Apr 5, 2013

Do government film subsidies add up? Yes, and no

The federal government is giving a big Hollywood studio $21 million to film a remake of 20,000 Leagues Under the Sea in Australia. Is it money well spent? It does return, but not where it's needed.

Ben Eltham — <em>Crikey</em> arts commentator

Ben Eltham

Crikey arts commentator

Most people enjoy a movie. But should the government pay for a local screen industry?

Since the early 1970s, the answer to that question has been “yes”. Before Phillip Adams and Barry Jones convinced John Gorton to start funding Australians to make movies, the majority of the television and essentially all of the movies consumed by Australians were made overseas. Australia has developed a significant local screen industry since, but it’s been highly dependent on government funding.

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8 thoughts on “Do government film subsidies add up? Yes, and no

  1. John Williams

    I know a bloke who runs a truck company for film locations. He can afford to give local productions big discounts when he’s paid properly by the international productions. Surely there must be other examples of this happening and proves that these productions are not in isolation and have good knock-on affects for the local sector.

  2. The Pav

    $21M to have the film done at Fox Studios.

    I’m surprised that that scion of free entrprise (Rupert Murdoch) countenances the receipt of such tainted money

    And I’m guessing Tony Abbott won’t complain

  3. Suzanne Blake

    Why does Australia have to spend $20m funding Hollywood and Disney, when that money could by 10 MRI’s machines for hospitals around Australia. I agree with Labor’s Ed Husic.

  4. Peter Gray

    From my school work, circa 2009:-

    Discuss the ways in which Australian films are marketed in Australia and compare this with your experiences of the ways in which American films are marketed.

    I like to assert that creative markets, like music, theatre, film, television, radio and politics, are audience driven. Commercial producers and broadcasters have access to useful audience data. Much of this data is simply a count of bums on seats within demographics: the who; what; where; when; and how much. In the long term, extrapolating the ‘why’ doesn’t matter that much. Trial and error over time develop a feel for trends and genres. I have seen more bottom-line success achieved by following audiences than by leading them.

    These days film marketers and distributors are becoming more aggressive in their approach. They are experiencing a lack of growth which may herald a major downturn. The Internet, home and mobile computing are the challenging the media status quo. In recent times, games are on the increase, movies are static and music has declined.

    The Australian film industry has been in a steady state over the last decade or so (figure 1). Gross national film production budget (of the core slate) range between $70-100M pa (Screen Australia 2009). In the last five years the number of film produced in range between 29 and 41 (EAO 2009). Audience figures are fairly static at about 85 million admissions per year (EAO 2009) each paying about $11 each. In the last few years there has been a significant increase in gross box office takings driven mostly by increased ticket prices (EAO).

    Currently, 85% of Australia’s $875M (on average) movie going audience see an American film (EAO 2009). Only about 4% see an fully Australian movie. That comprises a $35M box office return on a $100M investment. Some of the shortfall is made up in tax breaks for investors and post box office sales, DVD, Television and such like.

    The lack of attendance at Australian films can be attributed to the business model of the distributors. They adopt a US model because they are mostly owned and/or controlled by US interests who supply the bulk of available product. The current model is focused around the blockbuster and avoiding showing films in empty theatres. Unless a film become a blockbuster it is not shown for long in movie theatres.

    These tactics may be good for scraping the barrel in hard times but seem to me to be detrimental to the Australian national film industry. Short runs in theatres do not allow Australian film to build or maintain a following. The rise of the megaplex theatres at the demise of the small theatres, which operate at lower turnover, consign Australian film to short token runs in megaplexes.

    I presume that the long term promotion of the Australian film industry is not a priority for local distributors given it represents only 4% of their market. That successive Australian governments have allowed our local distribution industry to be controlled directly or indirectly by Hollywood is at the core of the stagnation of the Australian film industry. We have proven repeatedly that we have the talent to entertain the world and ourselves.

    We are making good films that few get to see until shown on television. Last week the Sunday Herald newspaper sold me two recent Australian movies on DVD for $6. Thank you very much. Now I keep an eye out for DVDs in my breakfast cereal. We need to give Australian movies a suitable shelf life. I suggest that a healthy ‘second division’ of small theatres could economically provide a feeder for slow rising blockbusters, allow movie going Australians to reacquire a taste for Australian product and serve as a hot bed for new emergent interactive media that we ‘know’ are coming, assuming of course, if Hollywood doesn’t mind.

    AFC 2005, Fast facts 2005, Australian Film Commission, viewed November 2009 at http://www.afc.gov.au/downloads/pubs/infofilm.pdf
    EAO 2009, Focus 2009: World film market trends, European Audiovisual Observatory, viewed November 2009 at http://www.obs.coe.int/oea_publ/market/focus.html
    DCITA 2006, Review of Australian government film funding support – Issues paper July 2006, Department of Communication, Information Technology and the Arts, viewed November 2009 at http://www.arts.gov.au/__data/assets/pdf_file/0020/40781/australian-film-review.pdf
    Green, P 2006, LPW603: Script adaptation – Lecture 9: Involvement, Swinburne University of Technology.
    Hannaford, S 2007, Hollywood’s marketing dilemma, Oligopoly Watch, viewed November 2009 at http://www.oligopolywatch.com/2005/06/13.html
    Hannaford, S 2007, Industry brief: Movies I, Oligopoly Watch, viewed November 2009 at http://www.oligopolywatch.com/2003/08/06.html
    Screen Australia 2009, Trends in the core Australian feature slate, viewed November 2009 at http://www.screenaustralia.gov.au/gtp/mpfeaturesfocusfunding.html
    Sutter, C 2005, Sales And Marketing Trends In The Music Industry, MusicDish Network, viewed November 2009 at http://www.get-it-all.net/indie112-Sales_And_Marketing_Trends_In_The_Music_Industry.htm

    Trends in the core Australian feature slate – 2009, http://www.screenaustralia.gov.au/gtp/mpfeaturesfocusfunding.html

  5. woody woodpecker

    Not a lot of WATER at Fox Studios, last I checked…

  6. chugs

    Is it obvious a battle between CAPEX vs OPEX.

    What politican wants to invest in equipment that has a substantial OPEX charge when they can throw a once off $20m, have the headlines and come away with the claim that that its an investment that will provide, eventually, a net benefit?

  7. Susan Standen

    I came to exactly the same conclusions as Peter Gray in a similar study, unless the distribution model is addressed the value of these subsidies is questionable and may even contribute to its downfall in a similar way to VFX companies worldwide, the race to the bottom. The recent TownHall event by VFX workers calls for these subsidies to be eliminated and I tend to agree. They work against a sustainable industry model.

  8. JulesTAS

    Would like to see the Feds set up a lottery to fund Australian film. They can run it themselves through the Post Office so that all profits could go to the fund.

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