The “space is central” but the cinemas are empty –

Dfter two years after the appearance of Covid-19, the crisis of the cinemas clearly stands out. The numbers are relentless: Italy is the only one of the major European countries that shows a negative sign (-7%) in revenue in 2021 compared to 2020 (France +47.5%, UK +75%, Germany +20%, Spain +45%) and comparing the period of “full opening” (from April 2021) with the same period of the triennium 2017-2019 marks a decrease between 50 and 60%. In absolute terms, the total revenue loss (boxes + discounts) in 2021 compared to 2019 was about 700 million euros and for 2022 a decrease of almost 60% is estimated, equivalent to 600 million euros. In this context, Italian cinema has been the most affected and is therefore of great concern. These are values ​​that call into question the survival of the entire system. It is therefore time to ask ourselves about possible future scenarios and try to formulate indispensable and urgent proposals for the Italian film industry.

The government and the Ministry of Culture have always been close to the sector and, during these two years, ensured the tools and resources to first deal with the emergency and then support the reconstruction. More effort is required today. The emphasis on the “centrality of space” is not a catchphrase. It may seem strange that two major TV companies like Rai and Mediaset, which also owns Rai Cinema and Medusa, are focused on the crisis in the cinema market. We believe in the centrality of cinema not for ‘romantic’ reasons, but for solid industrial and systemic reasons.

First of all, Income from the distribution of films in cinemas has always provided an important cash inflow necessary for the return on investment which, it is useful to remember, encompass production and advertising. The success or failure of a film in cinemas has traditionally been an indispensable parameter for evaluating (including economic) work and a fundamental working tool for operators in the sector (including broadcasters). In addition, the importance of theatrical release for the “visibility”, also internationally, of the film and its talents (directors, actors, technical personalities) and the “strategic positioning” in the panorama of audiovisual products is undeniable. It is no coincidence that movies are the most popular content out there and over time are the ones with the highest value. Finally, it should not be forgotten that the sector provides work for tens of thousands of people between direct and indirect workers.

If all stakeholders (producers, distributors, exhibitors and the government) believe that the “centrality of the space” adds “added value” to the value chain of the audiovisual product, It is necessary that the next interventions are aimed at ensuring the exclusivity of going to the cinema and for a reward reserved for products designed, created and distributed for cinema.

There are four suggestions to avert a dangerous drift in the Italian cinema system. These are structural interventions for the sector which, however, do not require any special expenditure of time and resources:

1. Timeline. What was recently announced by Minister Franceschini regarding a 90-day window for all films is commendable and responds to the need for regulation after an unclear period regarding film release chronology. However, we fear that this will not be enough to return the hall to the centrality it deserves: we understand that the 15 months decided in France, although effective (96 million tickets sold in 2021 beyond the Alps compared to 25 million in Italy) are difficult to achieve, but we believe that 180-day theatrical protection window is reasonable and necessary for at least the next three years. In terms of chronology, the interventions we propose concern in particular: equal release windows for all films (Italian and foreign); 180-day window to protect theatrical release from other exploits, at least for the next three years (eventually returning to pre-pandemic 105 days).

2. Distribution Tax Credit. The distribution tax credit is an intervention in favor of the product and not the distributor; It does not bring the audience to the cinemas, but allows films to reach the cinemas with a good communication campaign, essential to attract viewers and limit economic losses in times of crisis. This measure makes it possible to invest more in the film’s advertising campaign and give the product greater visibility. We therefore consider it appropriate to extend the rate of this instrument to 60% for three years.

3. Production Tax Credit. We think it useful to distinguish a priori between films that are planned to be released in cinemas and films that are aimed at other uses. A theatrical film brings with it a higher economic potential, attributed to the launch and the associated longer production chain, where every element, including the star system, is upgraded. For these reasons, we propose the following interventions through a reorganization of the tax credit: tax credit for the production of works with priority cinematographic exploitation at 40%; 30% tax credit for the production of cinematographic works intended for uses other than theatrical uses, including those using the results of the event.

4. Regulations the use of the 3-day event exit and the so-called “technical exits”. It is necessary to intervene with a clear regulation on the use of the event, which in order to optimize the delivery of special audiovisual products (concerts, historical, cultural and artistic events) has unfortunately been used in recent months as a real trick to get around the windows and get to the other exploits faster.

Not caring about the showing of a film in the hall means creating a separation between the production and the audience that is supposed to enjoy the films.. The supply chain would be irreversibly damaged and production would also be affected in the long term. Also for these reasons, in the medium term it would be desirable to continue to strengthen the platforms, whose role has now become indispensable for the Italian sector, by providing a greater commitment to the purchase of films that have had an effective theatrical release and so on of the production while enriching the cinematic showcase. The readiness expressed by Minister Franceschini to intervene on this issue and the convergence expressed on several occasions between the various political parties, both majority and opposition, give reason to hope that it will be possible to define new measures quickly that enable companies to plan activities and investments for the coming months. Without “fixed points” there is a serious risk of not being able to plan the cinema releases in the coming weeks and making the crisis in the cinema business irreversible.

We hope to intervene in time and really give the space the central role it deserves within the industry.

Paolo Del Brocco is CEO of Rai Cinema
Giampaolo Letta is CEO of Medusa Films

04/29/2022, 9:02 p.m. – change 04/29/2022 | 21:50

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