VOD paves new path to profitability

Cannes Daily Spotlight 2012: Spanish Cinema

In February, Spain dipped its toes in a digital future.

Having swept the Spanish Academy Goya Awards Feb. 19, Enrique Urbizu’s noirish cop drama “No Rest for the Wicked” saw a massive simultaneous multiplatform release, including on 10 legal online VOD portals.

Over the following weeks, nearly 22,500 users paid €3.99 ($5.20) to view “Rest” online.

Those figures don’t surpass combined DVD and Blu-ray sales of 19,000 and 6,000 units, respectively, but they at least indicate a burgeoning entertainment trend in Spain.

In an ever-tougher market, “everything’s declining save one factor: Internet,” says Juan Carlos Tous, at VOD portal Filmin.

Just how the Internet can be monetized in Spain, a known piracy hotbed, is another matter.

Transactional online movie revenues in Spain were just $6.5 million in 2011, says Irina Kornilova, at IHS Screen Digest.

But in recent months things have started to change.

The media impact of January’s Megaupload’s shutdown added to the first initiatives in March under a new anti-piracy law, have suddenly put the spotlight on Spain’s streaming platforms.

“Megaupload’s closure placed legal VOD front and center,” says German Renau, CEO at online video-club Cineclick.

IHS Screen Digest estimates a full-year 80% uptick in transactional online revenues to $11.7 million — far from the numbers in the U.K. ($100.1 million), France ($81.9 million) and Germany ($66.3 million), but close to those in Italy ($14.3 million).

“An important part of Spanish online users are ready to pay a reasonable price for accessing film and TV contents legally,” says Susana de la Sierra, director general of Spain’s ICAA Film Institute.

“The growth is going to be slow, but we’re moving in the right direction,” says Fernando Evole, Youzee portal co-founder.

Moving to enforce new anti-piracy regs, the Spanish government created a copyright commission March 1.

Unlike France’s three-strikes-and-you’re-out Hadopi law, Spain’s regs go after copyright infringing sites rather than end-users, introducing a laborious procedure involving not just the judiciary — as in the U.S. — but also the government in order to crack down on online pirate services.

Content owners suffering rights infringement must lodge a complaint via the commission. A notice and take-down process can take almost two weeks, depending on whether the site disputes the infringement.

One month after its launch, the commission had received 292 infringement complaints.

Beyond that, “it is too soon to see if the law really works,” says Jose Manuel Tourne, general manager at Spain’s FAP Federation for the Protection of Intellectual Property.

Piracy in Spain has been often explained away by the fact that the country lacks legal online VOD services. This argument is losing force as more than a dozen online VOD players are operating or starting up.

The U.S. majors are testing the Spanish market. Sony, Disney and Warner Bros. are inking deals with many of the portals. Fox, for the moment, is more cautious.

In general, portals pay the studios a minimum guarantee for subscription films and share transactional revenues.

Platforms are in talks to create an association to energize the VOD market. They face other big challenges beyond piracy.

Netflix announced last year its intention to enter Spain, but has delayed its plans, partly because of the high price of copyright. Unlike many other services, Netflix has the marketing muscle to target home entertainment consumers in a market of 14 million households.

VOD execs are campaigning for more “dynamic release windows, so that each film has its own schedule,” Juan Carlos Tous says.

All that would be key to further reduce the gap between Spain’s legal online VOD services and still massive illicit distribution.

VOD squad

A sampling of Spain’s video-on-demand portals

Canal Plus Yomvi, premium paybox Canal Plus’ a-la-carte version, reaching nearly 300,000 Spanish homes after four months on the market. The service is fishing beyond CP’s traditional subs base with a $14.20 flat fee for telco Jazztel users. Yomvi enjoys the most extensive U.S. content deals of all Spanish VOD platforms.

Cineclick, promoted by vet Spanish distributor Juan Montilla Eslava. It allows access to a nearly 1,000 film-title library for $12.90 a month.

CinesaPlay, an upcoming video club created by top Spanish cinema loop Cinesa, owned by U.K. private equity company Terra Firma.

Filmin, Spain’s dominant indie pic website. Launched in 2008, its streaming service offers close to 2,200 titles, including Euro pics and TV skeins. Premium service costs $143 a year.

Filmotech, the pioneering site created in 2007 by powerful Spanish producers rights collection society Egeda. Charges a flat fee of $11.70 a month for more than 1,200 Spanish film titles.

Mitele, Mediaset Espana’s online store, offering pics from film production arm Telecinco Cinema and TV skeins, plus U.S. titles such as “Spartacus.” Plans to incorporate third-party film titles.

Nubeox, which is backed by TV giant Antena 3 group and parent company DeAPlaneta, bowed in a pilot phase April 26, offering 1,500 movie titles and 50 TV series.

Voddler, which launched March 7 in Spain after reaching 1.3 million registered users in Scandinavia in only two years. It has a Europe-wide deal partnership with mobile giant Nokia and includes ad-funded catalog movies.

Wuaki, led by entrepreneurs Jacinto Roca and Josep Mitja, and backed by risk capital funds Axon Capital and Bonsai Venture for a $6.5 million initial investment. As a competitive advantage, it’s integrated into smart TV sets manufactured by Philips, Panasonic, LG and Samsung. Operating from December, it includes sponsored free access to film catalog titles.

Youzee, a start-up founded by exhib circuit Yelmo Cines CEO Fernando Evole and Carlos Cruz, creator of social network Tuenti. Officially launched April 20, it’s betting on a $9.10 monthly flat-fee subscription for catalog pics and TV series.

Cannes Daily Spotlight 2012: Spanish Cinema
Biz dodges crash landing | VOD paves new path to profitability | Creative finance | Int’l sales agents steer the market | Films in the fest, market | 10 to track
Return to Cannes Film Festival: News & Reviews