European Distribution : Focus on Germany

European Distribution: Focus on Germany

 „Der Untergang“ 

 by Birgit Heidsiek


For the very first time in the history of mankind, we can observe the rise and fall of a whole art form. The experience of watching a high quality piece of art in a cinema, be it a master piece from the silent movie era of the 1920‘s, or be it a milestone from the 1970‘s or 1980‘s, will be replaced by seeing these works on small computer screens in a very private environment. The value of the  art form is not only diminished by the loss of the cinema but also by an inflationary production of moving images. According to independent distributors in Germany it is the overproduction which is seriously damaging the market.

„There are too many movies released theatrically“, states Andreas Baumann, General Manager Marketing & Distribution at drei-freunde filmverleih. „This makes it much more difficult to find, buy and market the right films,  especially in case of small films.“ Some exhibitors don‘t have the know-how to do the „right“ selection. They don‘t cultivate movies anymore. „If a film doesn‘t work after three days, it will be thrown out“, reports  Andreas Baumann.

According to the statistics by the German Federal Film Board (FFA), the number of theatrical releases of German films nearly doubled from 107 in 2003 to 223 in 2013 while the average number of cinemagoers per film went down by almost half from 415,000 to 229,000. The distributors blame the German Federal Film Fund (DFFF) to flood the market with German films which are forced by the funding regulation to be released theatrically. Producers in Germany can apply for 20 percent of their budget at this automatic fund if they come up with a distribution partner who signs a contract that he will release the film with at least 45 prints. Projects that receive less than € 320,000 have to be released with a minimum of 20 prints.

There is no way for the distributors to get out of this contract. If they do so, the producer has to pay back the full funding amount which often might lead to bankruptcy. Due to this strict regulations, a lot of screens in Germany are blocked with films which would not be released at all or at least not with so many prints if the distributors had a choice to go with a production straight to VOD if a film doesn‘t have a potential for the theatrical release.

„Film politics are partial fixated on production“, points out Michael Höfner, founder and CEO of Berlin-based indie distributor GMfilms. „Some production companies could be likely nationalized because they are not marketable without any subsidies.“ Meanwhile small distributors are struggling and barely survive – but at least without any subsidies. „The DVD market for independent movies mostly collapsed in 2014“, underlines the distributor. „If we want to realize the same receipts via VOD, we have to attract six times as much consumers as with DVD. That is not going to work.“

The higher flexibility in terms of booking in combination with a growing number of films that are released theatrically lead to the result that despite a higher number of prints there are less slots for European films in the cinemas, according to the analysis of Emma Klopf, CEO of Munich-based arthouse distributor Prokino. „There are more movies on the constant number of screens fighting for an audience“, underlines Emma Klopf. „If a film doesn‘t satisfy expectations at the first weekend, it won‘t get a second chance in order to find an audience in the next weeks.“ A day-and-date release is not desirable in Germany either. „Therefore it is unalterable that exhibitors and distributors search together for possible solutions.“ The Prokino team is open for experiments but emphasizes that a distributor needs all the rights of a film, especially for VOD, during the licence period. „Due to the shrinking cinema and TV receipts, we can‘t recoup our investment otherwise.“

Compared to cineaste countries such as France, arthouse films don‘t perform well in Germany. While the Oscar short list candidate „Timbuktu“ attracted about half a milion cinemagoers in France, the drama didn‘t even draw ten percent of this number to the cinemas in Germany. „With the fivefold European Film Award winner ‚Ida‘ it was even worse“, says Egon Nieser, founder and CEO of the German arthouse distribution outfit Arsenal. In France, the Oscar short list entry sold more than 600,000 cinema tickets, in Germany it had only 20,000 viewers –  in the best time of the year. „Too many bad films are released theatrically“, concludes the indie veteran. „If there are only 300 people come to see a movie, it will be gone.“ But it was not always like this.

„Once upon a time arthouse distribution in Germany was a risky, but also rewarding business, and – believe it or not – sustainable: In the long run, we made more money than we lost“, recalls Ludwig Ammann, Founder and CEO of independent arthouse distributor Kool Film. „This is no longer the case. Around the year 2008, the numbers started to drop. In the beginning, we blamed ourselves: We must have chosen the wrong movie; and we certainly more than once paid inflated MGs reflecting not the movie’s potential but the deep pockets of reckless competitors and dubious promises of MEDIA support. But a few years later, it became obvious that the whole market had changed. We used to achieve around 1000 – 2000 admissions per print. All of a sudden, 500 – 1000 admissions per print had established itself as the new norm. A decent European first or second movie with no names attached used to clock in around 40.000 – 80.000 admissions. It now hovers somewhere between 15.000 and 30.000 admissions – hardly enough to pay for the quality dubbing German audiences expect. And since our TV buyers were quick to grasp that the theatrical arthouse market had deteriorated, they became much more picky and thrifty, offering less and less for the few movies they picked: Our product has lost value.“

Ludwig Ammann clearly calls a spade a spade: „The decline of arthouse distribution is the – some would say: unintended, but this view must be qualified – consequence of boosting the market share of German movies by throwing tons of money at producers. There is a glut of movies competing for the same number of screens and slots and total of ticket buyers per year – and so the slices for most releases simply get thinner and thinner.

As Oliver Castendyk, Director of Research and Head of Entertainment at German Producers Alliance, ascertains in his analysis, there is a strong correlation between the number of releases of German movies and the number of admissions per print: The more releases there are, the more the number of admissions per print drops. In 2005, when only 146 German movies were released, the median per print was still 836 admissions. In 2010, when the number of releases had risen to 189, the median had dropped almost by half to 463. And the steep drop to such low levels actually occured in 2008.

There is also a strong correlation between the rising number of German feature film releases and the German market share between 2000 and 2011: „The political goal of boosting the German market share by spending more money – subsidies – on German movies was reached, the market share almost doubled, rising from on average 11,86% to 20,5%“, underlines Ludwig Ammann. „But that success came at a cost – and the price is not paid by producers who typically make money even if the film they produced turned out so badly that it doesn’t get any distribution, a risk-free business of which distributors can only dream – we normally risk 50% of our own money and sometimes a stunning 100%. The heavy price for producers’ paradise is paid by distributors who must cope with ever diminishing returns on their investments and mounting debts.“

The arthouse distributor claims that it’s time to demand a public debate about the level of promotion of German Cinema – the millions of subsidies spent on German movies. „When for the first time in many years a few extra millions were cut this summer according to plan, the producers’ lobby managed to portray this overdue event as if the apocalypse of German Cinema was imminent. No other voices were heard – a disgusting lack of debate“, concludes Ludwig Ammann . „Is the decline of arthouse distribution really just an unintended consequence of boosting the German market share? I doubt it. I have reasons to believe it is at least condoned, tacitly, by the politicians who decide about who gets the money. Let‘s break the silence!“