The European Union in its ever so insightful one-size fits all sense of humanity and business wants to globalize the European film market. The European market with its taste for unique films and shows is a polyglot of tastes – which benefits the keen film entrepreneur. But now the EU leader Juncker has different ideas. Rather than allow the independence of a country’s markets, his mandate is to create a single market – and crush independent films to the benefit of traditional (i.e. Warner Brothers, Universal, etc., ) and tech dominant (i.e., Google, Apple, Netflix, etc., ) content creators.
PreSales Is Indie Financing
I’ve had two films this year miss on their financing because the pre-sales were not enough to trigger the financing. Independent Film Finance relies upon pre-sales, incentives and equity and/or bridge loans to complete its financing package under the aegis of a bank and – most of the time – a Wikipedia – Complete Bond Company The layer for mistakes and gaps is very, very narrow.
The equation for Indie film involves incentives of 25 to 40% depending upon the location. In the United States, Georgia has the most robust and easiest incentive of 30% without a lot of restrictions. The Illinois incentives does not include Above The Line (producer, director, actor) costs which are considerable on films these days. Talent is driving the deals for pre-sales with lopsided budgets where – on a recent film that I was on – the ATL and BTL were almost at parity.
The EU is seeking to allow its citizens to move freely with their digital assets. A noble idea when an Estonian can now watch football in Brussells – but it doesn’t consider the historical infrastructure in place for current sales and financing arrangements.
Digital Rights Bundling Kills Sales
The EU Article on Digital Rights highlights future Industry problems with the “One Size Fits All-Others Be Damned” mentality of the EU. One commentator bizarrely notes that it is “Brexitism” at its worse without any apparent understanding that the Brexit was the United Kingdom’s answer for a variety of imposed One Size Fits All mandates from Brussels – without a democratic approval from its populace. So, a forced mandate without consent.
Bertrand Moullier, owner of Narval Media, a London-based firm that advises on competition strategies, says a regulation abolishing license rights for non-linear catch-up would undo a complex architecture in pre-licensing sales, creating havoc where the financing economy of film is concerned.
“I think it will maintain very successful content for a very small amount of aristocracies that can afford to go day-and-date across Europe while rest of us will get squeezed out,” says Moullier. “We’re going to see a tremendous impoverishment on the offer of content and geo-blocking means we will see a concentration in the marketplace for the Palo Alto companies in the universe.”
Essentially, the rights which provide for Indie Financing can be wiped out with the stroke of a Brussels mandated pen.
Today, Ministers of Culture from all 28 European Union Member States meet in Brussels to discuss the proposed regulation which seeks to remove territoriality of online broadcast services, such as simulcast and catch-up.
What this means, for example, is that if you are financing a British film and sold the free-TV rights to the BBC in the UK and their catch-up rights meant it would be available throughout all of Europe, selling the title to foreign buyers would become increasingly challenging because there would be no value in those rights. With indies having to dig deep to buy rights and release projects theatrically as is, only to take a small share on theatrical, and with DVD value dropping dramatically, TV often backs up the purchase. With this piece of the pie out of the equation, the international sales model would simply collapse.