Digital Single Market threat to co-production debated in Sarajevo

The second panel of the European Film Forum – “Public funding for co-productions: Cooperating better across borders in the borderless digital world” – took place at the Sarajevo Film Festival on August 21.

The session was a response to the EU initiative to create a Digital Single Market in the 28 member territories that would allow consumers to access content across borders - a move the European entertainment industry says would destroy hard-won co-production, distribution and exhibition models, and facilitate only significant players such as Netflix, Apple and Amazon in distributing content across the continent.

SFF’s Head of Industry, Jovan Marjanović, moderated the lively discussion between Marten Rabarts of the Eye Institute Netherlands; Hrvoje Hribar, head of the Croatian Audiovisual Institute (HAVC); Robert Balinski of the Polish Film Institute; Dorien Van De Pas of the Netherlands Film Fund; Tamara Tahishvili of the Georgian National Film Center; and independent film expert Andre Lange.

Marjanović said the goal of the discussion was to “spread the word and gather ideas of how to find positive solutions for what many think is a gloom-and-doom scenario.”

What would be most at risk in the new scenario, for cinema in particular, is the European contribution system of film financing, which requires industry stakeholders – TV channels, cable and internet providers, telecoms and VoD platforms – to invest in national film production.

Anxiety levels are high all around, from smaller countries such as Croatia and Georgia, which are still celebrating relatively recent political and financial victories that allowed them to join institutional international co-production circles, to the largest European markets like France and Germany.

Since 2007, when Croatia introduced comprehensive film legislation based on the stakeholder contribution structure, there has been a marked increase in the number and quality of films produced, as well as in international co-productions.

Hribar is proud of the fact that the country’s film industry “went from nothing to something in a short while” but added: “Local operators all run multi-territorial-based businesses in Croatia, where the revenue in the audiovisual industry is worth €550 million. They are all scared and can’t decipher what is going to happen to them if the Digital Single Market goes into effect, because their turnover is based on author’s rights and territoriality.

“What we know about the Digital Single Market is that it’s a venture that’s about to bring a surplus of billions of dollars to our industry and will open millions of jobs. But what we don’t really know much about is how is thing going to be devised? Who’s going to pay the price of progress and be the benefactor of reform?”

With the contribution system a vital part of film financing in countries such as France, Germany, Poland, Spain, Belgium and Portugal as well, the first benefactors lie elsewhere: “Apple, Sony, Microsoft, Netflix and HBO have chosen countries where these kinds of obligations do not exist – Luxembourg, the Netherlands, UK or the Czech Republic – to establish their VoD services,” said Lange, who previously headed the European Audiovisual Observatory’s department for information on markets and financing.

Hindering co-productions will deal a terrible blow to film admissions, continued Lange, citing figures from 2000-2007, during which average admissions for a national film in Europe were 19,000 – and 51,000 for co-productions. That number is even higher today given how much international co-productions have been facilitated in the interim, regardless of the fact that “distribution activities in Europe are very fragmented.”

Rabarts stressed that European industry professionals must bear in mind that is fragmentation is also global, and very much philosophical in nature: “We call ourselves an industry but the way we do things in Europe comes from a philosophical standpoint and I think that needs to be addressed. The North Americans have a business model and we have a cultural model. We have cultural exception, thank God, which we thought we’d resolved, but with the TTIP that’s on the table again, up for grabs.”

Cultural exception, specifically the fact that it was not part of Georgia’s complicated legal system, was at the crux of its long negotiations with Eurimages:  “We opened up discussions with the World Trade Organisation, and, to be quite honest, we were hitting the wall,” said Tatishvili. “It was impossible to negotiate the cultural exception, which is a crucial element of European co-productions.

“After two and a half years of funny and sometimes tragic discussions, Georgia became part of Eurimages, which has absolutely boosted national production. But what will happen now in the global European picture?”  

Rabarts, who has worked for three years with the National Film Development Corporation in India, once again spoke to the even greater global picture: “Working with the Indian finance and production system is like trying to co-produce with the US.

“They are vertically integrated moneymaking entities, and even the tiny subsidized part of the film industry is not funded by the [Indian] Ministry of Culture, but the Ministry of Information and Broadcasting. So there is legally no basis to employ the cultural exception.”

Willfully playing devil’s advocate, Rabarts went on to bring up the point that “HBO actively making works all over the world, in the local languages, with local actors, and local directors, subsidized from the home base as well, so it’s not all monstrous.”

The industry is still struggling to understand what the consequences of the Digital Single Market could be, although Lange admits to being astounded that the initiative even exists in the first place.

“The initial proposal of the Commission to review the territoriality of copyright reminded me of the 1984 Green Paper, ‘Television Without Frontiers’,” he said.

“At that time, the Commission was arguing that any TV services established in the EU should be received in any EU territory and that copyright legislation should be reviewed to allow this. This was of course an absurd proposal that was rejected by all branches of the industry.

“It is amazing that 30 years later, the commission is making the same mistake, creating fierce opposition from the overall European industry and even the Motion Picture Association of America.”