EXPORTING CANADIAN SCREENBASED PRODUCTIONS IN A GLOBAL MARKET TRENDS, OPPORTUNITIES AND FUTURE DIRECTIONS Maria De Rosa | Marilyn Burgess Communications MDR (A Division of Noribco Inc.) July 28, 2021 REPORT Exporting Canadian Screen-based Productions in a Global Market: Trends, Opportunities and Future Directions PREPARED FOR SUBMITTED BY Canadian Media Producers Association Maria De Rosa (CMPA) Marilyn Burgess 251 Laurier Avenue West Communications MDR 11th Floor (A Division of Noribco Inc.) Ottawa, Ontario 503 Victoria Ave K1P 5J6 Westmount, Quebec H3Y 2R3 July 28, 2021 Exporting Canadian Screen-based Productions in a Global Market Table of Contents TABLE OF CONTENTS ................................................................................................................................ 1 EXECUTIVE SUMMARY ............................................................................................................................. 2 INTRODUCTION ........................................................................................................................................... 6 1. PREAMBLE ................................................................................................................................................. 6 2. APPROACH AND METHODOLOGY ............................................................................................................... 6 I. UNDERSTANDING INTERNATIONAL SALES IN THE VALUE CHAIN OF SCREEN-BASED CONTENT ....................................................................................................................................................... 8 1. THE VALUE CHAIN FOR SCREEN-BASED CONTENT .................................................................................... 8 II. A PORTRAIT OF THE INTERNATIONAL SALES OF CANADIAN TELEVISION PROGRAMS .................................................................................................................................................. 12 1. EXPORTS OF TELEVISION PROJECTS SUPPORTED BY THE CANADA MEDIA FUND .................................... 12 2. SUMMARY OBSERVATIONS ...................................................................................................................... 18 III. A PORTRAIT OF INTERNATIONAL SALES OF CANADIAN FEATURE FILMS ................... 19 1. EXPORTS OF CANADIAN FEATURE FILMS SUPPORTED BY TELEFILM CANADA ........................................ 19 2. SUMMARY OBSERVATIONS ...................................................................................................................... 28 IV. INTERVIEW FINDINGS ON THE CHALLENGES AND OPPORTUNITIES IN THE EXPORTS OF CANADIAN SCREEN-BASED PRODUCTION ............................................................. 29 1. KEY MARKETS FOR EXPORT SALES: THE US AND THE LARGER EUROPEAN COUNTRIES ....................... 29 2. CANADIAN COMPANIES ARE EXPORTING INTERNATIONAL COPRODUCTIONS WITH MARQUEE TALENT 30 3. GENRES THAT ARE EXPORTABLE ............................................................................................................ 30 4. CHANGES IN WINDOWING PRESENT NEW EXPORT SALES OPPORTUNITIES AND CHALLENGES ............... 31 5. EXPORTS OF CANADIAN FEATURE FILMS AND DRAMATIC SERIES ARE INCREASINGLY CHALLENGING . 32 6. SUMMARY OBSERVATIONS ...................................................................................................................... 33 V. CONCLUSIONS AND FUTURE DIRECTIONS ................................................................................. 35 1. TRENDS IN CANADIAN EXPORTS ARE CONSISTENT WITH THOSE IN INTERNATIONAL MARKETS ............ 35 2. ADDRESSING THE CHALLENGES OF A MORE COMPETITIVE GLOBAL MARKET ........................................ 36 APPENDIX 1: TRENDS AND EXPORT DRIVERS OF THE TOP EXPORTING COUNTRIES ..... 38 APPENDIX 2: CHARACTERISTICS OF SCREEN CONTENT THAT TRAVELS ........................... 46 APPENDIX 3: GLOSSARY ......................................................................................................................... 54 APPENDIX 4: SELECTED BIBLIOGRAPHY ......................................................................................... 57 APPENDIX 5: LIST OF INTERVIEWEES ............................................................................................... 61 APPENDIX 6: ENDNOTES ......................................................................................................................... 62 1 Exporting Canadian Screen-based Productions in a Global Market Executive Summary The Present Study This report provides an analysis of trends in exports of Canadian film and television produc- tions (i.e. sales of rights to these productions in foreign jurisdictions) in the years from 2013- 2014 and 2018-2019, as well as trends in exports of film and television in some of the top ex- porting countries. Foreign sales of Canadian film and television rights are critical to the fi- nancing of Canadian screen-based production. In 2019-2020, foreign financing accounted for 26% of the total value of Canadian film and television production.1 This report provides evidence of the popularity of Canadian film and television programs with foreign audiences. Canadian productions are highly valued and sought after in global markets. The Post-Covid Future It is clear that production and distribution were disrupted by the pandemic. The pandemic accelerated pre-existing industry trends, amplifying ongoing shifts in consumers’ behaviour. With audiences sheltering in place and cinemas shuttered, at-home viewing increased sub- stantially during the pandemic, boosting the number of viewers accessing content on sub- scription-based or ad-supported streaming services,2 further disrupting the film and television distribution models. Streaming has become a crowded field, as the number of plat- forms has also grown, some of which may have started as linear broadcaster’s catch-up ser- vices.3 The pandemic also accelerated the ongoing transformation in film consumption. Cinema go- ing was in decline before the pandemic, a trend which has been amplified during the pandem- ic. It is predicted that theatrical distribution of tent-pole, big budget “event” movies will accelerate as the industry emerges from the pandemic.4 As Canada and its key trading partners emerge from COVID-related lockdowns, these trends may impact the future market for independently produced film and television exports, provid- ing new opportunities, and some challenges. 1. Trends in Exports of Canadian Television and Films Television Between 2014-2015 and 2018-2019, television projects funded by the Canada Media Fund (CMF) were pre-sold for a total value of $279 million. Ninety percent of the programs pre- sold were produced in English. International coproductions financed a higher proportion (31%) of their productions through international pre-sales, as compared to 22% for domestic productions. The majority of pre-sales (74%) were of drama projects, including historical, family, thriller and comedic dramas. Other genres that sold in international markets include animation (15%), children's and youth (7%), and documentary (3%) with $208M in export pre-sales. 2 Exporting Canadian Screen-based Productions in a Global Market Drama projects with budgets greater than $10 million achieved a higher proportion of inter- national pre-sales. These trends are consistent with trends observed in the international mar- ketplace. The primary markets for the top-selling Canadian television programs are the United States (US), the United Kingdom (UK) Ireland and France. Four of the top Canadian pre-sold programs were based on underlying properties. A notable trend in international pre-sales of CMF-funded productions is the importance of advances from distributors, who are investing earlier in projects to ensure access to rights. There continues to be demand for Canadian productions at higher budgets, but there is also a greater need to finance these productions through international pre-sales. Compared to the previous five-year period examined in Exporting Canadian Television Globally, the propor- tion of budgets financed through international pre-sales has increased from 16% to 24%. Film Between 2013-2014 and 2018-2019, Canadian feature films funded by Telefilm Canada gener- ated total international sales of $407.2 million. Sixty percent of these revenues were derived from international pre-sales and the other 40% from international sales of completed films. Of the films that had both pre-sales and sales (70 films in all), half were international copro- ductions (35 films). Canadian feature films shot in the English language with high budgets, and produced as in- ternational coproductions achieved the highest volume of sales. Coproductions with budgets of $10 million or more were the most successful in achieving international sales, accounting for 56% of all sales. International pre-sales of Canadian feature films represent about one- third of production budgets for films of $10 million or more. France is a coproducing partner of choice for Canadian films, followed by the UK and Ireland. The majority of films sold were dramas accounting for 61% of all pre-sales and 55% of all sales after completion. These were followed by genre films (horror, mystery, science fiction and thrillers), which accounted for 22% of pre-sales and 29% of sales. The twenty top-selling Canadian films funded by Telefilm Canada generated 70% of all inter- national sales of completed films. These films are characterized by