Necessary and Sufficient Conditions for success – If you can’t know, why bother trying to find out?

The value of audience engagement and the activity of the producer / filmmaker in that process is a powerful theme in current industry debates. There are a number of great resources to facilitate producers’ work in that area (Distrify, Workbook project, etc) and a mini-industry has developed in delivering case studies and tutorials.

What merits more analysis is the business logic for different types of activity, especially with reference to the value chain and the specific financing and distribution strategies employed by different films. Often there is a lack of clarity on evidence, aims and results. An awful lot of time can be wasted on, for example, social media analytics, without a determined objective that fits with an overall strategy for a film.

The dominance of two paradigms, or ways of thinking about the film business, has contributed to this lack of detail in approaches to digital engagement. One of these truisms is about to change and one is likely to remain a permanent feature.

1. At the micro level, the absence of direct connection between any engagement metric (Likes, views, shares) and conversion to purchase has prevented digital campaigns from attributing a reliable return on investment (ROI) to the activity.

The cynic would argue that this neatly allows digital agencies to charge whatever conforms to maximum public funding subsidy e.g. £30k, for whatever work they do without being responsible for overall results.

However, the needs of the industry are definitely being recognised by certain tech companies and services and it is likely that vastly improved ROI measurement will come to the fore, even if in the short term they are not empirically evidenced Box Office sales. Some really interesting things are being done in Scotland by Distrify and Forth Metrics.

The first evidence of UK indies able to gain relevant ROI data from audience engagement during production onwards is coming from low budget films and documentaries.

This is simply because bigger films financed by the market are not in a position to circumvent traditional distribution and directly convert digital marketing activity to purcahses themselves. The integration of platforms enabling such advanced ROI have yet to be integrated across segments in the value chain. How producers and distributors work together in this area is a complex question with emerging issues.

This is particularly the case if distributors are not financiers of a film but just pick it up. If a distributor cannot easily bring the data and relationships created by producers into a system that can then be directly related to a monetary amount, then the question of value from producer activity remains open.

It then comes down to the POV of the producer and what they are trying to achieve with their activity. Is activity creating enough demonstrable value, sufficient for its cost to be built into development or production budgets acceptable to financiers? Or is this activity viewed simply as a necessary condition to be in the game, part of the “do more with less” mantra, and not attached to any expected increase in returns?

This theme of the necessary and sufficient conditions also applies to:

2. The Macro level – “There is no typical movie and averages signify nothing” (De Vany 2004)

In the entertainment industry “when it comes to new product introductions, we are always positioned somewhere between risk, where the odds are known, and uncertainty, where the mean-wandering, infinite variance of a returns distribution process implies that anything from a huge hit to a total flop might occur.” (Vogel 2007)

The fact that the wealth of film research points to the impossibility of predicting performance with a known degree of probabilistic risk, is often used as cover for not engaging in serious business planning. This is an inappropriate way to operate and an unhelpful way to think about action in relation to managing uncertainty.

Its not that it is possible to put together projects with characteristics sufficient for success, or even reliable odds of sucess before the majority of costs are sunk, the fundamental dynamics of the business do not allow for that.

However, if one’s aim is to capitalise should success occur, there is a compelling need to understand the variables at play and position one’s self accordingly – in the value chain and therefore in the recoupment chart.

The potential information available from the application of digital tools across the value chain may not allow for predictive accuracy prior to sinking production costs, but it can inform strategy at each stage, including the raising of finance.

Michael Franklin
Research Associate, Creative Scotland

 

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