New era, new challenges
FEATURES
Film distribution in the Gulf
New era, new challenges
A
Badar I. Salem - Dubai
combination of factors is changing the face of the film distribution in the Middle East, according to industry observers. The steady growth of multiplexes is a major development in the region, with them now accounting for more than half of all cinemas. In the GCC, around 70 multiplexes are in the pipeline - including 50 planned cinema multiplexes in Qatar alone. But while such cinema technologies are offering new opportunities, they are also challenging the traditional models of distribution. The steep decline in DVD sales is a major issue now, and the majority of the film distributors in the Gulf region agree that business is quickly vanishing. “Piracy has made the DVD marker irrelevant,” said Samy Khoury, president of Jaguar Film International Distribution. “DVD
24 I VARIETY ARABIA I FEBRUARY 2012
distributors are struggling to stay afloat. If the “The DVD business is dying this is a fact,” levels of film piracy remain unchecked, they said Gianluca Chakra, CEO of Dubai-based will eventually kill the business.” Front Row Entertainment. “We can’t release Hisham al- Ghanim, general manager of small good titles on DVDs anymore. They Kuwait National Cinema Company, Kuwait’s don’t generate big business as few years ago. But with big titles, even sole exhibitor, revealed that the idea To tackle the issue with piracy, people are still of dropping DVD sales altogether interested in buying the came to his mind three years ago. of piracy, many original DVD.” “Until last year, the UAE’s DVD distributors in Piracy is the distributors’ market was doing pretty well. But the Gulf region open wound in the Gulf now you can find pirated films have started to region. But while some everywhere and governments don’t countries like the UAE are release their films seem able to stop it,” he added. Alstepping up the enforcement Ghanim noted that the company’s in accordance with of copyright legislations, DVD sales have dropped down by the release date others are not as tough or 50 per cent in 2011. in the US or to the as determined. For them, “We lose US$2-3 million a year fighting piracy in a digital first territory to from piracy. We buy the original world is a losing battle – a copy of the film for at least US$15, release the film reality that was echoed while others sell the pirated copy elsewhere. for US$1.5-3. This is nonsense,” Piracy costs the United al-Ghanim argued.
FEATURES States US$58 billion annually, according to the Motion Picture Association of America. In January, US legislators postponed the vote on the controversial Stop Online Piracy Act (Sopa), which would impose tough penalties on illegal “We lose US$2-3 million a year from piracy,” says sharing of copyrighted Hisham al- Ghanim, material. general manager of Kuwait “When I meet with National Cinema Company. American studios, I always tell them that there is no piracy coming from the Middle East. Films never get pirated from the region, they get pirated to the region,” argued Khoury, stressing that the US is one of the major sources of piracy when it comes to films. To tackle the issue of piracy, many Gulf distributors have started to release their films in accordance with the release date in the US or to the first territory to release the film. But while this move could be useful in fighting piracy, releasing the films too early in the region could also backfire. “Sometimes it’s better to release the film after the US, as the film will get the publicity it needs. But you should be careful, if you release the film in theatres two months after the US, the film will suffer big time,” argued Chakra. While growth in the theatrical and TV segment of the film distribution industry has been flat in the GCC region, competition has long been a big concern for new distribution companies. Film distribution is an expensive business. Marketing and promoting films, including special printing materials costs a lot (the cost of marketing and promotion alone for a film requires a minimum of US$2 million in the United States). The distribution industry is also risky, requiring extensive financing capital to acquire and market both blockbusters and independent films. Becoming an independent player in the film distribution industry in the Gulf region requires companies to form alliances with the biggest exhibitors and distributors to get their films into cinemas, while procuring a niche to operate in order to avoid head-on competition with existing players. These factors sometimes serve as barriers to entry. Gulf Film is the Middle East’s largest film distribution company and parent company to Grand Cinemas. Established in 1989,
the company is a partnership between Ahmad Golchin and Salim Ramia. In order to get exposure the majority of local distributors in the Gulf had to enter into partnership with Gulf Film – at least at the beginning – including “We don’t participate in Jaguar Films, Eagle bidding for the acquisition Films, Front Row of films,” says Joseph among others. Vincenti, president of Italia Film. “Competition is not a problem for us,” said Ramia. “When you have a 15-years relationship with major studios, and you take care of your local partners, there is no need to worry about that. For us, it’s all about building relationships. Thanks God, we don’t consider ourselves to have a competitor.” He noted that Gulf Film is expanding its reach by opening new cinemas in Abu Dhabi this year. Despite admitting the role of Gulf Film in developing the film industry in the Gulf region, distributors are also aware of the limitations. “Gulf Film has made the film and distribution industry in the Gulf one of the biggest in the region when it comes to cinemas,” said Chakra. “But this was limiting the other distributors who wanted to enter the market. Distribution wise, it was a hassle to distribute in their cinemas, as they had a majority of screens then.” He added that Front Row was ‘practically forced’ to partner with Gulf Film at the beginning for only “Competition is not a six months before he problem for us,” argues Salim Ramia of Gulf Film, was introduced to al- the Middle East’s largest Ghanim of Kuwait film distribution. National Cinema Company – at Ramia’s office – and partner with him. “I worked with Gulf Film for a bit, but I saw that there is no way of developing the industry and bringing a variety of films,” noted Chakra. Front Row is not alone. After years of partnering with Gulf Film, Beirut-based Jaguar Film has decided to operate solo and open a new office in Dubai, which will be fullyoperational this year. Italia Film, one of the few distributors not
to partner with Gulf Film, is one of the oldest independent distributors in the Middle East. It was established in the 1960s in Beirut and has offices in Dubai and Egypt. “Italia Film does not participate in bidding for the acquisition of films as we have output deals with major independent film producers and sales agents in addition to development deals with talent, talent agencies and producers,” said Joseph Vincenti, president of Italia Film. He noted that the high costs of production and the financial difficulties facing several European and South American countries are affecting the film industry in the region saying that even major American studios have reduced their slate of films because of the lack of funding. Piracy, competition and the steep decline in DVD sales are not the challenges facing regional distributors. The overall home-entertainment market is also dropping, although as not as fast as DVD. At the same time, the industry is facing immense prospects and commercial opportunities provided by the digital revolution. While traditional DVD distribution is deteriorating, the VOD technologies are on the rise. Being attached to the internet, this technology has no boundaries. According to a report by market research firm, companiesandmarkets.com, the global online movie market is forecast to reach US$4.44bn by the year 2017, mainly driven by continued penetration of broadband and deep-seated demand for digital content consumption. This is could be bad for traditional distribution, but it’s great for modern moviemakers. Although the “Piracy has made the DVD film distribution marker irrelevant,” warns industry in the Gulf Samy Khoury, president of region is a hostile Jaguar Film International one, as distributors Distribution. find themselves sandwiched between market dominance and falling attendance figures because of piracy and illegal downloading, there are many opportunities available to the Gulf distributors, with the changes that are occurring within the industry. Distribution in today’s era of technological convergence needs to present new and dynamic business models that take advantage of the digital revolution and thus, generate new revenue streams. FEBRUARY 2012 I VARIETY ARABIA I 25
Film distribution in the Gulf
New era, new challenges
A
Badar I. Salem - Dubai
combination of factors is changing the face of the film distribution in the Middle East, according to industry observers. The steady growth of multiplexes is a major development in the region, with them now accounting for more than half of all cinemas. In the GCC, around 70 multiplexes are in the pipeline - including 50 planned cinema multiplexes in Qatar alone. But while such cinema technologies are offering new opportunities, they are also challenging the traditional models of distribution. The steep decline in DVD sales is a major issue now, and the majority of the film distributors in the Gulf region agree that business is quickly vanishing. “Piracy has made the DVD marker irrelevant,” said Samy Khoury, president of Jaguar Film International Distribution. “DVD
24 I VARIETY ARABIA I FEBRUARY 2012
distributors are struggling to stay afloat. If the “The DVD business is dying this is a fact,” levels of film piracy remain unchecked, they said Gianluca Chakra, CEO of Dubai-based will eventually kill the business.” Front Row Entertainment. “We can’t release Hisham al- Ghanim, general manager of small good titles on DVDs anymore. They Kuwait National Cinema Company, Kuwait’s don’t generate big business as few years ago. But with big titles, even sole exhibitor, revealed that the idea To tackle the issue with piracy, people are still of dropping DVD sales altogether interested in buying the came to his mind three years ago. of piracy, many original DVD.” “Until last year, the UAE’s DVD distributors in Piracy is the distributors’ market was doing pretty well. But the Gulf region open wound in the Gulf now you can find pirated films have started to region. But while some everywhere and governments don’t countries like the UAE are release their films seem able to stop it,” he added. Alstepping up the enforcement Ghanim noted that the company’s in accordance with of copyright legislations, DVD sales have dropped down by the release date others are not as tough or 50 per cent in 2011. in the US or to the as determined. For them, “We lose US$2-3 million a year fighting piracy in a digital first territory to from piracy. We buy the original world is a losing battle – a copy of the film for at least US$15, release the film reality that was echoed while others sell the pirated copy elsewhere. for US$1.5-3. This is nonsense,” Piracy costs the United al-Ghanim argued.
FEATURES States US$58 billion annually, according to the Motion Picture Association of America. In January, US legislators postponed the vote on the controversial Stop Online Piracy Act (Sopa), which would impose tough penalties on illegal “We lose US$2-3 million a year from piracy,” says sharing of copyrighted Hisham al- Ghanim, material. general manager of Kuwait “When I meet with National Cinema Company. American studios, I always tell them that there is no piracy coming from the Middle East. Films never get pirated from the region, they get pirated to the region,” argued Khoury, stressing that the US is one of the major sources of piracy when it comes to films. To tackle the issue of piracy, many Gulf distributors have started to release their films in accordance with the release date in the US or to the first territory to release the film. But while this move could be useful in fighting piracy, releasing the films too early in the region could also backfire. “Sometimes it’s better to release the film after the US, as the film will get the publicity it needs. But you should be careful, if you release the film in theatres two months after the US, the film will suffer big time,” argued Chakra. While growth in the theatrical and TV segment of the film distribution industry has been flat in the GCC region, competition has long been a big concern for new distribution companies. Film distribution is an expensive business. Marketing and promoting films, including special printing materials costs a lot (the cost of marketing and promotion alone for a film requires a minimum of US$2 million in the United States). The distribution industry is also risky, requiring extensive financing capital to acquire and market both blockbusters and independent films. Becoming an independent player in the film distribution industry in the Gulf region requires companies to form alliances with the biggest exhibitors and distributors to get their films into cinemas, while procuring a niche to operate in order to avoid head-on competition with existing players. These factors sometimes serve as barriers to entry. Gulf Film is the Middle East’s largest film distribution company and parent company to Grand Cinemas. Established in 1989,
the company is a partnership between Ahmad Golchin and Salim Ramia. In order to get exposure the majority of local distributors in the Gulf had to enter into partnership with Gulf Film – at least at the beginning – including “We don’t participate in Jaguar Films, Eagle bidding for the acquisition Films, Front Row of films,” says Joseph among others. Vincenti, president of Italia Film. “Competition is not a problem for us,” said Ramia. “When you have a 15-years relationship with major studios, and you take care of your local partners, there is no need to worry about that. For us, it’s all about building relationships. Thanks God, we don’t consider ourselves to have a competitor.” He noted that Gulf Film is expanding its reach by opening new cinemas in Abu Dhabi this year. Despite admitting the role of Gulf Film in developing the film industry in the Gulf region, distributors are also aware of the limitations. “Gulf Film has made the film and distribution industry in the Gulf one of the biggest in the region when it comes to cinemas,” said Chakra. “But this was limiting the other distributors who wanted to enter the market. Distribution wise, it was a hassle to distribute in their cinemas, as they had a majority of screens then.” He added that Front Row was ‘practically forced’ to partner with Gulf Film at the beginning for only “Competition is not a six months before he problem for us,” argues Salim Ramia of Gulf Film, was introduced to al- the Middle East’s largest Ghanim of Kuwait film distribution. National Cinema Company – at Ramia’s office – and partner with him. “I worked with Gulf Film for a bit, but I saw that there is no way of developing the industry and bringing a variety of films,” noted Chakra. Front Row is not alone. After years of partnering with Gulf Film, Beirut-based Jaguar Film has decided to operate solo and open a new office in Dubai, which will be fullyoperational this year. Italia Film, one of the few distributors not
to partner with Gulf Film, is one of the oldest independent distributors in the Middle East. It was established in the 1960s in Beirut and has offices in Dubai and Egypt. “Italia Film does not participate in bidding for the acquisition of films as we have output deals with major independent film producers and sales agents in addition to development deals with talent, talent agencies and producers,” said Joseph Vincenti, president of Italia Film. He noted that the high costs of production and the financial difficulties facing several European and South American countries are affecting the film industry in the region saying that even major American studios have reduced their slate of films because of the lack of funding. Piracy, competition and the steep decline in DVD sales are not the challenges facing regional distributors. The overall home-entertainment market is also dropping, although as not as fast as DVD. At the same time, the industry is facing immense prospects and commercial opportunities provided by the digital revolution. While traditional DVD distribution is deteriorating, the VOD technologies are on the rise. Being attached to the internet, this technology has no boundaries. According to a report by market research firm, companiesandmarkets.com, the global online movie market is forecast to reach US$4.44bn by the year 2017, mainly driven by continued penetration of broadband and deep-seated demand for digital content consumption. This is could be bad for traditional distribution, but it’s great for modern moviemakers. Although the “Piracy has made the DVD film distribution marker irrelevant,” warns industry in the Gulf Samy Khoury, president of region is a hostile Jaguar Film International one, as distributors Distribution. find themselves sandwiched between market dominance and falling attendance figures because of piracy and illegal downloading, there are many opportunities available to the Gulf distributors, with the changes that are occurring within the industry. Distribution in today’s era of technological convergence needs to present new and dynamic business models that take advantage of the digital revolution and thus, generate new revenue streams. FEBRUARY 2012 I VARIETY ARABIA I 25
