location :: root / tv mass-media film / ECAFIC 2005


27.6. 2005 - 22. 7. 2005 Paris

The European Certificate in Audiovisual Financing and Commercialisation course was organized by French National Audiovisual Institute (INA) thanks go namely to Ana Vinuela and Chrystel Jubien. My participation was made possible by grants from INA a Czech Mediadesk office.

Scope of the training for purpose of this report could be divided to 7 parts. Project development consisting of pitching training, financial plan etc., financing film from public and private sources, contract and copyright issues, audiovisual distribution with current market analysis for fiction, documentary and animation, marketing, DVD publishing and online archives and delivery in a case study of INA's own projects.
I would like to point out that this division is logical and the steps of making a movie are often closely tied together, i.e. the 'final' marketing part is important in early development, distribution agreements are part of financing etc. Also the first lecture of Jonathan Davis was an overview with broader perspective and context of movie making industry and policy. Mr. Davis as coordinator of audiovisual policy across national film agencies of the EU member states explained why the movie and television industry are publicly funded, and that some of the good reasons for funding are cultural diversity, preserving and raising the profile of local culture, cohesion, creating employment, strengthening the economy and improving trade balance.

The development phase was the theme of lectures of Isabelle Fauvel, who was in an informal and more conversational way introducing the personal relationships in the business, the needed steps to get the project developed and start the production. More discussed Linda Beath as of the packaging essentials, Philipp Kreuzer with Chain of Title contracts and Bernhard Stampfer who identified in detail sources of development finance. The art of project presentation - pitching - was trained with Michel Schneider and Carl Clifton, also Linda Beath focused on goals for different kinds of pitches and practises how to achieve them.

Development is the first phase of making a feature movie, animation series or documentary. In development, the original idea, a novel, story etc. is made into a script, thus often research needs to be made, financial planning for production is prepared, scriptwriter, director, actors and other talent is identified and contracted (sometimes in this stage only in the form of Letters of Interest), studios, technology, locations etc. are assigned and all of this is a part of production package. From the beginning all legal aspects and rights have to be set up for producer as the only rights holder and we call this Chain of Title.
Development can be lengthy process, taking typically from 6 months to 3 years, where many skilled professionals take part and therefore needs to be financed. Good development is very important for making a successful movie, so bigger producers have more projects in development at a time and only some of them are made. Financing development can be through distributors contracts, from broadcasters, subsidies (MEDIA programme), investment of producer's own or other private money. During this phase, project is checked several times from different parties, which can ask for script rewrites.
Pitching - presenting project - can be critical in several key moments, from getting the idea into development, to rising the production finance for developed package. Pitching has several steps, first 2 -3 sentence pitch, 2.5 min pitch (paragraph), 10 min pitch (synopsis) and 45 min pitch with a director, all of them have to be carefully prepared, pinpoint the key elements and advantages of the project.

The production phase was not deeply analyzed in the course, except the financing and contractual part with Bernhard Stampfer and Philipp Kreuzer. Production is where the option or letters of interest turn into real contracts so the brilliant copyright lecture of Tony Morris also belong here.

Producer assembles the pieces of the jigsaw, the key role of producer is to communicate and put all parties together. Sources of production finance can be regional subsidies (conditional loans, grants), these are often to promote the region or require spending in the region, national and European film subsidies, from national there are i.e. CNC France, FFA Germany, UK Film Council, European is mainly EURIMAGES, which requires 3 coproducing countries. Money from Subsidies are conditionally or non- repayable, do not impose any creative control and there is no rights ownership. The Other sources are TV pre-sales for some territories and assignment of distribution rights against minimum guarantee payment, these often come with approvals and controls like final cut etc. Tax incentives (breaks, shelter) are becoming popular when producing (shooting) in countries that support it, another interesting source for lowering the costs are Below The Line (kind) investments of facilities, equipment etc. Important source is also gap finance from bank, it's hard to get because film is a risk business and require due-dilligence of all parties, completion bond etc. On the financial side of production all finance has to be contracted (hopefully win-win deal), and also completion guarantor, attorneys, collection agent, bank, insurers, accountant and tax advisor.
After the financing work is done, the hobby of producer is copyright collecting. All the rights for creative elements have to be assigned to producer. Creative contracts are the director and talent (crew) agreements, screenplay, music publishers and record companies agreements, cast agreements etc. Copyright was harmonized across EU and lasts 70 years after death of the author, rights can be assigned or licenced. As authors of the film writer, director, writer of dialogue and original music composer are considered.

Distribution strategies were presended by Alberto Pasquale from point of view of major distributor and Stefano Massenzi as independent. Advantages of both production and distribution company on international market presented from his experience in conversational lecture Pascal Diot.

Distributors are major players in film business. Distributors act as financiers, they have distribution networks (pipes and trucks), manage content libraries, they are marketeers and retail sellers. So-called US Majors include 20th Century Fox, The Disney Company, Universal, Sony (Columbia Tristar, MGM), Paramount and Warner Brothers, their owners mostly own other publishing companies, newspapers, TV and cable networks. The majors of Europe are broadcasters. The alternative of large distribution networks are local independent distributors and sales agents, which act as intermediaries between producers and local distributors in different territories. Sales agents tend to focus on special kind of films and build up a relationship of trust with their buyers.
European marketplace is strongly fragmented and can be divided into several regions in both AV production capacity and skills or audience taste. In opposite the US market is largest and richest single cultural market and international TV business is dominated by USA.
Release of the movie uses a settled model which suits best for extraction of value (people pay several times). Release windows are chronologically Theatrical (6 months window), Home video - rental and sell-through (both 3 months, sometimes together 6 months), Pay-Per-View (1 month, rare), Pay TV (12 months), Free-to-air TV coproducers and other Free TV (unlimited). Producers and distributors deal in rights to exploit the movie for a limited period of time through different windows and territories.
Pre-sales are done in several forms. Outright pre-sale is the case when rights are sold indefinitely for a flat fee, Advance is a fee for certain period and the profits are shared between producer and distributor. Distributor first recoups its fee (15 - 35%) and distribution expenses (P&A). The Minimum Guarantee is advance payment for production finance or rights acquisition and can be recouped by distributor from the revenues. Distribution or sales agent agreement(s) are often used as a security for a bank loan for production (discounting).

Production and distribution companies often have close relationship. A case study of Onoma, coproduction, international sales and distribution company showed possible new way in the industry, when distributor gains the rights by coproducing a movie, builds a library and makes international sales. Coproduction as a way of acquisition of a movie is often done by broadcasters in different countries.

Marketing strategies and techniques were the theme of numerous lectures. Starting with market analysis for fiction by Peter Andermatt, for documentary by John Marshall and for animation by Giovanna Milano, continuing through marketing techniques lecture of Carl Clifton to final strategic overview of Serge Schick.

As was said before, European market is strongly fragmented on cultural/geographical basis. Every territory can have different marketing specificity and movies successful in one country may gain low audience in another. European countries except UK and France do not have internationally appealing stars and there are other reasons for ongoing search for "European movie".
By market segments there is main division based on audience maturity (consumption skills) to mass market or mainstream and niche market, also called Art-house. Some movies have cross-over potential from one segment into the other. Mainstream and Art-house have different market characteristics and thus requirements for succes, i.e. mainstream audience is influenced mostly by advertising, art-house audience relies on publicity (magazine reviews, reference). Marketing campaign has to be carefully coordinated with release windows.
Important places for marketing the film are festivals and other events with the presence of star actors and it's a task of distributor to organize such events and gain publicity. Buyers also do not watch all the movies and buy on convincing presentation of the movie.

For the main genres, situation is now a bit pesimistic for feature films, perhaps because of oveproduction and shift from the movies to entertainment formats in TV primetime.
There is ongoing growth of the market for documentaries by volume and slightly less by value. Production of documentaries has decreasing budgets thanks to new digital technologies and there are more opening slots by broadcasters, also primetime documentaries are emerging. The documentary market is the only market where there is no US domination.
Animation market is also increasing and is at an all time high. All US majors are involved in the genre and share 64 - 94% of admissions in Europe. European producers cannot compete 10 times higher production budgets and marketing machinery US studios have.

DVD publishing was represented by presentation of John Wyver as independent artistic DVD producer and distributor and strong-vision lecture of Adrienne Frejacques from Arte video.

2/3 of production studio's revenues come from DVD. DVD sales reflect theatre, but are widely segmented in terms of genre. DVD market was accelerated by technology shift from VHS and synchronous demand from home-theatre owners for building their library on DVDs. Market is influenced by majors. Pricing of DVDs was changing a lot in the past and still has not settled. 40 - 70% from the price is VAT and retailer's discount, royalties for the authors of content can be 10 - 25% from the revenues, but often high advance payment is asked. Independent DVD production costs are hardly recouped from 10% producer fee from publisher, so there is almost necesity to do both production and publishing and still it takes 2 -3 years to recoup the investment.

INA, organizer of the course, was introduced by Max Benoit and Ana Vinuela, INA Media by Jean-Luc Vernhet. French National Audiovisual Institute began in 1974 by the split of state ORTF to 7 public specialized companies. INA collects, safeguards, digitises, restores and distributes French TV and radio archives since 1945. Since 1992 INA works also as legal deposit of all programmes broadcasted on French territory, recording real-time 17 radio and 41 TV stations. These mandatory archives of 2.2 mil hours of content are available for academic purposes only. By law INA also receives producer's rights to French public broadcaster's programmes 1 year after broadcast and commercializes them through INA Media website, where there is 220 000 hours of digitised programmes available.
INA also coordinates international projects of preservation of audiovisual memory and archives like IFTA, CapMed, FOCAL, AIBD and is leading training centre.

Another organization promoting and selling French TV programmes is TV France International (TVFI), presented by Mathieu Bejot, which includes around 160 member companies (making 85% of exports) such as producers, distributors and distribution arm of broadcasters. TVFI is maintaining catalogue and online database of 17 000 programmes and has its own digital content archive.



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