2017: Czech Film Industry Losing Competitive Edge In Advertising And Foreign Commissions; Domestic Production Has Reached It’s Historical Peak
In 2017, the Czech audiovisual market showed a slight decline for the second consecutive year. Since 2002, the Audiovisual Producers’ Association (APA) has been collecting and analyzing the turnover data of its members – independent producers in the area of foreign production, advertising, Czech film, television production, documentaries and animation. The overall turnover of the Czech production companies associated with APA dropped by 7% compared to the year of 2015 when it peaked. The trend in the market is set primarily by production companies in charge of foreign commissions, which dropped by CZK 0.546 billion compared to 2015 and by CZK 0.4 billion compared to 2016, and advertising where the data showed a modest rise reflecting simply an increased membership. Discounting the turnover of the members who joined APA this year, we can still see a decline compared to 2016 reaching a total value bellow CZK 2 billon. The turnover of independent production companies in Czech film and television surpassed CZK 1 billion and thus reached its historical peak.
Apart from global trends such as the shift to the new media, arrival of new digital productions or a necessity to decrease the budget, the stagnation in commercials productionaround CZK 2 billion was significantly reinforced by last year termination of the Czech National Bank interventions which made the commissions in the Czech Republic more expensive for the international clients. However, the most pressing problem is presented by the increased waiting period for the location permits caused by the road bill amendment,which came into effect in January 2016 decreasing the flexibility of local productions vis-a-vis their foreign partners already in 2016. During 2017 the competitiveness of the Czech commercials production was severely diminished by a dramatic move of both local and international clients abroad where both the legislation and local administration accommodate the audiovisual industry more readily. According to the poll among the APA members, the commercials production companies lost about 20 - 50% of contracts last year due to long waiting periods for location permits forcing some of them to cut the number of employees.
Apart from the expenses charged by the Czech productions, the international clients in the area of advertising spent, on average, 3-10% more in the investment augmented by travel costs, meals and accommodation of their crews.
Last year’s overall turnover of independent producers was mostly affected by the decline of international television and film commissions, which dropped by 15% in comparison to 2015 when they reached the highest level following the introduction of film incentives system, and by 12 % in comparison to 2016. This occurred despite the stabilization of film incentives within the State Cinematography Fund budget, despite positive filming experiences of international crews in the Czech Republic and despite the audiovisual bill amendment, which made the system of film incentives more open, simplified and accessible. Also in this regard, the Czech Republic is losing its competitive edgeon the international scene. According to the data available to APA, the system of film incentives has been introduced in 24 out of the 28 EU countries. Only 4countries, that is 16%,require the refund rate of 20%,the remaining countries offer to the international producers significantly more accommodating commission conditions.
The Czech loss of competitive edge in obtaining commissions becomes obvious on the example of costly projects of big production companies where the refund rate plays a significant role in the decision making about the location of the filming. In 2016 the highest foreign investment of about CZK 1.1 billion came from the filming of the historical series Knightfall in partnership with APA members Stillking Films and Barrandov Studios, followed by CZK 1 billion from shooting Britanniawith Film United. However, one of the reasons for moving location of the next Britannia season is the lower rate of film incentives in the Czech Republic. Similarly, several other large projects planned in our country have been moved abroad due to the incentive rate, namely to Hungary. This made the share of high budget, mostly television, shows to drop markedly: among the most the high-priced projects were Amazon series, Carnival Row, (Stillking), which brought CZK 800 million to the Czech economy and Genius,which brought CZK 335 million through the same production company.
A foreign project which has received the highest paid incentive was the Knightfall series(Stillking) at CZK 177 million, followed by Britanniaseries (United Film) at the paid incentive of CZK 141 million and The Adventurers (MILK and HONEY PICTURES) with the paid incentive of CZK 56 million. These are significantly lower figures when compared to the incentives paid in the previous year.
Beside so-called eligible costs which are subject to a detailed audit and which let the foreign producer to take 20% back, the additional costs of international film companies reached further 3 – 30% of foreign investment in Czech Republic, according to the APA statistics.
Czech film and television production reached its historical peaklast year, the turnover of the APA members surpassed a record of CZK 1 billion. A significant increase of the State Cinematography Fund budget begins to reflect significantly in the options and productivity of the Czech film production companies thanks to an one-time government subsidy in 2016 and the amendment to the audiovisual bill coming into effect with the Fund’s budget reaching CZK 370 million. Since last year, the amendment has opened and simplified noticeably the system of film incentives making them more accessible for the local film makers.
For the first time this year, the APA members identified the turnover based on the primary manner of distribution: the turnover from the independent Czech production intended for the cinema reached CZK 605 million; CZK 407 million for television broadcasting and CZK 28 million for the on-line distribution. TV broadcasters and various domestic on-line platforms represent an important partner of the independent producers. Czech Television decreased the production of independent producers by 2%. Concerns were raised namely over the reductions in external production possibilities associated with yet another change in the rules for the GDP deductions for the upcoming period.
Czech Television External Production Share Comparison (without sports, newscasts and acquisitions):
Audience Interest in Domestic Film Production Didn’t Reach Last Year’s Levels
In 2017, the distributors introduced to the Czech movie theatres in total 281 movies, 59 of which were domestic premieres: 32 feature drama films (41 in 2016), 21 documentaries (20 in 2016) and 2 animated films (4 in 2016). 4 digitally restored versions of older Czech films had their second premiere. In 2017, a total of 15.233 million people visited cinema in Czech Republic, which is the second highest turnout since 1993. Based on the date of Union of Film distributors (UFD) last years’ receipts reached CZK 2.004 billion.
Comparison of Czech Cinema Attendance and Box Office Takes between 2016 and 2017
(source: Czech Television)
Last year’s premiered films of the Czech production didn’t bring any outstanding audience hits. Anděl Páně 2(Angel of the Lord 2) kept its appeal with the audience also in the 2017 and was seen by almost 1.3 moviegoers.
The most successful film premiere of the previous year was Jan Svěrák’s Barefoot(Po strništi bos)seen by almost half a million people, followed by a family comedy Over Water(Špunti na vodě) with the attendance of 400 thousand. Among the 50 most visited films in 2017, 10 movies come from the Czech production. The following chart contains the list of movies that attracted the highest turnout – a Czech movie was on top of the list 8 times in the last 11 year.
Movies with Highest Audience in Czech Republic from 2007 – 2017:
10 Movies with Highest Attendance in Czech and Moravian Cinemas in 2017:
In total, 3,39 mil Czech cinemagoers went to see a Czech film to the cinema which is lower approximately by a 25% compared to the previous year. The domestic production share reached 22.3% compared to 29.5% in 2016.
2017 From the Perspective of Animated Film Producers
Animation is part of the film industry continuously attractive for the wide audience. The top ten in the turnout was headed by Despicable me 3(Já, padouch 3); 8 animated movies of the 50 most visited were seen by almost 2 million people which makes up for 18% of the previous year cinema turnout.
In the area of animation, the Czech Republic produces one or two animated feature length film yearly, along with short films and several TV series episodes. Last year, the audience mostly enjoyed Hurvínek a kouzelné muzeum (Hurvínek and a Magical Museum). Though it came to the 22nd place in the Czech Republic, seen by 187 thousand, it became a successful export item currently sold to the 90 countries around the world. The film was not produced as a typical Czech movie, it was partly created in European studios and on a European budget. The formal quality of the production is one of the factors of its commercial success.
Despite the efforts of the State Cinematography Fund, the Czech animated films production is troubled by a long-termed underfunding. Based on the research conducted last year, the budget levels of the animated film production make up 11% of the European average. The fragmentation of the original production capacities, the collapse of domestic market due to the transition from the analogue to the digital transmission and more or less pirate distribution led to the slide into what can be called “garage” conditions. Pat and Mat (Pat a Mat) is the Czech most successful animated series. The new episodes are being made in parallel both in Czech Republic and in China. Over the years of “fasting”, the production capacities became depleted and insufficient.
2017 from Perspective of Documentary Film Producers
The Czech documentaries successful crusade to the festivals around the world continued. When the War Comes (Až přijde válka), produced by Radovan Síbrt, premiered at Berlinale. Three Czech documentaries were introduced at a prestigious international documentary film festival IDFA in Amsterdam. Two of those were shown in the competition sections: The Russian Job (Švéd v žigulíku), produced by Martin Juza, and Nothing like before (NIc jako dřív), produced by Martin Hrubý and Pavla Kubečková. The World according to Daliborek (Svět podle Daliborka) produced by Vít Klusák and Filip Remunda, was presented along with the classics of the world film in the prestigious section Masters.