What to watch for in the overseas film industry in 2020:
Virtually every major U.S. entertainment company we speak with is thinking about how they can grow their international film and TV footprint, from Netflix to Cohen Media Group, WME to CAA, Anonymous Content to FilmNation. As content (and creatives) cross borders more than ever, having a foothold in a foreign land is becoming essential in the fast-moving entertainment arms race. Netflix leads the way. When the streamer maxed out its subscriber potential stateside, so began an aggressive overseas push. In July, the online giant signed a deal to move into the UK’s Pinewood studios. The firm launched a Madrid studio 18 months ago and, despite its Cannes ban, has set up shop in Paris too. Italy, Germany and Scandinavia are ramping up. But the flow of business isn’t only from the U.S. as UK giant Cineworld’s recent acquisition of Canadian chain Cineplex attests. International M&A is flowing as local businesses try to shore up against deep-pocketed U.S. rivals. Meanwhile, emerging markets such as Southeast Asia represent unprecedented opportunity.
Studio executives we speak with struggle to contain their anxiety about further consolidation in the market. “The shakeout will continue and there will be further huge change in the next few years,” one told us. The streamers and Disney’s acquisition of Fox have already shaken the business to its core. Disney+ launched in November and will roll out internationally over the next two years. Apple TV+ also debuted in November and in many more markets than Disney. NBCUniversal’s Peacock is due April 2020; HBO Max should arrive at a similar time; then there’s Quibi and the BBC-Discovery factual tie-up. Each of these services enter different ecosystems with their own hierarchies. In Europe, multi-territory pay-TV stalwarts Sky and Canal Plus are already strong, for example. How will so many content providers co-exist? How painful will the fallout be from studios exiting existing content deals as they look to fortify their walled gardens? How many more international content creators are in line for platform mega-deals?
The 70th anniversary of Berlin marks the first for new directors Carlo Chatrian and Mariette Rissenbeek. Can the new artistic directors inject fresh life into proceedings? Veteran Berlin chief Dieter Kosslick was at the helm for almost two decades, doing plenty of good. Frustration grew in recent years, however, over the direction of the event. Two years ago, 79 directors signed a letter calling for an overhaul of the festival. Starry red carpets have been in short supply in recent editions and the lineup has lacked heft. Lone Scherfig’s The Kindness of Strangers was a flat opener last year. Wes Anderson movies have opened the festival twice in the last decade, but despite the crowd-pleasing director’s latest being almost ready it doesn’t sound like he is rushing to get it to the festival. Berlin remains one of Europe’s premier film events but it is in need of a spruce. There are changes on the way: Last year marked the first Berlinale to host a Netflix film. The festival has also moved to slightly later dates in 2020, which means it will no longer be contending as closely with Sundance, the BAFTAs and Oscars.
India In Demand
With a population of more than 1.3 billion, India is simply too big for content providers to ignore. Netflix, Amazon and the major U.S. studios are scrambling to grow their footprints in the Indian sub-continent where online entertainment is booming in step with the proliferation of mobile phones and new technology. Hotstar is the dominant VOD service in India. The company is now owned by Disney following the Fox takeover. The app, which offers movies, TV and sports coverage across subscription- and advertising-supported tiers, crossed a goliath 400 million downloads in December. Netflix recently commissioned a trio of Indian original series from producer Viacom18, which followed Reed Hasting’s pledge this month that it would invest more than $400 million in Indian content by 2020. Earlier in the year, Netflix launched a lower-price tier in the market as it attempts to compete with the likes of Hotstar as well as Amazon. Recent stats released by Netflix show that the streamer’s major growth area is now the Asia-Pacific region. Endemol India is also ramping up its slate. The Indian market, which for decades has had a thriving cinema culture dominated by Bollywood releases, is a major opportunity for global content providers, and we’re likely to see plenty of deal-making there over the next 12 months.
Netflix, No Cannes Do?
Can Cannes afford to continue its Netflix holdout? Last year, the festival got a needed shot in the arm from Quentin Tarantino’s Once Upon a Time in Hollywood. But there won’t be a Tarantino next year. Netflix’s remarkable domination of the Golden Globe nominations a few weeks ago spoke to a new reality. Admittedly, an impressive four of the five foreign-language Oscar nominees debuted on the Croisette. But it’s not the festival’s art house credentials that are in question, it’s the lack of the more glamorous, crossover movies that combine to create such a unique buzz. It should be remembered that this is a wider structural issue in France, rather than purely down to Cannes. France has taken a principled stand in favor if its indigenous exhibition industry, but at what cost to the world’s most celebrated festival, which some say has been overtaken by Venice in terms of lineup buzz.
Saudi Arabia Returns
Saudi Arabia’s crown prince Mohammad Bin Salman embarked on a massive Western charm offensive in 2018, but much of the global business gave the kingdom the cold shoulder following the murder of journalist Jamal Khashoggi. Endeavor returned a $400 million Saudi investment earlier this year and leading exhibition chains withdrew planned expansion in the emerging market. But Saudi Arabia is edging back into the picture. 2020 sees the launch of the country’s first ever film festival: The Red Sea International Film Festival. Shah Rukh Khan, Jackie Chan, Jason Momoa and Jean-Claude Van Damme were among those to take part in a starry media and entertainment conference this fall. AMC says it is continuing with plans to expand in the market, which earlier this month made waves by hosting a world championship boxing bout. Restrictions on cinema content remain tough even while the likes of Netflix and other streamers grow in the region.
Oh My Pod
According to a recent study, there are more than 700,000 active podcasts in the world. That’s up from around 550,000 in 2018. 90 million Americans listen to podcasts at least monthly. U.S. firms such as QCODE are bridging the gap between audio podcasts and the film and TV industries. To what extent will the trend for starry drama podcasts from acclaimed film and TV creatives take hold on the international scene? We’re aware of at least one UK pod whose screen-adaptation rights are subject of a bidding war by leading U.S and UK firms. Crypto currency and block-chain financing was all the rage 18 months ago. Could pods be a new content frontier for the global film and TV sector?
China Foreign-Language Boom?
The China boom has probably been the most-talked about change in the international theatrical landscape over the last decade. China’s box office is set to overtake the U.S. in 2020, and Chinese money has washed into Hollywood. Meanwhile, a more nuanced conversation has begun about China’s growing appetite for art house cinema. Capernaum, the indie feature from Lebanese director Nadine Labaki, was a critical success following its Cannes debut in 2018, but the movie didn’t break out in a significant way at the international box office despite being Oscar-nominated. That changed in late April, when the film was released in mainland China via Road Pictures, with the distributor utilizing word of mouth and social media to catapult the film to a remarkable $54 million in the territory. While quotas, censorship and trade wars remain major stumbling blocks (U.S. blockbusters saw a downturn in fortunes in China this year), firms will be wondering how they can replicate Capernaum’s success and penetrate China’s middle class, which has increasingly sophisticated movie-going patterns.
Short form is all the rage, in part thanks to Jeffrey Katzenberg’s voracious Quibi. Everyone seems to be getting in on the act. Cinephile Ridley Scott is the latest to do so overseas, partnering with London-based financier-producer Anton and UK production outfit Stigma Films on CURS_R, a short-form thriller series. Anton, BBC and Clerkenwell Films (The End of the F***ing World) are also teaming on Cheaters, an 18-part comedy-drama told in 10-minute chapters. Meanwhile, Snapchat is growing its original content footprint. In Scandinavia, local drama Semester was a hit on the platform and was soon picked up by multiple broadcasters.
Brexit: Plus Ca Change?
2019 was largely a year of static chaos in the UK thanks to Brexit-wrangling. However, Boris Johnson’s recent election victory and the passing of his Withdrawal Bill makes departure in 2020 all but inevitable. This may only be the first step in what many assume will be a painful and protracted negotiation over the shape of a future relationship (trade, security etc) with the EU, but in film and TV terms the picture should look clearer come the end of the year. Meanwhile, the process has decimated the value of the pound against the euro and dollar, created headaches over the continuation of free movement, and jeopardized vital European soft money. Even if a deal is struck with the EU, there is fear the UK government will further restrict the amount of visas handed to workers, which could impact the creative industries that rely on importing foreign workers, such as the VFX industry. The decline of the pound has made the UK even more attractive for production, adding to the generous tax credit, in-demand talent and skillful crews. This has led to a “space race” as American companies rush to occupy the finite existing studio spaces on Brit shores — see Netflix setting up officially at Shepperton Studios in a long-term deal and Disney doing the same at Pinewood. A number of other studio projects are in the works, including a major development in east London, but securing permission takes time. Uncertainty remains, which is bad for some, and an opportunity for others. Also in Blighty, keep an eye out for growing tension between the government and the BBC.
Can International Carry The Box Office Load?
Global box office for 2018 hit an all-time high of $41.7 billion, thanks to a significant increase of almost 7% at the North American box office. That bucked a perennial trend of international gains eclipsing those in the domestic market. Early estimates are that 2019 domestic box office will be down on 2018. With no Star Wars or Avengers in 2020, and a slightly weaker Disney slate compared to recent years, many are predicting an even further drop in 2020. “Next year, there won’t be the same huge peaks but there are a number of strong movies,” predicted Cineworld CEO Mooky Greidinger following their recent acquisition of Canadian giant Cineplex. In the same call, the exhibition vet acknowledged that admissions growth potential is highest in emerging markets. Can international development help plug the domestic gap once more?