Film Distribution in Australia – Myths and Realities, part 1

You can take Hollywood for granted like I did, or you can dismiss it with the contempt we reserve for what we don’t understand. It can be understood, too, but only dimly and in flashes. Not half a dozen men have ever been able to keep the whole equation of pictures in their heads. – Cecelia Brady, in F. Scott Fitzgerald’s The Last Tycoon (1941)

The “whole equation” quotation above refers to the great difficulty which almost everyone has in fully understanding the movie business. Some insights are so profound that they remain relevant, as in this case, for six decades. Film historian David Thomson believes that this phrase encapsulated the nature of Hollywood so well that he named his 2005 Hollywood history after it: The Whole Equation: A History of Hollywood, although he notes that Fitzgerald “had insights about Hollywood that he could never apply in practice.” Thomson also believes that “the form of a medium and its commerce are linked” and that “in movies where there is no punch there is no impact” (Thomson 2005, p. 98). In other words, in film, money matters.

Film distribution is an under-appreciated and highly significant component of the continuum of film development, production, distribution and exhibition. (Jeffrey Ulin describes this point succinctly, commenting that, “stars make the headlines, but marketing and distribution convert content into cash” – Ulin 2010, p.l.)  In Australia, historically scholars have focussed primarily on the production of Australian films and textual analysis of films or clusters of films, but have paid relatively little attention to how films are distributed. Even less attention appears to be paid to the system and key factors/players influencing Australian film distribution.  Deb Verhoeven points out that, “the political economy of (Australian) entertainment industries has invariably meant … copious analysis of the interaction between government and industry.” Since 1975 there has been an “increasing inability to separate ‘Australian film industry’ from ‘production industry’. Before 1975, the idea of a film industry in Australia dealt with film exhibition and distribution, but this has since been “relegated to a background role as focus is given over to the activities of filmmaking” (Verhoeven 2006, pp. 131-132).

Even the Oxford Companion to Australian Film (1999, edited by McFarlane, Mayer and Bertrand) – which contains more than 1000 entries on topics large and very small – combines Australian film distribution and exhibition into one entry (see the article by Diane Collins, pp. 136-141). A large number of Australian organisations have been established to support the production of Australian film and television drama. Virtually every state and territory has its own film commission or office, and on 1 July 2009, Screen Australia was established through an amalgamation of the Australian Film Commission, the Film Finance Corporation and Film Australia. The Australian Film, Television and Radio School receives its own Parliamentary appropriation each year.

There are also an increasing number of Australian film awards and presentations: in addition to the long-running Australian Film Institute (AFI) awards, there are the highly professional “IF” awards and the increasingly popular film critics’ awards in both Sydney and Melbourne. Sydney, Melbourne, Brisbane and Adelaide have major film festivals, as well as hosts of other small and specialised festivals in small towns[1] and capital cities. Even the old film societies – the original foundations on which the Sydney and Melbourne Film Festivals and the AFI were built – have not only survived but prospered, with more than 120 around Australia, some with memberships of more than 1000 (Webber 2007). Adrian Martin describes Australia’s “rich history of cinephilia”, building through the 1950s, 1960s and 1970s – resonant of the French “New Wave” and its cultural influence (Martin 1988, p. 91). By 2009, in addition to the comprehensive city film festivals, Sydney and Melbourne in particular were able to boast annual (or at least occasional) French, German, Italian, Spanish, Greek, Gay and Lesbian, Jewish, Israeli, Palestinian, Canadian, Mexican, Japanese, Latin American, Mexican, Russian, Irish, South African and Nordic film festivals.  One of the most interesting of the “small town” film festivals is the Dungog (NSW) Film Festival, solely devoted to Australian films and operating since 2007.

By way of comparison, during 2007/08, a total of $AUD675 million – up from $AUD630 million the year before – (see Screen Australia) was spent on Australian film and television drama production, with total audio-visual production probably just under $AUD2 billion[2], when other television production, commercials, corporate videos, etc are included. By comparison, in 2008 a total of $AUD945,400,000 was spent at the Australian (theatrical) box office[3] and $AUD1,157,500,000 spent on the purchase and hire of DVDs and over video formats.[4] In other words, Australia spent about the same amount of money making all sorts of film and video product as they spent on buying and viewing films that year (of which only about one-third was on film production in the “classic” sense). It’s not difficult to guess which industry is the more dynamic and profitable one.

Film distribution is, purely and simply, where the money is, a fact that has not gone unnoticed by some commentators (Miller et al 2001; Putnam 1998; Sheehan 2009; Ulin 2010). Unlike production – a risky venture by any examination – distribution is the one place in the film “money chain” where there is the opportunity to make significant financial profit without major investment. Richard Harris[5] argues this point clearly:

As glamorous as it may appear, production is widely recognised as absolutely the wrong end of the audio-visual business to be in. Those who make the real money from content are those who control, distribute and exhibit it, rather than those who make it…. The major American studios … are not really producers in the classic sense, but are in the distribution business (Harris 2007, pp. 5-6).

Australian film producer Vincent Sheehan relates a story about how his production company (Porchlight Films) was formed in the same year (1996) as the Australian film and video distributor Madman Entertainment. He notes somewhat wistfully that Madman was sold in April 2006 for $AUD34.5 million. Sheehan recognises the power of distribution and speculates about why Australian film distributors have so much more leverage than film producers. He claims that this difference is partly about risk (distributors carry relatively little) and partly an “information advantage” that gives distributors a “privileged position in the flow of information”, referred to in the economics literature as the “principal-agent problem” that accompanies “information asymmetry”, which, Sheehan claims, the film industry has “in spades” (Sheehan 2009, pp. 2-3).

(For more on the principal-agent problem applied to film distribution, see Chisholm 1997, Weinstein 1998, Pokorny 2005 and Weinstein 2005.)

(full bibliography to come)


[2] Estimated based on a Screen Australia reported total production amount of $1,882.4 million in 2006/07; see www.screenaustralia.gov.au/gtp/mpactivityall.html

[3] Source: Screen Australia, based on data from Motion Picture Distributors Association of Australia (MPDAA; see www.screenaustralia.gov.au/gtp/wcboadmission.html

[4] Source: Screen Australia, based on data from the Australian Visual Software Distributors Association (AVSDA); www.screenaustralia.gov.au/gtp/wvwsrevenue.html

[5] Currently CEO of the South Australian Film Corporation; previously Executive Director of the Australian Directors Guild.

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