From a New Zealand screen creative’s perspective, in my view, there are only three areas that are of real relevance in the NZFC Act.

The first is in Section 2, Interpretation; the meaning of the word ‘film’:

film includes a photographic film, or a recording on magnetic tape or on any other material, from which a series of images, with or without associated sounds, may be produced

You can see that this interpretation applies, but is not limited to the meaning of film as we in the screen industry use it. In fact, it’s more akin to the interpretation of ‘film’ in the NZ Copyright Act:

film means a recording on any medium from which a moving image may by any means be produced

In other words, ‘film’ in the NZFC Act actually can be interpreted to mean audio-visual content.

The second pertinent part is, I believe, (1A) in Section 17, Functions of Commission:

to encourage and also to participate and assist in the making, promotion, distribution, and exhibition of films

The key word for me here is ‘exhibition’, but more appropriately the active verb ‘to exhibit’:

exhibit – to show something publicly

exhibition – an event at which objects such as paintings are shown to the public, a situation in which someone shows a particular skill or quality to the public, or the act of showing these things

We all think exhibition means theatrical exhibition in film, but the Cambridge Dictionary definition, which I think can be applied here, just means showing to the public. Again, how this is applied is open to interpretation.

The final area of real interest is Section 18, Content Of Films. There are a significant number of stipulations for this, but they essentially tell us that the film should have significant New Zealand content, and be made by New Zealanders in New Zealand, unless it’s an official co-production, which confers New Zealand status on the film.

That’s pretty much it. So, what does it all mean?

Well it pretty much means that the NZFC role is very open to interpretation. And the New Zealand Film Commission’s guidelines for everything it does are their interpretation as they see it, guided by the Ministry of Culture and Heritage, who they report directly to, although the Ministry of Business, Innovation and Employment (MBIE) has oversight for the International NZ Screen Production Grant and makes a contribution to international promotion of the NZ screen industry; both elements of economic development.

More than anything else, MCH want films to be seen by audiences—NZ first and then the world. Theatrical release is generally considered the most important way of delivering an audience. Watching a film on the big screen with other people delivers the cinematic experience that is meant to separate ‘film’ from TV.

Theatrical exhibition also delivers box office, which is an indicator of the commercial success—or not—of a film. Commercial success can provide funds for future investment into films. In reality, we all know that nine out of ten NZ films fail to deliver real Return On Investment (ROI), so whatever revenues come in are really only reducing the size of the loss of investment. But nowhere in the Film Commission Act does it say that films have to return investment. The International NZ Screen Production Grant overseen by MBIE is the only film-related investment where ROI is expected.

Let’s take a closer look at the interpretation of ‘film’.

Obviously, NZFC has gone for the wriggle room in the Act to take on premium TV drama as well as film: both audiovisual content. It’s clearly strayed into the domain of NZ On Air here, but by targeting internationally-focused NZ drama content, it’s not stepping on NZ On Air’s toes, which are firmly anchored in domestic terra filma.

How about the guidelines for NZ Content?

The Act is very prescriptive and NZFC adheres to them for local films. Official co-productions, though, allow for interpretation. More than one NZ film with a completely American setting has passed as New Zealand content, Slow West being a good example as a NZ – UK co-production.

What about exhibition?

The film commish has theatrical exhibition as a key requirement. And exhibition, for me, is where my main interest lies, because it’s at the heart of NZFC investment. In fact, like the meaning of ‘film’, it could be broadly interpreted but it’s not at this point, although COVID has thrown a spanner in the works with cinemas shut down during lockdown, and now suffering under renewed COVID outbreak. NZFC has made some temporary changes to adjust for this.

We can take traditional theatrical exhibition as a given for now, although COVID is certainly trying to push it into oblivion. But I think we could be looking at other interpretations as well.

A true public broadcaster in TVNZ could become a channel for exhibition of all New Zealand films. TVNZ OnDemand is an Advertising Video On Demand (AVOD) service. They may not get to be the first window for screening, but they could certainly be made to carry all NZFC-funded New Zealand films that wanted to sit there, with TVNZ making an in-kind contribution for promotion—trailer/promo and airtime—in return for getting the film for free. A Boosted campaign could generate funds for the filmmakers to use on marketing and promotion. Viewing statistics could be shared with NZFC so that they could gauge the film’s and the platform’s ability to deliver.

Of course, there’s no ROI here for NZFC, but does that really matter? Not if they fund these films 100% so there was no need to seek private investment. A budget cap for films of this type could make it feasible. This approach is probably suited to films that struggle to find commercial partners in distributors and sales agents or those who don’t want to go down the traditional path to market. But this doesn’t mean they don’t have an audience. It could well be niche, and there’s nothing wrong with that. OnDemand would find out.

Another approach to exhibition could be Transactional Video on Demand (TVOD). The New Zealand International Film Festival could provide its Online platform for NZ film TVOD, as it did for delivering films in the 2020 festival. This would essentially offer the same revenue generating experience as cinemas. The added advantages would be that NZIFF could clip the ticket, while distributors could be removed from the picture, increasing revenue flow back to the NZFC, investors and filmmakers.

Filmmakers who chose this path as their primary distribution channel should be able to access the NZFC Distribution and Marketing Fund to drive audiences to their film, with NZIFF opening its considerable database to them and providing additional marketing and promotion as theatres now do. Again, viewing statistics and other data could be made available so that marketing plans are adjusted and audience size and revenues determined.

A spin on the TVOD approach would be NZIFF Online becomes the Premium Video On Demand (PVOD) channel, in a Day and Date with New Zealand theatrical exhibition. Online revenue would likely have to be shared with the theatres, and a distributor would also be involved to get the film into cinemas (self-distribution an option, though), adding to the layers of revenue extraction on the way back to NZFC, investors and the filmmakers.

This approach is a revenue generating one and would likely have a sales agent already attached so international sales could help deliver an ROI. With NZ films struggling at the NZ Box Office, this I feel is a viable alternative to getting NZ audiences to watch NZ films. After the film has done it’s run using this approach, it could be put on TVNZ OnDemand so that it had an ongoing opportunity to get additional viewing.

What about the promotion of NZ culture you might well ask?

Well that doesn’t seem to be in the NZFC Act. It’s obviously a concern of MCH, though, and Section 18, Content of Films could be seen to cover it. But does significant New Zealand content equal New Zealand culture?

You’d hope so.

 

Tui Ruwhiu
Executive Director