Last week, our Director had been invited to the 53rd International Leipzig Festival for Documentary and Animated Film (DOK Leipzig, Germany) for a keynote speech to producers and film industry representatives about the development of the international documentary film market. Accordingly, Paul Pauwels presented his take on the fundamental changes that, more or less, disrupted and reshaped the factual entertainment business over the past years. The full version of his speech is available as a PDF via our official website. Please find below a summary of the key issues that had been addressed in his speech.
The old models have died: be inventive or disappear.
“(…) Life was easy back in the early nineties when production rules where clear and simple. There were not many independent production companies around. Documentaries were very often fully financed but also the full retention of rights by the commissioning broadcaster was quite normal. Knowing the right people at the right position was the most important skill a producer needed to possess.
The proliferation of commercial broadcasting in Europe changed that situation. It’s no
coincidence that the strongest documentary tradition came from those regions where
commercial television was already present in a rather early stage. The emerging competition forced the broadcasters to improve the quality and the originality of their slots. To achieve that goal they needed independent producers. New companies were created and many of them florished. They produced wonderful and strong documentaries. New subjects were being discovered, new forms of storytelling developed and new audiences found. Factual became popular. Being independent became hot.
The new market situation also stimulated a phenomenon that, until then, had mainly been
reserved for fiction: international coproductions (…) No longer would money come from one main national source but several investors would be combined to bring together enough money to produce a documentary that in form and content would reflect its international setup.
I think it’s fair to say that in those days there was a genuine interest in what was going
on outside the own borders. This was reflected in many slots on television that were now
showing documentaries that were no longer strictly nationally produced. And it worked: the audience loved them.
At the same time, many filmfunds started showing a growing interest to support
documentary. You would be surprised how limited the possibilities were to get financial
public support to produce documentaries in the eighties. In my own country, Belgium, it
wasn’t until ’92 that documentary projects became eligible for subsidy. This improved
support for factual projects would become a major factor in the successful economic
development of many a European production company.
I’m not going to spend much time on talking about the European support that, for the first
time, was made available through the European Commission’s MEDIA plan (…) I believe that many excellent documentaries would never have been made without this support and many production companies that exist today would never have been able to survive without MEDIA’s financial input.
Just to illustrate how different the times were: I remember that financing my first – modest – documentary took me about a month. One visit to the two national broadcasters (with a one page description of the project) would give me 60 % of the budget and with that amount guaranteed I had no trouble finding a foreign coproducer for another 20%. Nevertheless and inspite of the rather good financial starting point, I managed to loose money on the production, mainly because of a lack of knowledge about the knots and boults of international coproducing (which led to a serious conflict with the coproducer before the first cassette was put into the camera) and certainly about the follow-up process in distribution which resulted in not getting the sales income I was hoping to get to fill the 20% gap in the budget.
But such where the times that even bad management would be forgiven and I could
continue the activities; bruised but not mortally wounded. I’m not sure that would still be the case today. I was lucky enough to develop my activities exactly in the period when
European coproduction was really developing and money was available; when the
broadcasters, the film institutes and the politicians in charge of media and culture budgets
started taking documentary serious.
And then … there were the commissioning editors. In those far-away days they were really
powerful people who (…) would be the ones who took the decisions and their word would be good as gold (well, in most cases at least, sometimes promises turned out to be fools gold). They were also limited in number. If you knew thirty people, you more or less covered the entire European broadcasting world involved in international coproductions. And to complete the picture of those golden days, television was about your only client and a relatively well paying client too. Contracts were simple, two or three pages would do and a child could understand them. Broadcasting waves seemed to stop at the border and the whole rights situation was generaly simple.
Can you see the picture coming together?
A media environment that created opportunities and stimulated international coproduction; technical developments that allowed easier access to production facilities; a general intererest in well told international stories, more access to national and international public money, short decision lines at the broadcasters and a very personal contact to the people that mattered (…)
Even I could create a production company in such circumstances and turn it into a success.
Would I be able to achieve the same result today? I very much doubt it. Most of the
elements that made life easy 20 years ago recently seem to have been turned into threats,
more than into opportunities. It’s a completely different world out there and I am convinced that, if I would try to set up a company today with the same business management background that I had 25 years ago, I would fail miserably. The old model does not function anymore!
Breaking the wall of illusion: much talking, no money.
(…) Having been the biggest supporter of the traditional pitching system until a few years
ago, I now declare loudly that is doesn’t function anymore. At least not for those who are of the opinion that it’s at the pitching forums that real decisions are being taken or that the commissioning editors that you’re talking to are the final decision takers.
By now, most of you will have experienced that the decisions are being taken by marketeers or by strategic departments of the broadcasters. The very best you can hope for is that the commissioning editors to whom you pitch will pick up your idea, add it to their wish list and much later get the “go” from higher up in the hierarchy to support you financially. There are some exceptions, but they’re rare. Of course, pitching forums are still a good marketing tool. They’re a great place to meet people and test the waters for an idea but stop considering them as an important factor to instantly add money into your account (…)
As so very often every cloud has a silver lining. Today’s new situation offers new opportunities for a company that goes beyond the borders of traditional one-off
documentaries; a company that is based on a solid long term business plan, that is using
serious market research and is no longer built on enthusiasm and love for the medium
alone. This will also mean that, alongside creative documentaries, these companies will
produce other forms of audiovisual content and might even be active in whatever domain
that creates a company income.
The successul producers of tomorrow will develop new ideas and find new ways of marketing them. But they’ll need to do more than that. They will also have to convince their clients’ financial departments that, as a supplier, they are trustworthy and will deliver the goods. They will have to prove that there’s enough money in the till to finance the development and bring the production to a good end. Without being able to deliver such a warrantee your chances to success are becoming slimmer by the day. The logical result of this is that we will see a lot of mergers and acquisitions in the near future. No matter how beautiful “small” might be in our eyes… increasingly, the market tells us that size does matter.
But, in fact, this new situation is – in a way – a minor problem. The dwindling decision power of the commissioning editors within the broadcasters is one thing; the diminishing power of the broadcasters within the content distribution environment is a different and much more worrying phenomenon. For a very long time broadcasters have been the monopolists of content distribution and consequently the major contributors to documentary financing. Increasingly, they are now under threat because of the changing media market where new players are stealing their audience.
For many years the smaller broadcasters – and those are the majority in Europe – have
supported a very unlogical system. Although working in a non-competitive environment still they would pay good money to take huge cofinancing risks while they could have gambled and waited and bought the finished programmes for a much lower price. This attitude had to do with taking up responsibility. They understood that without taking risks a lot of good documentaries would never have been made.
Nowadays, broadcasters are functioning in a much more competitive environment and the logic doesn’t function anymore while the sense of responsibiliy towards the independent sector seems to have dwindled. Digital TV and Pay-TV providers undermine the traditional broadcasters’ position. Digital video recording is becoming hugely popular – much to the despair of the advertising agencies and commercial broadcasters – and many wonder what is going to happen once connected-TV will bring OTT offerings and VOD to every single living room. It’s a cliché, but the saying that people now watch what they want, when they want, where they want and on the screen they want has become reality.
Is this good news? There are now so many more screens to reach, so many digital channels
to fill, so many more potential buyers to meet… all true. But there’s one big question that
remains unanswered: where’s the money?
One thing is certain: the newcomers on the market (Pay-TV, VOD services, Over The Top
providers, mobile TV operators) they have no intention at all to adopt the same generous
attitude that was so common in the old days. All of you who have already dealt with these
new players on the market will have found out that they don’t have deep pockets (or at least no money to spend on production) and they can’t or won’t contribute to the financing of your documentary. There might be some exceptions, but only few.
The secret of surviving in these harsh circumstances seems to lie in the quantity of
programmes you’re able to produce (many small producers fees make one bigger one) and
in the ability to reformat and to re-use the footage. But of course, that you can only do when you’re the rightsholder of your documentary, which – much to my surprise – often is still not the case. The biggest danger that I recognize in this new situation – and it really scares me – is that it’s a threat to the middle-sized production companies: they are in danger of disappearing.
I’m fully convinced that the changing media world will lead to the creation of a few powerful international super-indies who will produce both very high-level popular content and loads of factual reality-trash. Programmes that can be used on many platforms and that can easily be reformatted and re-used. These companies will have priviliged access to the broadcasters and other content distributors and together they will deal the cards.
At the other end of the production spectrum, I predict that we’ll see enthusiast filmmakers
who, with limited technical means and hardly any budget, will continue to tell strong stories
but who will not be in a position to build a sustainable business on the basis of their work.
Internet will provide them with an easy accessible distribution platform but there will hardly be any income to be expected from that.
It’s going to be rough out there (…) This situation forces you to rethink your way of
functioning and to be very critical about your company’s operations. Can you make it on
your own or can’t you? This is a question that, within a short while, will become crucial for
New players on the market: VOD and OTT – new sources of financing?
Nobody can invent a new business model out of the blue or by simply reshuffling the different elements that are part of the old one. New ideas are needed, new markets need to be found, new ways of conquering these markets have to be developed. Many were of the opinion that VOD – whether through cable or online – would bring in fresh money that would allow the development of new documentaries and would help to keep their company afloat. Until today, I still need to talk to the first producer who can look me in the eye and tell me that this source of income is more than a drop into a huge ocean of his financial problems. So many initiatives have been taken in this domain – there’s a wide choice of websites to turn to – many of them enhancing their reach by sometimes successful DVD sales, and even those – so I’m told – do not provide a reliable source of stable income. Things will become even more complicated when soon VOD will become a commodity for the cable operators and the incumbent telecom companies who need to occupy the biggest possible part of the market with their digital TV offerings and Pay-TV channels. On their servers, thousands of programmes will be made available and intelligent and interactive search engines will assist the audience in finding the programmes they prefer.
Even the best VOD sites that exist today might be swept away by the sheer force of
numbers and the power of money that these new players can spend on marketing and
technical innovation. But take it from me: they will invest more in quantity than in quality.
Over the past two years, I’ve listened carefully to the presentations of the CEO’s of these
companies and it is being said loud and clear: VOD is a teaser to seduce the client to
subscribe to their paid services. It is not and never will be a money maker! And I’ve never seen any commercial company invest important sums of money in a product that has no potential to bring in a nice return on investment.
The same goes for OTT offerings that are the next big thing. Hulu, blinkbox, youview… all
these initiatives make content available in a way that directly threatens traditional TV
distribution. They make your productions available for a theoretically unlimited audience, but none of them are offering decent compensation for the use of the programmes they show. All say content is king, but nobody has been able to explain to me today where the money is to be found that will allow the production of this content as far as creative documentary is concerned. Although the distribution channels are multipying, at least in the near future, they do not represent serious new sources of income.
360° commissioning: the new bubble ready to explode?
For several years now, the new buzz is the 360° commissioning. Instead of investing all time and effort into the production of one stand-alone documentary or a series for the tv screen alone, there is a growing demand for extra content to be made available on the internet and on mobile devices. Here, also efforts are being made and innovative and creative people achieve wonderful results. Recently, we’ve seen broadcasters come up with some money to support web-based productions. These amounts however are rather low and in comparison to the traditional production investment they mean nothing. The whole 360° concept is still very much in the stage of research and development and in most cases it costs more than it brings benefits.
Worrying as this sounds, you should not loose too much sleep over this. The research &
development phase is always a costly one, with a high percentage of failure. I’m absolutely convinced that there is a huge potential to be discovered here. Discovering and exploiting it, however, will go parallel with the development of a new class of audience: people who will deal with the new media in a way that we cannot imagine today. And still it’ll be your task to find out how that will work before they do. That’s the opportunity that lies waiting behind the bits and the bytes. But before you get to that stage you’ll have to kill your business and build it up again. A frightening thought but in my view a necessity (…)
Now the time has come for you to do the work. I’ll lean back in my sofa, put a blanket
over my old legs, ask my young and beautiful nurse to switch on the tv, the computer,
the psp, my mobile phone and whatever screen I have available and I will sit in
anticipation to see how you’ve dealt with the problem. How you’ve reinvented
documentary… for I’m sure that’s what you will do.
Paul Pauwels (2010)
The unedited version of this speech is available here.