v.1.1. Draft. 41019.
The European Film Agency Directors (EFADs), which includes BFI and CNC are unequivocal in their position on the importance of film data and digital technology:
“Digital technologies are critical to the entire film business. Most answers to industry challenges, whether in communication, business models or audience insight will be technological. We must effectively disseminate best practice across the industry. Digital distribution channels of all kinds need to find their place in the filmmaking landscape.
We would like to see newer stakeholders partner with the film industry just as traditional broadcasting has been, contributing financially, creatively, and socially. Transparent access to film and audience data across the industry, including via blockchain, is also essential. This will provide invaluable information which helps films reach their target audience. Authors and right holders must always have access to the quantitative data on the full exploitation of their work, and data on all publicly funded works must be available to the funds, through legal mandates if necessary; film agencies must share this data.”
http://www.efads.eu/news/efads-vision-paper-2019.html
A key question remains how the UK and its international partners can pursue this agenda.
The data agenda appears fundamentally connected to two other key positions that EFADs stands for – “A Rethinking of the Fundamentals of Film Financing and Improving collaboration within the film sector.” It is also at the heart of the number 1 proposal from the BFI’s Commission on Independent Film, which is:
“1. Maximising the value of rights Examining the existing approach to the arrangements governing the licensing of UK independent film – from the theatrical window to free TV – to maximise the value of rights. Developing a better understanding of the applications of technology for independent film, including its potential to improve data sharing and to transform transactional relationships for independent film.”
These are substantial areas of practice and research, which require serious attention. It is crucial that the simplified goal of “getting more data” is not viewed as a panacea to the film industry’s myriad problems. Instead, the considered application of smart solutions to specific, discrete tasks should be foregrounded, be that revenue collection (https://filmchain.co) or theatrical release dating (https://gower.st)/
The methodological process of proceeding from the problem first, not with “what can the (existing / available) data tell us?”, or “what can this new technology do?” is extremely important.
The EU and CNC are clearly preparing an ambitious approach to the area. The Boutonnat report highlights key issues of collapsed financing revenues from HE (drop in MGs), fragmentation of audiences, decline of private film investment (inc foreign & tax advantaged) and parlous state of company finances in France which require multiple deeply interrelated areas of work: improve the transparency and reliability of the sector; develop an ecosystem conducive to private investment (& increase asset profitability); increase development funding and the ability to finance slates; support different models & measures of integration between production and distribution (most radically building P&A into prod budgets and making recoupment pari passu) such that producers have a commercial interest in a film’s exploitation not just the greenlight; address lopsided balance of power in the value chain, empower producers to develop, deliver and exploit high quality international projects in aligned partnerships that stand to share risk upside.Key recommendations are the moving of rights and revenue information (CAMA, the registry of audiovisual works, tax on Box Office) to a blockchain underpinned system, at industry scale; and company pooling / umbrella-ing to enable creation of sufficient critical scale either temporarily or via consolidation. Linked to capitalisation of companies using valuation of catalogues.
Complementary to this work in France, is the European Commission’s strategy for Media Sovereignty, including a call for a 1 Billion Euro Media Data initiative, with media tech hubs focussing on application of data analytics, AI, and blockchain to the media, particularly audio-visual sector, noting that the opportunity requires urgent mobilization of all stakeholders. https://ec.europa.eu/commission/sites/beta-political/files/gk_special_report-european_media_sovereignty.pdf
Similarly, in the Open Methods of Coordination Group report on European movies, the EC similarly highlights the use of VOD data, exhibitor and audience data as part of an agenda for improving market competitiveness, and supporting investment and assessment in the area.
These initiatives are required to help improve the problematic state of investment in independent film especially. A state so clearly expressed by the Institute for Information Law http://www.europarl.europa.eu/RegData/etudes/STUD/2019/629186/IPOL_STU(2019)629186_EN.pdf; the European Audiovisual Observatory https://rm.coe.int/fiction-film-financing-in-europe-2018/1680902fd9
https://rm.coe.int/fiction-film-financing-in-europe-big-picture-book/168094f6aa
and categorically by Olivier Debande, of the European Investment Bank in Film Finance: The Role of Private Investors in the European Film Market. In Handbook of State Aid for Film (pp. 51-66). Springer, Cham.
https://www.researchgate.net/publication/324162858_Film_Finance_The_Role_of_Private_Investors_in_the_European_Film_Market – which shows how vitally a film-specific fully resourced knowledge capacity building program, sketched in the CCIs more broadly via the Cultural and Creative Guarantee Facility is needed. https://www.eif.org/what_we_do/guarantees/cultural_creative_sectors_guarantee_facility/index.htm
Alongside the clear economic imperative, is the cultural argument for retaining creative independence. This argument is indelibly linked to ownership of rights and information, that is presented at the EU level. The working party looking at co-production for the EC advised to: “encourage all players, including online service providers, to share audience data with public authorities and rightsholders and make use of this data to know and better understand their audience in order to adapt support schemes accordingly” https://data.consilium.europa.eu/doc/document/ST-8806-2019-INIT/en/pdf
It is this kind of data connectivity that the The Institute for Information Law recognises the importance of when explaining that dominance of OTT providers in controlling content access, aggregating audience information and thereby challenging traditional audio-visual players, is leading to significant impacts on independent production such as investor reluctance regarding risk. http://www.europarl.europa.eu/thinktank/en/document.html?reference=IPOL_STU(2019)629186
This field is not only about transparency but also about understanding. The European Audio-visual Observatory highlight the independent sector does not have the skills or technological capacity to benefit from data-intensive approaches, should they have access. https://rm.coe.int/iris-plus-2019-the-promotion-of-independent-audiovisual-production-in-/1680947bc8
These evidential points are all to say that enabling the future of independent content – both commercially and creatively speaking, requires strategic industrial leadership that recognises technological, legal, political and educational complexities.
The complexities include attention to the context of film data, re-highlighting the notion of discrete tasks. The work area is not really or only a matter of pure data, it is a matter of understanding data use, of language, of process, of valuation and decision making. It is one thing to “understand the audience” in terms of a rights holder considering whether a future project may interest a past fan, but putting data to use across the value chain in a strategic, coherent fashion, is of a different order entirely.
It is instructive to consider relevant sub components of this complex field in connection to the most high-profile example, Netflix, and the crucial concept of Derived Demand – what do vital market intermediaries think the audience wants? What do financiers, distributors, SVODs, sales agents, believe the audience demands? How do they use what data to inform such positions?
The oft-celebrated / heralded use of data by Netflix in commissioning and acquisitions has been increasingly rolled back by the company and insightfully critiqued e.g. by analyst Ball, M. (2019) https://twitter.com/ballmatthew/status/1143158844513611777.
Speaking about decision making in content selection for production in 2015 Netflix Chief Content Officer Sarandos stated: “Seventy is the data, and thirty is judgment” “But the thirty needs to be on top, if that makes sense.”
https://www.newyorker.com/business/currency/hollywoods-big-data-big-deal
Speaking about decision making in sizing investment in content in 2019 Sarandos stated “even with this great data. I really think it’s 70, 80% art and 20, 30% science.”
This imprecision, or intentional obfuscation has been slightly modified in 2019 to discount data from the greenlighting process: “Picking content and working with the creative community is a very human function,” Sarandos said. “The data doesn’t help you on anything in that process. It does help you size the investment” Op Cit. Hayes 2019.
Increased transparency in viewing and/or valuation is predicted to be predicated on the need to retain and reward key talent in an era of increased competition. https://www.bloomberg.com/news/articles/2019-09-18/netflix-plans-to-pay-bonuses-to-filmmakers-when-movies-succeed
Industry analysis sets out some of the business model implications of Netflix data use, notably the potential distancing of producers as suppliers of acquisitions Netflix Originals (as opposed to self-managed Originals) from audience data and the (in)ability to calculate links between the content, viewership and financial returns. A re-intermediation is potentially a result. Kay. J. 2019. Netflix ‘Murder Mystery’ numbers fuel ‘profit participation’ speculation Screen Daily. https://www.screendaily.com/features/netflix-murder-mystery-numbers-fuel-profit-participation-speculation/5140643.article
The company has never been open or clear about its use of data in commissioning and acquisitions, unlike in its successful and clearer cut data science application areas of recommendation and production services https://research.netflix.com
Following criticism from BBC head of TV strategy Becky Marvell for a “lack of context and transparency” in its ratings data, responses note Netflix has been “guilty of being simplistic” in the past in areas like data-sharing and rights flexibility, with Reed Hastings saying“We’re trying to grow up a little,” having learnt to be defensive about hiding information historically.
However, notwithstanding the varying performative business value in being seen to be data led or not, there appears to be both a lack of clarity and understanding within the company about data use in valuation, commissioning and acquisitions and a similar confusion in how public policy in the UK deals with the issue.
In the recent House of Lords inquiry into SVOD and PSBs Anne Mensah, VP Original Series stated in evidence:“We share information with our producers and creatives as and when they want it.” Questioned by Viscount Colville of Culross: “That is interesting. I have talked to a number of independent producers who say that you have categorically refused to give them any data and that they are thinking of inserting a request to have access to that data into future contracts. Is that not right?” the response was far from a clear calculative practice:
[Anne Mensah: I have not been there for the whole time, but I know we have discussed data with a number of producers recently. So that is not my experience, but I could not speak for the totality of people’s experience at Netflix.
Benjamin King: On that point, we recognise that our business model puts us in something of a privileged position, because we are not bound by ratings in the way linear broadcasters are. Being freed from the constraints of having to get the largest possible audience for a specific timeslot in a programme schedule means that we can cater for a much more diverse audience.
Fundamentally, what matters is that something on our service has a fan base, a loyal viewership and people who keep returning, and that it makes people want to carry on being members of our service. It does not matter how big that audience is per se; it just matters that they love the content as much as they do.
The Chairman: We may come back to you in writing on this data issue and ask for a bit more clarity on your policy and practice.
Baroness Grender: I want to get my head around the “truly love” criteria and how you measure or judge that. You say that you want to know that people have truly loved the programme. That is great, but without data how do you know they have truly loved it? How do you measure that?
Anne Mensah: I do not know if you can ever truly know. You can look at how many complete or get to the end of a show, or how many people talk about it.
Baroness Grender: So that is data?
Anne Mensah: It is about how people engage with a show, or whether
they talk about it with their friends.
The Chairman: But if you go through a process of talking to people about how they feel about you, you must have some numbers at the end of that.
Anne Mensah: We look at social media and the press. We look at a number of things.
Baroness Grender: But those are measurements. If you had 100,000 hits on Instagram, that is still a measurement. So how do you measure it?
Anne Mensah: In a multiplicity of ways. It is not just about eyeballs. It is about conversation, and whether people come back, episode on episode. There are lots of ways to frame people’s engagement with a show. It is not dissimilar to the way we worked when I was at Sky. To be
honest, it is not entirely dissimilar to the way the BBC works. There is no special formula to it; it is just about engagement.
The Chairman: Opacity of data is an issue that has been raised, so what we might do, so that we can move on, is write to you and ask you to be clearer about some of these issues, if you can.]
https://www.parliament.uk/public-service-broadcasting-and-vod[all evidence is archived]
Unfortunately, the supplementary evidence request was far less demanding than the Lords questions, providing an open ended offer to provide further information on “their approach to viewing data”. The response is minimal but informative in its difference to Anne Mensah’s first statement quoted above:
It would be highly surprising were Netflix or any other commercial business to divulge their calculative approach to valuation, but what is instructive is the changeable nature and lack of detail in all sides of the discussion. Especially when you consider the substance of the BFI Commission proposal number 1. How does a film entity more reliably manage its operation with increasingly circumscribed understanding of derived demand? How can external investors be expected to become involved if an already opaque business becomes cloudier?
The logics of EU industry approaches were neatly set out at the San Sebastian Film Festival recently. At the Film Forum Martin Kanzler of the European Audiovisual Observatory noted that “Netflix is buying less European films but producing more European contents, in particular series. It is also moving toward exclusive multi-territory rights” highlighting the increasing importance of such derived demand data. Julie-Jeanne Régnault, Secretary General, Association of European Film Agencies stated Big “SVoD platforms are black boxes. We need to get the data about promotion and revenues of European titles”, with Silvia Cibien of the EuroVoD network suggestions “we should invest more in technical development and sharing data to create an economy of knowledge” the conclusion being “Collaboration, working together, sharing and managing data are essential elements for making European films reach wider audiences.”
The film industry is increasingly organised by market devices involving derived demand calculations and audience data. There is no quick, clear response to address all the issues introduced above, but there are myriad potential approaches to try to improve efficiency and understanding, many underwritten by innovative technical approaches, for instance differential privacy for shared computation https://enigma.co/enigma_full.pdf. Teamwork between EFADs and its members, the European Audiovisual Observatory, international leaders like Sundance will be vital if progress is to be made.
Image credits –
Handheld – D Smith https://www.flickr.com/photos/cerillion/35210832443
Icons image – https://commons.wikimedia.org/wiki/File:Netflix_meaningful_logo.svg
Michael C B Franklin 
