Industry Report: Distribution and exhibition
Video on Demand Distribution in Europe – Case Study: Movieurope.com
by Cartoon, the European Association of Animation Film
- Niels Aalbæk Jensen has 16 years of experience as a frontrunner and entrepreneur in the IT industry. He is the founder & Managing Director (CEO) of FIDD. FIDD is co-owned by 160 of Europe’s leading filmmakers’, from 17 European countries. FIDD operates the online/IPTV platform www.movieurope.com with access to Europe’s largest selection of feature films, documentaries and short films at a fixed price per month. Movieurope has more than 1.200 titles in total.
What is FIDD (Filmmakers' Independent Digital Distribution)?
FIDD is a company co-owned by some 160 companies from 17 countries (40 Danish companies, 30 Swedish, some 15 to 20 Norwegian, Finnish and Icelandic and the rest of Europe). The aim is very simple. We don't want producers to be submerged by iTunes, by Microsoft, by the big American blockbusters. We want to create the European number one producer-owned digital distribution system.
Who are the share holders of the company?
We are working on a co-operative model: 50% of FIDD is owned by hardcore capitalist investors, that pays for everything; the other 50% is owned by United FIDD, the 160 companies. I think the limit must be somewhere around 1,000 to 2,000 European producers. The philosophy of this project is one company, one vote, one share.
There are no costs that are deducted from the selling price. We take care of the translations in as many languages as possible.
How can a producer join FIDD?
Producers have just to express their interest to me. It doesn't cost them anything to join FIDD.
Who is paying for the digitalisation and the subtitling?
FIDD. The company is financed by the MEDIA Programme, private investors and regular revenue and it covers full cost.
We don't sell film by film, we only do SVOD (Subscription Video On Demand). That means that we package films in themes -for kids, action, thrillers- so that people can subscribe to their preferences (or to all films if they choose the Premium package). People can subscribe for a month.
Why did you choose SVOD model?
There are variations in the way you do business, whether it's feature films, English spoken or another European spoken, documentary, short films and animation...
In Video On Demand there's a heavily tendency to focus on feature film and mainstream feature film. All the other films have no chance to make decent revenue in the Video On Demand business. What is happening on iTunes -just to mention this- is that there is a list of films and it costs some three to five euros to get one film. The users generally choose what they know and generally they go for blockbusters. We want to promote also other kind of content. Short film or documentaries are difficult to prize in a VOD model. What is the selling cost of a Finnish short 9 minutes film? 0.10€? What can you do with it? And what can you do when you have 270 of them as we have? In our gold package you will have up to 500 films (short, documentaries, feature films) that you can subscribe to for 19€ per month.
Are you proposing some special offer for animation?
Yes, we have a platform called Toon Telly, released in Germany. It is a platform for 3-11 years old kids. We divide the platform into boys and girls, ages, features films and series. We know what the parents are asking. When you do a platform, don't make it for the kids, make it for the adults, for the parents. If you please the parents, everything is cool.
How do you split the revenues?
Every film coming to FIDD is rated with a film point system going from 3 to 51 points, depending on admissions, production year, budget and duration. Films that had high budgets have higher points. If you have ten films in our catalogue and your film has 1 point, 5 points, 10 points, 30 points... then the revenue that the films are gaining in a month is then divided by the total film points. That means that if 100 films have made €1 million, we take the 100 films, we evaluate how many points the 100 films do and we multiply the points by the numbers of views per film. So if the film has 10 points and it's viewed 10 times, then it has €100.
How do you market the VOD service?
We simply join up with partners who have a huge marketing machine. The marketing partners get 20% of the revenue that they generate from their customers. They have just to marketing us!
What is the advantage of distributing films online?
You want to make money you need to reduce the value chain. In theory, producers can distribute films directly without the intermediary of a distributor. When you do digital distribution, it's very easy to do it.
9 out of 10 films reaching cinemas are failures. Why shouldn't we start thinking of how we could distribute those 9 films digitally instead of expending thousands of euros distributing through the cinemas. Lars von Trier films in Denmark are always a failure in cinemas. In France and Spain they go well. We might think to distribute the Lars von Trier's film in Denmark only online, saving a lot of the distribution money. The film can sells easily 80,000 tickets online if everything goes well in Denmark.
The movies are in a non-exclusive basis on your platform?
Yes, I'm a true believer that the only thing that benefits your revenue is that you only deal on a non-exclusive basis. On the Internet exclusive deals simply doesn't make sense.
Is VOD going to growth in the next years?
Yes. There are two positive things that are coming. Firstly the speed of streaming is rapidly growing. You can show films streamed in a very good quality. Secondly people will be able to watch Internet on their TV displays with a simple little cable. That little cable is a revolution for all the producers. That little cable links the laptop or the PC to the 42 inch flat screen in the living room. Producers have straight access to the customers, they are not depending on the huge television companies to finance their films.
The consequences are many. We made a survey to find out what types of services (SVOD, Video On Demand channels) would people consume or expect to consume. 9% of the consumers are already watching TV on their computer. If the trend continues, it will be a big problem for the cable and satellite TV. 51% of the consumers would cancel their subscription to cable TV or a satellite TV if they can access Internet (and VOD) on their TV.
How to you see the ads driven model?
It is true that the ads driven model for Video On Demand is developing rapidly. The problem of this model is that the ads companies are going to tell producers what film to produce because they suits their product. I don't want to support that direction.
Is it your intention to develop financing using direct contact with consumers?
Some of the co-owners are thinking to took 5-10% of the revenue to create our own film fund to do pre-production.
How can you do money?
There is the direct business to consumer and the partnership model. For example in Denmark all trains will soon have a little screen in the neck rest and they will offer VOD. We are actually negotiating with the train company to have Movieurope in their offer.
Are you considering alliance with other players like Universcine?
Universcine is co-owned by fifty French filmmakers. The difference is that Universcine is an inwards project, they collect films from around Europe to be shown in France, we collect films around Europe to shown worldwide. The answer is yes, when possible, we would like to do alliances... Universcine for example doesn't have short films, they have a few documentaries, and sometimes they have exclusivity, which is not our policy.
What the MEDIA Programme could do to encourage the circulation of films?
The MEDIA Programme could offer translations for the films in the major languages of the European Union. Producers always are lacking money to translate the film. All the feature films produced in Europe could be translated to 8 to 10 languages, and the translations should be accessible for free for distributors or content aggregators. People want the films with local spoken languages or local subtitling.