A few weeks ago Sean and I attended the world premiere of a new locally produced Australian horror flick, Storage, at the Brisbane International Film Festival. The film was written and directed by Michael Kraft, a fellow QUT graduate and was financed completely independently (no mean feat for a production coming out of Brisbane). Overall, the film was generally enjoyable with exquisite cinematography that belied its low budget. Even though the film was generally enjoyed by all, I am pessimistic as to whether it will be seen by an audience significantly wider than BIFF. In fact, the film is yet to secure proper distribution which is usually obtained during preproduction. Quite frankly, without distribution having been secured before production, the chances of a film ever really seeing the light of day are minimal.
I can’t help but feel there is a crisis in the Australian film industry. But surely it has nothing to do with a lack of talent. There are internationally successful Australians in most facets of the film industry: direction, acting, cinematography, sound and even costume design. Yet, if you look at the statistics, Australia, along with Canada, are the two markets in which local films can barely break 5% of the theatrical market share. Alternatively, in countries like France, Japan, China, India and South Korea, local films comprise anywhere from 30% to 90.5% of the local theatrical market. There is not one reason for why this is the case but rather a confluence of factors which have combined to create a perfect storm for the Australian Film Industry. Below I will suggest why these factors have become so damaging and propose some ideas for how we could possibly reorientate the industry towards greater commercial success.
I think it be sensible to begin my analysis of the Australian Film Industry by asking, what industry? Ok, I am being overly provocative but the Australian film industry exists in highly disparate parts. Can you name me even one Australian production house? Yet if I asked you to name an American one I’m sure most of you would have heard of at least one of Warner, Universal, Paramount, Disney, MGM, 20th Century Fox, Columbia or maybe even New Line or Dreamworks. Perhaps the only other international movie production house worth a mention outside of the dominant “majors” is Lionsgate, a Canadian outfit who has experienced phenomenal success in recent years. The point is, there are no dominant, market orientated Australian production houses which have the economic viability to produce world class quality product (perhaps Village Roadshow Productions is the closest thing we have to a successful production house along with Palace Films being the only other one of note).
Production Houses and the Need for Collateral
An historical analysis of the Hollywood’s major’s rise to power will indicate that the most important critical success factor for a flourishing movie industry is the possession of collateral. What do I mean by this? Well since the U.S. film industry began in the early 1900s up until 1949, the industry had always been vertically integrated. Vertical integration is where a firm owns all the value adding parts of the distribution chain. In this vertically integrated business model, the major movie studios owned the production, distribution and exhibition parts of the value chain. This ensured a vertically integrated oligarchy in which a few firms dominated the industry – an oligarchy which more or less still exists today. But it wasn’t necessarily the vertically integrated business model which ensured the success of the oligarchy. In 1949 the Supreme Court of the United States decreed that the major studio’s vertically integrated model was in breach of the Sherman Antitrust Act. The court forced the studios to either sell off the production or exhibition arm of their value chain. All the studios choose to retain their production houses but the ruling precipitated one of the greatest declines in Hollywood’s history. For about 25 years, the studios had to contend with falling profits, flop and flop and the concomitant rise of television.
It wasn’t until a new breed of filmmaker emerged who brought new ideas about how films should be made that Hollywood’s fortunes began to reverse. This new paradigm became known as the Blockbuster strategy and involved Hollywood producing few films at bigger budgets in the hope of drawing audiences to the theatres to witness the spectacle. But it wasn’t this new strategy in isolation that saved Hollywood. Just around the corner in the late 70s and into the early 80s another innovation was about to hit the market. This new technology would breathe new life into Hollywood – the VCR. Even though the initial technology was met with trepidation by the majors for fear that it would cannibalise theatrical profits, it would actually give rise to a market larger than the theatrical market itself.
What am I trying to say with all this information? Well the secret to Hollywood’s success as an industry boils down to the sine qua non of a successful film industry – collateral. From the early 1900s to 1950, the major studios funded each and every one of their films on the basis of the collateral of their theatre real estate. It’s what allowed them to mitigate the risk for investors, diversify their assets and made investing in feature film production a less risky endeavour. Then in 1949 their real estate was yanked away from them. The business model was thrown into turmoil and no longer could the risks be diversified. Massive budget flops (such as Cleopatra) nearly sank entire studios.
It wasn’t until the rise of the VCR and the post theatrical market that Hollywood really found its teeth again. The reason why is because the post theatrical market gave back collateral to Hollywood. Before the VCR, a completed film which had run in the theatres had a carry-over book value of $1. It was essentially worthless (in fact it was a drain on resources because of the cost of warehousing). Then suddenly all these films became valuable again. With the VCR studios were able to turn their old movies into products – videos – which consumers were keen to buy or rent. Suddenly, the Hollywood studios could finance their new projects on the basis of their film libraries which suddenly skyrocketed in value. This has continued with the advent of the DVD which simply exploded the post-theatrical market to a point where it now comprises some 70% of Hollywood’s revenue. The latest statistics foretell doom as the DVD market starts to mature – Blu Ray and HD will keep it at bay for some time but there are big structural upheavals that will occur in the industry in the next 20 years (but I’ll save that for a later blog post).
This brings me to the first thing we need to get right for a successful Australian film industry – the creation of a production house with enough collateral to maintain a viable production slate. Both Village Roadshow and Palace are cinema operators but they are too focused on the more lucrative exhibition end of the market. There is little incentive for them to allocate resources to production which is fraught with higher risk and smaller potentials for return. This is part perception, part reality. Just because no Australian firm has never been able to create a sustained portfolio of films doesn’t mean that theoretically one can’t. The problem with most Australian productions is that the production company is usually an ad hoc creation for the sole purposes of financing that one film. After the film has been produced and inevitably failed, the production company disbands and recedes into the night. This does not an industry makeith. Most films fail. Most Hollywood films fail. Even blockbusters fail. Waterworld (which I still maintain is a good movie) exemplifies this. But the reason why Hollywood studios remain in profit is because they diversify so that the failures are absorbed by the profits of the runaway successes. Without such diversification, you cannot maintain a viable company let alone industry.
So necessary ingredient number one: A group of production houses with the capital/collateral to finance a diversified slate of movies.
Why is Marketing Such a Dirty Word?
Another major perceptual battle the industry needs to fight is the anti-marketing credo that seems to reverberate around the industry. Unfortunately the artisanal vs. product debate will rage on regardless of whatever happens but I think it is a distraction. Don’t get me wrong, I enjoy independent artisanal films, in fact when I lived in Petrie Terrace I would always saunter down into the nearby Dendy and watch the latest independent fare (in fact the night I went down to watch John Pilger’s War on Democracy changed my career goals over night). But artisanal and commercial films do not necessarily have to be mutually exclusive. Similarly, a thriving commercial film industry can support the production of creatively risky artisanal films that would have never been produced without the support of an industry behind that is willing to take creative risks – go read about Sony Pictures Classic for more information.
The secret to any film’s success is good marketing. For some reason the term marketing with all its pernicious stigma has come to be seen as the weapon of highly invidious corporations out to destroy the soul of humanity. But marketing is really a grassroots thing. It’s about information and providing the consumer with the knowledge they require to make an informed choice. Ok. Let’s cut the bullshit and just sober ourselves to the simple reality that if nobody knows about your film, nobody is going to see it. The secret to Hollywood’s formula is the fact that each film’s marketing budgets comprise at a minimum 1/3 of their production budgets. In Australia, most films are barely able to acquire the financing to cover the production budget let alone anything for exploitation (Hollywood’s early term for marketing). In fact, marketing is just something that is given an afterthought. Producers and directors think that if it’s a really good film then people will somehow find out about it and go and see it. Unfortunately, this mindset is naive. Likewise, Australian’s seem reticence to self-promote. Perhaps the is a cultural vestige or whatever, but unless we start to champion ourselves and our own products (even at the risk of being a tall poppy) then we will never have a viable industry.
Movie theatre owners seek to fulfil one objective: arses in the seats. They don’t care who produces the film or what the film is, as long as it’s going to bring people to the cinema. Therefore, production and distribution houses need to stimulate pull demand where the consumers themselves are the ones who force the exhibitor into showing the film through a groundswell of demand. That’s why I’m a firm believer that when you a writing the on-screen story (a script), you should also be crafting the off-screen story – or the story which will go out into the public sphere and which will fulfil the role of stimulating people’s desires to see the film.
Necessary ingredient number two: Whenever acquiring the funds the finance the film, make sure you at LEAST apportion 2/3 of the total funds raised into production and 1/3 into marketing. For every good script there must be a good off-screen story which can be spun to arouse people’s desires to see the film.
Let’s Murder the Auteur
There is another odious spectre haunting the film industry and that is the curse of the auteur. It seems to be common amongst small film producing nations such as ours that when we do create a national spectacle, we need to do so with a stylistic punch. I don’t know about you, but I really can’t stand most of Baz Luhrmann’s movies. This is just my boorish, uncultured opinion. But my point is that all of Baz’s films are highly stylistic. There is nothing inherently wrong with this, but for a film industry to succeed we need directors who are willing to suspend their stylistic desires and rather create films which appeal to a wider market. I realise this point will probably be my most controversial. But it is a necessary fact that we need to face to sustain an industry. Overly stylistic pieces only appeal to certain markets. To have broad appeal, then films need to appear as though they could have been directed by anyone. That is not to say that film’s need to sacrifice their art. But every film slated for production need not be directed by an artiste with a highly developed and iconic style. Yes, Luhrmann has been an internationally successful director, but it is not sufficient to sustain an industry.
So necessary ingredient number three: Kill the auteur.
The Australian Cultural Cringe
The final issue which I wish to discuss is the Australian cultural heritage which acts as an impediment to the successful growth of our industry. Problem number one: our accent. Americans can’t understand us. And quite frankly, when I am watching an American production and an Australian appears, it is actually quite jolting. Sometimes, I too, am hard pressed to understand what the Australian is saying and I am an Australian. We need to find a way to neuter our accent. Or at least make it palatable to international audiences.
But also, just because we are a small nation with a small film industry does not mean that every Australian movie needs to concern itself with hackneyed Australiana. Sure Kenny, The Castle, Muriel’s Wedding, Young Einstein and Priscilla were successful (even internationally) but these films were black swans. They come around once every 4 or so years and satisfy our (and the international community’s) palette for Australian fare before we (and they) go back to usual diet of American blockbusters. My question is why do we have to produce films that are typically Australian often to the point of cliché? The United States film industry does not restrict itself to American stories. They do stories about China, Japan, Europe and Canada. Why can’t we produce films about the United States? Why can’t we write stories set in China, with Chinese actors? There is nothing to stop us. We can’t restrict our cinema culture to stories about Australia – for one thing these stories do not necessarily play well to international audiences. Secondly, we just do not have enough of a history to sustain enough fodder for films. Thirdly, Australian consumers generally don’t like stories about Australian people. I make no normative claims about whether this is right or not. This is just the way it is.
Necessary ingredient number four: Look further afield. Write stories which are not just about Australia. Seek stories that are global but which can be produced locally.
Conclusion
I have only really just scratched the surface. In fact, most of what I have written here is a crude, reductionist account of what’s wrong with the Australian film industry. My analysis of Hollywood is incomplete; my discussion about auteurs borders on hysteria, my elaboration of why marketing is important is poor; and my analysis of what’s wrong with Australian stories is weak at best. And I have made no effort to analysis the global hegemony that Hollywood has over worldwide distribution networks. But what I think we need to do is start thinking about the possibilities for Australian film. I might sound like a capitalist pig by trying to commoditise an art form and I’m sure there will be people who deride me for this. But films create jobs. Films give us the ability to express ourselves. This nation has world-class facilities (Narnia is currently be filmed on the Gold Coast), we have world-class actors, cinematographers, directors, we have world-class equipment and yet we have a third-rate industry. We can barely crack 3% market share of our own market! In a world where most national market shares are clawing back ground from Hollywood, our industry remains in the doldrums. Our film students are resigned to a lifetime of living on skid row because we, as a nation, cannot get the formula right. I suggest that we can do it. We just need people to take the risk and with the right strategy we can develop a world-class, competitive, globally focused industry. And I suppose if New Zealand can do it, surely we can too!