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    The challenge to geo-blocking and the film industry in the EU

    The whole debate about “suppressing borders” to online film viewing will only have any possibility of success if it is combined with a structural support to an evolution of the current chain of value and the whole European film industry source of inco [read more]
    byIgnasi Guardans | 20/Feb/201510 min read
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    The whole debate about “suppressing borders” to online film viewing will only have any possibility of success if it is combined with a structural support to an evolution of the current chain of value and the whole European film industry source of income.

    February is an essential month in the movie industry calendar. For a few days, the Martin-Gropius-Bau, an elegant XIXth century building which survived Berlin’s historical dramas, becomes the most important film marketplace in the world.

    At the European Film Market, which runs parallel to the Berlinale, hundreds of films from all over the world are sold to film distributors, also from all over the world. In the market corridors, or in the large bars of international hotels, tens of agreements will turn film projects into a viable reality.

    Indeed, Europe is here the main player both on the selling and the buying side, but not the only one. And what is sold here? Well, leaving aside co-production deals, this is essentially a market of distribution rights within a particular territory.

    Film sales agents, authorized by the films’ rights holders contact distributors, and do what humans have been doing in markets for many centuries.

    Films we have never heard of; films which are only known, if at all, in their country of origin, or which are already a hit in the domestic box office; films which may not be fully finished or which are little more than a script and a production plan; titles of all sort of budgets and genres are sold to distribution companies on a national basis, for these companies to make them available to theatres; or to include them in an online catalogue, or… : it would be long to describe here all the possible deals and formats these agreements can take.

    What is important is that, as a result of those deals, as in any business, someone will be putting money at risk betting on the success of a movie; someone will start to recover part of an investment thanks to a good sale; someone will obtain the final amount allowing the film to become reality: “pre-sales” are in many cases an way of financing the film itself.

    Once the market is over, distributors from small, midsize or large companies will return home with some titles in their bags and the rights for their theatrical and/or online distribution (and even other options nowadays) within a particular country.

    Once back, they will spend time and money, in the form of advertisement targeted to the particular audience and in the language of the country where the film is to be released.

    Many months or a couple of years later, leaving aside piracy, some of those movies will fall into total oblivion. But others that started their commercial life in Berlin may have won some awards here and there, or may have been very successful at the box-office.

    Then, viewer’s demand for them will grow; people will look for those titles online… only to discover that the film is not available for viewing in that particular country.

    Geo-blocking, that is the word. Online catalogues are territorial, even within the EU, and what is perhaps already available in one member state is blocked for you as soon as the platform’s software discovers that your IP belongs to the other side of the border.

    What? Outrageous‼ Wasn’t the EU supposed to be a single market? Is that only true for the offline world? This is a truly anti-European practice! Well, wait a minute. This is not the result of an evil plan against consumers.

    This is just the natural consequence of those deals which started at the ground floor of the Martin-Gropius-Bau, or any other film markets in Europe and abroad. It is just the result of a complex business model which sustains the very existence of that film you want to watch.

    If someone paid for the film rights in Belgium, that company naturally expects to recover that investment in the Belgian box-office or through a Belgian web platform.

    And that would be complicated if the Belgian audience can watch online the film from the online distribution made possible by someone who purchased the online film’s rights for Austria or for Ireland. It could even be possible that a movie is already online in Ireland, before even having been released in theatres in Antwerp or Brussels.

    The European Commission wants to change this state of things. Commissioner Oettinger travelled to Berlin on February 9 to proclaim again that message before an audience of 700 film professionals.

    It was his first direct contact with the film industry in his political career:

    “I want more choice for consumers. They should also benefit from the advantages of digitalization and be able to shop for more films across-borders”.

    This is the mantra constantly repeated by EU Officials, even by Junker himself. As they sometimes make it sound, their ideal world is a European digital single market where consumers can watch what they want when they want from any country. It sounds so nice. But who will be paying for that? To whom? How?

    Too often those same officials forget to say that it is also the Commission’s responsibility to ensure in such an idealistic scenario, viewers can keep watching European content. That is also their obligation, both political and legal obligation according to the Treaties.

    A similar consideration can be applied to many Members of the European Parliament (although MEPs are certainly free to have an anti-European political agenda or one that attacks European interests if they wish so).

    That means that the whole debate about “supressing borders” to online film viewing will only have any possibility of success if it is combined with a structural support to an evolution of the current chain of value and the whole European film industry source of income.

    This is not about protecting old business models per se: everybody and everything must be adapted to the online world and to new habits of consumption. The current “media chronology”, for example, which sets the mandatory timing for movies consecutive windows from the theatrical release to laptop downloading or TV broadcasting, must be reviewed.

    It is definitely too rigid. And so can be reviewed other issues, as it is the case for the situation of films which are just not available at all in one country as the demand is too small there, but are fully available somewhere else in Europe.

    Those and other aspects will need to change, and the industry knows that. But who has the capacity to buy the distribution rights of a film for the territories of 28 Member states at the same time? Who can manage and care about those theatrical releases of one title from Palermo to Gdansk, dubbed or subtitled in Polish, Italian and all the other languages?

    Can that be done with one single uniform marketing campaign? And can it be done simultaneously? The replies to those questions easily lead to the names of a few non European companies, and to the film titles those companies would be ready to invest in.

    In other words: for too many people it is Europe’s cultural diversity that can be at risk here, if the current scheme of contracts and investments and payments, which keeps the industry alive, is just killed through the EU’s Official Journal before the European film industry has been transformed and alternative ways of monetising film production and film distribution have been put in place.

    Innovation can bring – it is bringing already – new opportunities to those who risked their money for a beautiful film to exist in the first place. It is so interesting that almost at the very moment that Commissioner Oettinger was talking at the first floor of the Ritz Carlton hotel in Berlin, Netflix made the announcement that it is opening its service in Cuba, and promised to include a large amount of Cuban movies in its U.S. catalogue (and when possible in other countries).

    This will not reach a wide audience in Cuba for now (according to the International Telecommunications Union the country had 5,360 fixed broadband subscribers in 2013 out of a population of about 11.3 million), but the symbol is there.

    In approximately three years, an audience of tens of millions of viewers, in the US and abroad (and a few Cubans among them), will have access via Netflix to some of the best European films resulting from deals closed in Berlin in February 2015.

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