Will Cinema Just Disappear?

1 April, 2019 - 06:02

South Africas local film industry is becoming a serious economic player, but for all the advances in technology, film distribution has become far more complex. Forbes Africa delves into whether theatrical releases are still feasible.

Theres the old ADAGE that there must be money in film, but research and interviews this reporter conducted recently revealed a complex and tricky new system that needs to be simplified and explained.

The biggest question remains, why do it? What are the models for making money?

There must be money being made somewhere since the South African and African film industry and box office seems to be thriving. The time has come to demystify one very specific area of the business of film and this is distribution.

A brief explanation of distribution is in order before we delve into the technological advancements that have disrupted the entire industry over the last few years.

Distribution is defined as the release of a completed film. Back in the 1980s, 1990s and up until the late 2000s, the process was fairly simple; write the script, get the funding or studio backing, shoot the film, post-produce the film and have a distributor release the film to cinemas, then video or DVD and ultimately television.

The process is no longer that simple. One of the major reasons for the more complex distribution model these days is the advent of high-end digital technology.

Back in the day, about a decade or so ago, all films were projected on 35mm film. The origination format was irrelevant but the final product was always 35mm projection. Now, although 35mm has its advantages, it also has its flaws.

It was both cumbersome and expensive. Prints of film cost anywhere from $2,000 to $5,000 per print, then there was the delivery costs associated with the prints, as well as the fact that after a certain period of time, the prints would be damaged and/or ruined - due to their organic nature, film as a medium does degrade over time.

The advent of high-definition cameras in the early 2000s and ultimately 4K and 5K cameras in the last five years changed everything.

Cinemas decided to adopt a new standard, the Digital Cinema Print (DCP). A DCP is a digital file that, much like a film print, consists of a variety of digital stills and sound files that are sequenced and recognized by the digital projectors that cinema owners have now equipped their cinemas with.

The file can be either in 2K or 4K depending on the projection system thats available.

The cost of the digital conversion from the old 35mm projectors was astronomical, so much so, that the cinema owners, locally and internationally, had to be subsidized by whats now become known as a virtual print fee. This has effectively replaced the old 35mm print fee and is cheaper, ranging from $750 per screen to $2,000 per screen.

Helen Kuun from Indigenous Film Distribution in South Africa has some insights on this.

When the world converted to the DCP system, all that equipment had to be funded by two banks in the world who funded it because it was around R1.5 million ($110,000) per screen to the software and hardware conversion.

So the exhibitors put up as much money as they could and then Arts Alliance Ventures put up the rest of the money; everywhere in the world, they are there for digital conversion as a bank, so that digital print goes straight to them to pay off the digital equipment. But there is an end in sight, its November of 2020.

The financial burden has now been placed on the distributor who owns the film to pay the virtual print fee to screen it. This has become an additional rather large expense, thereby reducing profit margins for the filmmakers and their respective distributors.

If you want to put your film into 100 cinemas, at $650 per cinema, thats $65,000, and this is more than the entire budget of some South African feature films.

Also, the exhibitors are keeping on average 55% of your box office receipts on top of all these fees and this excludes print and advertising costs.

The burden of profit is far greater than it used to be, even though its become cheaper than ever to produce a film with 4K production and projection available to almost all.

You have to structure your funding. You need to source money from more than one place in the world. You can tap into various structures of soft funding and then you can have two environments of recoupable funding. If youre spending, say R10 million ($732,000), you should be able to, quite easily have not more than 60% of your budget recoupable due to soft money, Kuun says.

Due to the complex nature of the business structures behind the independent film world, this is often times why the cinema market is flooded with mainstream Hollywood releases and not local independents.

We spoke to Ben Crowley, CEO of Gravel Road Media in Cape Town, whos a South African and international distributor, about the merits of a theatrical release. Is it still feasible?

Releasing a film theatrically is not necessarily the start and the end of the film. Its a very important part of the life of a film, certainly if youre wanting to drive other sales because a good theatrical performance will drive your home entertainment sales, it will drive your pay TV price, it can influence your initial batch of marketing that happens, creating awareness around the project, so it is important especially with the higher budget films. One shouldnt be naive thinking you can do a high budget film and then release it straight to TV or VOD (video on demand) platforms, he says.

The truth is this money is being made in the process of windowing.

It would be remiss of me not to mention that South Africas local film industry is becoming a serious economic player, having contributed R5.4 billion ($395 million) to the GDP during the 2016/17 financial year.

The research was gathe

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