It’s The Economy, Stupid
Recession is coming and the global TV and film industries are far from immune. Inflation is rife in multiple international markets and consumers are feeling the pinch: in the UK, for example, almost one million households cancelled their streamer subscriptions between January and September. The cost-of-living crisis has been prominent in Deadline’s chats with producers, buyers and sales agents in recent months. Showtime Entertainment President Jana Winograde summarized the situation neatly at the recent Content London event when she said “belt tightening is coming.” Layoffs have hit the tech and entertainment sectors hard in the past quarter. Meanwhile, a recent survey from UK producer body Pact found that costs of production have already rocketed by 10% to 20%. Dozens of producers used the same survey to lambast networks for failing to help with rising costs. As energy prices soar, the industry will have to seek workarounds to a global crisis that will likely be felt for some time.
Box Office Returns?
The international box office is currently projected to see an 11.6% increase in 2023, reaching $20.4B, according to early estimates by film tech firm Gower Street Analytics. Regardless of whether the forecast stays precisely on track, industry execs we polled roundly anticipate a better 2023 than 2022 as most markets return to better form, and despite continued uncertainty surrounding China. To be sure, after a dearth of major new product from the latter part of the summer to mid-October 2022, next year’s calendar is jam-packed (some even say too packed) with potential blockbusters. That said, macro economic challenges are growing and consumption habits remain altered. Markets to watch will include Italy which is causing great concern on the part of distribution mavens; it’s down 50% in 2022. Saudi Arabia’s growth slowed, but that could partly be explained by Disney titles sidestepping the Kingdom due to censorship issues. Russia remains largely a no-go zone for studios following the invasion of Ukraine. While markets with strong local industries like France and Japan tightened the gap with pre-pandemic years and with Germany getting healthier, Korea is another to keep an eye on in 2023 as some homegrown titles — which help all boats to rise — were held back amid a Covid-cautious population. Still, it wouldn’t be surprising to see the usual suspects of China, Japan, UK, France and Korea in the Top 5 market rankings next year.
If the pandemic helped global streamers scale serious heights, 2022 brought them back down to earth with a thud. The once untouchable streaming biz is now looking more nervously towards 2023 as consumers are pushed to make hard choices amid economic woes. Netflix has continued to bullishly push ahead with its international original content strategy despite share price issues, while high-level sources continue to say Prime Video is scaling back its efforts in several key territories outside the U.S. – those rumors have been rubbished by Amazon Studios. Probably the biggest question mark, however, hangs over Warner Bros. Discovery, which will begin merging HBO Max and Discovery+ next year. With most of HBO Max’s international originals team now gone and commissioning power back with local country bosses, there’s a question over whether the new streamer is in the market for expensive, HBO Max-style scripted projects, or if it follows the lower-cost model of Discovery+’s unscripted commissioning focus. In 12 months’ time, the state of international streaming could look very different to where it is now.
Anticipation is growing around the upcoming Berlinale, which will run February 16 to 26 as its first fully in-person edition in three years. Appointed in 2019, festival heads Mariette Rissenbeek and Carlo Chatrian have overseen only one physical edition to date. The obvious challenges facing the duo have not stopped industry sniping around the festival’s need to up its game in terms of pulling in star power and higher profile titles. Whether it’s a deliberate move or happy circumstance, the Berlinale appears to be doing just that this year, securing A-listers Steven Spielberg as an honorary guest and Kristen Stewart as head of the jury. An early announcement for the Panorama section also augers a starrier presence thanks to Tina Satter’s Reality, starring Euphoria and The White Lotus’ Sydney Sweeney; Jennifer Reeder’s Perpetrators with Kiah McKirnan and Alicia Silverstone; Vasilis Katsoupis’ Inside, starring Willem Dafoe as an art thief; and Ira Sachs’ Passages, featuring Ben Whishaw and Adèle Exarchopolous in the cast. The fest announces it main Competition and Encounters selections on January 23.
Filmmakers Under Fire
“All Films Are Political” is an oft quoted phrase but it has held particular resonance over the past year with filmmakers around the world finding themselves on the frontline of social and political conflicts. In Ukraine, cinema professionals have joined war efforts against Russia, some in a military capacity, such as director Oleg Sentsov, who has been serving in the Donbas as a member of Territorial Defence Forces. Others are using their skills to document what is happening or continue to make films as an act of resistance. Tragically, there have been fatalities: Lithuanian documentarian Mantas Kvedaravičius was killed while filming in the besieged city of Mariupol, and U.S. filmmaker and journalist Brent Renaud died when he was caught up in heavy shelling outside Kyiv. In Iran, the cinema community has come under attack from its own hardline Islamist government. Directors Jafar Panahi, Mohammad Rasoulof and Mostafa Al-Ahmad were detained over the summer in a clampdown on dissent. Recent freedom demonstrations have resulted in a raft of figures from the worlds of art, entertainment, media and sport being rounded up. Detainees include actress Taraneh Alidoosti, singer Shervin Kapour and Kurdish Tehran-based rapper Saman Yasin as well as soccer star Voria Ghafouri. In neighboring Turkey, an 18-year-prison sentence for producer Cigdem Mater, on trumped up charges linked to a documentary about anti-government protests that never went into production, has sent shock waves through the industry. In Myanmar, the country’s indie film community has been caught in the crosshairs of the military junta since it seized control in 2021. There is particular concern for filmmaker Ma Aeint who was sentenced to three years in jail with hard labour in April. A new flashpoint in the region is also brewing in Indonesia, following the introduction of new rules banning sex outside of marriage. 2023 could be another bruising year.
There are several questions hanging over China heading into next year. Box office remains severely depressed and this isn’t expected to change in the near-term after authorities did an about-face on the zero-Covid policy, leading to concern among the population about leaving their homes. With no clear picture as to when infection peaks will give way to troughs — it’s been said there could be a surge as late as March — we hear there may be significant local movies pushed into the latter part of 2023. And, with Chinese New Year kicking off in January, it remains to be seen what becomes of the typically lucrative period which may (or may not) include anticipated sequel The Wandering Earth 2. So, what of imports? With exhibition in tatters, they need product, but China has been stingy with release dates for U.S. films in the past year. One expert tells us: “The market for Hollywood is not going to come back to what it was, I just don’t see that possibility.” Could returning Disney CEO Bob Iger work some diplomatic magic and smooth things out for Marvel titles which have been blocked from the Middle Kingdom since Avengers: Endgame? As ever, China remains a fascinating if confounding market.
Public Broadcasting In Peril
Public Service Broadcasters (PSBs) face a perfect storm in 2023. These cultural staples – which are worth around $33BN in Europe alone – are struggling to get a handle on the rising costs of production and the intensifying competition from the many streamers that have launched in recent years. These factors, in addition to political hostility from some governments, mean that pubcasters will be fighting to prove their worth more than ever. With future funding settlements still being ironed out in key nations such as France and the UK, the coming year will be vital in the futures of these institutions.
Global streamers cranked up their investment in Africa in 2022 with a number of eye-catching talent deals and local projects set up across the continent. Netflix led the way, inking a third local talent deal in August via a deal with South African filmmaker Mandlakayise Walter Dube (Silverton Siege). Amazon was also busy on the continent, teaming up with Nigerian writer-director Jáde Osiberu (Gangs of Lagos) and her production company Greoh Studios. Amazon also inked a three-picture commissioning deal with the Lagos-based production house Nemsia Films. In response, local players like the South African-based streamer Showmax ramped up production to protect their share of the burgeoning market. In September, Showmax completed the rollout of its big-budget “Game Of Thrones-esque” historical drama Blood Psalms, billed as the streamer’s most ambitious production to date. With new investment, there’s a growing sense of competition on the continent in terms of attracting audiences. For the global streamers, the continent, particularly sub-Saharan Africa, offers an alternative to the stagnant growth in North America and Western Europe. For local talent, there is a growing opportunity to launch work to a global audience. Among questions for 2023 are where new investment comes from, what the continent’s first global hit will be, and which territories will pop.
Factual Boosts M&A Market
The international arena has become increasingly fertile ground as an M&A opportunity for the U.S. UTA’s deal for Curtis Brown was one of the splashier pacts in 2022. Conversely, international giants will not be shy about taking on U.S. assets: see CJ’s acquisition of Endeavor Content. High-end, international scripted producers tended to be the bread and butter of hungry studios. Companies like The Crown-maker Left Bank Pictures sold for big numbers. More recently, talent agencies have been in-demand. However, another change has crept in, as evidenced by ITV Studios paying well over $100M for natural history specialist Plimsoll Productions. European M&A sources are now sizing up the premium factual market and see it as the next big growth area. Premium documentaries are accounting for more viewing minutes on streamers. Fremantle bought a majority in Elephant prodco Wildstar Films in November and we believe more sizeable international deals will follow in 2023. Elsewhere in the M&A world, eyes will be trained on whether ITV Studios really is up for sale and whether the much-maligned UK-led government sale of Channel 4 is called off.
Saudi Surge Continues
When Saudi Arabia first announced in late 2017 that it was lifting its 35-year cinema ban, the move was greeted with cautious optimism by the international industry. However, less than a year later, many of the U.S. and European companies keen to expand into the territory froze their plans following the murder of dissident writer Jamal Khashoggi. Four years on, the raft of international guests attending the second edition of the country’s Red Sea International Film Festival suggests that international cinema professionals are warming to the territory again. The event, unfolding December 1-10 in the port city of Jeddah, welcomed a raft of high profile guests including Sharon Stone, Oliver Stone, Spike Lee and Bollywood stars such as Akshay Kumar and Shah Rukh Khan. Guy Ritchie was there scouting filming locations. Questions around culture washing and the country’s poor human rights record remain, but jury president Oliver Stone told the opening night that he was impressed by the pace of reform and change, saying the Kingdom was greatly misunderstood and that people needed to visit for themselves. We understand that some of the celebrity guests received hefty fees to attend but a raft of industry professionals we talked to were positive about the event and the opportunities in the country with some even pledging to come back and shoot in the territory. As Saudi Arabia continues to ramp up development of its facilities in Neom and Alu-Ula as well as its local film industry, the country’s designs to become a significant film and TV player in the region look back on track.