When it comes to a diversity of films, the elephant IS the room

By Deb Verhoeven and Bronwyn Coate
Published in the film industry trade journal if Magazine on April 18, 2017

Deakin University’s Deb Verhoeven.

Australia enjoys a diverse array of cinema releases each year. For instance, in Australia in 2014, there were 484 new release feature films that screened in Australian cinemas more than 50 times each. If we include films screened in festivals and those with a more limited cinematic release the number of new releases jumps to over 600 titles (source: Kinomatics Database).

In fact more and more films are being released over time. The evidence tells us so. In Australia alone in the ten-year period from 2006 to 2016 the number of films released almost doubled (from 333 to 609). But this increase isn’t always easy to see. This is because the vast array of film titles released in Australia are not distributed on an even playing field. For example, we are particularly interested in how films from a range of different countries, what is called “source diversity”, are made available to Australian moviegoers. In other words, we want to go beyond just looking at the number of films from different countries, since this statistic doesn’t really tell us how accessible these titles are.

One of the biggest influences on whether you have access to a wide selection of titles is the size of the cinema screening them. Perhaps surprisingly, on average, the largest cinemas with the most screens make available the least variety of film titles. Of greatest interest here is that in the Australian cinema market, which is dominated by films from the US, Australian titles are also a measure of diversity. And yet, even though cinemas with three to six screens (around 14 per cent of all the cinemas in our dataset) release the widest variety of titles by country of origin, many of these films do not stick around for very long. So diversity is delivered via a revolving door releasing pattern, with film titles rotating quickly in and out of the system.

The table below presents some summary statistics related to source diversity in terms of screenings across different sized cinemas based on 2014 data. Comparing cinemas of different sizes, we can see clear evidence that smaller-sized cinemas allocate a much greater share of their screenings to Australian and non-US titles. Of special interest is that as cinema size increases the percentage share of screenings for Australian films falls. On the other hand, the table also shows that larger cinemas screen a less diverse range of offerings (at the level of country of origin) and are far more reliant on a staple diet of US films (presumably Hollywood blockbusters) compared to smaller cinemas.

Economists have explored the question of diversity and its counter of concentration, in many different fields and under different circumstances or sets of assumptions. This generally involves the application of a Herfindahl Hirschman Index (HHI) which is most commonly used to measure industry concentration levels. The HHI enables us to assess the degree to which cinema in Australia is decentralized and diverse as opposed to centralized and concentrated. The HHI approaches zero when a market is occupied by a large number of films (or screen-shares) and reaches its maximum of one when a market is controlled by a single film. The HHI increases both as the number of films in the market decreases and as the disparity in screen-share size increases. In other words, lower values are associated with higher diversity. So we can see from the table below that mid-sized cinemas with three to six screens is where diversity can more reliably be found and accessed by Australian cinema patrons. Movie-goers living in the vicinity of cinemas this size are the beneficiaries of the widest set of options for seeing films from around the globe. But they have to be quick.

The cinema is repeatedly held to be dead or dying. Evidence to support these claims is practically non-existent. Each year more and more films are made and released around the world. Our data however, does infer that outside the mainstream ecology of US dominated film exhibition and distribution, the increased number of films has had a “cannibalising” effect, in which intensified competition has produced a disproportionately negative impact on the success of non-US film titles, including Australian films. Policy makers would do well to consider more than just production subsidies when they look to enhance the success of our local industry. If we really care for the fortunes of locally produced, theatrically released films then we need to also pay attention to the smaller cinemas that deliver them to Australian audiences.