BRIC REPORT BRAZIL RUSSIA INDIA CHINA Summary of key film/TV information per country Current status on importation of existing Nordic productions Recommendations on potential sales & promotional initiatives by Annika Pham, October 2012 2 BRIC REPORT BRIC REPORT CONTENTS PAGE 1 Introduction 5 2 Executive Summary 6 2.1 Challenges 2.2 Opportunities 2.3 Key Industry Recommendations 3 BRIC territory profiles 10 3.1 Brazil 3.2 Russia 3.3 India 3.4 China 4 Key Film Festivals in BRIC Territories 25 5 Promotion of Nordic Films and Talent in BRIC Territories 28 6 The Unifrance Approach 30 7 Acknowledgements 32 BRIC REPORT 3 4 BRIC REPORT 1 Introduction The emerging ‘BRIC’ nations of Brazil, Russia, India and China with their combined population of 2.9 billion people (approximately 40% of the global demographics), their geographical sizes and fast-growing economies hold a formidable potential for Nordic film and television exporters. China and Brazil are currently the second and sixth largest economies in the world and are set to keep their positions by the year 2020. Russia and India - currently number 9 and 10 respectively - are expected to become the fourth and fifth biggest economies by 2020, according to the Centre for Economics and Business Research (Source: CEBR, December 2011). In the global film and media industries, professionals are carefully monitoring the rapid socio-economic and cultural developments in these emerging markets where rising middle classes keen to spend their money on filmed entertainment and stimulated by a wider access of content on digital platforms and cinemas are a vast new audience on which to tap. The BRIC nations themselves that used to rely on their domestic market for films produced and watched by their compatriots, are gradually breaking their insularity and offering incentives to foreign producers and investors to develop their own film and television industries and become an integrated part of the global film entertainment business. Hollywood is already a dominating force and key partner to the BRIC countries and other major film nations such as France have for years, cultivated close ties with BRIC, aware of the paramount dual role of film as a purveyor of economic and cultural exchanges. But what presence does Scandinavia have today in those emerging territories? What is the current state of Nordic film and TV drama exported and how could it be improved? How can the Nordic film and TV industry, in particular exporters, maximise the opportunities within BRIC and what tools or assistance are on these exporters wish lists to reach these objectives? With this report commissioned by Nordisk Film & TV Fond and financed by the Nordic Council of Ministers globalisation pool, we address these questions and offer preliminary recommendations drawn from qualitative research and interviews with sales and promotion experts working within the Nordic region. The report offers an overview of the current state of the audiovisual markets and growth forecasts in Brazil, Russia, India and China. We have also detailed the key film festivals in the BRIC countries and in order to compare current and possible future Nordic strategies in those countries we have looked, at some of the initiatives undertaken by the French promotional and export support body Unifrance. BRIC REPORT 5 2 Executive Summary Unique economic growth potential – although challenges have to be addressed. The BRIC nations with their large populations and rapidly growing economies offer a true ray of hope amongst the gloom and doom of Western economies. By 2020, China’s economy will be the second in the world, Russia fourth, India fifth and Brazil sixth according to UK’s Centre for Economic and Business Research. Summarised below by country are the key challenges, followed by the opportunities facing Nordic film and television productions wishing to tap into these markets. 2.1 – Challenges Brazil · Different business practises with difficulty sometimes to keep agreements. · US films dominate market. Russia · Piracy: According to official government figures, piracy exceeds $2 billion in value terms, representing 70- 80% of the entire film market in Russia. DVD sales are gradually shifting to illegal online downloading. · Corruption: Non-transparent business practices still prevail among some areas of Russia’s gigantic media and entertainment market. · Festivals: Too many smaller festivals and the main event - Moscow International Film Festival - lacks in professionalism, according to Nordic film institutes. India · Local films supremacy: The Indian market remains self-sufficient, with local films taking around 80% of all film revenues. However the burgeoning educated urban middle-class is gradually opening up to foreign - and Nordic - films. · Multilingual and multi-cultural society: The distribution market is split into 14 different zones, making it difficult for foreign distributors to have a national reach on Indian screens. Because of the multitude of languages, foreign films would have to be dubbed in five or six different dialects to access the mass market. “For theatrical releases, any other language than English is a major drawback” says Ann Kristin Westerberg from Svensk Filmindustri International. · Concentration of distribution: Over the last few years, distribution has been concentrated in the hands of a few vertically-integrated (and generally larger) companies. This has led to the decline of the independent sector, who are traditionally more inclined to acquire Nordic films. · Small fees paid by distributors. · Censorship: Since the introduction of the Cinematographic Act from 1954, all public screenings have to be validated with a certificate from the Central Board of Film Certification. The censorship board is particularly strict regarding sex, nudity, violence and inter-religious conflict. · Festivals: Too many small festivals that lack in professionalism. China · Regulations: China has a wide range of restrictive mechanisms for film and TV imports of which SARFT (State Administration of Radio, Film and Television) is the main gatekeeper, regulating the country’s radio, TV and film industry. 6 BRIC REPORT · Quotas: Only 20 foreign film imports plus 14 IMAX or 3D films a year are allowed on a revenue sharing basis. The state pressure on business practices allows China to set below-market pricing for imported films. · Censorship: Chinese censorship relies on moral and political elements and although it differs for film and TV imports it is still restrictive due to cultural differences between China and the west. · Piracy: rampant DVD and online piracy is a major problem in China. The Hollywood body MPAA estimates that 95% of the DVD business involves counterfeit copies. · Different Business practices: use of agents for international content transaction is off-putting for many Nordic sales companies. 2.2 – Opportunities · Booming theatrical markets. In 2011 Brazil’s GBO (gross box office) reached $790 million over 141 million admissions (revenues up 12% from 2010), Russia’s GBO passed the $1.15 billion mark in 2011, India’s GBO was $1.85 billion (up 11.5% on 2010), China’s GBO $2 billion (up 28.5%). If screen development seems to have reached saturation in Russia, there is ample space for more screens in Brazil, India and China. · Booming TV market. Television is a highly popular and influential medium in all BRIC nations where hundreds of channels are available and giant media companies operate in a very competitive market. · VOD with biggest growth potential. All BRIC nations are avid Internet-users and VOD service providers are aggressively acquiring content from around the world, including Scandinavia. For a closed territory like China VOD that enables foreign films to by-pass censorship rules offers serious new business opportunities. · Popularity of Scandinavian model, culture and cinema. Scandinavia and its long tradition of assisting developing nations and promoting cooperation is highly popular with BRIC nations such as China and India. Scandinavian cinema has developed niche audiences around the world – including BRIC - that enjoy auteur films from Nordic talents such as Lars von Trier, Bent Hamer and Roy Andersson among others, as well as genre films and children’s films. · Co-production as key to open BRIC markets. With financial rules easing up in the BRIC nations and governments trying to attract foreign investors, co-production opportunities are being championed between Brazil, Russia, India, China and other nations, including the Nordic region. Co-production is also seen as another way to by-pass quotas and penetrate the second biggest film market in the world: China. 2.3 - Key Industry Recommendations Here under is a summary of key recommendations based on qualitative interviews with sales agents and distributors. 2.3.1 Public Support Public support on a Nordic level should focus primarily on trade activities with direct support to BRIC distributors and sales agents of Nordic film and TV drama. Festival support is also essential to reinforce the promotion of Nordic film and TV dramas, and increase audience awareness in the BRIC territories. Distribution support Public action to improve and sustain the export of Nordic films in BRIC territories should focus primarily on the introduction of Nordic distribution and market support schemes similar to successful initiatives in place for instance in Germany (via German Film Services & Marketing) and in France. BRIC REPORT 7 · Re-introduce High Five International Cinema Distribution Support The initiative was launched in 2010 by Nordisk Film & TV Fond thanks to an additional grant from the Nordic Council of Ministers Globalisation Fund for 2010-2012 and ended early 2012. The selective subsidy scheme offered international distributors the possibility to apply for partial coverage of marketing costs relating to the theatrical premieres of Nordic films in their home countries (see chapter 5.3 for details). For sales agents, such a public scheme is vital to guarantee the circulation of Nordic films in the BRIC territories and to raise the awareness of audiences in the BRIC region for Nordic films.