TBI Distributors Survey 2018: part two

Brexit future looks hazy

Not all distribution companies will be impacted by political matters such as Brexit, especially if they have no business with the UK. But our international distributors still had a lot to say about the matter.

Statistically, 84% of those questioned do not believe that Brexit has had any impact on their business so far. Only 16% have seen any impact, usually the ones with bases in Britain.

When the question shifts to future effect, however, the picture looks a little different. Nearly half, 46%, believe that Brexit will have some impact on their business in the future. Meanwhile, 54% believe that it will not.

Key concerns about the UK’s shifted political and economic position in Europe include whether the nation will be a part of EU content quotas, future coproduction capabilities, the movement of a creative skill force in and out of the country, impacted exchange rates and market uncertainty.

“With so much of our business negotiated in foreign currency, the weak pound means producers’ profits from international sales are definitely going up,” says Orange Smarty’s Karen Young.

Armston-Clarke from TVF, adds: “Brexit impacted exchange rates which was significant for all businesses selling abroad. Looking ahead we’re following the negotiations with interest.”

Entertainment One’s Stuart  Baxter also predicts impact, saying: “Market uncertainty impacts advertising confidence and as a result broadcasters’ income has been hit.”

There are, however, some that are sceptical about whether the UK’s shift will have any impact on the entertainment industry.

Cineflix Rights’ Chris Bonney says: “Good content will always be in demand in the international marketplace. We are less concerned about Brexit, as our sales activity is well spread between global regions and we are proactive in managing currency fluctuations.”

Meanwhile, a range of companies are getting proactive about the matter. “We continue to be extremely mindful of the impact and will have to asses and reassess constantly as we approach the final date,” says Kew Media Distribution’s Jennifer Brinkworth.

Red Arrow’s Sarah Walker adds: “Operationally we foresee no immediate consequences, but general conditions for investments have not improved. We are currently talking to Creative Europe and other industry bodies to better understand issues such as the future handling of EU production grants.”

TCB’s Heaney sums it up, expressing the general uncertainty everyone is feeling. “If the UK government doesn’t respect the single digital market and doesn’t see the need to be included in EU quotas, then we would have a situation, but let’s be honest: no one knows anything,” he says.

A positive outlook

From the impact of a more fragmented industry to Brexit, distributors have expressed a range of areas that concern their business today. But, despite this the majority have an overwhelmingly positive outlook on their own business and the market in general.

A whopping 91% believe that their business will improve in the next 12 months. A majority of 67% also expects the market to improve in the next 12 months.

Reasons for an optimistic prediction range from a backlog of projects in development that are set to go into production, to an increase in the number of buyers or new product and service launches.

“We are expecting a major growth on the coproduction side of our business and a substantial increase in local production,” says Vanessa Shapiro, president of worldwide TV distribution and coproduction at Gaumont.

Increasing SVOD sales were frequently noted as a reason for a rosy outlook in future finances. Peter Hill, president at Goldwater Media; Todd Bartoo, director of sales and acquisitions at C3 Entertainment; and Lucas Bertrand at MoMedia all mentioned new SVOD opportunities as a reason for growth over the next year.

Endemol Shine’s Cathy Payne, explains what’s keeping her business strong: “Distribution is a strong business for the right product. British product has been performing very well across the past couple years. It is considered innovative, well packaged with on- and off-screen talent, and with broadcasters allowing for risk taking.”

Some have had a more cautious prediction for how the market will evolve over the next year. Giustio Toni, CEO at Wiz, says: “On the one side there are more players and opportunities, but on the other side the fragmentation is often very hard to manage.”

MIPCOM beats the markets

Despite industry murmurs that international TV markets are no long crucial, results from the survey show that distributors consider a range of them to be ‘must-attend’ events – none more so than MIPCOM, which 100% of survey participants consider important to attend.

“MIPCOM continues to be the launch pad for Passion’s portfolio for the following 12 months,” says Passion Distribution’s CEO Emmanuelle Namiech.

“MIPTV still works well for us but it’s smaller and its importance is waning as fewer buyers attend. Regional markets such as NATPE, Discop and Asia TV Forum [ATF] add real value as well as specific business trips to meet up with buyers in their own territory.”

While some, like Namiech, have commented on the decreasing value of MIPTV, 72% of responders said it was considered a necessary event in their yearly calendar. Perhaps this year’s launch of Canneseries had an impact, as 8% more participants considered the event ‘must-attend’ than last year.

It also seems that services such as TRX’s digital distribution platform have not impacted the markets just yet, as many distributors still consider face-to-face meetings as an essential part of their business.

3DD Entertainment’s Dominic Saville says: “Maintaining healthy working relationships with humans remains important. It’s really about how you value the cost and what you expect in return. New online offerings such as TRX are going to be important in many areas, but the traditional TV Markets are important to our business for the next five years.”

ITVS GE’s Ruth Berry echoes Saville’s sentiment. She says: “The traditional markets are still a great meeting place to see a large number of clients in a very short space of time and get a face-to-face account of the industry trends while launching some of our flagship shows.”

Other popular international markets include ATF, which 40% of the distributors think is must-attend, NATPE Miami, which 37% think is worth being present for and Realscreen, which 35% consider of high importance.

Ed Galton, COO and managing director at Cake, says: “TV markets are still a good opportunity to see all our buyers at once and to begin conversations on new shows which we follow up with sales trips post-market.”

However, some still claim that although these events are worth attending, it is not of as much importance as in the past.

“We are more connected with our buyers online, by phone, and in-person, and in their home markets than ever before. Information flow between the sales team and clients is no longer dependent upon waiting for one of the traditional market forums,” says Sonar Entertainment’s Ellender.

Looking Ahead: Distribution in 2019

Despite a fast-changing industry that has resulted in some unpredictable new trends, the survey respondents have shown that they can be resilient.

For every major set-back the group has reported, from a growing competitive environment due to SVOD or M&A, to emerging political climates, they have also been quick to provide solutions.

Where 27% believe that buyers’ budgets are worse than ever, 91% have said they have found a formula for growth – whether it’s in creating new services or adapting their relationships with clients.

And yes, we are looking at a world that has become dominantly focused in on-demand services. But with this, there is also opportunity.

As Gaumont’s Shapiro states: “The rise of the SVOD platforms worldwide has created a new pool of clients and allow the opportunity to offer new original and serialised content that would not have found an audience otherwise.”

Meanwhile, during this evolution, distributors are still finding space to hold on to business with broadcasters.

As Orange Smarty’s Karen Young says: “International broadcasters are now more in tune with conversations no longer reserved for finished content, but also for the ideas coming through.”

“Distribution is not just about selling the new product,” says Endemol Shine’s Cathy Payne.

“But managing your on-going franchises, to deliver a long and sustained multi-window sales life. One of our big focuses is how we manage our franchises and ensure we are not tempted to oversell too fast – it’s always a balancing act.”

As we look to 2019 with a mixture of queries and some excitement, one thing’s for sure: we’ll be seeing all of these distributors at MIPCOM.

Read part one of the survey here