In the second set of reflections on the 2015 Europa Cinemas conference, Michael Gubbins looks at the place of cinema in a changing film market.
The relationship between cinemas and home viewing has always been complex. The arrival of VHS (and Betamax) into a much more fragile exhibition sector in the 1980s was as contentious, and arguably more challenging, than the emergence of VOD today.
Exhibitors speaking in Prague were fairly sanguine about the place of cinema in a changed economy, with some justification, as this article argues.
At a time of rapid change, however, it is sensible to stay focused on the clouds, not the silver linings and Europa Cinemas conference set the right example by grappling with the key challenges:
A major reason why many in the exhibition sector are approaching the future with cautious confidence is a simple matter of mathematics: While DVD and television revenues have fallen away, the box office has defied many predictions in remaining relatively resilient.
During the strongest years of home entertainment, theatres accounted for only a minority of overall revenues and were often used as a “loss leader.” Today, theatrical revenues have become, once again, the core earners for film.
But the hard figures do not tell the whole story.
Revenues have climbed but admissions have been largely static with particular problems in attracting young audiences.
And research suggests that, while rising ticket prices have kept the overall box office healthy, they may also have alienated the next generation of audiences.
The other hard truth is that a world in which theatrical plays such a dominant role in film revenues does not provide the kind of economic base that can sustain a diverse film industry.
Film needs to be a mixed economy, with revenues from multiple sources. The decline in DVD and television revenues has been eating away at European film, with public subsidy playing the (some believe unwarranted) role of life-support system.
It is natural then, that attention has turned to the potential of new multi-platform on-demand services, increasing the reach of films. VOD, in its many forms and flavours, is clearly the coming power, with global subscription services, such as Netflix and Amazon threatening to dominate.
They promise to reach customers, which, for reasons of geography, time, or inclination, will not watch particular films in a theatre. The European Commission has gone further in trying to encourage this reach, with the initial draft of its Digital Single Market proposals, suggesting that artificial barriers and borders, limiting the export of content, needed to be removed – to the consternation of an industry built on territorial rights. (The potential for further exploration of cross-media content creation and new kinds of Intellectual Property to increase sustainable revenues and creative growth remain an oddly marginal concern).
Speakers in Prague generally accepted the idea that audience demand was changing and that VOD would be a critical part of the European film economy.
But they also made a case for why cinemas would remain essential to film – and why it was very greatly in the interest of the whole European industry that they did.
The cinema brand
The comfortable use of the word ‘brand’ might have been shocking a decade ago with its overtones of US commerce. It is, however, a valuable term in discussion of the role of cinema in a changing market.
The first and most obvious point is that cinemas are rare in film in actually having brand recognition – in the sense of generating customer loyalty and trust.
Very few people go to see a film because of the name of the distributor, or sales agent (however much value they might have added to the film).
Many people’s first motivation in going to the cinema is often the place, the environment and the experience, rather than a desire to see any specific film.
The brand also magnifies those other elements of films that have a degree of consumer recognition, including actors, directors, festival awards, etc.
And all the evidence so far, is that box-office success is what creates the demand that on-demand platforms exploit. VOD feeds on cinematic success.
Cinema creates demand.
There is an argument that the domination of cinema in demand creation is the result of established practice and habit, rather than any innate qualities of the big screen. Sceptics also like to suggest that a protected first release window has prevented other, equally valid forms of release from creating their own support base.
Cinemas in Prague made a different and multi-faceted case for the continued role of cinema as the pre-eminent demand creator (one that is perhaps being neglected in the enthusiasm for borderless digital release). Speakers suggested:
- Films are made specifically for the big screen and the unique cinema experience: all other forms of screening, by definition, are a diminution of the creative vision. It could be argued that film critics or festival juries, for example, could not really judge the value of a film unless they have seen it in the form intended.
- Collectively, theatrical release is still seen as the “gold standard” around which revolves the whole superstructure of film, including critics, premieres, markets, festivals, etc .
- Cinema brands are powerful in their communities. Without the marketing muscle of Hollywood, International success for European film crucially begins local and then goes global.
- Box office remains the most transparent and established means of understanding and generating demand on other platforms.
- The VOD sites which have generated demand without success on other platforms have largely concentrated on their own branded (mostly television series) for their own commercial reasons.
The sofa-palace axis
The weakness of the theatrical argument is that independent and arthouse venues are overwhelmingly based in affluent parts of big cities and university towns; and there are large areas of Europe, particularly the less developed parts of New Europe, where screens are sparse.
As discussed in Part One of this report, one way of dealing with that problem is for cinemas to expand beyond their current geographical limits.
Digital technologies and a more mature broadband and satellite infrastructure, have opened up the potential to take a rich and diverse cinema culture to a much bigger audience.
A very good blog of the conference includes an overview of case studies that demonstrate the different ways that cinemas are reaching out to communities.
There were also valuable contributions, explaining how challenging European content could be taken beyond core cinephile constituencies, including a presentation from Melissa van der Schoor, of the Rotterdam International Film Festival, about a project called IFFR Live, which enabled simultaneous screenings of competition films at the festival and in cinemas; and another from Alice Quigley, of the Watershed in Bristol, on how a collaborative, multi-venue initiative from the BFI Film Audience Network, called Conversations About Cinema: Impact of Conflict had taken serious film out to a wide range of audiences.
Expanding the reach of venues, however, will only ever be one part of a mixed economy. The question is how far cinemas and VOD will co-exist and cooperate; or as more than one speaker put it, how the relationship between the Sofa and the Palace will evolve.
Sofa culture deserves more explanation. Contrary to myth, the sofa is less sedentary and solitary than its image. While it is true, that shared family viewing in a main living room has declined, the Sofa today can be more like an operations room, from where the armchair general can marshall myriad choices of media and communicate with friends, and even followers.
Many digital natives are now ‘second-screeners’ simultaneously watching media, while communicating with friends and sometimes even interacting with the programme in front of them (voting in talent shows, etc).
The Sofa/Palace dichotomy misses a huge crucial space between the two: the always-on mobile platforms, but the core argument of many in Prague was that cinemas and the emerging on-demand services could be friends and partners – or at least need not be mortal enemies.
The conference heard from three cinemas, which have been experimenting with their own branded VOD channels: Ivo Andrle, of Czech cinema group Kino Aero; Jaki McDougall, of the Glasgow Film Theatre in the UK; and Sigrid Limprecht, of German exhibitor, Bonner Kinemathek.
What united them was a belief that, for better or worse, their customers were embracing, or would embrace, VOD in some form, and that standing back and waiting to find out the impact of their choices on their cinemas was not an encouraging prospect.
Each though, more or less, represented a different strand of thinking.
Kino Aero is part of a group, which is both distributor and exhibitor. Like other companies, includingCurzon Film World in the UK, there is considerable interest in the potential of multi-platform distribution and a degree of control over the release models.
McDougall, as chief executive of the GFT, was interested in extending the audience trust and curatorial expertise that clearly works in the cinema business into the on-demand environment. The GFT Player, set up a year ago, has been a challenge, however. While VOD players can be set up fairly easily (in her case in partnership with online video specialists Distrify Media), the balance of work and investment to returns has not met initial hopes. But she said that it takes time to establish a new brand in a still emerging field, and that she had committed to another year of experimentation.
The least enthusiastic of the three was Limbrecht but she represented a large group of generally sceptical exhibitors, who felt that VOD services might, at best, be a cruel necessity. She hoped that at least having a service might offer a degree of control over the damage, that she felt was more than possible to cinema screenings.
Cinema’s place in an on-demand world
There was a feeling from Prague that consumer demand was changing, and that the economics of an on-demand world were clearly going to have an effect on the practice and processes of the European film industry. There was also no point in fighting the inevitable.
Instead, the key was to focus on core values and the potential to make them count in the new world: the cinema experience; local brand strength; proven ability to create demand; curatorial experience; and perhaps most of all a passion for film as an art form.
The biggest concern was not mass closures and marginalisation, predicted by some for theatres. Those believing that fixed spaces and linear programming might be an anachronism in the age of convergence and ubiquitous access, do not understand the nature of the Experience Economy.
Instead, it might be that a tougher economic climate will lead to greater conservatism in commissioning, distribution and exhibition, built around a shrinking niche of older, more affluent audiences. That conservatism may make short, even medium-term business sense, given the ageing population and the competition for time.
But it also raises genuine fears about the future.
There is an alternative vision, of a dynamic exhibition sector working with new platforms to build on respective strengths and committed to building the audiences of tomorrow for daring, exciting and culturally-challenging films.
At least, Prague suggests that there is an appetite to join the battle.