FNE and Europa Distribution are launching a new chapter in our Distributor of the Month section focusing on new trends and challenges of film distribution. In the coming months we will talk with European distributors about the digital single market and VOD, trying to understand how they see the future through these lenses.
This month we speak with Ivan Hronec, the founder, owner and CEO of Film Europe Media Company. With offices in Prague and Bratislava, and also in London and Cannes, Film Europe is a media company specialised in financing, development and production, distribution, sales and publishing, consulting and broadcasting of European films.
In November 2016, Film Europe Channel is celebrating its five year anniversary.
FNE: What impact would the Digital Single Market have on your work?
Ivan Hronec: The question is relevant and at the same time irrelevant. We all are under the full pressure of the idea of a single digital market and regardless of our wishes, the single digital market will be a reality as it is a reality for any other commodity. Even Britain is saying that they most likely would join a single EU digital market if they could manage it. We have already been experiencing the Digital Single Market for many years, though. Pirates are operating in a single market and they are pretty international, aren’t they? Pirates predict what soon will be a reality for the world.
There will be a world Digital Single Market, at least in the case of big studio films. Parallel to pirates, HBO has been buying for seven territories for more than a decade, and they are implementing the same rules for HBO territories that Netflix and Amazon and Canal+ want for the whole of Europe. They want us, distributors, to buy rights without pay TV, which is extremely unfair. We arrange theatrical premieres and we are expected to invest in the marketing campaign. Then HBO is coming, hijacking the film and scheduling it as a beautiful first pay TV premiere by saying: Look, we have a great theatrical film exclusive for HBO! We fight that with agents and we argue that this is extremely unfair since we create marketing for HBO and yet we don’t see a penny from HBO.
We fought, complained and in some cases won. We buy all rights and then we sell to HBO a premium pay TV window on our own, or schedule it on our own TV stations. This is fair and this is predicting what would be the best formula for a digital single market as well. It is worth mentioning that in the fields of film Netflix is losing against Amazon. Netflix did not respect the cinematic environment, and it provokes cinemas by having its digital premiere before the theatrical premiere. Amazon seems to respect the rules and they intend to cut deals with local distributors by either offering all rights except SVOD, or buying SVOD rights from them after their theatrical releases.
This is what I could call a partner deal. I don’t have a problem working with Amazon, since they respect and cherish what we as theatrical distributors do best. We know how to market the film by having its theatrical premiere at festivals and in cinemas. Amazon is smart! Of course, there will be many films which are going to go directly to digital, but those with a cinematic quality require a big screen, undoubtedly. So a single digital market is going to be another level in the global film distribution ecosystem, not an entire distribution environment.
FNE: How important is VOD for your business? Does it bring in an important part of your income?
I. H.: Standard TVOD and SVOD are still marginal. Linear pay TV channels and associated catch up is still huge. We must adjust our optics according to the reality. We are most likely the only distribution company in the world that has pay television projects integrated into a theatrical distribution system. But for an art house distributor, having its own cinema is far more important than having a VOD platform. I don’t find it healthy, but we must face it.
To have a cinema is a must for an art house theatrical distributor. If you don’t have a cinema, you don’t have a true chance! In small countries bellow 15 million, we see the model in which former cinema owners are becoming distributors and they intend to monopolise the niche art house market. In the case of Slovakia, the only state run cinema is practically programmed by the state supported distribution company and our films are programmed in this cinema just cosmetically. In the Czech Republic the biggest festival and biggest art house distributor and cinema owner partners with a public broadcaster and creates a distribution platform.
This is a clear monopolistic sign and we have to deal with it. The US government banned this monopolistic combination in 1938 and they were absolutely right. We are experiencing that “cinema and distribution” combination in many countries in Europe. Let me be fair, in our case as well. Not VOD, but cinema ownership is crucial for our distribution business. Art house distribution is the business of events, locations, bars and cafes and, yes, films. Not films on VOD. This is Netflix and Amazon.
We are about the “going out culture” and original social events, where VOD and TV is a neighbor with different behavior. Let me be clear, in the case of Film Europe we deliberately cultivate the whole ecosystem of films, from festivals, cinemas through DVD, VOD and TVs. But at the same time we must clearly see that the theatrical business is a different one comparing to VOD and TV.
FNE: Where do you see VOD five years from now?
I. H.: As an integral part of our distribution ecosystem. Not as a major one, but an important one. VOD will be a part of the distribution mosaic in combination with our own cinemas, own VOD platform and own linear pay television. We cannot and will not abandon cinemas, especially in the case of thematic traveling festivals such as Be2Can, Scandi and Weird Europe. These will remain the main marketing kick that should launch the film in the territory.
After Be2Can there will be a limited theatrical distribution, where we must live with the bitter fact that our competition, which owns cinemas, is not going to schedule our films extensively. Then in four months films are on TVOD and later on SVOD and linear pay TV channels. There will be cases where day-and-date could make sense, but I believe that there are and will be films that require traditional step by step distribution and some that allow an instant jump to digital. There are going to be different quality and genres though.
FNE: How can the VOD distribution for independent European films be improved?
I. H.: Digital Single Market will be the reality, regardless of our wishes. What we can do is to implement anti-monopoly preventions. As has been pointed out, general “VOD” is perfectly and already implemented by pirates. So the first issue is how to deal with pirates. I don’t have a clear answer and I leave it open. I believe that the way to improve European film VOD distribution is to accept the paradox, that there are films which still require independent festival and theatrical distribution, and that local theatrical distributors are as important as giants such as Amazon.
Locals are creating awareness and giants could benefit from that awareness, to pay a fair price for our effort. Another way to improve the VOD market is to remind film agents, loudly, that if they sell directly to HBO/Netflix/Amazon and skip theatrical distribution, then they actually undermine their own existence, since producers could sell their films to Netflix/Amazon/HBO directly without the need to pay agents. So, let's cultivate our ecosystem together and let's present the best possible scenario, which could be as follows: A producer finds an agent, an agent finds a local distributor, a distributor launches a film at local festivals, a local festival pays a fair fee or gives 50% of tickets sold to a distributor, then a film goes into limited theatrical distribution and shortly after at TVOD, then in a 6-12 months to SVOD and premium linear pay TV and later to Free to Air. Films with less potential and less quality could skip steps on that ladder. Quality films require the best timing to build up a devoted audience and media attention.
Let's be realistic, Son of Saul by László Nemes, without Cannes and proper distribution all over, would be just another interesting Holocaust film debut. With all of the traditional distribution attention it is a debut feature which won the Grand Jury Price in Cannes and the Oscar in Hollywood. There are many categories of films and many other categories of audiovisual works. Each of them requires special attention and a special distribution environment.
Films are divided into multiplex blockbusters, festival art house films, short films and documentaries. Another audio product to consider is series and games. Anytime we deal with VOD, it is fair to reveal the position I am taking now about our profiles and films, which are festival or European films only. And those, in many cases require a proper window respecting distribution, which enhances their VOD perception as well. Cinemas help VOD!
FNE: What was your biggest hit in the last 12 months? Did you use any particular strategy?
I. H.: Our biggest hit and distribution strategy is not based on any individual film, but on a distribution platform event called Be2Can. This is the kind of perfect distribution multi-cloud composed of competition films from the recent Berlinale, Venice (in Czech Benatky) and Cannes festivals. Be2Can is a traveling festival and at the same time a distribution platform presenting films in more than 50 Czech and Slovak cinemas, several VOD platforms, at the DVD edition Festival 12, on the premium film television Film Europe Channel and in 2016, for the first time, on the Czech and Slovak public broadcasters.
Be2Can is still the only film event, most likely in the world, which programmes in parallel the same kind of films in cinemas, VOD, DVD, pay TV and free TV. This allows us to count our audience at all levels of Be2Can distribution, not just in cinemas. Combining numbers of our audience most likely gives us the status of the biggest thematic festival far beyond the Czech and Slovak republics. This is Film Europe's invention and the flagship of our strategy and operation. In order to enhance this effect we are just launching another film channel, FESTIVAL CINEMA CHANNEL, which is going to reflect the films and programming of Be2Can and is about world festival cinema, not just European cinema.
Summing up, Film Europe operates two distribution companies in Prague and Bratislava, offices in London and Cannes, one festival cinema in Bratislava, four festivals: Be2Can, Scandi, Weird Europe and Crème de la Creme, the DVD platform Festival 12, and three HD films channels: FESTIVAL CINEMA CHANNEL, which reflects the dramaturgy of Be2Can, CESKOSLOVENSKO running feature films and documentaries from Czechoslovakia from 1918-1993, and FILM EUROPE CHANNEL.
In November 2016, Film Europe Channel is celebrating its fifth year anniversary and will continue to cover the best cinematography from all 52 countries of continental Europe. The concept of Film Europe Channel was proven to be culturally and commercially successful and it is still unique. There is no other channel in the world which dedicates its programming to European cinematography alone. Film Europe Channel is now ready to be replicated in other territories of Europe and the World.