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Part 2: International performance

Intel analyses the 10 most popular Australian films in international cinemas and in terms of post-financing sales outside Australia.

The Quick read

Some Australian stories told on film travel well internationally but trying to pinpoint why one does better than another is a minefield. Does genre play a part? Is it all about cast? Does being quintessentially Australian help or hinder? Questions like this are impossible to answer definitively because so many factors determine how something “performs”. Some of those factors – entertainment value and cinematic quality for example – are also very hard to get a handle on.

This part of the analysis is all about the performance of Australian films internationally. It focuses in on the films that have done best according to two indicators: popularity in cinemas and post-financing sales.

These two indicators are related because a film has no chance whatsoever of having a significant impact in cinemas worldwide unless multiple distributors commit to buying the rights for the countries in which they operate. In other words, films have to be set up to succeed. It doesn’t happen by accident. As explained later, this is exactly why official co-productions do consistently well in cinemas abroad – those co-productions backed by Screen Australia anyway.

The top 10 hit list in cinemas outside Australia is a much more mixed bag than those that find big audiences inside Australia. The size of the international marketplace brings opportunity for a bigger range of films, including genre films that traditionally don’t work locally and festival darlings. That’s good news.

There are 22 films in the 94-film sample that have grossed more than $1 million in international cinemas.

Sales revenue, that is, what the distributors pay for the films rather than what audiences spend to see them, is also examined. By both value and volume of sales, the US and/or North America is the top territory for Australia, followed by the UK and/or UK/Ireland. The top 10 films by sale price in these two territories are revealed – albeit in alphabetical order – and also the top 10 in German-speaking Europe (Germany, Austria, Switzerland), which comes in third by value, and the top 10 by all sales for the whole world. The Middle East comes in third by the number of sales made.

Films that haven’t succeeded locally on any measure can sell well internationally – and that’s very good news – although cast has an impact in certain circumstances.

Determining the most commercially successful films is the whole point of this series of articles but it is necessary to understand all the different ways that revenue flows into a film – and what happens to that revenue – in order to understand profit potential.

<em>Bait 3D</em>

Films can be popular with audiences and/or buyers

The world has a population of more than seven billion people. Right now Lion is demonstrating what that can mean in terms of opportunity for Australian films. The heartfelt drama based on a true story had sold an extraordinary $127.3 million worth of cinema tickets outside Australia as of 14 March. That’s more than four times the Australian gross of $27.3 million. Expect both figures to keep rising.

Ensuring Australians are able to see their own films is a significant reason behind the Federal Government’s direct funding of film production via Screen Australia. Yet there is enormous opportunity for the films to also be seen further afield, earning export dollars and showcasing Australia, its stories and its creativity to the world. Lion is a stand-out example.

This discussion is exclusively about international performance. The film financing and film sales business is a complex web of deals, players and individual film circumstances. It is impossible to be comprehensive. The approach taken here is to see what Australian films have had the most impact in cinemas around the world then hone in on the sales of films to distributors.

Lion

First performance indicator: cinema results

The films examined in this analysis of overall financial performance are those that have investment from Screen Australia and were released before 14 March 2017. (See more details here about the 94-film sample).

Below are the 10 most popular films in cinemas outside Australia, judged by how much audiences across the world spent on tickets – in industry terms gross box office (GBO) – as of 14 March 2017:

TOP 10 FILMS IN CINEMAS OUTSIDE AUSTRALIA

<em>Predestination</em> Predestination

Ranking Film title Cumulative international box office (with three top earning territories) No. of countries where the film was released Year of first international release International sales agent
1 Lion $127.3m
(US, UK/Ireland, France)
53 2016 The Weinstein Company
2 Maya the Bee Movie# $38m
(France, Germany, South Korea)
48 2014 Studio 100 Media
3 Bait 3D# $30.6m
(China, Russia, Italy)
13 2012 Arclight
4 The Railway Man# $21.3m
(UK/Ireland, US, NZ)
34 2014 Lionsgate
5 The Dressmaker $14.5m
(US, Italy, UK/Ireland)
26 2015 Embankment
6 The Babadook $13.1m
(Italy, UK/Ireland, Spain)
21 2014 eOne/Seville
7 A Few Best Men $10.4m
(Italy, Russia, Spain)
21 2012 Arclight
8 Predestination $5.8m
(China, Italy, South Korea)
14 2014 Arclight
9 The Sapphires $5.2m
(US, UK/Ireland, NZ)
11 2012 Goalpost Film
10 Tracks $5.0m
(UK/Ireland, Germany, US)
19 2014 HanWay

Source: comScore Inc.
These are Australian features that have received production investment from Screen Australia and were released prior to 14 March 2017.
The figures are in Australian dollars and are as of 14 March 2017.
Cumulative international box office (gross revenue from ticket sales) excludes Australia.
Top earning territories and number of territories excludes Australia.
#Official co-productions.
Year of first international release excludes Australia, usually the first place a film is released.
Generally sales agents do not have jurisdiction over Australia and New Zealand.

These 10 hits released in cinemas in an average of 26 countries. The average GBO – excluding Australia – is $27.12 million. In the case of four films, just one country contributed more than 30 per cent of GBO; the more common pattern was that revenue came from a myriad of countries to make up the total.

The Bababook

Four films that were hits in Australia are also hits abroad

The top 10 films in cinemas outside Australia are more of a mixed bag than the 10 films most popular in Australia – and appear to have less in common with each other. (The discussion on local hits is featured in part one.)

There are four films on both the Australian and international top 10 cinema hit lists: Lion, The Railway Man, The Dressmaker and The Sapphires. All are adaptations and dramas – though two are laced with comedy – with ambition, sweep, narrative drive and an upbeat ending, yes, including when (spoiler alert!) Kate Winslet’s character in The Dressmaker burns down her hometown.

The other six films that have done best on home soil are two Red Dog films, Tomorrow When the War Began, Oddball, Paper Planes and Last Cab to Darwin. Are they too quintessentially Australian to appeal abroad or are films that are true to their place of origin attractive? Perhaps live-action family drama doesn’t travel; but then again Oddball is on the runner-up international list below.

The second biggest international heavy hitter after Lion, animated children’s film Maya the Bee Movie, grossed $38 million outside Australia, helped by the character’s brand recognition in Europe. It did hardly any business in Australia. The third, Bait, only did modest business in Australia.

It is acknowledged that genre films don’t perform in Australia but the mind-twisting science fiction film Predestination and The Babadook, which is sometimes described as horror and sometimes psychological thriller, did exceptional business internationally – especially given The Babadook had a $2.5 million budget. It’s 49 international awards would have helped.

The sheer size and diversity of the international marketplace spells opportunity for a bigger range of films and that’s very good news.

Twenty-two films grossed more than $1 million overseas

<em>Backtrack</em> Backtrack

In all there are 22 films in the 94-film sample that have grossed more than $1 million in cinemas outside Australia. The additional 12 titles are:

ALSO POPULAR IN CINEMAS OUTSIDE AUSTRALIA

Ranking Film title Cumulative international box office (with three top earning territories) No. of countries where the film was released Year of first international release International sales agent
11 Adoration# $4.5m
(France, South Korea, US)
29 2013 Gaumont
12 The Tree# $3.8m
(France, Belgium, Spain)
18 2010 Memento
13 Animal Kingdom $3.8m
(US, France, UK/Ireland)
14 010 eOne/Seville
14 The Blinky Bill Movie $3.5m
(NZ, Poland, Italy)
20 2015 Studio 100 Media
15 Tomorrow, When The War Began $3.4m
(NZ, Russia, Italy)
10 2010 Lotus
16 Lore# $2.9m
(US, UK/Ireland, The Netherlands)
17 2012 Memento
17 The Rover $2.9m
(US, France, Italy)
18 2014 FimNation Entertainment
18 Oddball $2.8m
(Poland, Italy, NZ)
8 2015 Global Screen
19 Wog Boy 2 $2m
(Greece)
1 2010 Arclight
20 Life# $1.9m
(France, Germany, South Korea)
22 2015 FilmNation Entertainment
21 Backtrack $1.6m
(Mexico, Brazil, Argentina)
19 2016 Bankside
22 Oranges and Sunshine# $1.1m
(UK/Ireland, NZ, Greece)
3 2011 Icon Entertainment International

Source: comScore Inc.
These are Australian features that have received production investment from Screen Australia and were released prior to 14 March 2017.
The figures are in Australian dollars and are as of 14 March 2017.
Cumulative international box office (gross revenue from ticket sales) excludes Australia.
Top earning territories and number of territories excludes Australia.
# Official co-productions.
Year of first international release excludes Australia, usually the first place a film is released.
Generally sales agents do not have jurisdiction over Australia and New Zealand.
The original sales agents are listed; two no longer exist.

The average international GBO for all 94 films in the sample is $3.4 million. Included are 32 films (34 per cent) that either weren’t released in cinemas or did not attract enough revenue to register as having been released.

Some films do not have much theatrical potential but can earn decent revenue from other platforms such as video on demand. Screen Australia deals with sales agents that specialise in home entertainment and can sell a film to as many as 40 territories. These sales agents pay more for a film that will do well in that arena than other sales agents would pay for a small independent Australian arthouse film more obviously suited to a cinema release – unless it had significant cast.

Co-productions rule in cinemas

<em>Lore</em> Lore

Among the 94 films there are eight (8.5 per cent) official co-productions. Each has performed impressively in cinemas abroad and can be found among the top 22 films in the two lists above (see this symbol #). This is a striking result and, had Lion not recently burst onto the scene, the three best international cinema performers would have all been official co-productions, namely Maya the Bee Movie, Bait 3D and The Railway Man.

The average international GBO of the co-productions is $13 million.

Official co-productions are made under formal government-to-government arrangements and recognised as Australian as well as the nationality of the partner country. Getting co-production status means that a release strategy is highly likely to be in place from the outset, not just in Australia but in at least one other country too. This is a key reason behind the success of co-productions. (That they are eligible to apply for any financial incentives or funding only available for local films in Australia and in the relevant partner country is another reason to embark on a co-production.)

Maya the Bee Movie, a co-production with Germany, was released in 48 countries and earned 43 per cent of worldwide GBO from France and Germany combined. On The Railway Man, a co-production with the UK, UK/Ireland together delivered 34 per cent.

<em>Oranges and Sunshine</em> Oranges and Sunshine

Bait was a very unusual case. It went into production as an official co-production between Australia and Singapore but before it was completed it also qualified as a co-production in China. This meant it was exempt from China’s small annual foreign film quota. China subsequently delivered nearly 80 per cent of worldwide GBO.

France was the partner on Adoration and The Tree and delivered more than 30 per cent of total GBO on Adoration and about 10 times more revenue on The Tree than the next largest contributor, being South Korea. Lore, a three-way co-production with Germany and the UK, performed best in the US, UK/Ireland, The Netherlands and Germany. Life, a three-way co-production with Germany and Canada, attracted the most revenue from France and Germany – figures were unavailable on Canada at the time of publication. (Note that Australian revenue is included in all the percentage calculations in the last three paragraphs.)

Oranges and Sunshine was made in partnership with the UK and, outside Australia, performed best in the UK/Ireland. Of all eight co-productions, Oranges and Sunshine was the only one that grossed more revenue in Australia than any other country. The conundrum of co-production is that their content often doesn’t reflect Australian culture; Oranges and Sunshine did.

A warning: this analysis is based on the 94 films that Screen Australia has helped pay for and they are a subset of all the Australian films made. Not included among the 94 films is nearly a dozen co-productions that did not get direct funding from the agency – but probably got a tax rebate known as the producer offset (PO). (There is rigorous confidentiality about what films get the PO.) Because the data available on these additional co-productions is limited it is not possible to say how they have performed  – in international cinemas or financially overall.

The success of co-productions in international cinemas may not financially advantage all film’s investors because Australia may not have any claim on ticket revenue from certain countries. Indeed, without all the relevant information, it would be foolish to assume anything about how much is flowing back to the investors in any film.

<em>Maya the Bee Movie</em>

Second performance indicator: post-financing sales

For a film to be eligible to apply for investment from Screen Australia, a sales agent must be attached. Sales agents push films out into the world via distributors.

International post-financing sales generally occur after a distributor has seen some – the film might still be in production – or all of a film. That’s not to say that the decision to buy a film is entirely based on what’s seen: the perceived appeal of certain cast members, the director’s previous work, whether the genre suits the distributor’s territory, the necessity to find films to fill distribution schedules, etc etc, might all be considered.

US and UK are the most important markets

By both volume and value of sales, the US and/or North America (Canada and the US) is the top territory for the 94 Australian films in the sample, followed by the UK (England, Scotland, Wales) and/or UK/Ireland. German-speaking Europe (Germany, Austria, Switzerland) comes in third by value and the Middle East third by volume.

There were: 83 sales of 72 films to the US and/or North America; 57 sales of 55 films to the UK and/or UK/Ireland; and 55 sales of 53 films to the Middle East.

In most instances a distribution company bought all rights for all platforms but in some cases educational, inflight, VOD and/or other rights were held back and sold separately, hence the differences between the number of sales and the number of films. Research shows that where there was more than one buyer the film was not usually released in cinemas.

The 94 films attracted: $27.4 million in total gross revenue from the US and/or North America; $11.8 million from the UK and/or UK/Ireland; and $10.8 million from German-speaking Europe. There were 48 sales of 45 films to German-speaking Europe.

All these figures are as of a point in time. They will keep growing. They are new revenues. They are not presales signed before a film went into production. Such presales are often crucial because producers borrow against their value to help fund production. In other words, presales are revenues already spent. Presales are based on the sales agent’s spin and sizzle – and on the distributor’s perception of how a film will turn out and its likely appeal.

(The impact of presales on post-financing sales revenue is uncertain: a heavily presold film has less of the world open to the sales agent but presales can generate confidence and prompt other distributors to sign on.)

The following titles – in alphabetical order – have attracted the most revenue in Australia’s top markets:

<em>Adoration</em> Adoration

THE TOP 10 FILMS BY SALE PRICE IN THE US AND/OR NORTH AMERICA

  1. Adoration (distributor Magnolia Pictures)
  2. The Babadook (IFC)
  3. Backtrack (Saban Films)
  4. The Dressmaker (Amazon)
  5. Kill Me Three Times (Magnolia Pictures)
  6. The Railway Man (The Weinstein Company)
  7. The Rover (A24)
  8. Son of a Gun (A24)
  9. Strangerland (Alchemy Films)
  10. Tracks (The Weinstein Company)

THE TOP 10 FILMS BY SALE PRICE IN THE UK AND/OR UK/IRELAND

  1. Animal Kingdom (Optimum Releasing)
  2. Bait (Studio Canal UK)
  3. Beneath Hill 60 (Momentum Pictures)
  4. The Dressmaker (Entertainment Film Distributors)
  5. Kill Me Three Times (Universal Pictures UK Limited)
  6. Lion (Entertainment Film Distributors)
  7. The Sapphires (E1 Entertainment)
  8. Son of a Gun (Koch Media Licensing GmbH)
  9. Tomorrow When the War Began (Paramount Pictures Corporation)
  10. Tracks (Memento)

<em> A Few Best Men</em> A Few Best Men

THE TOP 10 FILMS BY SALE PRICE IN GERMAN-SPEAKING EUROPE

  1. Adoration (Concorde)
  2. Bait (Square One)
  3. The Dressmaker (Ascot-Elite)
  4. A Few Best Men (Tele-Munchen)
  5. Lion (Universum Film GmbH)
  6. The Railway Man (Koch Media Licensing GmbH)
  7. The Rover (Telepool)
  8. These Final Hours (Weltkino)
  9. Tracks (Ascot-Elite)
  10. Tomorrow When The War Began (Splendid Films)

Source: Producers and sales agents supply the figures to Screen Australia’s recoupment division.
The figures used to compile this list were as of 14 March 2017.
These are all Australian features that received production investment from Screen Australia.

Alphabetical order is used for reasons of confidentiality.
Some of these distributors have gone out of business.

The highest sales price and the average is: $2.2 million and $1.6 million in the case of the US and/or North America; $1.3 million and $574,000 in the case of UK and/or UK/Ireland; and $1 million and $689,000 in the case of German-speaking Europe. The calculation for the UK was done only after a film with a significantly higher than usual sale price was removed because it would have pushed the average unrealistically high. The calculation for German-speaking Europe was done only after The Railway Man was removed because its sales price encompassed Germany and Italy and how it was split between the two countries is unknown.

If the reader expects to see some films on the lists but they are not it could be that they were acquired as part of very lucrative multi-territory deals but a value was not attached to each individual territory.

There may also be films that were presold for more than some of the films in these three lists – presales are not included. For the record, single territory presale deals for the US are rare.

Cast appears to drive sales in the US in particular but there are many factors at work, including the fact that business is all about relationships and some sales agents are experienced and effective marketeers and sellers that have been around for a long time while others are not.

Films can be distributed on a best endeavours basis with no money paid to the sales agent up front. In these cases, it is expected that the distributor’s commissions are lower than if a DG is paid. There were 59 best endeavour deals encompassing 38 films across the period being examined.

It is possible to widen the lens and examine all post-financing sales revenue from across the world:

TOP 10 BY REST OF WORLD (ROW) POST-FINANCING SALES REVENUE

In alphabetical order

  • Adoration (sales agent Gaumont)
  • Bait (Arclight Films)
  • Lion (The Weinstein Company)
  • Predestination (Arclight Films)
  • The Sapphires (Goalpost Film)
  • The Rover (FilmNation Entertainment)
  • The Dressmaker (Embankment)
  • The Railway Man (Lionsgate)
  • Tracks (HanWay)
  • A Few Best Men (Arclight Films)

Source: Producers and sales agents supply the figures to Screen Australia’s recoupment division.
The figures used to compile this list were as of 14 March 2017.
These are all Australian features that received production investment from Screen Australia.
Alphabetical order is used for reasons of confidentiality.

The Dressmaker and Tracks are among the top 10 films by sale price in all three of Australia’s top territories (US and/or North America, the UK and/or UK/Ireland and German-speaking Europe). Predestination is the only film that does not appear in any of them.

Royalties received by the distributor from the exploitation of home entertainment and digital, airline and other ancillary rights were not included when compiling this list because that revenue is difficult for Screen Australia to track. It is also impossible to estimate in advance. Screen Australia knows if a film has done well on this measure if and when a distributor begins to pay overages, that is, returns above and beyond its minimum guarantee and expenses. Revenues from international GBO may in many cases be less than what comes in from the exploitation of these other rights, but GBO  – particularly where it is substantial – is often a good indicator of the level of these earnings.

It is challenging to provide a comprehensive picture of international earnings across a slate of films because each film has different circumstances and a different web of deals involving many partners. There is a lot of interest in the relatively new subscription VOD services such as Amazon and Netflix, and how they will impact the traditional sales business. Screen Australia is keeping a watching brief.

In the overview of this three-part analysis it was made clear that not one of the films that Screen Australia has invested in over its lifetime has returned all its production costs and gone into profit. That doesn’t mean, however, that the films haven’t made money for exhibitors, sales companies, distributors, private investors or producers. It was also made clear that identifying overall financial performance was the aim. The third and final instalment will complete the picture by revealing which 10 films have recouped the biggest slice of their production costs – providing the producers agree. It is hoped that they will also talk about why these films performed best financially and what lessons were learned as a result.