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Are Australian features facing a paradoxical future?

'The Dry'.

Australian feature films are currently dominating the box office, with exhibitors reporting a “revitalised” audience appetite for local stories.

Since the start of this year, the 12 Aussie features released in cinemas have taken a whopping 55 per cent of the national box office, or $26.6 million. Last weekend, in an unprecedented result, four out of the top five films at the BO were Australian.

Roadshow Films’ The Dry, the no. 1 film in the country for weeks now, is approaching $20 million, seeing it rank among the highest grossing Australian films of all time.

That local films are performing so well is in part by virtue of COVID, with a lack of new releases from the US allowing films more screens and more time to build word-of-mouth and momentum. However, both distributors and exhibitors have also thrown their weight behind all of the local releases.

Australia isn’t alone in this revival; other territories where cinemas have reopened are experiencing similar phenomena.

Japanese film Demon Slayer, released last October, became the country’s highest grossing film of all time. Last weekend Detective Chinatown 3 smashed records as it opened in its native China, where it notched $US398 million (RMB 2.57 billion). That makes it not only the biggest opener in Chinese history, but also the biggest opening weekend ever in a single market globally.

However, Australian producers and distributors alike have concerns about being able to actually get features off the ground in the future, with the Producer Offset slated to fall from 40 to 30 per cent from July.

On a Screen Forever panel discussing the future of Aussie cinema earlier this week, Roadshow Films CEO Joel Pearlman said The Dry would not have been financed if the offset was at 30 per cent, nor would the majority of the other films that it is involved in at present.

Combined with changes to the Gallipoli clause, he predicted it would become more and more difficult for filmmakers to mount major releases, noting most Australian feature producers are already in a position where they have to reinvest fees.

“Every single Australian feature we’ve ever been involved in has been an immense mountain to climb to get it financed, even at 40 per cent. I’m very worried about drilling down to 30 per cent and what that means,” he said.

In studio: Claire Gandy. On Zoom, from top left: Sue Maslin, Joel Pearlman and Emile Sherman.

See-Saw Films co-MD Emile Sherman believes his company could still have made 2017’s Lion – the fifth highest grossing Australian film of all time, nominated for six Oscars – with a 30 per cent offset, but said the budget would have likely been reduced.

“Producers are a crafty lot and we would have managed somehow. But the question is, would it have been at the same budget? Would it have had the same international punch?” he said.

“It managed to really achieve that bullseye, where it was an Australian story done at a decent budget of about $US12 million; where it was able to have enough cast and enough punch internationally to really cut through. We’re definitely going to need someone to come in. I think it’s the government’s role.”

The producer said a 40 per cent Producer Offset was never enough to begin with, noting that most large features typically had required direct funding from Screen Australia.

“Screen Australia will need to increase their investments on the projects that they decide to back [in order] to supplement the reduction. That feels obvious to me. It’s unlikely we’re going to be in a landscape where suddenly 10 per cent is going to be found,” he said.

Producer and distributor Sue Maslin agreed that it would be difficult to locate the additional 10 per cent from sources other than Screen Australia.

“I can’t see it coming from distributors having to up their minimum guarantees in an even more risky environment, and we’ve clearly seen the erosion of sources of ancillary returns to distributors,” she said.

“I’m unsure how it comes from private investors, particularly if the so-called push is to look to online platforms as homes and destinations for our films, because the one thing private investors want is an equation between risk and reward. That goes [out the window] in finance plans that are geared towards streamers, where you have no access to back-end and no accountability of reporting. It’s not going to come necessarily from the producer because our overheads are now going to be capped.

“It certainly throws open the question: Is Screen Australia, and not necessarily the market, going to be the gatekeeper now determining the kind of films that we might have going forward?”

Could ‘Lion’, the most successful Australian film of the last decade, have been financed at the budget it was if the Producer Offset was at 30 per cent?

Sherman added that by the government setting the Producer Offset at 30 per cent, roughly in line with what foreign productions can receive via the combo of Location Incentive Program and the Location Offset, it is not valuing the “Australian nature” of content.

“What we’re being told is that we’re as valuable as an offshore production. We know from experience, from looking around the world, that an industry needs to be fuelled from the inside out. Global productions can come in and out based on exchange rates changing and the offset being higher in Venezuela [for example], suddenly everyone goes there.”

However, he said repealing the need for films to have a theatrical release to be eligible for the offset was welcome, observing that streaming has blurred the lines between cinema and television. What type of film constitutes a theatrical release and what constitutes a streaming release will be something producers will need to grapple with going forward.

“Where theatrical sits as a really open question. We’re all rooting for theatrical is an ongoing and key part of the of the landscape and audience experience.”

Asked how Australian films could maintain the recent box office numbers once the Hollywood blockbusters return, Pearlman suggested a multi-pronged effort. Producers would need to be able to make great, competitive projects and distributors must be clever and ambitious with their release plans, so that exhibitors are supportive and committed to the films.

“Making choices regarding dating, and being highly strategic about when and how you’re taking film into the marketplace will remain critical. We all expect to see at some point a major rush from these [Hollywood] films that have been delayed entering the marketplace… But that will also only be temporary because production, as we all know, is quite lumpy on a global basis at the moment,” he said.

“We also need to acknowledge there needs to be a portfolio of local productions. It’s not fair to expect every single Australian film to be a giant box office hit. That doesn’t happen in any market, in any sector of the business… It’s about having distributors that are encouraged to take risks and to be ambitious in terms of ensuring that the films are presented in a way that they can compete.”

Event Cinemas general manager of content Claire Gandy told delegates the production, distribution and exhibition sectors had to learn how to work together better going forward, and to all think innovatively.

“We have to get our house in order so that we have a really healthy environment and we can continue supporting Australian stories. It’s culturally very important. We have the talent here. We have the infrastructure here. We have everything here that we need to make a successful Australian film industry and have things that are relatively more consistent. Cinemas want to help. We are begging for it. We want that content on screen.”