The Role of the UK Distributor

Author: David Kosse Managing Director, Momentum Pictures

Background

Momentum Pictures' turnover has grown to around ?30 million a year. Their strategy has shifted from buying more expensive films which offered a higher chance of being successful in the UK market, to having a broader acquisition strategy which might unearth some less likely successes. This includes becoming involved in films at the production (or even pre-production) stage, and investing in the production budget, to develop a strong relationship with the producer and director which will help them in creating their distribution strategy.

Recent Changes in the UK Market

The UK market has changed significantly since 2000 (when Momentum began). In that year: Film Four and Sky Pictures were very active; the three film franchises were in full flow; the Premiere Fund and New Cinema Fund were not yet active, but British Screen was still playing out; sale and leaseback deals were adding 8 - 9 % to budgets and the German Neumarkt was booming, providing financiers with plenty of money to invest in the media sector.

In 2003: Film Four has all but disappeared; Sky Pictures, Granada Films and British Screen and the Neumarkt have gone; J & M has closed and Intermedia has moved to Los Angeles; the broadcasters are not pre-buying as many titles either in the UK or across Europe. Even Canal Plus is scaling back. Furthermore, the video rental window is being closed creating greater potential, but also higher risks, for titles released simultaneously to the rental and retail markets.

Looking on the bright side: the Film Council's three funds are very active and the proportion of budgets being covered by tax breaks has risen to around 15%. The independent distribution sector in the UK is stronger than for many years with companies like Momentum, Pathe, Icon, Helkon/Redbus and Entertainment increasing their share of the market. Fewer British films are now failing to achieve UK distribution.

Acquisition Strategy

At the most simplistic level, the acquisition strategy is all about finding titles that the distributor thinks they can make money from. This requires a combination of buying the film at the right price and generating sufficient revenues from it to cover the costs of acquisition and marketing. Another strand of the strategy is to try to acquire a blend of titles that includes some top quality films that will help to keep the staff motivated alongside those titles that are bought purely for their potential to generate significant revenues (hopefully the two are not always mutually exclusive).

Once a title has been identified as a possible acquisition, they will run low, medium and high scenarios to test the implications of different levels of performance for revenues and net profits. This scenario analysis can also help to influence the level of marketing spend that they put behind each title to give it the best chance of performing to the desired level in the market. If the numbers stack up, the next step is to meet the people involved in the film to check that the relationships will work over the course of the campaign - the success of the film can be severely affected if these relationships do not work out.

Momentum will get involved in a film at any stage of its development, from treatment to after its first festival screening. Their acquisition budget of $15 - $20 million per annum is rarely fully used: it is more important that they buy the right films - and the right blend of films - than just use up their budget. They also seek to strike a balance across the different types of rights they have and the markets that particular films will play in. Some films are bought more for the video market than theatrical release. Any investment in production comes from within the acquisition budget, but Momentum do not take an equity stake in these films - their contribution is, effectively, a pre-buy. Despite not having an equity stake, they will act like producers and make an input into editorial decisions. They will not enter into a project if they feel that any of the key creative elements are wrong.

Building Awareness

The awareness building campaign will depend to some extent on how the title was acquired. If it was bought following a successful festival screening, and therefore, already has some recognition in the press and the public, then this can be built using different techniques than if the film has not yet had any exposure. They will usually arrange early screenings of their films to key critics and exhibitors before rolling out to a broader audience over time. Screening results are helpful in developing the appropriate strategy but do not always tell the whole story. For example, My Little Eye performed ten points below average in test screenings but, thanks to a successful marketing campaign, has performed well at the UK Box Office and on video.

Critical reaction is important in the UK as negative press coverage can adversely affect almost any release. Only horror films tend to be critic-proof.

Top Tips

    * No one ever really knows where the hits are going to come from. But if the distributor believes in the project and gives it the right backing, it will perform.

    * The UK distribution sector is stronger now than for many years - but the lack of investment in films by the broadcasters means there are fewer good films coming through.

    * Acquisition strategy should try to ensure the right balance between different genres and films that will perform in different exploitation windows. It is also important to release some high quality titles to boost staff morale and the company's standing.