The title of this blog might sound a little bit too catastrophist or even like pure fake news. It is not. It is an appeal to all those interested in ensuring that Europe is able to maintain in the coming decade a diversified and rich landscape of audiovisual content production and distribution. Beyond the body count and the rising notoriety of having been infected – have you heard that Madonna also had Covid? – there is a dramatic chain of events occurring that can have profoundly negative consequences for European television production and distribution.
We all know that the present state of general panic around the COVID-19 pandemic is having effects across all divisions of society. As time passes by, it’s becoming more and more clear that one of the sectors that will suffer heavily from the consequences of the pandemic will be the so-called creative industries and, in particular, the film and television production sector.
In most European countries, production has come to a full stop, making even more fragile the situation of many workers in a sector already marked by informality and precariousness (freelance, project-based work, low pay and long hours). In the past, this dreadful situation was often mitigated by a rhetoric of passion and love for the job that the current situation nulls, making the acquisition and development of talent – a crucial feature of the dynamic of the field – much more difficult in the future both for companies and educational institutions.
Precarity on the workers’ side and lack of scale on the side of companies have been known for long as two of the main problems of European creative industries and in particular of the field of audiovisual production. The linguistic diversity of Europe calls for structures that can provide local audiences with content spoken in their own language. Alongside this, territoriality plays a key role in the financing of the audiovisual sector and in existing business models. Thus, territoriality sustained a strong and diversified mosaic of local and regional production and distribution entities which the pandemic threatens to destroy.
Already in 2015, the European Audiovisual Observatory rightly pointed out in its “Territoriality and its Impact on the Financing of Audiovisual Works” Report that the legal question of territoriality was at the heart of the discussions around the future of the audiovisual sector and that the transformations occurring due to digital technologies and convergence, with new ways of consumption of audiovisual works quickly becoming a reality, would boost the growth of major non-European distribution platforms. This process would affect the traditional value chain in this sector and have a profound impact on the production and financing of audiovisual works in Europe. This report highlights the relevance of territoriality at different levels. First, from the perspective of copyright: in this domain, territoriality contributes directly to the financing of, for example, feature films through the pre-sale of rights, a process at the core of the film (and television) industry’s current business model. But territoriality is also core from the perspective of the new AVMSD (Audiovisual Media Services Directive), that tries to include in the funding scheme of the sector those services originating from outside the EU or targeting member states different from the country of origin. The most recent revision in 2018 of the AVMSD rightly addressed this problem with its focus on creating a level playing field for emerging audiovisual media; preserving cultural diversity and safeguarding media pluralism. The AVMS Directive wants to strengthen the competitiveness of the European audiovisual industry and thus promote cultural diversity and heritage in Europe. In order to do this, the Directive requires broadcasters to reserve a majority proportion of their transmission time for European works and provides that on-demand audiovisual media services will promote the production of and access to European works. Such promotion could be carried out, amongst others, through financial contributions to the production and rights acquisition of European works or by ensuring a share and/or prominence of European works in the catalogue of programmes. The Directive represented a desperate attempt at minimising the consequences of the above-mentioned processes of convergence and emergence of monopolies, the big SVOD platforms represent. If one could already see signs of troubles for local and regional producers and distributors due to these trends, the pandemic quickly accelerated the process, creating a perfect storm that threatens to engulf the European audiovisual sector. This is an attempt at leveraging the playing field by avoiding the uneven competition that results from territorial jurisdiction not being claimed over these services. But while the AVMSD was being transposed to national legal frameworks, the pandemic came. And everything stopped!
The most recent news show that the transposition process has come to a halt in most European countries. In France, the debate was put on hold to focus action on measures to counter the Covid-19 pandemic. In the UK, draft legislation (where needed) is scheduled to be introduced in parliament this summer, but a delay is possible because of the outbreak. In Italy, all legislative activities not related to the pandemic have also been put on hold. And the situation is similar in most European countries. This means that for sure the Directive will not be transposed to national legislation in time with unforeseen consequences from a legal point of view. But independently of the legal aspects, the fact is that meanwhile in most European countries (the UK seems to be an interesting exception in this context) the emergence of the GAFAN (Google, Amazon, Facebook, Apple, Netflix) monopoly has become a reality: locally produced content is losing ground every day. And there are many reasons for this, but I would argue that changing habits on the part of audiences, or at least the exacerbation of trends that were already in place, due to the confinement, and the inability of the sector to react to the economic consequences of the Pandemic, are on the top of the list.
Rising figures in terms of production in many European countries in the last five years (see data from the European Audiovisual observatory between 2014 and 2019) – Portugal, Turkey or Italy being three prominent players where television content production has become increasingly massified – do not disguise the fact that this was also achieved via the massive, and in many cases abusive, exploitation of human resources – to use the Marxist terminology dear do the field of PEC (Political economy of communication). The COVID-19 pandemic exacerbated the existing precarious conditions of creative workers across the globe, and particularly in Europe, and exposed the fragilities of the companies in the sector that, in most cases due to their small or medium size and exclusive dependency on local or national sources of revenue, were badly hit by the pandemic and will hardly survive without external support. At the same time, the pandemic also brought to the spotlight the (fully proven) importance of audiovisual content as a medium for edutainment, well-being, besides being a source of the now eagerly searched-for health and safety information, besides, obviously, entertainment. And that is why audiences are having the time of their life, consuming more and more audiovisual content across many platforms. But this can also be problematic, because while doing it, they are actually intensifying the power of emergent audiovisual monopolies. The nightmare film theaters are living through – in Portugal for instance the market dropped 75% in March according to data from the Portuguese Film and Audiovisual Institute ICA and figures for the United Kingdom and Ireland, according to COMSCORE data, are devastating, with movie theaters closing down and dragging a total drop in revenues as early as the second half of March -, highlights one of the problems other audiovisual content distribution channels and media, such as FTA (Free To Air) PBS (Public Service Broadcasters), are facing: a lack of perception about the consequences the pandemic will also have in terms of changing the habits of the audience. SVOD are capturing all the eyeballs and it’s not a temporary situation. The risk of economic irrelevance and unsustainability traditional and local distribution structures face is the greatest menace this crisis brings, and we are not doing enough. Governmental intervention across Europe at this moment in time is in most cases nothing more than a palliative, not a cure, and things will only get worse.
If the topic wasn’t so serious, it’s almost hilarious to look at the paradox that people are consuming more and more hours of high-end televisual content and money is pouring into the pockets of the distributors, namely the ever-present GAFAN, but the living conditions of those who actually produce that content are getting worse and worse, and most local distributors are struggling to survive as the revenue from advertising keeps falling. And all this is occurring not only but also because the pandemic is also affecting trends and forms of media consumption. A recent article in the Visual Capitalist 3, “How COVID – 19 Has Impacted Media Consumption, by Generation”, dated 7th April 2020, discusses the configuration of content consumption, according to 4 different age categories, which they consider to be Generation Z, younger, the Millennials, Generation X and the Baby Boom Generation focusing on UK and USA markets.
In the first typology, 16-23 years old (Generation Z), online video and streaming consumption predominates, even more than before the pandemic outbreak. Between 24 and 37 years of age (Millennials), there tends to be a greater variation of content (online video and offline television and online streaming). Between 38 and 56 years of age (Generation X), offline television predominates, but also some online and streaming television. Between 57 and 64 years old (Baby Boomers), offline television tends to be valued, as this is the age group where there are less fluctuations, compared to the pre-Covid-19 period.
Additionally, and according to the Visual Capitalist, the number of people who, in the context of the pandemic crisis, do not consider paying for subscriptions they did not have before the coronavirus phenomenon, grows with advancing age, which means that, in proportion, younger people are more receptive to paying for new subscriptions and adhering to new practices of monetary relationship with content. The rule is very simple: as the fear of the pandemic grows the online is worth more and more and the offline is worth less and less.
The Statista service recently published data on media consumption in the last half of March that depicts the structure of media consumption in a period of isolation. In all the countries analysed, news consumption appears as the most valued product at the beginning of the crisis, but this seems to fade as the crisis continues. Nevertheless, audiovisual consumption is on the rise and the ones benefiting from that are not national and local producers and broadcasters that see their audiences shrinking. The justification for this decline lies in the fact that, unlike other players in the market, such as Netflix, offline TV channels do not have as wide and as current an offer of entertainment content (i.e. films) as those available with other competitors, something that leads to a rapid saturation of programming grids and a migration of audiences to other platforms. Netflix acquired more than 15 million new subscribers with the pandemic but only 2 million of those came from the USA. It’s the acquisition of European subscribers that is greatly contributing to Netflix growth well above analysts’ expectations.
A recent paper by the NEM initiative – the European Technology Platform – on their vision for 2030 highlights how the cultural and creative industries contribute to the creation of technology and content-based innovation, and the key role the film and audiovisual sector have in this context. The role film and television can have in shaping social inclusion and diversity has also been the topic of many research- and social endeavours. But for all that to be possible we need first of all to have a diversified and sustainable sector that nourishes professionals and talent and that reinforces the values Europe needs if it wants to overcome this crisis.
Alerted to the potential consequences that the coronavirus may have on the industry, a group of members of the European parliament and policy experts for the media signed an open letter at the end of March asking for urgent support from the European Commission to work around what they claim to be an unparalleled test. Signatories take the idea of the previous sovereign debt crisis to ask whether, as in the case of banks, there will also be the courage to save the media and cultural and creative sectors from an announced death. The general idea is that, more than ever, democratic institutions should not look at the media as an acquired system. Despite the profound challenges experienced in recent decades, due to the pace of technological change and the migration of advertising revenues to large American companies, the media will not be able to survive in this phase if there is no capacity to understand the context of financial urgency. This is the idea of the signatories of the letter sent to President Van Der Leyen, who list a set of measures that should be taken in the short term, namely: increase media literacy; spend more on advertising; promote greater commitment on the part of philanthropy and prepare for the future through technological investment and modernisation. I completely agree with this position, but this is not sufficient. We need funds to be injected in the sector in multiple ways more than via the acquisition of advertising space by governments. Those that know me know that I’m no big fan of state intervention, and I’m aware of the lessons history tells us about that. But in this particular case, I think we are coming to a stage where it is either that or we will be witnesses to the death of the European Audiovisual sector. It is time to act and all those that love and cherish television should contribute to this cause and ask at local and national level for the urgent need of action in support of the national television and film production and distribution systems. I know audiovisual content will continue, but someone else will be telling the stories…
Manuel José Damásio is the Head of the Film and Media Arts Department at Universidade Lusófona in Lisbon, Portugal and the Chair of the board of the European Association of Film and Television Schools (GEECT/CILECT). He has worked both in academia and industry for more than twenty years.
