Contrary to the image it willingly gives of itself, cinema is not only the world of creation and inspiration, it is also often a heavy industry. Cinema has always blendedfrom its origin, artistic dimension and scientific and technical means. At the time of the numériqueHowever, this relationship creates "dangerous liaisons" with content producers, both at the shooting stage and during production and post-production.
Pn response to these constraints, its economic model became fixed, very early on, by organising itself around three poles which stand out in terms of investments and business models: production structures (film development), distribution (ensuring a function of pure logistical and financial intermediation) and cinema networks.
In the face of globalization and the emergence of new distribution channels, the coherence of the film industry has been gradually undermined. This transformation is seen, most often, through the sole filter of digitization and the Internet. Revenues and the traditional bases of the cinema would be threatened by the calling into question of traditional modes of consumption in cinemas and by the rise of new players from the audiovisual, telecommunications and IT world, such as Netflix or Youtube.
The case of the music attests to a proven threat, but as shown a recent reportFor the cinema industry, technology and digital technology provide a unique medium for new content and uses, as well as renewed sources of efficiency and profitability.
Digital and film... dangerous liaisons?
Cinema has always involvedfrom its origin, artistic dimension and scientific and technical means. In the digital ageHowever, this relationship creates "dangerous liaisons" with content producers, both at the shooting stage and during production and post-production.
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The current weight of the technological function in industry makes it particularly important for the firms that control the technical systems and the supports for the circulation of products to be in a position to make the necessary investments. This explains why, in almost all sectors of the cultural industries, the major developments in recent years have been the result of massive intrusion by the actors who are the bearers of these technologies.
The New Zealand company Weta Digital provides an interesting example of the dynamics of development and innovation at work in the sector. The latter has made a name for itself by developing innovative simulation and visual effects tools for the global success that will be Lord of the Rings. This is what will then allow it to take a central position in many other productions such as The Adventures of Tintin or Avatar.
The fall in the price of hardware and software has stimulated the creation of many SMEs specialising in special effects (3D, virtual simulation) constituting what is presented as one of the most dynamic and disruptive segments of the cultural industries.
These post-production tools - 3D for example - are not only used to enrich aesthetic and filmic expression; they are most often aimed at enabling directors to rethink their production by reducing the costs of certain scenes (crowds, shooting outdoors, camera movements, etc.). As said Jeffrey Katzenbergthe president of Dreamworks:
This technological push not only helps our artists' creativity; it also allows us to shorten the length of our production cycle, while drastically reducing the costs of our films.
But the new digital technologies are not only relevant to filming, they also have a growing weight in production in the strict sense. Historically, filmmakers developed their films on storyboards, scripts, bibles, memos, tables and cards allowing them to structure their vision and organize all the characters, locations and sequences.
Today, this phase relies more and more on preview techniques. These tools are even sometimes used at the stage of fundraising!
Being at the forefront of technology
Film production is discontinuous, takes place over only a few months, and these very conditions of manufacture preclude any economy of scale.
Cinema is a prototype industry where each film is a particular project, calling for the cooperation of different contributors with varied skills. The activity of producer thus has a strong entrepreneurial character and explains a persistent tendency to organise itself on a very individual basis. In EuropeDespite the significant number of films produced, there are only a very small number of structures integrated with the image of the American majors. The profession is marked by its lability, the weakness of its financial surface and its own resources.
The consequences are twofold in a cinema that is undergoing strong economic and technological change when the expertise acquired must constantly evolve and be called into question. It is difficult to capitalize on experience and resources from one project to another, which limits the capacity for investment and development of technological skills in its own right.
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The production segment then prefers to outsource these skills to other players who are better able to ensure technical innovation, financing, development and implementation of tools that are constantly being renewed. However, this situation is reflected, in terms of the internal organisation of the sector and of filming, by the renewed weight of the players and companies carrying the technologies, as well as by the opening up of new areas of development for new entrants.
The singularity and variable success of film projects does not only affect producers. The case of Dreamworks shows that even the most renowned technical companies in the film industry are affected by their economic dependence on a model where a large part of the income depends on only a small number of successful projects.
However, the services provided by Dreamwork require substantial and constant investment in the latest technologies (machines, servers, software, developers), reconfigured for each film, without it being possible, unless quickly overtaken, to reduce these costs in periods of reduced activity. Dreamworks renews its workstations every six months, systematically equipping itself on this occasion with the latest updated applications...
This high renewal rate has consequences on the organisation of production because the extremely sophisticated degree of tools now used on a film also changes the composition of the film crews. They are no longer organized around the producer and director alone, but increasingly call on a third pivot, the technical supervisor.
Far from being a simple technician at the service of the director, the latter ensures the complete supervision of all technical dimensions (image, sound, post-production, shooting plan and set organization) and is a real alter ego alongside the producer in charge of the organization and finance part, and the director, in charge of the creative part.
The distribution segment is also facing digital innovations that require very significant investments (3D projection equipment, digitization of the supply chain, etc.). These developments have opened up interesting opportunities for innovative companies in the sector.
Ymagis has seized this opportunity to build a tremendous growth in the field of theatrical distribution, which has been overtaken by online video distribution. In the traditional model of cinema, distributors were mainly responsible for the cost and delivery of copies, promotion and revenue management. Ymagis has relied on the digitization of projection and theatres (digital projector equipment, financing services for this equipment, electronic film catalogue) to extend its offer by developing operational services to theatres (ticketing management, digital information screens, audience profiling, etc.).
A new ecosystem
The disruption brought by digital technology to the cinema is not only limited to the arrival of Netflix, which fixes the attention of professionals and observers like the headlights of cars and rabbits in the night.
Several other forms of technical innovation should be highlighted: specific developments carried by the existing technical film industries, new applications carried by digital companies, incremental technologies integrated by the majors.
These developments are giving a growing and very particular role to new forms of intermediation carried, in the sector as well as on the filming itself, by companies specialising in technology.
The many high-tech firms that have emerged and are now working in the film industry are giving it a new face, just as they are shaping the new challenges that the sector must now face: financing technical investments with a high renewal rate, the weight of patents and industrial protection, the possibility of industrial spin-offs in other sectors of imaging and simulation techniques.
Pierre-Jean Benghozi...Professor of Economics and Management, École Polytechnique - University Paris Saclay
Elisa SalvadorAssociate Researcher Ecole polytechnique, Centre de Recherche en Gestion, École Polytechnique - University Paris Saclay
Jean-Paul Simonfounder and director of JPS Public Policy Consulting