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Commerce / Jun 2019

Thought: An Oligopolistic Industry

Aquaman, Ghost Rider, Where the Wild Things Are, Fool’s Gold, Street Fighter, The Wolverine and The Matrix… what have they all have in common? You guessed it; they were all shot here in Australia! (And if you were thinking monsters and muscles, you might be onto something there too). But why were they shot here, so far from Tinseltown? And at what cost? This month we’re diving deep into the complex world of Australian film and TV to ask, who controls the industry here in Australia? Who determines which movies get made? And why, when it’s seemingly so easy for foreign producers to make films here, do we face such challenges finding the resources to make our own?

Australia’s iconic screen industry is an essential component of the nation’s cultural life. From Wake in Fright to Samson and Delilah, our vast desert, surreal landscapes, fifty-thousand-year history, and propensity to make truly terrifying movies have gained us a well-deserved reputation abroad. The screen industry showcases the talents and creativity of our actors, writers, producers, directors, and post-production workers.  Earlier this year, the Australian Government’s Department of Communication and the Arts published a Senate report based on the findings of Screen Producers Australia (SPA), and it reveals a great deal about the state of the Australian industry.

The Market

SPA’s market outline described the state of the Australian television industry as that of an oligopsony. As distinct from a monopoly (exclusive control to one party), and in contrast to an oligopoly (many buyers and few sellers), and oligopsony describes a state of the market in which only a small number of buyers exists for a product.  In simple terms, this means too many sellers and not enough buyers, which in the case of our screen industry translates as, lots of producers and not enough broadcasters. For years, the Australian screen sector has been dominated by both commercial, privately owned broadcasters and public sector broadcasting services, which are collectively known as regulated buyers. In the Australian market, there are currently three different types of regulated buyers. These are public broadcasters (ABC and SBS), commercial broadcasters (Channel 7, 9 and 10) and subscription buyers (Foxtel). For years these few broadcasters had a hold over the Australian industry. Why? If the broadcasters are aware that there is always more product that they can program, they have the power to control the industry. If desired, they can set producers off against one another, dictate costs, and bypass any risk inherent in the product.

In the past decade, the rise of the internet has significantly impacted the screen industry, primarily through the expansion of subscription video on demand (SVOD) services like Netflix and Stan, and online content platforms like Youtube. For consumers, this has meant a massive increase in content, and one only has to glance at the subscriber statistics to see how happily Australians received such services (with Australia boasting 10 million Netflix users already in August 2018). At first glance it’s easy to assume that this is a good thing for viewers, given that Australians are so spoilt for choice. But dig a little deeper, and you’ll find we’ve drawn the short straw.

The new contestants…

In Australia, SVOD services like Netflix and Stan are not currently required to meet any industry standards of Australian content. No Australian content requirements mean fewer guaranteed jobs for those who make Australian movies and TV. This is not common. Elsewhere in the world countries have made a point of issuing sanctions on streaming services, ensuring that their local producers continue to be supported by local broadcasters and foreign streaming services alike. In 2017, the European Union launched a campaign, ensuring that SVOD services met a 30% European made quota and this quota has already proven fruitful for producers and audiences alike. Shows like The Crown (UK) and Dark (Germany) are a direct result of enforced sanctions on Netflix, ensuring that local producers are supported through the production of new content.

In March of this year the Senate published the report, ‘Australian content on broadcast, radio and streaming services’, inquiring into the economic and cultural value of Australian content on broadcast, radio and streaming services. The report called for submissions from major media organisations, and gathered data from several studies conducted in the last five years, including the 2016 Deloitte report “What are our stories worth?” and 2016 Olsberg Report “Measuring the value of our screen industry”.

How we value our industry

So, what did they find? Beginning with the economic impact, the Deloitte Report conducted in 2016 found that in 2014–15 the Australian screen industry contributed: $3072 million in value add to the Australian economy; and 25,304 full-time (FTE) jobs. Deloitte found that core Australian content generated $252 million in export earnings in 2014–15, and the screen industry as a whole generated $725 million in tourism expenditure in Australia. In addition to these findings, State Governments also reported on how the screen industry has brought in revenue on a state level. In Queensland, from 2013 – 2017 the government provided $30 million worth of funding over four years as part of their Production Attraction Strategy. This strategy has resulted in Queensland becoming one of the premier locations for filming international blockbusters. In 2017, the Queensland Government provided an additional $20 million to further attract productions, and in the last few years alone films like Aquaman, Pacific Rim: Uprising and Thor: Ragnarok have provided an estimated 2,340 jobs in the area. The Queensland Government have also noted the flow on effects to tourism in the area due to the popularity of the films. It’s a far cry from local content, but from an economic perspective, the jobs created from Queensland’s blockbuster esteem are understandably hard to pass.

As part of their study Olsberg considered three ways in which screen productions generate cultural impact. They categorised impact into three distinct groups including, instrumental value: describing the direct social or economic impacts of content; institutional value: the impact by which organisations, governments or countries are able to gain the trust and esteem of the public through content; and intrinsic value: the content that allows individuals in a society to engage with ideas and aesthetic excellence. In response to these categories, many institutions listed films and television series that demonstrated cultural impact and value in all three groups. Particularly noted was the prevalence of Indigenous films and television series and the effectiveness of these productions in their power to not only preserve language and culture but to bring a wide range of Indigenous Australian stories to both Indigenous and non-Indigenous Australian viewers. Also mentioned was the benefit to children of having their own language and culture reflected back at them in local content, with programs like Playschool improving learning, language acquisition, and school readiness. Where would we be as parents, children, and families without programs like Round the Twist, Playschool and Skippy the Kangaroo!?

Government investment

In April, just before the announcement of the federal election, the Morrison Government declared their decision to extend tax offsets to streaming services. Platforms like Netflix continue to have no obligation to invest in Australian content. CEO of the MEAA Paul Murphy commented, “Allowing streaming services to benefit from tax-payer funded offsets without any requirement to invest in our stories sells Australian audiences short and means fewer Australian stories being seen around the world,”. In contrast, in the lead up to the election, the Labor Government pledged to take action on the Netflix quota. So, in the wake of the election results, as we enter into another term of Coalition Government, it’s fair to ask, why does this country seem to have so little investment in our own stories?

The Make It Australian Campaign

So, where does this leave us? In September 2017, the Make It Australian Campaign launched in every major city across the country. Since its inception, Australian screen luminaries such as director Gillian Armstrong, Judy Davis, Richard Roxburgh and Deborah Mailman have joined those taking up the fight to save Australian stories and the livelihoods of those telling them. The Make It Australian campaign marks the combined efforts of five major screen organisations, Screen Producers Australia, the Media, Entertainment and Arts Alliance, the Australian Directors’ Guild, the Australian Writers’ Guild and the Casting Guild of Australia, in their plight to push for reforms and government support to ensure the film industry’s sustainability. But this is not a new battle.

The campaign’s catchy title, Make It Australian, references a hugely successful 1960s campaign, pushing to re-establish the place of Australian content within commercial television networks. In the 1960s, the (then almost non-existent) Australian film and television industry had no government support whatsoever. In fact, it was revealed that 99% of the dramas screened on Australian television was produced overseas (primarily in the US and UK).

Like the original campaign, the current movement to enforce sanctions on services such as Netflix and Stan is an attempt to ensure a strong government commitment to a sustainable film and television industry for producers, cast and crew, writers and directors. The Make It Australian movement wants to see the Australian screen industry supported, ensuring that they can continue to supply a diversity of high caliber Australian content for both Australian and international audiences.

In March 2018 Make It Australian issued an open letter to Australian politicians urging them to commit to growing the screen industry by evolving Australian content laws to cover new media, providing better funding to public broadcasters and screen agencies, and enforcing competitive tax incentives. Cate Blanchett, Peter Weir, Catherine Martin and Liam Hemsworth are just a handful of the many screen legends that have signed the cause so far.

Conclusion

Our screen industry should be a source of pride for all of us. It’s time to stop taking our stories for granted. So how can we make a difference and pledge our support to the industry? The Make It Australia campaign provides a portal through which individuals can contact their local MP’s to take action towards enforcing Netflix quotas. Make a point of investing in Australian stories by standing with film-makers in the fight for content regulations. As we enter another term of Coalition Government, public broadcasters face yet another setback with the ABC expected to see $83.7 million funding cuts over the next three years. Regardless of your politics, it’s evident that our screen industry needs our support now more than ever. We have been telling stories on this land for tens of thousands of years. Let’s not stop now.