WHISTLER – Operating in a relatively small market, Canadians have learned to produce great product for less cost than many countries it competes with argues Michael Hennessy, President and Chief Executive Officer of the Canadian Media Production Association. Speaking today at the China Canada Gateway luncheon held at the Whistler Film Festival, Hennessy said Canada’s status as “Country of Honour” at the MIPCOM TV market this year underscores the nation’s success.
In a speech entitled “Thinking outside the Lens and Beyond Our Borders; A New Strategy for Film in Canada,” he maintained that while quality is not an issue when it comes to Canadian content, financing, distribution and marketing are, and that future growth will be determined by the industry’s success in attracting new sources of funding.
“But quality is a great place to start from if the ultimate measure of success is the ability of our content to resonate with consumers as audience.”
As an example of growing Canadian film quality, he cited the recent Hollywood premiere of Rebelle (War Witch).
“War Witch is Canada’s nomination for Best Foreign Language film at the Oscars. And an Oscar nod would be well deserved. The ability to squeeze so much humanity and compassion from the brutal tale of a female child soldier in the Congo makes the film riveting and stands as a testament to our ability to tell stories with universal resonance.”
Hennessy noted that British Columbia is the fourth largest centre for film and television production in North America. He added that according to the BC Film Commission, in 2011, 281 film and TV projects were shot there generating in excess of $1.1 billion in production spending. And in 2010-11 alone Canadian films won a total of 133 prizes and mentions at festivals— including 61 at the international level.
“This success did not come easy. Remember in the late 1960s there was no Canadian feature film industry to speak of. Hollywood had about a fifty year jump on us.”
Hennessy recalled how the growth of the Canadian film industry required the support of the National Film Board in the late 1930s to nurture creativity. Later it needed a commitment at the federal and provincial levels, particularly through vehicles like Telefilm Canada, to invest in its creative industries.
“And, most importantly over time, entrepreneurial producers have invested in and sustained a talent pool that has attracted investors to shoot film and television projects in Canadian locations, and on Canadian sound stages.”
That pool of talent has helped attract $5.5 billion annually in film and TV production activity and some 128,000 direct and indirect and predominantly high quality jobs.
But figuring out how to sustain that base and grow in the face of competition, funding pressures and margin squeezes is no easy task he added.
“One need look no further than this province to understand how the impact of changes to tax credits in different jurisdictions due to interjurisdictional competition can affect local investment.”
He told the audience that earlier this month while attending the American Film Market in Santa Monica he was struck by the similarity in the number of challenges independent producers face around the world. This included the “erosion of adult audiences going to the theatre, a cratering of the DVD market and a decline in the exhibition of new films on traditional television channels. And all of these factors make it even harder to attract financing.”
Today, production budgets of Canadian feature films now total between $300 million to $350 million each year, and sustain between 7,000-9,000 high quality jobs said Hennessy.
“But it has become abundantly clear that to remain financially viable, the Canadian industry must reach beyond its borders and traditional platforms for distribution.
He conceded that Telefilm’s new Success Index, has met with a “considerable degree of concern from some producers.” But that they need to recognize that Telefilm’s direction in “emphasizing audience success and awards, is critical to demonstrating value to government” so that public funding levels can be sustained. Success includes providing young Canadians with more quality job opportunities in the future.
In response he says the CMPA is working with Telefilm to make sure “we get our priorities right.”
But he noted that with Telefilm’s parliamentary appropriation to be cut by $10.6 million per year by 2014/15, public funding has become a “zero sum game and every cut results in a reduction in bottom lines throughout the system.”
As a result he said private equity and growing new markets becomes even more critical to “simply sustain and second to grow our production capacity.”
Canada’s challenges are universal, and combined with the economic downturn, have led to a reduction in financing of independent film in a number of countries.
“And the scary part for those of us in Canada is that when financiers at AFM focus on the difficulties of financing independent films, even with the Oscar success of movies like Slumdog Millionaire or The Hurt Locker, they are talking about the prospects of films averaging $25 million in cost.”
With the average budget of $5 million for a Canadian film it means the industry needs to explore co-productions and digital markets to increase scale argued Hennessy.
“The principal message from financiers at AFM was as follows. First for financing, an independent production needs either a name star, a successful director and/or a writer with a proven track record. But that requires bigger budgets than we are used to.”
That is why co-production is becoming a critical factor in this market segment to enable sufficient financing he told the audience.
Over the past ten years Canada has had close to 800 official co-productions in film and TV. Hennessey further noted that last year, three of the five movies shortlisted for the Genie Awards were international co-productions.
“For Canada I would submit that the co-production model is the path to prosperity. It works as we have seen with TV shows like The Borgias. And that, after all, is the reason we have a pitch session for the China Canada Gateway project.
He noted that Canada is ranked as the third largest movie-watching nation in the world, “so how do we exploit this in our favour?”
“We know that Canadians want to be able to access quality content on their preferred platform and at a time of their choosing. And, they are increasingly doing so—whether it is on the TV screen or at a theatre at the end of the block. So we need to take a look at the convergence of film and TV in a digital world.”
New measurements of success also need to be developed that reflect that most film product is consumed at home he added.
“A recent survey by Canadian Heritage shows that almost 8 out of 10 Canadians are interested in watching Canadian films. And, 73% want Canadian broadcasters to show more Canadian films on television. This reality is now being evaluated by Telefilm and officials at Canadian Heritage.”
The industry he said also needs to encourage the growth of a greater number of Canadian distribution companies that are truly capable of investing in Canadian films and then taking those films out into various markets in Canada and abroad.
“It is my view that government may well turn its attention to updating its distribution policy to address many of these issues.”
He also called for effective solutions to entice Canadian television broadcasters to re-engage in supporting Canadian feature films.
“The same survey I mentioned earlier also underscores one of the major hurdles for the industry. 67% of Quebec respondents agree that Canadian movies are well-promoted and advertised. In contrast only 31% of residents in the rest of Canada agree. Securing screen time and ensuring that adequate promotional efforts are put behind Canadian films, particularly in English Canada, have always been big challenges. That leads to the video-on-demand alternative.”
The industry he maintained needs to embrace new opportunities like on-demand from cable VOD to OTT services like Netflix.
“On-demand creates opportunities to make up for the collapse of the DVD market and reductions in the broadcast windows. VOD is a huge opportunity but it is unclear whether it can offset the declines we currently see.”
With increasing vertical integration in Canada Hennessy added it may be easier for broadcasters and exhibitors to begin a conversation about developing a new windowing sequence for independent films.
“For instance, I wonder if we can’t figure out how to initiate a theatrical release day and date with a one or two night Premium VOD release? I suspect that there would be very little, if any, cannibalization between these markets, if we experiment first with indie films. But the extra promotion might actually drive more people to the theatre based on the initial buzz.”
He concluded by urging the industry to increase its focus on promotion and marketing all with a view to stimulating demand, as well as raising awareness of the overall value of Canadian content among all Canadians.
“Right now we are more successful than we have ever been at creating quality works, but the broader sector doesn’t do a great job marketing and promoting that success.”
The key to success he said rests on exploiting new distribution options and on building brand and project awareness through new markets, new platforms and social media networks.
“I have no doubt that Canadian producers will continue to effectively compete with the best independent content the world has to offer as long as we can sustain and then build on the financing models we have today. We have already proven we can compete with the best. Now we need to ensure consumers and policy-makers get the news.”
