US investment in British films in the last year is down. Both lower-budget and big-budget pictures have been affected.
So I decided to give myself the Christmas break - from just after boxing day until the 9th of January when I returned to work to tryand get Netribution 2.0 up online. I ordered one of the most boring christmas presents in memory - Larry Ulman's 'PHP and MySQL for Dynamic Websites' and proceeded to teach myself some basic PHP, beynd what I'd hacked for the www.ukfilmfinance.com websites
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I get it. The people have spoken (well, 37% of the electorate or ~26% of the UK). Brexit means Brexit (tho no-one knows quite what that is) and the decision is clear. There may be a multitude of reasons why people voted Brexit – to save money, to avoid EU regulations, to get more parliamentary sovereignty, to cut welfare for EU migrants, to send a message to Westminster, to send a message to Brussels, to get rid of non-whites, to get £350m a week for the NHS – but change is coming. What sort? Well, although had the EU offered David Cameron a better deal in February, we'd probably have voted to Remain, making it plausible the EU could offer us a better deal now, that doesn't appear to be happening. The British negotiating positions looks like either Single Market without free movement or if not given that, full Brexit, perhaps with a right-to-remain agreement for current residents in exchange for similar deal for Brits in the EU or a Canadian-style trade deal. In either scenario the system of democratic influence into the operation of the EU we currently have; the seat at the negotiating table for new deals, treaties and funding schemes – that has gone, as are the network of MEPs who exist to communicate local issues to the EU.
Removing free movement means that if I was going to open a big factory, if I couldn't employ enough cheap skilled workers to do that in the UK, I could just set up a factory in in Poland and do it there. Poland would get my PAYE, VAT and Corporation Tax and there would be no tariffs for me to sell my stock back into the UK. I'd employ fewer local businesses to support and build my factory. It's good for me, Big Business, but terrible for countries and communities. This is the thing about free movement that politicians seem to not bother explaining. Economically speaking, free movement is designed to protect local jobs and the local economy, it's a concession to social issues in an otherwise purely business deal.
Though for me, free movement means something different. It means the ability to not have to make the trade-off between being able to travel and being able to hold down a job or start a business. I can currently both work and run my business while travelling and living around the EU. I'd prefer if that was the world (and to be honest, provided I bring money with me, and keep moving, that's true). I appreciate many people in many jobs don't have this luxury, tho they doubtless earn more. Still, remote working, the gig economy and digital businesses are only growing, ten years from now my lifestyle of working for clients while starting ventures from any nice place I chose (with Wifi) could be the norm. What kind of lifestyle do people want their kids to have? My brother is just starting a top MA in Sweden – for free! Why prevent people from the freedom to bounce between Florence and Copenhagan, Paris and Krakow, Berlin and Madrid, building a network of peers, co-workers and friends? Why deny that luxury to British citizens?
If free movement goes, then I guess I would to, and move to a country that does offer it. Businesses and entrepreneurs will be the first to be offered plenty of EU27 incentives and residency by other states, something that's already begun with the Berlin billboard van. America wants to fast-track visas for entrepreneurs with startups. The public funding systems in some EU countries are brilliantly set up to support startups and small business (not to mention research, art, film, tv production, theatre, etc).
I can imagine some Brexiters would call those who Leave a traitor to their country – actually all of this is the reverse: it's because I want to stay in the UK and run my business from here that it matters so much to me that we get the best possible post-Brexit deal. I know I'm not alone.
Why the EU matters to a tiny business like Netribution
I've not done the sums but maybe up to a quarter of my business in recent years has come through the EU. Netribution is a tiny outfit that's chosen to stay really lean and small with the lowest possible overheads in order to maximise time to develop new ideas. Still, through this microbusiness, I've worked on Honeycomb, an EU Interreg project researching and building creative digital micro/SME business networks across Ireland, Northern Ireland, Scotland and England; and Interreg's Scandinavian World of Innovative Media, bridging Copenhagen and Malmö with some of the region's most creative digital people and microbusiness. You can download a copy of the research I did for Honeycomb here, and watch the slightly stumbly lecture on web film distribution I did for Swim here.
Eight years ago with Adam P Davies, Netribution launched our 490-page world Film Finance Handbook at Cannes. We sold copies in the local bookshop and the American Pavilion, and on upturned boxes in the street to passing multi-million dollar producers. We even thrust a copy into the hands of a then Culture Secretary, Tessa Jowell – better access then we could have got in London. Best of all, we paid no tariffs and had to fill in no forms.
I'm pretty new to TV, drawn like many by the existence of a business model far superior than film. With TV you can cover up to 80% of your budget on the first commission potentially, sell one other territory (or find gap finance) and from then every subsequent sale is profit. After two years typically in the UK, the rights can revert to you forever, Great British Bake-off can sell to the highest bidder. And in the UK as an indie, the format rights are yours to sell for remakes around the world, so Ver Firina in Turkey, or Le Meilleur Pattisier in France can keep pushing profits higher.
But coming into the TV world after a long spell in tech and even longer observing from the sidelines of film, I'm amazed at how rigid it seems. Peers with a huge slate of feature docs behind them are told they have to start nearly at the beginning, their film success bears little impact on how long it will take for them to be producer/director. Commissioners seem to want to see exact replicas of existing hits, by people with track records. Sales are made by describing how exactly your show is like an existing successful show or strand.
Of course there's exceptions to this, and new concepts do often appear. But these typically come from seasoned hands in the industry, not new entrants. If you want to innovate as a newcomer, sign up to YouTube.
Compare this with the tech startup world. Provided their team looks competent enough, new entrants can get finance for any level of innovative idea. There's still finance for established concepts or remakes (the 'Uber of India' or 'the ARM of smart-watch chips') but a completely new idea can fly simply if it sounds convincing and the team have proven they're competent.
The problem may be classic too-deep management hierarchy – large multi-national media companies own super-indies, who own production companies, with their own experience-led hierarchies. The freedom for innovation at each level is reduced by the high cost of failure for the individuals concerned. For almost everyone involved, it's not *their* company, and if they back a dud, they could be fired. It seems much closer to the studio system with a tough, competitive environment that doesn't tolerate failure.
If it aint broke…
Still, this is how TV has long worked, so it could be argued, if it aint broke, why fix it?
For as long as there weren't innovation platforms for TV, the system worked ok, but now we have YouTube. A feminist analysis of video games may never get commissioned conventionally. Online, Feminist Frequency's Video Game Tropes is a storming success, getting 25 million views, 700k Twitter followers and raising $168k on Kickstarter. Vice has pivoted a sub-culture magazine into a multi-billion dollar company, part-owned by Disney, in recognising early the huge hunger of younger ‘millennials' for fresh voices and approaches.
Of course many YouTube channels imitate the formats and styles of trad-TV, but the most popular tend to look and sound like nothing you could find on TV. The more different the better, provided it meets the basic needs of being engaging and sufficiently well produced. The main problem is that advertising revenues from YouTube are pitiful – millions of views can translate into barely a few hours pay at Equity rates.
Worse, the message from MIPTV earlier this year was even YouTube ads weren’t safe. Laura Henderson, Global Head of Content & Media Monetization at Mondolez International (ie Kraft, Cadbury, Milka, Kenco, etc) explained "consumers are in the driving seat – they're skipping ads, blocking ads". Advertisers see neither trad-TV or YouTube as a safe or cost-effective means to reach their traditional consumers. "Cost per reach point is rising exponentially" she explained. So advertisers are looking ever more seriously at producing their own content. Branded content, co-produced by the brand, is growing so fast YouTube keeps changing its rules about creators' brand relationships, recognising it was a form of advertising on their platform they were unable to monetise.
I wrote about Branded Content for Moviescope after my first trip to MIP in 2014, and by 2016 it was an even bigger story, making up an ever growing chunk of Vice's production output. There's countless examples. Mondolez created the Sour Patch House, where musicians could stay for free provided they made music (and ideally snacked on the giant bowels of the sour dotted around). Mattel tells stories around Barbie and Thomas the Tank Engine; the Lego Movie was actually pretty awesome. Shell, somewhat disturbingly, supposedly has $100m+ annual production fund which they operate through Darlow Smithson, normally keeping the 'documentaries' produced uncredited.
RedBull, of course, is the king of this space, making so much from documentaries and live-streams of their adrenaline sport universe they created a new production arm, Terra Mater, without the Red Bull logo or any connection with outdoor pursuits.
There's a good case study about how Factory Media conceived a six-part 30-minute TV show, The Indestructibles, raised £1m from Casio to produce it, built a big following on Facebook and YouTube, then gave it to the men's channel Dave for free. It met product placement rules, but effectively was a 30 minute advert. Appealingly though, the broadcaster didn't care that the agency weren't established TV producers, it was free programming.
Where does this leave us?
So these are our choices if you have an original, innovative idea for TV – be it drama, comedy or format:
- Stay within trad-TV and make derivative programmes until you have sufficient reputation to try something new.
- Find the money yourself to make original content on YouTube for a tiny advertising income, or for the slowly burgeoning and high-risk tVOD market.
- Or make adverts pretending to be programmes for web and trad-TV.
I can't help but feel the disruption cycle isn't complete.