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The Making-of 2014

New Models, New Perspectives

Theatrical 2.0 – The Challenges of Finding New Distribution Schemes for the Black Box

By the German producer Martin Hagemann (Zero Fiction Film Gmbh) and Joachim Keil (Daredo)

Martin Hagemann offered to approach this session as a conversation between him and Joachim Keil, sharing their respective backgrounds, experience, opinions on the current situation of the film industry (compared to the music one especially) and their visions of the future. Are there new models for new perspectives?

As he stated, he used to be an independent producer like most of participants in the audience, producing with love, having the sensation to produce better films but making less money. Some years ago, he became a Professor at film school and this is how he met with Joachim Keil from Daredo. Looking at the major changes of the industry caused by digitisation, or let’s say the disruption of the film market, he convinced him to dare experimenting new things to attempt to find new ways of producing and distributing films.

The old school funding model

One of the first issues we all face is that we evolve in an old system, especially in terms of financing: the 2 main players being public money (national and regional funds) and TV. The whole chain is being covered, from development all the way to distribution and cinemas. Film funding in Europe amounted to 3b€ in 2012. There are some differences between countries in Europe but still European independent cinema mostly exists thanks to public funding. If we take the example of Germany, a standard film is being financed as follows: 45% by film funds, 25% distributors, 15% by TV, 10% by producers, 5% by others.

Old school revenues

If we take the example of a medium size European film of 4mio€ budget, the break even figures are as follows:

This situation has turned producers into line producers for distributors and exhibitors. Those taking the risks are the producers. The only realistic income for producers: producer’s fee + mark up’s, around 8-12% minus 5-10% producer’s investment, which leaves the producers with about 5% from the budget.

Business model for old school producers

The credo is:

Results of the old school funding system: a huge increase of film production and a saturation in the cinemas.

If we keep the focus on Germany & European films:

So too many films that have to be distributed but we also have to face:

No new model yet and the crisis grows… what should we do?

Bad idea to hang on too long to the old ones. If there is no new business model yet, thus we urgently need to develop and experiment new ones!

Let’s dare experimenting: the Fogma example (production & distribution)

Martin Hagemann has been through a new experience, FOGMA, at film school. This is how he met with Joachim Keil, coming from the music industry. The latter also had to face a technical revolution (from physical to digital distribution) and piracy in his field. Instead of remaining frustrated, at Daredo they have decided to concentrate on the people who liked what they were doing, on the music fans. Investing in marketing is important for the film business too.

Students of the film school have produced “Love Steaks”: 10 people crew, 8 weeks of shooting with RED Epic, 15.000€ cash, regular post-production, 2K DCP. The film takes place in one location, a wellness hotel in the winter by the seaside, 2 actors, a dozen amateurs. Without in-kind investment (hotel) a realistic budget of 350.000€.

In Germany, like in most European countries, the old system consists in windows like 6 month-exclusivity in the cinemas. The audience of “Love Steaks” does not watch TV but goes to theatres and screen films on the net. Why not a simultaenous release?

Day & Date Release: “Cinestream”

They decided to create a model, a brand called “Cinestream”: they gave the VOD rights to exhibitors for free and the whole technique was in the hands of Daredo. 20 cinemas agreed to do it immediately and 20 more could possibly join. But the cinemas have been backmailed and the film had to be released the old way: in total, between 30-40 cinemas, 15-20 cinestream and 15-20 regular ones.

Distribution budget amounted to 100.000€: 15.000€ of technical costs for Cinestream and 85.000€ marketing costs including press and marketing agencies.

Deal & Recoupment:

We give all the rights.
50% coming from the cinema minus 15% fee for booking and billing fee.
1.Rank: costs from the top, 10% corridor producer till recoupment by investor.
1.Rank: 90% for producer up to 30.000€ (delayed MG), 10% to investor.
2.50% 50% on all rights

If we reach:

No windows, then: TV sales, regular VOD, international rights in the hands of the producer, 50% share.

New models future & recommendations for producers

It goes through experimenting:

It has become clear that producers’ rights are devalued, that linear TV does not work any longer, Internet does but who pays for it?

Conclusions

 

The Making-of 2014

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