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All roads lead to Hollywood

25 october 2014

Whenever journalists ask me about cinema or when I read bloggers’ posts about broadcasting of films on TV, I have a strong feeling that people who write this do not know about basics of television business. To really understand the laws of media industry, you must be inside it, know how it works, how one or another wheel moves in the mechanism. If you do not know it, the value of your statements, however high-flown they are, is very low. You may make any suppositions, contrive, guess, but all this is only your fantasy. Reality looks like this:

From the very beginning of 50s of XX century, when television began to become the mass one, it found itself under a very strong influence of cinematograph which had already fulfilled itself by that time. Television is, first of all, the content which you provide to the consumer. That is why the first American TV channels NBC, CBS, ABC, once they emerged and began fighting for the viewer, very quickly realized that the «heavy artillery» of cinema is needed for efficient competition. This cinema at that time could be taken only in one place — in Hollywood. That is why TV channels began to agree about the content with the biggest Hollywood studios: Paramount, Warner Bros and Disney.

Actually, during 60 years this scheme did not change. If you want to broadcast an interesting content which will make your television really attractive, you must sign a contract with the biggest Hollywood majors. A cinema product is the «oil» on which all media industry works. Let’s take the poll, results of which were published by Ericsson this September. 72% of Russian TV viewers named «the possibility to watch a good film» their priority (for comparison: TV series are needed for 48% viewers, and direct sports broadcasts — for 32%).

This is also interesting: people are ready to pay for such content. It is proven by the history of the same American television. Americans, very practical people, already then, in 1950s began to develop cable networks, and until now they say ‘cable’ even when it is a question not of cable, but, say, of satellite TV. For them ‘cable’ is a synonym of commercial television in general, they know: connecting cable, they gain access to the expensive content, first of all, to Hollywood films or expensive TV series.

But there is the similar situation in Russia too. the level of penetration of Pay TV in Russia has got over the critical mark of 60%. And this happens despite of the multiple forecasts of critics that television will die very soon at all. Statistics says that television is not only going to die — on the contrary, it is and will be developing further. the question is only when and how this quantity will grow into quality.

Signing contracts with Warner Bros. and Disney for broadcasting of their products in the operator’s package, which was lately announced by Tricolor TV, is a serious initiative aimed at implementation of the principles which were formed in the West already 60 years ago. These are the principles supposing benefit, first of all, for TV viewers. It is clear that the package with Hollywood cinema is more expensive than the basic one, but it will be cheaper than any purchases of DVDs or VoDs in the same format. Not to be unfounded, I will give a concrete example. A licensed Blu-Ray of «the Avengers» in the Internet shop where you can go via a link from the searcher, costs 1230 Roubles, «Brave» — 899 Roubles, «Legend 17» — 889 Roubles, «Oz the Great and Powerful» — 712 Roubles, «John Carter» — 525 Roubles, Part Four of «Pirates of the Caribbean» — 499 Roubles and «Olympus Has Fallen» — 494 Roubels. If you sum all this up, you will approximately get the annual subscription for our package of five film channels, where you can watch all these films in the same high quality, without commercials, plus other several hundreds of blockbusters and simply good films. It means that you can go to the shop and buy seven or eight films, or you may enjoy these films which are not simply shown to you but also «packed» into a certain TV program, all the year round.

What we are doing now is not a whim or an experiment — it is a marketing scheme worked out in the West decades ago. the scheme which was possible there very early, because already by the beginning of 1980s practically entire America was wrapped in cable. And we needed 30 years more before our cable and satellite reached the necessary level of penetration of 60%, after which it makes sense to begin working not only for extensive, but also for intensive development.

the only way to make one’s product really demanded, is to go to the major studios, representative offices of which mostly are there in Russia and to say «Sell us please these films for us to beneficially resell them to our subscribers». There is no other civilized method in the modern world. And never was.

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