by Chinaza Aijuswanarite

Online distribution will increase as broadband gets faster and penetration increases. Aggregators (like iROKO) beat VOD services any day…

Introduction:

This is an interesting time for the Nigerian film industry – Nollywood being the dominant but not the only segment. The industry is expected to double in size over the next 5 years (current size is between $500m – $750m) and become a multi-billion dollar a year industry. It is currently assumed that this growth is going to happen by magic. However this is still potential and a number of structural changes must need to occur for the potential to be realized.

For the industry to meet its potential, quite a number of things must change but primarily it must development its distribution. The industry must transition from the old informal DVD driven model of distribution, to a more holistic approach that takes into account the other channels and develops them fully.

This article focuses on the state of play in the five major distribution channels, and the trends that could drive these channels to contribute significantly to the development of the industry.

 

DVD Distribution:

Let’s start with the granddaddy, the distribution channel that made the Nigerian film industry what it is today. It’s still the primary method of distribution in the industry, and the primary source of revenue for most producers in the industry.

The industry currently churns out around 2,000 movies a year that sell an average of 50,000 copies. This translates to about 100 million copies. At N250 – N400 a pop, that translates to N12.5m to N20m per movie on average. There are a number break out hits that sell 200,000+ copies, but these are hard to identify beforehand, and so most movies target to make these returns. Obviously sequels to very successful movies have higher average sales and thus have higher budgets but for the majority of industry releases this is the reality.

The success of the informal DVD distribution network is that it can move tremendous amounts of units, it’s failure is that it cannot consistently produce films that sell one million copies. By way of comparison in 2012 the top 100 movies in the US sold around 100 million DVDs as well. The 100th movie on that list sold close to 600,000 copies while the top movie sold 7 million. Now we aren’t as developed as the US (greater, richer, population etc), but our average sales number should be significantly higher than it currently is.

When they are not blaming Africa Magic for the lack of blockbusters, the informal DVD distributors will tell you that their model works and that the people that are complaining are simply hating. However, it is the producers are also now hating. Right now they have no idea how many outlets their movies get released in, sales per location etc so you can’t plan for more than the 50,000 sales. So they are hoping and praying for the day that organised retail comes to save them from the current framework.

This lack of institutionalized infrastructure is one reason for the lack of blockbusters. Yes quality and competition matter, but look at the ability of the US distribution networks to drive sub-par products (quality wise) to significant commercial success.

In order to get even some of that US style distribution magic, we need organised retail. Put it this way, Jenifa was released in 2008, when’s the last time you had a DVD only release that did the 500,000 – 1m that Jenifa allegedly did? What about the numbers that BlackBerry Babes from 2011 did?

Organized retail changes the game completely. If you were a producer and knew for sure that you could place your DVD in 5,000 – 10,000 – 20,000 locations, then you could build your own estimates of the number of copies a movie could expect to sell etc. You could focus on higher budget movies that increase the chances that the movie will be a hit, etc.

Some of the existing ‘distribution’ networks in Asaba, Idumota, Alaba et al will institutionalize and provide that kind of service, but I fully expect a new crop of distributors to be the main drivers of this. The current distributors have made too much money doing it the old way, and I see them being loath to change.

 

TV Distribution:

The current daddy of this segment is Africa Magic. Judging by the complaints of producers you hear from time to time, this isn’t a very large source of revenue. However, that seems to have increased recently, judging by the increased number of new films being seen on their channels after a bit of a drought.

Africa Magic isn’t the only TV option and savvy producers are exploring TV deals both in the core Nigerian film markets of Nigeria, Africa and Caribbean, and in other markets with a strong diaspora population.

 

Cinema Distribution:

This is initially the most promising segment of the developments of Nigerian distribution. There are currently 12 cinemas in Nigeria, (13 if you include Accra) that have about 70 screens in total. The screens that matter obviously are the ones that a movie gets, which in this case is 10 – 13 screens. You also get a 2 week guaranteed run that could be extended based on performance of the movie.

People don’t publish numbers but it is telling that Ije is still the highest grossing Nigerian movie at N60 odd million. And since the producer gets about 50 per-cent of revenue you are looking at a maximum N30m per movie for now. However, more than likely most films are in the N20m – N40m revenue bracket, which means the producer makes N10m – N20m.

That’s a nice number, and increases the earning power of producers, but not enough to break out and go party… at least not yet. However if films start being able to get released on 30 – 50 screens, then things start to get interesting.

 

Online Distribution:

This is one of those distribution options that is still very futuristic. Aggregators (iROKO et al) buy content from film producers and distribute it via the Internet. It seems like the future of distribution in this our interconnected world, and may very well be, but right now not so much. For example, the CEO of iROKO says publicly that he pays around $10,000 – $15k,000 for the streaming rights for movies. For those keeping score that’s less than N3m. That’s a nice pick me up but not something that you are going to build a strategy around.

The prices are driven by the subscriber base available to the aggregators (iROKO them). Right now their subscriber base is mostly limited to Nigerians in the diaspora (and other Nigerian film lovers) that live in countries with fast internet, which in turn limits the amount they can pay for content. When true broadband comes to the core Nigerian film markets of Nigeria , Africa & the Caribbean, the potential subscriber numbers rise & so the prices for content should increase.

The other online option is the VOD option where the producer builds a site (or uses distrify & co) and charges people to watch. Nobody reports numbers for this but if you believe that 5,000 people will pay to watch your movie online, then you are probably better off going the VOD route at least for now. However if you cannot expect up to 20,000 – 50,000 subscribers on a regular basis willing to pay for your movie, this isn’t that much of a game changer, but it does increase the chance of decent returns.

 

International Distribution:

This is the holy grail of the Nigerian film industry:  The hope that a Nigerian film will get an international distribution deal, be seen on 50 – 100 screens, and make a few million dollars. The first step in that dream was Dr. Bello getting 20 odd screens from AMC in the US. The first test of that dream would be AMC being willing to do it again for another film.

 

Conclusion:

No article like this will be complete without prognostication about the future. And I will close by providing you with my view about how the various channels will develop in the next 18 – 24 months.

DVD distribution will continue to be one of the largest contributing channels, and will remain largely informal as the new entrants continue to work through figuring out a strategy that works to institutionalize the segment. The influence of the existing distributors will wane as producers will increasingly see it as an option rather than the make or break for their movies.

TV distribution will continue to be an important part of the distribution mix, but the growth will likely be driven more by spread of markets rather than by rise in payments, though that will also increase.

Cinema distribution will be a major driver of industry growth. I expect there would be another 15-20 multiplexes built in the next 18-24 months. The space will get more competitive as more producers target cinema releases but the average box office take for each movie will also increase.

Online distribution will increase as broadband gets faster and penetration increases. Aggregators (like iROKO) beat VOD services any day from a consumer perspective and that will be the future, but the prices that they pay to producers will have to increase.

International distribution will increase as some distributor will take a chance and end up with a break out hit (Dr. Bello wasn’t it) and that will make it more likely that more get picked up.

Over the next 18 – 24 months, we should expect to see the various distribution channels develop and along with that development an ever increasing number of movies begin to earn around a million dollars per release through all the channels combined. If that expectation is met, then it becomes even more likely that our dream of a multi-billion Nigerian film industry can be realized.

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Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija.