I appreciate the opportunity to speak to you today.
The Screen industry – film and television – is very important.
In my remarks today I want to speak firstly about why that is.
Secondly I want to speak about how the industry is changing.
Finally I want to speak about how the Australian Government supports your industry - and whether any changes to those arrangements are needed to reflect the way the industry is changing. I hasten to add I will not be giving any answers today – but I do want to raise some questions!
Why the screen industry is important
Let me turn, firstly, to why the screen industry is important. I doubt that anybody in this room needs to be persuaded – but let me make the case for a moment.
Telling Australian Stories
The first reason, of course, is the importance of telling Australian stories.
From the earliest days of the film industry Australians have been telling our stories on screen
– with productions like The Story of the Kelly Gang in 1906. Since the Australian film renaissance of the early nineteen seventies, thanks to the Gorton and Whitlam governments, with classics like Sunday Too Far Away and Picnic at Hanging Rock, much has been achieved.
Since television arrived in the nineteen fifties, we've also had a vigorous domestic television production sector – from the days of Homicide and Matlock Police to more recent shows like Doctor Doctor, Offspring and Secret Bridesmaids Business.
Both film and television production have been supported by government policy, recognising the cultural importance of seeing stories on our screens that reflect – and inform and offer insights about – the lives we live as Australians.
And it is pleasing that activity levels in the sector are as high as they are – as the recently released Screen Australia Drama Report highlights.
In 2018-19 expenditure on drama production in Australia exceeded $1.17 billion. This included a record $768 million spend on Australian stories
This expenditure on Australian titles was the highest in the report's 29 year history, driven by an all-time record spend on Australian television, including Total Control for ABC and Five Bedrooms for Ten, and a five-year high spend on Australian feature films, including I Am Woman, Babyteeth, and True History of the Kelly Gang. (Apparently not everything was covered in the 1906 production.)
There was also a rise in the production of children's drama and continued investment in
online productions such as Stan's The Gloaming and the Netflix original The New Legends Of Monkey Series 2.
Our commercial free to air broadcasters collectively remained the largest contributors to financing of Australian drama productions. But when we rank the contributions by individual broadcaster, it was the ABC which produced the most finance.
The Government is pleased by this amount of activity in producing Australian titles. Of course it is important that Australians see the best the world has to offer. But it is also important that Australians are not left in a position where the only stories they see on their screens are set in other countries.
The cultural value of screen content is profound. It contributes to our sense of identity and national pride; it helps create social cohesion and provides us with ways to connect with one another.
It is important for Australian adults – and equally important for Australian children. Sesame Street and Peppa Pig are great – but we also want Australian children to hear presenters and see stories which resonate with their own daily lives.
I am really pleased about the success of Bluey, the animated TV series about a blue heeler puppy who lives with her mum, dad and sister, which has had over 120 million views on iview and was recently nominated for an international Emmy. Programs like Hardball and The Inbestigators enable kids to learn key skills and values from characters they can identify with.
Taking Australia to the World
A second reason why the screen industry is so important is because of the work it does in taking Australian stories – and Australian scenery and images – to the world.
The list of internationally-acclaimed Australian films and television series is impressive and growing. Often, Australia's unique wildlife and natural beauty provides the backdrop to these stories and brings with it an additional benefit, one that can more easily be measured in numbers and dollars.
Screen Australia estimates that Australian screen content attracts some 230,000 international tourists to Australia each year drives $725 million in tourism expenditure.
Economic Significance of the Sector
This brings me to a third reason why the screen sector matters – because of its economic significance.
The economic research team in my Department estimates the value of the cultural and creative activity of the arts sector – including broadcasting, electronic, digital media and film
– at $9.7 billion in 2016-17.
Australian narrative screen content alone drives over $252 million in export earnings each year.
The creative and cultural sectors constitute 6.4 per cent of Australia's GDP to the economy.Film and television production is an important part of this – and a significant employer.
The Australian Bureau of Statistics found that in 2015-16 a record 31,262 people were employed in the film, television and digital games sector across 3,359 businesses.
Of course, some of these were working on foreign productions shooting in Australia. International production spend was up from just $13 million in 2017-18 to $297 million in 2018-19.
A big reason for this was the Australian Government's Location Incentive – which together with a lower Australian dollar has made Australia an increasingly competitive and attractive location for international footloose productions.
How the Industry Is Changing
Let me turn then from why the screen sector is important – to how the sector is
changing. As I know will be extensively discussed at this conference, a number of factors are impacting on the industry. I want to touch on changing technology and the rise of the internet; changing business models; and shifting consumer behaviour.
Changing Technology and the Rise of the Internet
The first is changing technology – particularly the rise of the internet. This has been happening for twenty five years – but each year its impact seems to get bigger.
It doesn't seem so long ago that we were in a world of Sunday night movies, video rentals and waiting months – if not years – before a US or British series reached Australian television screens. The underlying reason all of that has been swept away is the internet.
Of course other technology changes have hugely affected your industry. The change from analogue to digital; the rise of mobile telephony; breakthroughs in screen quality – all of these have revolutionised the way content is produced and consumed.
The change keeps coming – most notably in the rise of subscription video on demand or streaming services, such as Netflix, Amazon Prime and Stan. Four years ago, less than two per cent of Australians had SVOD; today around 57 per cent use SVOD services.
Let me make the point, incidentally, that the explosion of SVOD services in Australia simply could not have happened without the NBN. Ten years ago most people got their broadband over ADSL; two thirds had speeds of less than eight megabits per second; and most plans had download limits of about 40 Gigabytes per month. The rise of SVOD has been a function of the NBN giving Australians much higher bandwidth and, in the majority of cases, plans without monthly download limits.
Changing Business Models
Changing technology is one thing – but what really matters in your business is the way that business models respond to the changing technology.
Let me mention several factors.
First is the rise of global subscription video on demand platforms – like Netflix, Amazon Prime, Disney Plus and others speculated to arrive in Australia almost daily – creates new competition for free to air and subscription television providers. But for those in the business of producing film and TV it creates new opportunities – including for Australian content to go global.
Recently for example I visited the set of Stan's The Commons – commissioned by this leading Australian SVOD business, working with global partners and supported by Screen Australia funding. It will be seen on Stan in Australia and distributed internationally by Paramount Pictures Television.
Second is the pressure on scheduled, linear drama on broadcast television. Executives tell me that shows which a few years ago would have been watched by two million people around the country are now only getting a few hundred thousand.
On the flip side, our broadcast television networks are increasingly working out how to take their linear content and use it to draw larger audiences after it first appears in the schedule, using their broadcast video on demand (BVOD) platforms. They are even succeeding in generating ad revenue – although they are at pains to say that what they get from BVOD does not make up for what they lose from lower numbers when first shown.
This is an important point to remember when considering the Screen Australia numbers I mentioned before. It is good that there is a lot of Australian drama being produced; but if it seen by smaller numbers than before, and if it is much harder to monetise for the broadcasters, we need to ask how sustainable these arrangements are.
Third of course is the competition for eyeballs from YouTube and from other internet platforms. Again, while this may not be good news for traditional broadcast television businesses, it has created new business opportunities for content creators who get their audiences on YouTube – such as those behind RackaRacka, Superwog and How To Talk Australian.
Importantly, this again is a way for Australian content to go global – but only if it can stand out in a ruthlessly competitive global marketplace.
A fourth factor is the blurring of the traditional line between film and television. On the one hand, international productions for the SVOD platforms can have budgets – and casts – which ten years ago would only have been seen in movies made for major cinematic release. On the other hand, while Hollywood mega-adventure franchises are dominating the cinemas, today many lower budget films struggle to get cinematic release.
Shifting Consumer Behaviour
Text Box: While the change in business models is one response to the new technology, the other important change is in the way that consumers behave. Of course there is a feedback loop between the business models and consumer behaviour. Changing technology means that the way people view screen content has changed profoundly. They can watch when they want; not when the linear schedule says. And they can watch on a big screen TV, a tablet, a smartphone or a PC. The ABC recently shared with me findings from its own research about how Australians are watching video-on-demand.
- 94 per cent of video-on-demand viewing happens in the home – the remaining 6 per cent is at work, school or university or commuting/ travelling
- 63 per cent is viewed on a big screen – only 15 per cent via a hand-held device
- 46 per cent of viewing is solo, 38 per cent with a spouse/ partner and the rest with children
- 62 per cent of video-on-demand viewing happens between 6pm and midnight.
To me this says that watching television at home on a big screen is still a very big part of what Australians like to do – and they do not really distinguish between the content they see coming from broadcast television, from catch up television, or from other sources such as SVOD services.
The fact that Australians have unprecedented choice in how and when to watch is only part of the story. The bigger part of the story is that today consumers have virtually unlimited amounts of content they can choose from. This matters enormously – because the success of Australian film and television production depends ultimately on appealing to the tastes of audiences, globally and domestically.
People expect to see the best content the world has to offer; they expect to see it in Australia as soon as it is available anywhere; they want to watch it wherever they are; and they do not really care which technology platform it is delivered over.
We also know that Australians like to view content while simultaneously engaging on social media, texting or reading emails. And they like to binge – to watch whole series over a weekend for example. Twenty years ago this was virtually impossible; now it is common behaviour.
What All This Means for Public Funding
Now nothing I have just said is particularly insightful or original. But it does raise important questions for how we think about public funding and support for the screen sector.
How we support the Sector
Let me remind you of the many ways in which public policy settings support the independent production sector.
First, there are the Australian content obligations for the free-to-air and subscription television sectors.
Text Box: In addition, to a 55 per cent Australian content quota, commercial television broadcasters must also meet minimum levels of first release Australian and children’s drama, and documentaries, and minimum levels of preschool and children’s programs. Foxtel is required to spend a minimum of 10% of all drama channel expenditure, on Australian drama. These measures are estimated to generate over $1.6 billion of spending on Australian screen content each year. Secondly, there is direct funding provided through Screen Australia. This year – 2019-20 – we are providing close to $82 million to Screen Australia. Last year, each dollar that Screen Australia invested delivered solid returns: "
- $19.5 million of Screen Australia funding went to general television drama – generating $179 million in production budgets.
- Nearly $14 million went into feature films – generating $71.5 million in production budgets.
- $6.8 million went into children’s television drama – generating more than $33 million in production budgets.
Thirdly, there is just over $27 million for important organisations that support the industry like the Australian Film Television and Radio School, the Australian Children's Television Foundation and Ausfilm.
Fifthly, perhaps the largest single funding support comes from the Australian Screen Production Incentive – in its different forms of the Producer Offset, the Location Offset and the Post, Digital and Visual Effects Offset. In the most recent financial year, the total amount of funding provided through these offsets was $383.7 million. This resulted in over $1.6 billion in Australian production expenditure.
Finally, we have topped this up with the Location Incentive Program – totalling $140 million over the four years from 2019-20 to 2022-23.
Already this has resulted in support for 10 productions, Godzilla vs
Kong, Reef Break, Monster Problems, Preacher Series 4, Shang-Chi and the Legend of the Ten Rings, Thor: Love and Thunder, Shantaram, Clickbait, Ranger's Apprentice and The Alchemyst.
Together these productions will attract investment of over $970 million to the Australian economy. They are expected to support the employment of over 8,300 Australian cast and crew, offer over 16,800 days of work for Australian extras, and use the services of nearly 8,000 Australian businesses.
What do Taxpayers Get For Their Money
There is no question that a lot of taxpayers' money is going to support the screen
sector. Excluding the national broadcasters and Australian content requirements, over half a billion dollars of taxpayer funding is going into the screen sector in 2019-20.
If we rank all Australians by the amount of personal income tax they pay, from smallest to largest, and take the person in the middle, that person pays about ten thousand dollars a year in tax. You would remember from high school maths that this is the 'median'. So it takes fifty thousand median Australian taxpayers to fund what goes to the screen sector.
Those Australians are entitled to expect your sector to use that money wisely. It needs to tell great stories; and it needs to get as many people as possible seeing those stories.
How the Industry is Changing
The question of how we regulate and support the media industry – including the screen sector – is something the Australian Government is considering at the moment.
Earlier this year the Government released the ACCC's Digital Platforms Inquiry Final Report – the fruits of over eighteen months of detailed investigation by our premier competition regulator.
The reason we judged this investigation was necessary was because of the profound implications for the Australian economy of the rise of global internet based businesses. As I have argued earlier in this speech, we are seeing those implications very clearly in the screen sector.
The ACCC found that Australia's media regulatory framework is outdated and reflects industry structures as they stood in the early 1990s – and crucially before the advent and increasing dominance of online services.
For example, different rules apply to content depending on whether it is distributed on free- to-air television, subscription television or on subscription video on demand services.
The Inquiry found that despite the increasingly significant role played by digital platforms in distributing content to Australian consumers virtually no regulation applies to these services.
Indeed, the bulk of Australian content obligations only apply to commercial free-to-air television broadcasters – despite newer SVOD services being accessed by more than 10 million Australians.
One of the ACCC's 23 recommendations was that the government should harmonise the regulation of Australian media – so that businesses which compete to serve the same audiences should as much as possible face similar regulatory requirements, regardless of which technology they use to serve their content to those audiences.
The ACCC's recommendations raise important questions for your sector.
Should there be content obligations imposed on SVOD businesses?
Do the content obligations in their current form fit with the way that consumers are consuming content today?
Do our funding arrangements work as well as they could to support Australian productions getting onto global SVOD platforms?
When Treasurer Josh Frydenberg and I released the ACCC's report, we said we would consult on its recommendations and the Government would release our response to them before the end of this year.
As I have said before, I expect our response to set out a pathway the Government will take to engage with these and other issues and to reach decisions on them.
I have appreciated the engagement with your sector to date to better understand these issues – and I certainly want to maintain that close engagement.
Let me conclude with the observation that yours is a very special sector.
Everybody loves the glamour of show business!
What you do is important culturally – and economically.
Your sector is undergoing profound change – but it is a change which brings exciting new opportunities to supply content into a voracious global market.
It important that our regulatory and funding arrangements work to support your sector to capture these opportunities.
I look forward to working with you on these important issues – so that the Australian film and television production sector can continue to grow and continue to tell great Australian stories.
 Screen Australia, Screen Currency Valuing Our Screen Industry, 2016, p. 5
 Bureau of Communications and the Arts, Cultural and Creative Activity in Australia, 2008- 09 to 2016-17, October 2018, p. 7
 Screen Australia, Screen Currency Valuing Our Screen Industry, 2016, p. 6
 Bureau of Communications and the Arts, Cultural and Creative Activity in Australia, 2008- 09 to 2016-17
 Screen Australia, 2018-19 Annual Report, p. 63