Total foreign sales by American Film Marketing Assn. members from theatrical, television and homevideo markets rose only 3% in the 12 months ended June 1990.
Overseas revenues reached $1.14 billion for fiscal 1990, a new record, but were only about $36 million higher than the $1,103 billion collected the year before, according to a year-end statistical survey conducted by the accounting firm Peat Marwick.
Many sellers took a severe beating during the year because of pivotal changes under way in the international marketplace.
The distribution of international business was far from uniform for U.S. indies, as the stronger mid-sized-to-larger companies, with top-grade product, far outsold the preponderance of vendors with less desired lineups.
Amid cries from many AFMA companies that business is tough going these clays, the increase in sales appears incongruous to the market conditions of the times.
“The only way to explain it is there are a few more [ selling] companies, so the sales pie is divided bigger,” said AFMA chairman William A. Shields. “Some companies are doing considerably better than others – business is not evenly spread across the board.”
Results of AFMA’s survey were drawn from projections and extrapolations derived from 40 responding association member firms (38% response rate), all of which voluntarily submitted figures on an anonymous, good faith basis.
(Of AFMA’s 115 member companies, 106 were eligible for the survey, as merged firms and film commissions do not report figures.)
One AFMA member from a small independent firm who declined to participate in the survey expressed skepticism over its validity, claiming, “You don’t average a fly with an elephant.”
Europe and the Far East continued to be the two largest markets for American independently produced and distributed product, representing respective shares of the international pie of 65% and 21%.
Total sales to Europe were $744 million, up just 3%, while business from the Far East also showed minimal gains with $236 million, up 4% over 1989.
Japan was once again the single largest market in the Far East, with revenues of $160 million; suprisingly, however, the territory was the world’s third biggest sales generator, behind the United Kingdom with $196 million and Germany with $181 million.
Largest increase of revenues occurred in Latin America, which was up 12% to $44 million, primarily attributable to increases in video sales and resurgence in theater attendance.
The Soviet Union and Eastern Europe continued to show promise: business was $13 million, up 75% over the $7 million logged in fiscal 1989.
While theatrical sales accounted for 81% of the revenues in that sector of the world, both tv and video were up over last year, though still modest in terms of actual dollars.
Total sales in Australia/New Zealand were way down in 1990, plunging 42% from $83.3 million to $48.5 million.
Theatrical sales outpaced tv/cable and homevideo receipts across the board, remaining relatively even with last year at $463 million compared with 1989’s $457 million.
Television/cable continued to produce record revenues in 1990 with $345.5 million (up 19% from $291 million), for the first time surpassing grosses generated by homevideo; this was largely attributed to the deregulation of state-owned tv and increased appetite for U.S. films.
Worldwide video sales declined an overall 7% to $330 million from $354 million in 1989. Video sales were down in nearly every sector of the international market except for Latin America, where the reduction of piracy was responsible for the increase in a number of legitimate distributors.
In Latin America, where total video sales reached $17 million (up from 1989’s $10.4 million), Mexico, Argentina, Brazil and other countries showed gains, while Venezuela registered a marked turndown.
Overall theatrical sales stayed pretty steady with the previous year – Europe registered $264 million, the Far East accounted for $123 million and Latin America logged $18 million – but dramatic shifts occurred in various countries over the past year.
The U.K., which in recent years has been a depressed market for theatrical sales, registered a 71% increase; revenues of $72.5 million were up considerably from the $42.4 million logged the previous year.
France, up 15% to $32 million, was the only other European country to show gains in theatrical sales. Scandinavia showed the biggest decline with 50% ($19.5 million compared with $40 million); Italy’s sales slipped to $36.5 million from $50.1 million; Spain’s fell to $30 million from $42 million; and Germany/Austria’s dipped to $53 million from $59 million.
While theatrical sales to Japan decreased a bit to $78 million from $83 million, revenues were up slightly in Korea ($20 million compared with $14 million) and Taiwan ($9 million from $7.4 million).
Mexico led Latin America with an increase in sales of 100% to $6.5 million from $3.2 million a year earlier. Sales to Argentina are also up, $3.3 million over $1.5 million. Venezuela registered the only decrease, with sales slipping to a mere $797,000 from $1.8 million in the previous frame.
Privatization of European tv motivated increased competition for American tv product, reflected by a 179% leap to $76 million in Germany/Austria (up from $27 million); a 16% increase in the U.K. from $59 million to $69 million; and a major 73% surge in Spain to $33.6 million from $19.4 million.
Total tv/cable sales to Europe were $276 million, over the $209 million logged in 1989.
The second biggest market for tv/cable sales was the Far East, which had total receipts of $36 million, compared with $30 million a year ago, as individual countries generally showed modest or no gains.
Latin America was an extremely soft market for tv/cable in 1990, with sales plummeting 46% to $8.8 million from $16.4 million.
As the second largest exporter of American films, after the Motion Picture Assn. of America, AFMA estimates member companies remit approximately $1 billion in sales to the U.S.
That estimate is based on a formula for total revenues generated by the local foreign distributor, wherein one-third is remitted to an AFMA company, one third is retained by the U.S. distributor and the remaining one-third by the exhibitor, tv broadcaster or video retailer.
AFMA reports that total international gross revenues generated by AFMA firms in all media exceeded $3.4 billion in 1990, compared with $3.3 billion a year earlier.
The American Film Market continues to be the world’s most profitable venue for selling English-language films.
During fiscal 1990, approximately $266 million, or 23% of all sales, was generated outside AFM, Cannes and Mifed, a decrease from $392 million (35%) the previous year.
This indicates that AFMA members are drawing an increasing share of their revenues from the three markets and less from transactions taking place between the bazaars.
Compared to its two competitor markets, AFM’s share of the international market-increased to $362 million, or 32% from the 23% share it had in 1989. The Cannes market amassed $845 million in sales for a 30% share, and Milan’s Mifed registered $166 million for a 15% cut.
New fall market
As reported (VARIETY, Dec. 19), due to AFMA members’ disenchantment with this year’s Mifed results and the high cost associated with traveling and conducting business in Milan, the association has voted 67 to 11 to hold a second Los Angeles film market next fall in addition to the Feb. 28-March 8 AFM.
The new fall market, scheduled to run Oct. 21 to 27, will compete with this year’s Milan meeting.
AFMA’s decision has brought mixed reaction, with strong opposition mostly coining from the Italians and Germans. British companies generally support Mifed, partly to protect the highly successful pre-Mifed London screenings.
The French expressed qualified support for the AFMA decision, hinging on whether the second L.A. market is an interim step to having eventually one annual AFM in October. AFMA has not yet decided that issue.
With its added film market this year, AFMA can presumably make up its deficit, which for 1989-90 was more than $200,000. In 1989, AFMA netted $1.3 million from its traditional February market. Also, this year’s elimination of AFMA’s costly annual AFM party (upward of $400,000) should save the association additional dollars in 1991.
At this year’s Cannes and Mifed meets, aside from a handful of sellers (including Carolco and Morgan Creek) doing strong business, the majority of AFMA companies complained of soft sales.
“A 2.8% increase this year is hardly reason to jump for joy,” said Shields, particularly given the annual inflation rate, “which technically means you probably had a decrease.”
Shields pointed out that the weak dollar helped boost business in 1990. “Somebody paying $100,000 one year apart from presale to delivery may actually be paying fewer francs, marks or pounds,” noted the AFMA chairman.
Shields characterized the past year as one of “transition,” but stopped short of referring to the times as a problem.
“There’s a difficulty because the times they are a changing,” said Shields, noting during the past year there were a number of pivotal changes that affected the business of U.S. independents in the international arena.
“Video is down, fortunately tv is up, and the market is demanding better films, whether they be more expensive films with recognizable stars or just unique,” said Shields.
“As many of our member companies modify their business plans to meet the challenges of the ’90s, AFMA will continue to mine opportunities in their behalf in new media and markets,” said Shields.