Filmed entertainment

Executive summary

Crafting premium experiences for content-hungry consumers will ensure the growth of filmed entertainment over the next five years. Cinema attendance remains strong (5.6 percent growth in 2018), though it is vulnerable to fluctuations based on the quality and volume of titles. Simply screening a new release film is no longer enough to draw audiences, when there are a plethora of on-demand choices in the home. Alternative cinema experiences are gaining popularity with 18 outdoor cinemas open across Sydney and Melbourne in 2019.1

The increase in the number of international subscription video-on-demand services offers choice and convenience to consumers, however this disruption is a challenge for content produced in Australia. Getting distribution via streaming services unlocks international audiences, however, the expectation of high production quality adds increased costs to local filmmakers and producers.

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Growth drivers

1. Quality and volume of titles
2. Alternative cinema experience
3. Technologies that enhance the viewing experience

Forecasts at a glance

In 2023 transactional VOD will outstrip physical sell-through and physical rental almost disappears

 

Expansion of experience offering by cinemas is driving growth

The big screen is still big business

Despite a notable shift over the past decade to consuming more filmed entertainment from home, cinema attendance remains at an all-time high with 67 percent of Australians attending the cinema or a drive-in at least once per year in 2017-18.2 As President and CEO of The HOYTS Group, Damian Keogh describes, cinema is ‘the cockroach of the entertainment industry - nothing can kill it off’.Moviegoers still prefer to experience blockbusters on the big screen, particularly since cinemas have embraced new technology, such as 4K and Dolby Atmos speakers to enhance the viewing experience. Special event screenings are increasingly including classics (e.g. ‘Hollywood Classics on the Big Screen’ at The Event Cinemas), and live sports streaming (e.g. State of Origin).

‘There are three key trends that we have seen: diversity, nostalgia and the importance of social sharing.’⁴

Kylie Watson-Wheeler, Senior Vice President and Managing Director, The Walt Disney Company ANZ

Movies continue to innovate outdoor

A fast-growing alternative to the traditional cinematic experience is the outdoor cinema, a modern take on the traditional drive-in theatre concept. Consumers’ use of their personal devices on a near-constant basis has made watching films outdoors appealing.5 Opportunities exist to grow and innovate this concept, for example, Mov’in Bed uniquely incorporates beds and blankets into the viewing experience.6 While not necessarily new, recent rapid expansion across Australia and the UK suggests that the outdoor cinema has long-term viability.

‘Experience is key. Moviegoers demand a premium, state of the art cinema where luxury, comfort and quality is expected.’⁷

Kylie Watson-Wheeler, Senior Vice President and Managing Director, The Walt Disney Company ANZ

No place for the middle-budget film

Middle-budget films’ position in the market is being challenged. Blockbusters are safer-bets in terms of attendance and advertising revenues. Playing on nostalgia, film franchises (e.g. Mission Impossible: Fallout), remakes of old films (e.g. A Star is Born, Dumbo, Aladdin), and screenplays of popular novels (e.g. Ready Player One) continue to gain prominence. According to Ben Luxford, Head of Audience of BFI, ‘it’s tough for films that are in the $5 - $15 million budget range. They can rarely get financed anymore, because the opportunity for them to run and break out is not there in cinemas’.8

‘All independent content is now fighting for a decreasing pot of attention, space and money.’⁹

Graeme Mason, Chief Executive Officer, Screen Australia

Challenging the traditional distribution model

The traditional distribution model of bringing filmed content to market is changing. Films have traditionally been released in cinemas for an extended period of time, and then released for streaming on demand a number of months later. Netflix has disrupted this model, releasing a film on its platform only a number of days after its premiere in select cinemas (e.g. Roma and The Ballad of Buster Scruggs).10 Under this model, films can be considered for contention by traditional awards bodies such as the Oscars, making Netflix a comparably attractive platform for top directors, and in turn, more attractive to consumers.11

Consumers now expect a more curated cinema experience

Video-on-demand platforms have successfully used artificial intelligence and machine learning to provide a curated experience of their catalogues at scale. Cinema-goers now expect a more personalised approach to title recommendations with Damian Keogh of the HOYTS group believing that ‘loyalty data is becoming increasingly important to identify consumers to send relevant offers to’.12 Investing in creating loyalty programs with great scale and engagement also offers a low-cost way of reaching a targeted audience rather than relying on premium broadcast advertising media.

The future of Australian filmed content

The growing availability of foreign content being introduced by video-on-demand platforms is placing the Australian content under pressure. The Make it Australian campaign was launched in September 2017 by a number of industry leaders, including high profile Australian actors.13 The campaign aims to promote and protect local Australian filmed content by lobbying to extend local filmed content requirements to include streaming services and other new forms of delivering media and to boost government funding.14 Graeme Mason, CEO of Screen Australia says, ‘we get more applications now per round than our legacy agencies used to get in a year’.15 The ability to grow Australian storytelling and compete on the international stage would be enhanced with Government investment in production and distribution.

2014 - 2017 figures have been updated to reflect most recently available information
*Source: Screen Australia

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