“Public funders should take the opportunity to reflect on their role and how they can become more diverse and dynamic”
Industry Report: Distribution, Exhibition and Streaming
Michael Gubbins • Expert, author of Streaming Giants and Public Film Funding
The British analyst disclosed the possible scenarios European public funders could face in a landscape increasingly dominated by the streaming giants
Michael Gubbins spoke to Cineuropa about his latest report, titled Streaming Giants and Public Film Funding and commissioned by Sweden’s Film i Väst. Together, we discussed some key findings of his analysis.
Cineuropa: Could you please introduce your report and its main objectives?
Michael Gubbins: The report tries to understand the challenging scenarios for European public funding in markets disrupted, and increasingly dominated, by US-based streaming giants.
It was written at the start of 2022 and much of the change it predicted is already now coming to fruition, while new influences, such as the Ukraine War, inflation and a cost of living crisis are accelerating market evolution.
The main argument of the report is that the subscription streaming giants do not represent the new DVD or the new pay-TV. What marks them out is scale, exclusive content ownership and control over distribution and audience engagement. They have the power and potential to wield a kind of monopolistic power of which the old Hollywood moguls could only dream. In 2020, the top three streamers had 80% of the market in 21 of 28 EU countries.
The story of the growth of the streaming giants is not one of long-term strategic thinking but of Big Data-driven engineering, pragmatic opportunism and a good deal of luck, notably the pandemic, which shut down large parts of its competition for audience time.
What are the three future scenarios you outline in your report?
The first is a ‘Win-Win’ scenario in which a stable and competitive group of streamers at the tip of the market help in the emergence of a balanced ecosystem with benefits for a large number of stakeholders. The streaming giants create a production boom, creating jobs and bringing new talent to the fore with a premium on ‘originality.’
A dose of global free-market dynamism opens up international European content, and its focus on audience demand offers opportunities for diverse talent to make its mark without the elitism of some public institutions. Broadcasters too partner with streamers to build economies of scale and international reach. In this optimistic scenario, public funders can focus on risk-taking cultural work and nurture diverse new talent. The domination of those US streaming majors should encourage counter-programming competition with more local and niche players. Subscription stacking might create a healthy mixed market.
There is even an argument that the theatrical business could be boosted by increased interest in film and series helping promote the unique social experience of cinemas. To an extent, this Win-Win scenario has been in play for the last couple of years, notably in a production boom across Europe.
But the report suggests it is illusory and that this phase will give way to a second scenario of ‘Market Disruption.’ The report suggested that the Win-Win might be short-lived as market realities begin to exert themselves.
A combination of competition at the top, the end of the pandemic, reduced consumer spending and alternative demands on audience time would likely see numbers fall for some of the biggest players. The report also points out that the ceiling of overall demand for SVOD was unknown, making prediction of future growth difficult, while alternatives, including AVOD, might also exert a big influence on the market.
This scenario could see support for original content decline with a higher dependence on lower-risk commercial projects from established talent. There are signs of those trends already in play.
In the longer term, a tough market at the top could lead to market failures, mergers and acquisitions, reducing the demand for original content. The dream of a European Netflix to take on the giants is unlikely to emerge because it will be based in fragmented markets and without the access to the kind of finance driving the US operations.
The final scenario is the ‘Decline of Film,’ in which streamers lose interest in film in particular. Some have already diversified into games and sport. Film might be in a particularly vulnerable position. There is evidence that streaming is leading to a decline in cinema attendance, but there is also evidence that demand for film on platforms is still heavily influenced by theatrical screenings. Cinema closures could be a lose-lose scenario for streamers too.
A significant drop in original production could have a serious impact on European film economies. Producers will often give up their rights to streamers, leaving them without assets to exploit.
What should European public funding focus on? How can they adapt to the constant changes of the market?
While cinemas and festivals may remain an essential part of a film ecosystem, there is no convincing argument for a return to a theatrical-dominated business with old media chronologies and pre-streamer economics.
Public funders should take the opportunity to reflect on their role and how they can become more diverse and dynamic. The streamers have demonstrated that there is untapped diverse talent that have found opportunities that were not previously available. They have shown that European content can find markets around the world that the old systems had not been able to reach. […] It should be noted that the streamers benefit considerably from public funding, notably through production tax breaks, but also through support for skills and infrastructure development. The value of those incentives seems proven in the production boom of recent years.
The question mark is over the selective schemes where public funds have played such a key role. Those schemes have been at the heart of a European belief that culture is an exception to business rules and that cultural diversity cannot simply be left to the market.
Those ideas are being challenged right now and will be more so in the coming years. […] A serious discussion is needed about the future that goes beyond whether individual, regional and national funds can ethically work with US-based streamers. But this report suggests there is a lot at stake for the future of film and European cultural diversity.
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