2017 Nostradamus Report

For this year’s report, we have interviewed the following experts, who have given very generously of their time and thoughts:

Bobby Allen, VP of Content, MUBI; Catharine Des Forges, Director, Independent Cinema Office; Tomas Eskilsson, Head of Strategy, FilmVäst; Domenico La Porta, Director, R/O Institute; Joëlle Levie, Director of Operations, Olffi; Fredrik af Malmborg, Managing Director, Eccho Rights; Roberto Olla, Executive Director, Eurimages

In addition, we owe a debt of gratitude to the following thought leaders and experts for their time and help:

Linda Aronson; Julie Bergeron, Marché du Film; Lene Borglum, Space Rocket Nation; Martin Dawson, Creative Europe MEDIA programme; Åsa Garnert: Anna Godas, Dogwoof: Mike Goodridge, Protagonist Pictures; Annika Gustafsson, Boost Hbg; Carl Heath, RISE ICT; Anna Higgs, Nowness; Justine Powell, iROKO Global; Sambrooke Scott, Film Hub Scotland; Dawn Walton, Eclipse Theatre Company; Matthijs Wouter Knol, European Film Market.

The Nostradamus Project is a joint initiative from Göteborg Film Festival/Nordic Film Market and Lindholmen Science Park.

A Swell of Films

Despite increased competition for audience attention in general and cinema screens in particular, the number of feature films produced in Europe and the US continues to grow. It is not expected to shrink significantly in the next 3-5 years. Among the reasons are new tax incentives and increasing investment from new platform media companies, but also the impact of real democratisation of production technologies and to some degree of funding.

While this swell of cinema in theory allows a wider range of voices to be heard, in practice it makes it very difficult even for excellent work – of which there is arguably a lot – to find an audience, as there is no equivalent surge of innovation in distribution and audience relations. It also means that bad or irrelevant work has almost no chance to be seen. While it seems clear that public funds should be redirected from the latter categories either towards more deserving feature projects, or towards the production of excellent film content in other formats or for other platforms, this is currently not politically possible. A change like that might also exacerbate the already difficult career paths especially of directors in a marketplace where films by unknowns are very difficult to fund or sell.

A Specialising Screening Ecosystem

In the next 3-5 years, all exhibitors will need to focus on the customer experience to stay competitive, but this can look very different depending on their type. On one hand we are seeing the emergence of a technologically oriented cinema optimised for experiencing blockbuster fare. On the other, focus on human interactions and live performance – so called “live cinema” – is a rapidly developing segment of the exhibition sector, helping audiences both new and old to build relationships with institutions and curators. These ostensibly very different styles of exhibition have in common that they are immersive, allowing the viewers to place themselves socially or physically inside the story, or to engage with its themes together. The social aspect is also at the heart of the growing market for film festivals aimed at general audiences.

Another approach to eventizing movies is just to make the cinemas a lot nicer, with better chairs, better concessions, food and alcohol, increasing cinema’s appeal to, for instance, grownups on dates. This strategy is working well both in mainstream and arthouse environments. At the extreme end are the dedicated luxury cinemas, offering experiences like butler service, Tempur mattresses, or massages.

While the future looks bright for movie theatres big and small, the sheer number of feature premieres means a theatrical window is not feasible even for all quality films – not even on the festival circuit. There is certainly room in the VOD marketplace for both strong curation and dedicated film libraries, but among the pieces missing from the distribution puzzle are still business models for social or distributed digital premieres.

The Undiscovered Landscape

A complete digital transformation of the small screen landscape seems inevitable and will probably happen relatively fast since audiences neither understand nor much care about business models or back-end technologies. As we discussed last year, the end result will probably look something like TV has for the past few decades, with consumers paying one or a few separate bills to services aggregating OTT content. Viewers are however likely to be allowed to pick their packaged channels more selectively than before.

The revenue streams will of course be radically different from the current models. Mergers and acquisitions are likely to continue as the biggest players scramble to establish dominance throughout the value chain. In the US, studios and networks are eyeing a future after affiliate fees and syndication fees, and considering whether owning the viewer relationship directly could provide a similar amount of revenue. Similarly, it seems feasible that a major technology company could purchase a major studio. If antitrust regulation is relaxed under the Trump administration, as net neutrality rules almost certainly will be, the media landscape is regardless likely to consolidate dramatically during the next four years. Changes in the US entertainment industry have global ripple effects. It is also likely that the cultural importance of US content specifically will diminish in the long term, a tendency that could be accelerated by isolationist policies.

VR on the Verge

In the next 3-5 years, the fundamental grammar of VR storytelling will finally be developed, and the real leaps will happen once the production tools are more widely available. Some standardisation will help focus a splintered marketplace. Investment in “VR cinemas” today should be viewed as tests – exhibitors preparing for a coming generation of the technology that may not be easily available in homes. In the short run we are also likely to see a brief exclusive “theatrical” window for VR.

Our interviews were conducted in December 2016 and January 2017. In addition, we have benefited enormously from formal presentations and informal conversation at among others the Nordic Film Market, Marché du Film, the Edinburgh International Television Festival, the Copenhagen TV Festival, Media Evolution’s The Conference, The Future of Storytelling Summit, the Future of Storytelling Festival, Living Games 2016, and Boost Hbg.

Chris Baker: ‘How Game Makers Are Struggling to Make VR Fun’, Rolling Stone, October 14, 2016

Europa Cinemas: 19th Europa Cinemas Network Conference. 27-29 November 2015 – Prague. Resume.

European Audiovisual Observatory: ‘Press Release – Box Office hit record high in the European Union in 2015’, www.obs.coe.int, 4 May 2016

Ryan Faughnder: ‘The boldest move yet to fill more movie theatres: Screen TV shows’, LA Times, Jan 3, 2017

FreeWheel: Video Monetization Report, Q3 2016

Linc Gasking: ‘The Value in Virtual and Augmented Reality’, TechCrunch,org, Jan 8, 2016

Gareth Halfacree: ‘Global VR Association, Open VR Standards Initiative launched’, Bit-tech.net, 8 Dec 2016

Daniel Halloway & Cynthia Littleton: ‘FX’s John Landgraf Sounds Alarm About Potential Netflix ‘Monopoly’, Overall Series Growth’, Variety, Aug 9, 2016

Kayla Hegedus: Who’s winning in the world of The New Television? (Parrot Analytics).

IDC: ‘Worldwide Revenues for Augmented and Virtual Reality Forecast to Reach $162 Billion in 2020, According to IDC’, IDC.com, 15 Aug 2016

Diya Jolly: ‘Making YouTube Better in a Mobile, Cross-Screen World, Google Inside AdWords, Jan 20, 2017.

Khronos.org: Khronos Announces VR Standards Initiative, Dec 6, 2016

Brent Lang: ‘First 4DX Theater in U.S. a Hit with Audiences, Data Show’, Variety, Sept 2, 2014

Live Cinema Limited: Live Cinema in the UK 2016 Report

MPAA: MPAA Theatrical Market Statistics 2015

Propellorfilmtech.com

Will Richmond: ‘Amazon’s New Anime Strike is the First of More Branded SVOD Services to Come’, VideoNuze, Jan 17, 2017

Will Richmond & Colin Dixon: VideoNuze Podcast # 352: Predictions for 2017

Janko Roettgers: ‘IMAX to Open VR Experience Center in Los Angeles This Week’. Variety, January 4, 2017

Janko Roettegers: ‘Ridley Scott, Fox Innovation Lab Team Up for ‘Alien: Covenant’ Virtual Reality Experience’, Variety, January 3, 2017

Jeff Rouner: ‘In the Age of Streaming, How Houston’s Cinemas Keep You Going to the Movies’, Houston Press, January 3, 2017

Andrew Wallenstein: ’17 Media Trends That Will Define 2017’, Variety Premiere Thought Leader, Q4 2016 (No public link available)