How Love Steaks almost changed the German film industry

If the inside magazine “The Hollywood reporter” is writing about a German film school movie, it is worth reading, especially when it is connected in the next sentence to a new movement of filmmakers: “the first film of what could potentially become a new filmmaking movement – called Fogma, with a clear wink to Lars von Trier and Thomas Vinterberg’s Dogme 95 manifesto that kicked of a renaissance in Danish cinema – Love Steaks combines improvisation in scenes with a planned overall narrative structure.”^[1] Love Steaks, directed by Jakob Lass was produced by the German film school “Konrad Wolf” in Potsdam-Babelsberg and tells the uncommon love-story of two employees in a hotel at the German Baltic sea coast, who rebel against the rules they are living in. The film won several prizes, national and international and is nominated for the German Film Award this year.

Not only this announcement and the fact that Love Steaks is in German cinemas now, but also the way how it found its way into the theaters, gives an opportunity to have a look on how films are being distributed in the digital era. In the protected space of German film schools a large number of films is being produced of which only a few are able to attract public attention. Due to funding from public institutions (Filmförderung) only a few get the attention beyond certain critics. This dependence on public funding is not a unique feature of student films but can be seen in the entire German film industry. In 2011 about 40% of all production costs came from public funding (Goldhammer, Castendyk 2012, p. 109). The judicial basis for the public funding is described in the German film promotion act (Filmförderungsgesetz) in which the structure of different regional and federal institutions is described as well.

In this act it is also regulated that film under the support of public funding have to be screened in cinemas first before they can be sold on DVD, to pay-TV, free-TV and video-on-demand.

Because Love Steaks was financed only by the film school itself, the filmmakers Ines Schiller, Golo Schultz and Jacob Lass were able to develop a certain marketing concept called cine stream, which allows a parallel distribution in cinemas and via stream. It was planned to stream the movie for a similar price as in cinemas as long as it is screened here via the cinemas website. The plan failed because of the resistance of the film theaters association (AG Kino) as it Martin Hagemann, film producer and mentoring professor at the “Konrad Wolf” film school. As a reason Hagemann named the fear of loss of audience in the cinemas and according to this the loss of revenues by selling popcorn and coke. “The one who streams buys his popcorn elsewhere” as he claims in an interview with the author of this article. The number of viewers in cinemas is indeed decreasing in the last years. In 1999 about 141 million people went to cinemas in Germany, while in 2013 it decreased to 128 million (FFA 2014). The reasons are complex. Also the revenues in the DVD market went down from 1.750 million in 2004 to 1.140 million in 2013 (BVV, GFK 2013, p.18). Only the sales volume of Blue-Ray-Discs is still growing.

The biggest growth potential can be registered in the video-on-demand market. In a recent study of Goldmedia consulting a significant increase until 2018 is predicted, especially for the S-VoD subscription market (Goldmedia 2014).

These market changes are not a new phenomenon and are especially in the US-market advanced. Subscription-video-on-demand is much more common in the U.S. Netflix produces award-winning series like House of Cards and Lilyhammer and the market entry of Netfilx in Germany is assumed for this year. In his survey of the U.S.-market a few years ago Thorsten Hennig-Thurau examines the consequences of the parallel distribution in cinemas and on video-on-demand. “Our results suggest that recent industry speculation about simultaneous channel releases called a death threat by theater owners would indeed be devastating for movie theaters. However, such a change might be financially attractive  to movie studios and DVD-retailers if executed in the U.S. market, though externalities must be considered if the theater channel were to be irreparably damaged.” (Hennig-Thurau 2007, p. 79) The studios hope for rising revenues by unchanging marketing costs. That these results are cannot be transferred directly to the German market can be explained in different market structures and in the different international potential of German and American movies. Such a development would require a refocusing of the movie theatre owners in Germany. Mr. Hagemann sees a lot of potential in the screening of live-events like operas, premieres or soccer-games which gives the theaters a relevance and quality that could not be imitated at home, the watching of content in a group and on a big screen.

The origin of these inflexible and exclusive distribution windows for public funded movies can be found in the revenues that can be generated in a cascade manner. This model was created decades ago and is approved until now. With the growing number of broadband connections it is possible for more and more households to watch movie online. According to the German technological industry association (BITKOM) 85% of German households are provided by broadband connections (BITKOM 2014). The creation of the exclusive distribution windows can be explained according Hennig-Thurau as follows: “The exiting model of distribution for movies with its blocking blocking periods and passive users was created during the 1980s. Remember: it was developed as a reaction of the film studios to the rise of video tapes and video stores – it was the first time users were allowed to take a movie home.” (Blickpunkt:Film 27+28/12, p. 18) That these times have changed can be seen in the development of a certain funding program of the European union in 2012 to promote the parallel release in cinemas and on VoD, the so called day-and-date-release. Because the movies are still under production, there can be no answers if the projects are successful.

The British cinema chain Curzion Cinemas gives an example of how movies can be distributed in cinema and on VoD simultaneously. Although no exact numbers are available and this concept only seems to work with the support of EUs MEDIA program, it shows how the movie theaters may develop to survive market changes. Finally the distribution company that brought Love Steaks into cinemas is going to establish itself in the German market although it is not a generic distribution company. It’s main business was in the music sector, an industry that has learned to react on heavy market changes.

 Literature

• BITKOM Breitbandausbau: Deutschland in der Spitzengruppe 21.01.2014 https://www.bitkom-research.de/WebRoot/Store19/Shops/63742557/52E1/216B/B65A/0950/9B33/C0A8/2AB8/2606/BITKOM_Presseinfo_Breitband_Europa_21_01_2014.pdf
• Castendyk, Oliver; Goldhamer, Klaus Produzentenstudie 2012. Daten zur Film- und Fernsehwirtschaft 2011/2012 Vistas Verlag, Berlin 2012
• FFA 1/2014 03.03.2014, p. 13 http://www.ffa.de/downloads/publikationen/ffa_intern/FFA_info_1_2014.pdf
• FFA, GFK Der Videomarkt 2013. Erstellt im Auftrag der Filmförderungsanstalt. http://www.ffa.de/downloads/publikationen/Videomarkt2013.pdf
• Goldmedia Pressemitteilung vom 03.02.2014 http://www.goldmedia.com/uploads/media/140203_Pressemeldung_Goldmedia_VoD_Forecast.pdf
• Hennig-Thurau, Thorsten; Sattler,  Victor The last picture show? Timing and order of movie distribution channels Journal of Marketing 71 (4), p. 63-83
• Hennig-Thurau Die digitale Distribution muss kommen. Blickpunkt:Film 27+28/12, p. 18
• Hollywood Reporter The “Love Steaks: Film Review” 28.03.2014, http://www.hollywoodreporter.com/review/love-steaks-film-review-690636

^[1] http://www.hollywoodreporter.com/review/love-steaks-film-review-690636

This post is part of a weekly series of articles by doctoral candidates of the Alexander von Humboldt Institute for Internet and Society. It does not necessarily represent the view of the Institute itself. For more information about the topics of these articles and associated research projects, please contact presse@hiig.de.