The Daily. Monday, March 25, 2002

Film and video distribution

Led by revenues from foreign movies, film distributors and videocassette wholesalers posted a record $2.5 billion in total revenue in 1999/2000, easily eclipsing the $2.3billion mark reached in 1998/99.

But with expenses growing faster than revenues, profits fell for the second year in a row, (-17.6% to $271.5 million). Profits represented 11% of total revenues in 1999/2000, compared with 15% in 1998/99 and 18% in 1997/98.

Strong revenue from foreign movies led the way in 1999/2000, posting $360.5 million in domestic sales, up 13.4% from 1998/99.

Revenue growth of 20.7% in the pay-television market and 14.0% in the home-video market contributed significantly to the record total. Also higher were other sources of revenue, such as grants, subsidies, management and packaging fees, interest income from investments, and the wholesaling of pre-recorded videocassettes.

Film, video and audio-visual distribution and videocassette wholesaling by primary market

Distribution sales of Canadian film and video productions to other countries brought in a record $172.8 million, up 17.2% from 1998/99. (This figure does not include productions distributed directly to foreign clients by producers.) Total exports - made up of sales of Canadian productions combined with revenue from the distribution of non-Canadian films - reached $187.3 million in 1999/2000, up from the previous high of $185.5 million in 1998/99.

Canadian productions were increasingly popular in foreign markets. Fifty-seven percent of all revenues from the distribution of Canadian productions in 1999/2000 came from exports, up slightly from 1998/99. This compares with about one-third at the beginning of the 1990s.

In the domestic market, where they earned the balance of their revenues, Canadian productions accounted for 13% of total distribution revenues of both Canadian and foreign productions.

Expenses outpace revenues

Revenues were outpaced by costs, which rose 15.3% to just over $2.2 billion. Spending on advertising was up 17.6%; licensing fees and royalties, the largest expense item, jumped 14.0%, more than the rise in distribution revenues.

Note to readers This release presents results from a survey of the 205 film and video distributors and wholesalers in Canada. Film distributors are companies primarily engaged in distributing film and video productions to motion picture theatres, television stations and commercial exhibitors. They obtain rights to market and distribute films and videos. Video wholesalers are companies primarily engaged in the wholesaling of pre-recorded videocassettes, videodiscs and DVDs to retail outlets, which in turn sell to the public. Videos include videocassettes, videodiscs and DVDs. Home-video market refers to the rental or sale of videos for playback on household machines. Pay-TV market refers to the showing of films and videos on pay and specialty channels for which the viewer must pay a special fee either directly or indirectly. Conventional-TV market refers to the showing of film and videos on normal broadcast television. Theatrical market refers to the showing of films in commercial movie theatres and drive-ins.

Payments for Canadian and foreign products gained from 1998/99; the share for Canadian products remained at 11%, down from a high of 13% in 1994/95. However, in actual dollars, fees paid to copyright holders of Canadian products advanced 10.5% from 1998/99, and the fees paid for foreign products rose 14.4%.

Salaries and benefits also climbed - 20.6% from 1998/99 to $135.5 million. This increase reflected a 21.2% gain in full-time jobs to just over 3,200 and a 27.0% increase in part-time employment to 400.

Companies involved in video wholesale activities (less than one-third of respondents) reported a 9.2% increase in the cost of goods sold, but this was more than offset by a 12.7% rise in sales revenue.

Foreign films and videos still dominate the domestic market

Foreign productions accounted for 87% of the $965.6 million in total sales in the domestic market for films and videos, down from about 90% during much of the 1990s. However, in certain sectors of the industry, foreign domination was much higher.

In the theatrical market (commercial cinemas and drive-ins), foreign movies accounted for 97% of distributors' revenue, which totalled $360.5 million in 1999/2000. Canadian movies accounted for 3%.

Although the conventional and pay-television markets were also dominated by foreign productions, the share of revenue from Canadian product in both rose slightly from 1998/99. In the conventional-TV market, the share of Canadian productions edged up from 24% to 25%, and in the pay-TV market, from 21% to 24%. Total revenue from the conventional-TV market was $369.3 million, and from the pay-TV market, $68.7 million.

In the pre-recorded-video market, foreign productions continued to enjoy overwhelming popularity, accounting for almost 99% of the $1.3 billion in domestic wholesale sales in 1999/2000.

Canadian and foreign-content share of revenue in the domestic market

1999/2000

Canadian content edging up in non-theatrical market

The last distribution market, the non-theatrical sector, consists primarily of work for educational institutions, governments and private companies.

After declining two years in a row, this market rose 24.2% to $19.5 million in Canada in 1999/2000, from $15.7 million in 1998/99. The share of Canadian product in this market was also up, to 26% in 1999/2000 from 23% in 1998/99.

Share of royalties for Canadian films and videos remains low

Film and video distributors and video wholesalers reported a total of $2.2 billion in expenses in 1999/2000.

The largest item was $791.3 million in payments of licensing fees and royalties to both foreign and Canadian copyright holders. Canadian films and videos maintained an 11% share of these payments. Although this was down from a 13% share in 1994/95, the dollar value increased 10.5% from 1998/99.

Expenses related to video wholesaling activities, including the cost of duplication, amounted to $640.3 million. Revenues from these activities were $1.3 billion.

Selected details from the Film and Video Distribution and Wholesaling Survey are available in table format (87F0010XPE, $50). Data from the survey are also available by province and territory. Researchers can request special tabulations on a cost-recovery basis.

For general information, contact Client Services (1-800-307-3382; cult.tourstats@statcan.gc.ca). To order special or standard tables, or to enquire about the concepts, methods or data quality of this release, contact Fidel Ifedi (613-951-1569; fax: 613-951-1333; fidel.ifedi@statcan.gc.ca), Culture, Tourism and the Centre for Education Statistics.