Cinemas are owned by distributors

It seems there’s another round of hand wringing about the apparent dearth of Australian films, and their lack of box office success.

I certainly don’t know the answer, but I’ve been through some of the process of releasing a film to a cinema going audience as a producer on Lake Mungo. It’s certainly seems stacked in favour of the exhibitors and distributors out there. No matter how badly the film actually does at the box office, distributors and exhibitors rarely seem to loose money.

It seems to me one of the key problems is that almost all of the cinemas themselves are actually owned by distributors. I wonder how many people realise that an art house cinema like the Nova in Carlton is actually half owned by Palace, which is in turn half owned by Village Roadshow, the largest distributor in Australia ?

There are very very few truly independent cinemas. So if you are trying to release or self distribute or use one of the much smaller independent distributors, you’ll have almost no chance of getting your film into a cinema, and you’ll certainly not get preferenced on trailer positioning, poster positioning and session times, all key marketing tools for building audience awareness.

This vertical integration also means that the distributor get’s to double dip on the ticket price. It means they are making money on the ticket price AND they then take a distribution fee, AFTER they have deducted the costs of distribution.

Typically for an Australian film the exhibitor would get between 50-75% of the ticket price. The remainder in theory goes to the distributor who then deducts the cost of distribution and then takes a distribution fee. Once the distribution fee is paid, as well as the ongoing costs of distribution any remaining profit is then split with the producers and the distributors. They get to take a percentage of the profit after they’ve taken both the ticket price and a distribution fee.

If you owned a cinema and were also a distributor, would you rather screen a film that you were taking two bites from or would you screen the the independently released film that you only get the ticket price on and no control of marketing over….It make sense doesn’t it ?

Book publishers don’t own book stores. Music labels don’t own music stores.

I guess the counter argument is that if the film is any good it will somehow *find* an audience and be recognised as such and end up being picked up for distribution by a major. Except, how’s the film meant to resonate with an audience when it can’t even get a screening ?

The US government faced the same issue in 1948 and launched an anti-trust case to force the major studios to divest their exhibition holdings.

For some reason in Australia in 2011 this seemingly restrictive trade practice seems to be ok.