High-end international co-production, a growth area over the last few years, has seen a significant downturn during the pandemic, but how soon will it return?
Recent data from Ampere Analysis shows that two years ago, in the last quarter of 2018, a boom time for international drama, 8% of scripted commissions were co-productions, with 64 recorded during this period.
By the second quarter of 2020, as the pandemic took hold, this number plunged to 26 – with co-pros falling to account for just 5% of all scripted series.
While this drop off is inevitable, for many it’s a situation that’s not easily rectifiable, given the variables in legislation, quarantining and state-driven insurance measures from territory to territory.
Claire Mundell, managing director of Synchronicity Films, admits it would be much harder now to make her company’s four-part U.K./Australian co-production thriller “The Cry.”
“Projects shot in three different countries with all the COVID protocols seem too risky for any broadcaster to take on, so we’re looking at our slate to see how we can rationalize it into projects that can be shot largely in one territory,” she says.
She adds that Synchronicity, which recently opened up an Australian office, will also focus on projects for that domestic market.
Neil Zeiger, creative director at Nevision, a U.K.-based consultancy and funding business for independents, says his firm is now focused on developing two series in co-production with Pukeko Pictures in New Zealand – a territory that has recently come out of COVID-19 restrictions.
Both companies report that they have been using lockdown to hunker down and work out which projects are best to take to market – with a direction that appears to favor the streamers.
“Terrestrial broadcasters still want to go on that development journey with you; it’s less the case with streamers; we’re looking at projects on which we’re able to go straight to script,” says Mundell.
With broadcasters often linking up with other broadcast partners in different territories, the linear co-production model also appears less nimble in the age of the global pandemic.
Ampere Analysis’ data suggests that the streamers’ co-production model has certainly proved more resilient. Linear commissions have been on a downward trajectory from 57 in the fourth quarter of 2018 to just 20 by the time COVID hit in the second quarter of this year.
The streamers’ commissioning pattern over the same period appears flatter, the number of co-production commissions hovering between 20 and 30 for each quarter.
As Ampere’s Guy Bisson points out: “The streamers already had a backlog of stuff in post-production; they are not slaves to a broadcast TV schedule making it easier to weather six months of lockdown – and that’s flattened off the trend,” he says.
Whatever the end destination, international co-producers are still adjusting to the “new normal,” with most estimating that the extra measures now required have pushed up production costs between 10% and 25%.
“In the beginning we were calling these ‘COVID costs’ but now they’ve just become another part of the budget,” says Mundell.
It’s a situation Carlo Dusi, Red Arrow Studio’s EVP commercial strategy, scripted, believes all stakeholders now need to account for.
“We need to be conscious that if we want to do scripted then it’s going to cost more, which is a reality of complying with safety protocols in each of the countries we’re working with,” he says.
Based on the conversations that he has been holding with bond companies and on his own risk analysis, Christophe Vidal, deputy CEO at one of France’s top international film and TV financiers, Natixis Coficiné, is currently advising clients to ensure that the essential elements of their productions – principally the cast and the crew – are available for a period longer than the initial shoot and whenever possible they should be insured and/or replaceable.
“Because of the cost, if they have to interrupt the shooting, they need to be available for one or two months, and I’m not sure people are taking that into consideration in all countries,” he says.
Insurance has also been flagged as a critical issue, which is impacting those seeking a return to production following periods of lockdown; but with governments adopting different approaches, support so far has been arbitrary.
According to Dusi, when the second series of “Vienna Blood,” a U.K./Austrian co-production, was shut down during the pandemic, the Austrian government became one of the first to step in and offer a state guarantee system, covering up to 75% of investment.
“Once this was in place we were able to renegotiate with financiers and come up with creative ways to cover compliance,” he adds.
The U.K. meanwhile, is still fine-tuning the details of its Restart Scheme, announced this summer. While deadline for applications is the end of this year, productions can backdate claims from July.
“Right now they’re focusing on the fact that you will be able to get principal photography up-and-running by the end of year. High-end drama, however, takes longer to shoot – so the big focus going forward will be on pushing to extend the scheme when there’s proof that it’s needed and it’s working,” says Mundell.
In other territories, such as Spain, where there’s currently no state-sanctioned underwriting scheme, producers are faced with the unenviable decision of either taking out €1m ($1.1 million) insurance policies, or, in the case of smaller European co-productions, just winging it.
Alvaro Longoria at Spain’s Morena Films will go into production on the €2.8m feature, “Polyamory for Beginners” – a Spain-France co-production – in Madrid next week, with no insurance.
“If COVID-19 affects one of the main elements of the production, then I’m really done for,” he says.
He adds that this is the case for most smaller European countries and, he argues, the situation is eroding the ecosystem of independent production companies.
“Preserving talent bases should be the number one priority to protect the network before it becomes impossible to rebuild,” he says.
In his capacity as president of the European Producers Club, Longoria is calling for the intervention of the European Commission, through a variety of measures.
These include the introduction of a Europe-wide insurance underwriting scheme and also a reappraisal of the way that co-productions are funded.
He argues that the tax break model used to attract inward investment will quickly become outdated in a pandemic-struck world, and proposes a relaxation of the current 60% aid intensity limits.
“It’s very hard if you are obliged to shoot a movie in three different countries – it just doesn’t fit in with the new reality,” he argues.
The EPC’s other proposals includes the creation of an E.U.-supported development fund for high-quality projects with international potential as well as a European co-production fund to foster independently-created European film and TV series – “one which replicates and adds to the current Eurimages model for feature films,” he adds.
Mundell thinks that it will take “three to five years” before the industry gets back to pre-pandemic levels of co-production.
In the interim, she predicts that there will be fewer multiple territory shows and a greater reliance on controllable spaces – studios and single locations.
“It’s also a big opportunity to experiment with virtual environments and production techniques – as used on productions like Disney’s “The Mandalorian” or “The Lion King’s” live-action remake. They won’t match everyone’s budgets but they open up new opportunities,” she says.
For the short term, however, the era of lavish series with feature sized budgets per episode may be on hold – although, according to Zeiger, this in turn will open up new opportunities.
“The pandemic allows us to reconsider the sort of stories we tell, how we make them, and how we deliver them, and it’s a real opportunity to review the method and cost of production, which, in recent years, has escalated to an unsustainable level.”