### Case 1: A year with of the Norwegian high-resource distributors

In 2019 SF Studios and Nordisk Film Distribusjon released a total of 11 Norwegian movies. None of them were big hits, some of them were significant losses, a couple did as expected, and most were almost successful. The aim of this case study is to offer perspectives from these two companies at this moment in time, and to offer their reflections on what they perceived as the important issues.

The general findings are that they do feel that these are challenging times, more so than the previous decade. They find that it is more difficult to find success with local titles, that they have lost a significant source of income from the home entertainment market, and that their access to foreign titles has been reduced as well.

While they are very aware of these challenges, they also find it difficult to adapt to them, both in a short- and longer-term perspectives. While they have limited strategic latitude, they do actively look for ways to reduce risks, secure income and find ways to live in a market that perhaps has less use for the traditional Norwegian distribution company.

While Norwegian distributors are more exposed to market risk than Norwegian producers, the distributors are also chasing margins rather than hits. In the one occasion where overproduction was mentioned, it was not in the sense that a massive hit could save a string of misses, but rather that a string of on-budget titles could save one big miss.

#### Trying times, limited latitude

From the distributors' perspective, three major challenges have arisen in the last few years: the loss of home entertainment revenue, the ascent of global streaming services, and a cinema market that is becoming increasingly difficult to compete in.

All of these challenges are in varying degrees tied to global changes. The most evident is the loss of DVD revenue, which is happening across the world. However, it did hit very hard in Norway because Norwegians were very quick to adapt the new all-digital formats and because the sales of DVDs were exceptionally high.

For SF Studios, which has traditionally relied on output deals with Hollywood studios, this has hit even harder as these deals are now less valuable. Hollywood studios have in varying degrees used Norwegian distribution companies as sub-distributors for both cinema and physical home entertainment releases. However, the biggest studios tend to do their digital home entertainment releases worldwide without sub-distributors. For instance, SF Studio's output deal with Warner included cinema and physical home entertainment releases, but not TVOD and EST.

The rise of the global streaming services, and especially when tied to the major Hollywood studios, is creating a tougher market both in cinemas and at home. As Hollywood movies in cinemas are becoming even bigger, even more global and with even bigger marketing budgets, it is becoming more difficult for local movies to compete.

Acquiring foreign titles outside of output deals is also becoming more difficult as the competition has sharply increased. Previously, the Norwegian and Scandinavian distributors would largely bid against each other for Norwegian and/or Scandinavian rights. During the last few years the competition has become global players looking for global rights as not only the SVOD services are buying, but many Hollywood studios are also increasingly looking to buy finished films to limit risk. In 2019, all of SF Studios and Nordisk Film Distribusjon's foreign acquisitions came from output deals or other prior relations.

The appearance of transnational cinema chains in Norway during the last decade was also considered a challenge by the distributors, who felt they were more aggressively commercial and less flexible in their views on window lengths than the previous local/municipal owners. There is also a general impression that it is more difficult to release local titles now, as the digitalised cinemas are quick to replace underperforming movies that previously might have found an audience with more time and less competition.

While these challenges are apparent to the distributors, it is difficult to react to them in a significant way. Marketing budgets have decreased with the loss of home entertainment revenue, rather than increased to meet the higher Hollywood spending. With less access to foreign titles, local movies with higher risk become more important. However, they have limited control over their local slate as they are reliant on NFI decisions as well as the producers who raise the majority of the financing.

> "Our dream scenario is to enter into discussions with producers and say we're missing this, or we want that, and then be able to spend more money to develop projects because they fit our strategy. But then we're completely dependent on NFI, and it's impossible to know what they'll fund. Well, almost impossible."

Intellectual property rights generally remain with the production companies, not least because it is an NFI requirement. It is therefore not uncommon that they switch distributors from time to time, release movies with different distributors in the same year, and even franchises move between distributors. When it was offered the then upcoming *Jul i Kutoppen* (*Christmas at Cattle Hill*, Solbakken 2020), Nordisk Film Distribusjon found that it had a conflict with the already scheduled *Dragevokterens jul* (*Dragon Girl*, Launing 2020).

> "\[Jul i Kutoppen\] was originally ours, but we said we can't take a film that directly competes with one we already have. (...) We probably could have taken both, but it would be bad form. They would steal admissions from each other."

On occasions such as the scenario above, where the distributors knew early on that they would be facing competition that would hurt the box office, they have already committed their investment as the minimum guarantee deal (MG) is one of the first elements to be locked down.

> "In our deal, we can't adjust what we are going to pay for the movie. There is of course a certain understanding of what the movie will cost when the deal is made, but if the producer cuts the budget by three million, we won't reduce our MG because of that."

While the distributors see the need for adjusting strategies and deals with rights-holders based on the fast-changing market, the very nature of the film industry leads to slow reactions times.

> "The consumer moves very fast. Faster than the technical developments on our part, faster than the distributors and the rights holders' ability to innovate. But then again, there will always be a delay because the projects are initiated, the models established, and contracts signed long before they're released."

When reflecting on the level of risk involved, especially with local titles, the distributors generally viewed the risk as too high compared to the investment and the potential return, especially since the producers would get the major cut if any movie was a big hit.

Most of the Norwegian 2019 titles missed their budgets. Some of these misses were quite substantial, but most were relatively narrow. Reflecting on admissions slightly below expected, one informant said:

> "So, actually, everything is as expected. We are optimists as usual, and to be honest, this should not be a surprise. (...) It's not that the numbers are bad, but a bit more would have been nice. Like with every other film we've had \[this year\]".

This also suggest that these distributors actually "knows something", as opposed to the often quoted "nobody knows anything". In one instance, two relatively comparable movies had been given the same audience estimates before being released, and both missed the estimates by almost the same amount. As an industry that chases margins rather than hits, this ability to accurately estimate admissions is vital, even if the estimates often are too optimistic. However, the distributors also expressed the notion that while this optimism often led to losses, it was actually necessary to make the industry work.

> "If you have an accountant leading your company, you have a problem because you can never calculate an acceptable level of risk."

Once projects are set in motion, there is however little flexibility, leaving little room to adjust even when the distributors realise there is trouble ahead. One example is the autumn of 2019 when there were a number of Norwegian children's movies coming to the cinemas, in competition with a number of American titles aimed at the same target group.

> "Everybody understands this will likely lead to some reduction in admissions. But we think, "let's see the movies first, and see how they do before we make any adjustments". It's like we've talked about, the curse of this industry, that we're always optimistic. We always look at the positive estimates. So, even if we see now that it'll be less, we don't make the adjustments just yet."

Cinema remains the biggest earner for the distributors, and success or failure in the cinematic window tends to carry on to the other formats. However, in general, the informants described the cinema market as increasingly difficult.

> "It is a general worry that people are going to the movies less. Sure, they spend more money when they're there, but they're going less. We have great traction with older audiences, but we're struggling with younger ones. It's a trend we see and have discussed, but little is happening to stop it."

The distributors also felt that the increased presence of international cinema chains had a negative impact. While the chains were valuable partners that could plan effectively, they were also less flexible and more profit oriented.

> "There's no doubt that when we have more chains that it has become rougher, more profit oriented and more strictly business. At the same time, when you talk to the three or four biggest chains, then you talk to a lot of cinemas at the same time. That makes it is easier to plan things."

While many of the low-resource distribution companies were always mainly oriented towards cinema, Nordisk Film Distribusjon and in particular SF Studios relied heavily on home entertainment income in the DVD era. Most of this came from foreign titles, but the steady stream of income gave the distributors more room to initiate local projects as well.

> "The money came pouring in from home entertainment. So many projects were initiated internally based on home entertainment results, and all the taxes the DVD sales generated digitalised the cinemas in Norway. So, home entertainment has really carried the industry to where we are now."

#### Corporate strategies

While they have limited strategic latitude when it comes to their slate and the release of individual movies, SF Studios and Nordisk Film Distribusjon have the ability to use their relatively large corporate structures to strategic effect. This applies both as owners of production companies and as subsidiaries of Scandinavian parent companies.

In both cases, the parent companies can be understood as being "patient", in the sense that they have long-term commitments to the film industry and do not demand continuous and immediate profits. However, the Norwegian subsidiaries are expected to not lose money.

> "There's an understanding that this is an industry that's super risky. But it's clear that when we invest this much money, there's an expectation we deliver some profit at the end."

This expectation became more pressing when other parts of the conglomerate failed to deliver profits.

> "While it doesn't directly impact us, you feel that the pressure to deliver increases. Somebody has to cover the losses somewhere. So, from not paying that close attention, the headquarters start paying a lot of attention to the numbers. You feel the pressure."

Being a part of a larger conglomerate also gives better access to global platforms such as iTunes and streaming services. With the exception of Nordisk Film Distribusjon's deal with Norwegian TV2, which will be discussed later, all streaming deals were made on a Nordic level. The dialogue with iTunes was also mainly on the Nordic level, and both companies noted that local titles were given a higher priority after iTunes established an office in Stockholm. Informants from both companies describe the internal dialogue on these matters as varying from a genuine discussion to simply being informed.

> "In my case, the main dialogue goes through the headquarters, so that \[iTunes\] has the fewest possible people to relate to. But for each local title it's my responsibility to ensure they have the appropriate arguments. This is the same for international titles too, where there is something special in the Norwegian market -- if it's based on a book by an author that's particularly popular here, things like that. Then you have to get those arguments through the system, and to the right places."

Both SF Studios and Nordisk Film Distribusjon have faced layoffs directed from their parent companies as a response to the falling DVD revenue. For SF Studios this process was clearly quite though (Lismoen 2017, Rushprint 2014, Berge 2013). Both companies have also tried to establish a more unified Nordic approach to both corporate structure as well as content produced. However, at least from Nordisk Film Distribusjon's perspective, this is changing at the moment.

> "I think it's heading in the opposite direction now, towards supporting the local and the importance of being strong in each country. Optimising in each country to get a better total. (...) Five or six years ago we were very focused on releasing the same movies in all countries and creating the "Nordic blockbuster". Which we \[then\] saw was very, very difficult. There are very few movies that work across the borders, and you might get it to work in two countries but lose everything in a third."

Another key strategic development from the distributors was to acquire stakes in production companies. Both SF Studios and Nordisk Film Distribusjon have bought or established Norwegian production companies. While owning production companies means investing more in each film and thus increasing risk, this also allows them to partake in all the profits of a success.

> "When it works, you kind of get double profits, and when it doesn't work you've probably invested more."

Owning production companies is also a way for the distributors to partake in the series boom fuelled by the streaming services, a market where the traditional film distributor has little or no stake.

> "Now that we've bought Paradox, look at what they've been doing: a series for HBO. We're producing shows for Netflix, several shows for Viaplay."

Finally, owning production companies is a way to secure new titles in a market where acquisition of foreign titles is becoming more difficult.

> "This is a clear strategy for us. How the mix of what we're doing is supposed to be, how we generate income. If you don't have local, how can you compensate with foreign when there are so many others out there buying? It's not easy; it's a very different level of competition now."
>
> "Differentiating is becoming more and more important, and local content is really the only thing you can acquire that the big giants don't have. So, we see that local content is getting more valuable in the market, and that the competition is increasing."

##### Acquisition strategies

A key aspect of the Norwegian distribution companies is their inability to fully fund, and therefore to green-light, projects, and their reliance on foreign titles to secure a steady volume of titles and to balance the higher risk of local productions. For both SF Studios and Nordisk Film Distribusjon, the 2019 slate was more or less typical compared to the findings in the previous chapter.

###### Table 13: Local titles released by SF Studios in 2019

| Title           | Production Company\[\^49\] | NFI Support                    | Reported budget | Screenplay based on                                                               |
|------------|------------|------------|------------|--------------------------|
| Amundsen        | Motion Blur (49%)          | NOK 15 M (Market)              | NOK 75M         | Historical events                                                                 |
| Operasjon Mumie | Filmkameratene (50%)       | N/A                            |                 | Children's book series                                                            |
| De dødes tjern  | Pryser Film                | NOK 100 000\[\^50\] (Artistic) | NOK 18M         | Novel that was also the basis of a well-known movie with the same title from 1958 |
| Swingers        | Storyline                  | N/A                            |                 | Remake of a Latvian hit                                                           |
| Håp             | Motlys                     | NOK 11M (Artistic)             | NOK 29M         | Original story                                                                    |

###### Table 14: Local titles released by Nordisk Film Distribusjon in 2019

| Title                                                                     | Production\[\^51\] company     | NFI Support        | Reported budget | Screenplay based on        |
|------------------------|------------|------------|------------|------------|
| Ut og stjæle hester                                                       | 4 1/2                          | NOK 12M (Artistic) | NOK 39M         | Novel                      |
| Askeladden - I Soria Moria slott                                          | Maipo (50.1%)                  | NOK 15M (Market)   | NOK 60M         | Sequel based on fairytales |
| Kaptein Sabeltann og Den Magiske Diamant                                  | Qvisten                        | NOK 15M (Market)   | NOK 38M         | Franchise                  |
| Spionen                                                                   | 4 1/2                          | NOK 14M (Artistic) | NOK 14M         | Historical biography       |
| Snekker Andersen og Julenissen: Den vesle bygda som glømte at det var jul | Fantefilm                      | NOK 7M (Market)    | NOK 29M         | Sequel based on book       |
| Tunnelen                                                                  | Nordisk Film Production (100%) | NOK 7M (Market)    | NOK 35M         | Original story             |

While both SF Studios and Nordisk Film Distribusjon released about the same number of Norwegian titles, the total budget of the films distributed by Nordisk was likely twice the number for the films distributed by SF. Of the two distributors, only SF Studios released movies that had not received NFI support.

The local 2019 slate of both companies were also leaning heavily towards "known" content. They released nine of the 11\[\^52\] fiction films based on historical events, books, or franchises, and only two of the seven films based on original screenplays. They did not release any documentaries in 2019.

Informants confirmed that known content, and especially franchises, were considered easier to sell and predict. Franchises also created value, as new releases in cinemas boosted sales of previous instalments. However, distributors were once again hesitant to consider any aspect of the business "easy"

> "It feels like, in a market that is very unstable, it feels like the least unsafe thing you can do. Even if audiences are beginning to ask for more original and different content, so we have to see if going forward there will be more original and different content. The problem is that what audiences say and what they do are often different things."
>
> "You have more to base it on, you can do more stuff like bundling. You can get a bigger fanbase, though it not always the case. We saw that with *Karsten og Petra*, at first, audiences kept growing, but when it came to the fourth film it started falling and falling. (...) It is not every movie that is like Avengers or the Fast and the Furious that just keeps growing. Most of the sequels we work with are children's movies, and that has worked up to a certain point where it has started to fall."

Of the four franchise films released by SF Studios and Nordisk Film Distribusjon in 2019 only *Snekker Andersen og Julenissen: Bygda som glømte at det var jul* did well. *Askeladden i Soria Moria slott* and *Kaptein Sabeltann og den magiske diamanten* underperformed slightly, leading Nordisk Film Distribusjon to be sceptical whether they would get another sequel. \[\^53\]

The inclusion of a Christmas movie in Nordisk Film Distribusjon's lineup is, however, an example of a clear content strategy. Nordisk has released a children's Christmas movie every year since 2015.

> "Something happened when *Karsten og Petras vidunderlige jul* did 100,000 more than the previous Karsten and Petra film. After that it was easy to go to producers who have a brand and say that if you do a Christmas movie, you can count on about 100,000 extra admissions."

While Nordisk Film Distribusjon could not directly order or green-light Christmas movies, all the production companies they regularly work with came up with ideas for Christmas movies. Enough of these projects have also received funding so that Nordisk believe they will have had a family-oriented Christmas movie every year to 2025 at least.

> "It's one of the more concrete things we can do. We also say that we try to have at least one national adult-oriented blockbuster, and we also want quality movies, maybe some talent building, and perhaps a comedy. (...) It's difficult to create a strategy, especially these broad comedies that we want to make; that's a kind of movie that never gets \[NFI\] support."

One informant also expressed fear that the ongoing changes in the global film industry would force them into playing it even more safe with upcoming movies.

> "Now that \[Disney's acquisition of Fox\] is approved there is nothing we can do about it, but of course it makes competition harder and big films become even more important. There's no doubt that this makes it more important to get the right movies, the ones that make money, and that there will be less focus on the more challenging movies, talent development and so on. We have to play it safer. I think that will happen across the industry. If the big ones become as big as it looks now, there will be less room."

###### Table 15: Foreign titles released by SF Studios in 2019

| Title                               | Acquisition type | Source       | Country of origin             |
|-----------------------|---------------|---------------|-------------------|
| The Informer                        | Output deal      | Warner       | UK/USA                        |
| The Hustle                          | Output deal      | MGM          | USA                           |
| Legofilmen 2                        | Output deal      | Warner       | Australia/USA                 |
| Second Act                          | Output deal      | STX          | USA                           |
| Britt-Marie var her                 | Sister Company   | SF Studios   | Sweden                        |
| The Mule                            | Output deal      | Warner       | USA/Canada                    |
| Vice                                | Output deal      | MGM          | USA                           |
| Cold Pursuit                        | Output deal      | Studio Canal | Canada/France/Norway/UK/USA   |
| Mia and the White Lion              | Output deal      | Studio Canal | South Africa/Germany/France   |
| Shazam!                             | Output deal      | Warner       | USA                           |
| Teen Spirit                         | Output deal      | STX          | UK/USA                        |
| The Curse of La Llorona             | Output deal      | Warner       | USA                           |
| Kule Kryp 2                         | Output deal      | Studio Canal | France                        |
| UglyDolls                           | Output deal      | STX          | Canada/China/USA              |
| Godzilla: King of the Monsters      | Output deal      | Warner       | Canada/China/Japan/Mexico/USA |
| Asterix: trylledrikkens hemmelighet | Output deal      | Studio Canal | France                        |
| Pokémon: Detective Pikachu          | Output deal      | Warner       | Japan/USA                     |
| Sauen Shaun filmen: Farmageddon     | Output deal      | Studio Canal | France/UK                     |
| Booksmart                           | Output deal      | STX          | USA                           |
| Annabelle Comes Home                | Output deal      | Warner       | USA                           |
| Joker                               | Output deal      | Warner       | Canada/USA                    |
| It: Chapter Two                     | Output deal      | Warner       | USA                           |
| Blinky Bill Filmen                  | Output deal      | Studio Canal | Australia                     |
| Doctor Sleep                        | Output deal      | Warner       | USA                           |
| Familien Addams                     | Output deal      | Studio Canal | Canada/USA                    |
| Hustlers                            | Output deal      | STX          | USA                           |
| Black and Blue                      | Output deal      | Sony         | USA                           |
| Blinded by the light                | Output deal      | Warner       | UK                            |
| Countdown                           | Output deal      | STX          | USA                           |
| Western Stars                       | Output deal      | Warner       | USA                           |

###### 

###### Table 16: Foreign titles releases by Nordisk Film Distribusjon in 2019

| Title                     | Acquisition Type  | Source                    | Country of origin             |
|-----------------|-----------------|-----------------|--------------------|
| The House That Jack Built | Sister company    | Nordisk Film Distribution | Denmark/France/Sweden/Germany |
| Hunter Killer             | Output deal       | Lionsgate                 | China/UK/USA                  |
| Green Book                | Output deal       | Lionsgate                 | USA                           |
| After                     | Stand alone deal  | Voltage                   | USA                           |
| On the Basis of Sex       | Output deal       | Lionsgate                 | USA                           |
| John Wick: Chapter 3      | Output deal       | Lionsgate                 | USA                           |
| Long Shot                 | Output deal       | Lionsgate                 | USA                           |
| Midsommar                 | Sister company    | Nordisk Film              | USA/Sweden                    |
| Lords of Chaos            | Local co-producer | 4 1/2                     | UK/Sweden                     |
| Rutete Ninja              | Sister company    | Nordisk Film Distribution | Denmark                       |
| Angel Has Fallen          | Output deal,      | Lionsgate                 | USA                           |
| Journal 64                | Sister company    | Nordisk Film Distribution | Denmark/Germany               |
| Quick                     | Sister company    | Nordisk Film              | Sweden                        |
| Knives Out                | Output deal       | Lionsgate                 | USA                           |

With 30 foreign titles, SF Studios had just over twice as many foreign titles as Nordisk Film Distribusjon's 14. SF Studios' slate was also more successful, generating almost 1.5M admissions compared to just under 600,000 for Nordisk Film Distribusjon.

The foreign slates of both companies were dominated by films acquired through output deals, and together the companies only released one title acquired outside of output deals or existing company relations. Both companies had most titles from the USA, but the StudioCanal deal gave SF Studios several European titles and Nordisk Film Distribusjon acquired several Scandinavian titles from their sister companies. SF Studios only had one Scandinavian title acquired from their sister companies.

Titles from other companies within the conglomerate are the cheapest acquisitions, as there is generally only a revenue share agreement and no minimum guarantee. However, releasing any title is still costly.

> "It costs money to get a movie in cinemas. There are release costs, there's marketing. (...) And there's also the question of capacity, both internally and in cinemas. You spend capacity that will affect other titles."

With titles from the Hollywood output deals, marketing costs are often covered by the studio. However, they can still become too expensive. Distribution rights are still paid for on a per film basis, and sometimes movies do not go as well as expected.

> "You know, Hollywood movies always seem very big. They're very good at packaging -- things look very good when they first present them. And sometimes that candy is not as sweet as it was made to look. (...) We commit to a sum at a very early point, so it is difficult."

For Nordisk Film Distribusjon, foreign titles were mainly a way of keeping the lights on. While not without risk, foreign titles are a much more predictable source of income than local titles.

> "I would love to say that \[foreign titles\] are steady earners, but it does vary a lot. Some of our deals are quite expensive. However, when a foreign title does well, it is great for business. While there are a lot of fixed costs, the risk is also a lot lower. (...) Norwegian movies are our first priority, it's what we spend the most time and money on. But we have to have a Hollywood deal as well to make ends meet. Otherwise, the deviations, the variations in the market become too big. The revenue line from the foreign movies is a bit straighter than the local one."

Releasing foreign titles, especially big studio movies, is also a learning opportunity. These titles have plans and marketing already prepared when the Norwegian distributors bring them to market.

> "We get plans for big movies from our Hollywood partners, and we learn a lot from it. We learn how they do things differently, how they think. They are really good at thinking big about everything. Which is inspirational -- we're going to get even better at it."

In total, the 2019 slates of SF Studios and Nordisk Film Distribusjon were typical of the findings from the previous chapter and in line with their overall strategies of the last decade or so. While both companies invest in high budget local movies, Nordisk Film Distribusjon invest the most, and while both companies rely on foreign titles and output deals, SF Studios has bigger deals and more titles.

##### Cinema release strategies

###### Table 17: Cinema performance of SF Studios' local releases in 2019

| Title           | Release date | Admissions | 2019 Rank | Performance        |
|-----------------|--------------|------------|-----------|--------------------|
| Amundsen        | February 15  | 209,458    | 13        | Below expectations |
| Operasjon Mumie | October 18   | 101,633    | 31        | Below expectations |
| De dødes tjern  | November 1   | 17,650     | 96        | Below expectations |
| Swingers        | October 10   | 10,096     | 128       | Below expectations |
| Håp             | November 22  | 46,684     | 61        | As expected        |

###### Table 18: Cinema performance of Nordisk Film Distribusjon's local releases in 2019

| Title                                                                     | Release date | Admissions | 2019 Rank | Performance                 |
|----------------------------|-----------|-----------|-----------|-----------|
| Ut og stjæle hester                                                       | March 8      | 105,680    | 29        | As expected                 |
| Askeladden - I Soria Moria slott                                          | August 23    | 261,384    | 8         | Below expectations          |
| Kaptein Sabeltann og Den Magiske Diamant                                  | September 27 | 257,241    | 9         | Below expectations          |
| Spionen                                                                   | October 18   | 81,563     | 40        | Below expectations          |
| Snekker Andersen og Julenissen: Den vesle bygda som glømte at det var jul | November 8   | 421,017    | 4         | As expected                 |
| Tunnelen                                                                  | December 25  | 221,351    | 39        | Slightly below expectations |

2019 was not a particularly good year for Norwegian movies, or for Norwegian cinemas in general. Norwegian titles did 2M admissions out a total of 11.3M, giving a market share of 18.4%. The average of the last decade was 2.6M, 11.8M and 21.9% respectively. A total 257 new titles had regular releases in Norwegian cinemas in 2019.

The slightly disappointing result for the industry as a total is also reflected in the results by SF Studios and Nordisk Film Distribusjon's Norwegian slate. The only release that was a clear profit maker was *Snekker Andersen og Julenissen: Den vesle bygda som glømte at det var jul*. While *Ut å stjæle hester* also did as expected in Norwegian cinemas, it did not do as well internationally as hoped and likely faced a loss. One informant expressed a general disappointment in the 2019 slate:

> "I think \[the other distributors\] also have the same feeling, that things didn't work out like they'd hoped. I don't think there were any local films this autumn that delivered what was hoped for, or needed. And I'm afraid that this is a general trend."

All of SF Studios and Nordisk Film Distribusjon's 2019 local acquisitions had a cinema release prior to home entertainment release. While NFI has stated that they are awaiting the first Norwegian fiction film to have a digital release as its first window, the distributors did not see this as a viable option. Not only is 60% of the income generated from the cinema box office, but the ex post support is also dependent on reaching a threshold of cinema admissions.

While the ex post support is paid directly to producers, and not to distributors, it is a crucial part of the financing for any Norwegian movie. According to one informant, the cinema release is also the focus of most producers and creatives involved in making the movies.

> "If we have a local title, it is going to be in cinemas. The rights holders don't necessarily care that much about the next windows -- the cinemas are the important showcase. They want to make a deal with somebody who will give them cinema distribution."

However, one informant was open to the idea that some titles could be better served with alternative release strategies, if the economics allowed it.

> "It is very important for producers to get the film in cinemas, but as we've said many times, there's no basic right to cinematic distribution. There are about 260 titles each year, and that's already way too many. I'm convinced a lot of that should be event screenings and other special events, or go straight to some kind of platform."

The local 2019 release schedules of SF Studios and Nordisk Film Distribusjon were also typical. Both companies released one title each in the spring, and the rest at the end of summer and throughout autumn. Summer, and the last part of spring, is generally avoided for local movies because the weather is nice.

> "That's what we call the "dead period". The sun is out; it's exam time; clothes are coming off, so to speak; people are focusing on other things. (...) We're a simple kind of people in that regard -- if the weather is good, we're outside. If it's bad, we go to the cinema -- unless it's too bad; then we stay at home."

Great weather also impacted the release of *Askeladden i Soria Moria slott* and *Kaptein Sabeltann og den magiske diamanten*. The opening weekend of *Askeladden i Soria Moria Slott* had great weather, while *Kaptein Sabeltann og den magiske diamanten* was struck by a period of uncharacteristically warm weather after the opening.

> "I'm not saying that the biggest problem with the climate crisis is that our films are in trouble, but it does affect how we release movies. The last weekend of August used to be a great date for us; now we're not sure anymore. (...) Suddenly we sit around being afraid of the warm weather for a film released in October. The period we consider great for releases is getting smaller and smaller, and that is a challenge."

*Askeladden i Soria Moria slott* did well after the disappointing opening weekend, but it still came in below target.

> "*Askeladden* did pretty well after the opening weekend -- it had a 15-20% drop, which is low. (...) But the problem is that if you open too low, you're never going to get it back. So, the numbers are good based on the opening, but we're missing 100,000. (...) It's a pretty crazy business we are in. We spend years and millions of kroner to make a movie, and if the weather is nice on opening weekend, it doesn't work. It's pretty brutal."

Even with the release of *Snekker Andersen og Julenissen: Den vesle bygda som glømte at det var jul*, there was some concern about the weather. While Nordisk Film Distribusjon was hoping for a thin layer of snow to set the Christmas mood, too much snow would not be good either.

> "You can have a thin layer of snow, but not enough to go sledding or skiing. You don't want snow that can actually be used for anything."

For Nordisk Film Distribusjon, the release of family Christmas movies has also been a way to claim one of the two best weekends of the year. The first weekend of November each year is "Day of the Cinema" and tickets are half-price; Nordisk generally tries to have its Christmas movie ready for previews on this weekend and then open the following weekend. The company has also claimed December 25 every year since 2016, and in 2019 released the moderately successful *Tunnelen* on this date.

> "Christmas is great. You have daytime screenings that work, and there are a lot of days off."

In 2020 Nordisk Film Distribusjon had planned on releasing *Kampen om Narvik -- Hitlers første nederlag* (*Narvik: Hitler's First Defeat*, Skjoldbjærg 2022) on December 25. The movie was originally set for a February 2021 date, but the shooting schedule had been re-arranged to be able to make the earlier date. In the end, *Kampen om Narvik -- Hitlers første nederlag* became severely delayed. The December 25, 2020, date was abandoned when the production hit delays because of COVID-19-restrictions. Nordisk Film Distribusjon instead released *Den største forbrytelsen* (*Betrayed*, Sevensson 2020) on that date, despite severely limited cinema capacity. *Kampen om Narvik -- Hitlers første nederlag* was rescheduled to December 25, 2021, but a new lockdown in Oslo limited cinema capacity again and the release was delayed until March 18. However, as Russia attacked Ukraine on February 24, *Kampen om Narvik -- Hitlers første nederlag* was once again delayed. At the time of writing, it is again scheduled for December 25, now in 2022.

Speaking prior to all these delays, Nordisk Film Distribusjon did not imagine going for the December 25 date beyond 2020 to avoid conflict with the *Avatar* (Cameron 2009) sequels originally planned for release in December 2021 and onwards. In the end they have had to brave a release just nine days after *Avatar: The Way of Water* (Cameron 2022).

> "We talked about it. Do we believe the hype is gone? But no, it's going to be huge again, so going up against it would be super risky"

In the case of *Spionen*, Nordisk Film Distribusjon chose to move the premiere date from its scheduled September 20 date. This was partially to have more time to finish the film, but mainly to avoid *Downton Abbey* (Engler 2019) which later came in as a September 13 release.

> "If we had pushed, we would have met the \[original\] date. But it was mainly because of Downton Abbey, which was slated the week \[before\] us. We saw pictures and heard reviews from England, and we saw from the test screenings that it worked very well with adult women (...) which was also the audience we were aiming for. And Hollywood almost never moves when they've set a date, so it was up to us to find another."

With the new date, *Spionen* was released on the same day as SF Studios' *Operasjon Mumie*. While Norwegian distributors generally avoid releasing local titles on the same day, Nordisk Film Distribusjon found this particular clash unproblematic.

> "There is a gentleman's agreement that you don't release on the same date, but when the target audiences are this different, it's not a challenge. (...) Of course, one challenge is that we're already struggling to get PR for our films, so if we were to have press days at the same time, that would be a problem. So, we coordinate it so that there's no conflict there, \[and we have\] different press days and premiere events."

A major challenge for both distributors was the "pileup" of children's movies in the autumn of 2019. Nordisk released three, SF released one, and there were also three titles from Disney and several others. Nordisk admitted that they were obviously a part of the problem, and that they had discussed moving some of the children's movies to the following year.

> "We went into discussions with all the producers to see if we could move to next year, to make more room. It didn't happen, and we probably should have, but there's that optimism again. "We'll find room, it will work out." (...) \[The producers\] often have very high loan costs, and there's the momentum of having finished a movie and just having it lying around for six months or a year. I understand that it is difficult."

Both SF Studios' *Håp* and Nordisk Film Distribusjon's *Ut å stjæle hester* had their world premiere at international festivals. *Ut å stjæle hester* premiered at the Berlin International Film Festival February 9, was then screened at the Norwegian festival Kosmorama March 5, before the regular premiere March 8. For *Håp*, SF Studios chose a longer gap from the premiere at Toronto International Film Festival at September 7 to the Norwegian premiere at November 22, probably to get a release closer to Christmas as the movie takes place during the holidays.

All the 2019 local movies released by SF Studios and Nordisk Film Distribusjon opened wide, with some previews the only exception. As discussed in the previous chapter, almost all movies in Norway open as wide as possible, which after the digitalisation of cinemas generally means that no cinemas are added after opening week.

> "We do event screenings, early screenings where the director hosts an in-person introduction, and things like that. But we rarely open in the big cities and then wider after. I don't think that has happened at all, actually."

While the distributors are discussing alternative release strategies, implementing such strategies require the cooperation of cinemas. Who until now have generally required national premieres if they were to screen a title at all.

> "We talk about it, and it could probably be a good idea, to get word-of-mouth going and find out if this is something for the smaller cities. I know that some of the smaller cities are starting to wait a bit, actually, and see how it opens before they decide to take a movie or not. But then again, distributors and cinemas are always positive and think that the movie will be bigger. And I also guess that it was a bigger problem earlier, where the cinemas weren't used to getting premieres. That was very important for them, after spending so much money on digitalisation, to at least get premieres. Now they are starting to see that some movies need time to establish themselves, but most go wide at once."

From the distributor perspective, the cinemas are also too quick to abandon underperforming titles and are too willing to give new titles many screens.

> "Everyone in this business is slightly too optimistic, and that includes the cinemas. And they are generally optimists on behalf of the premieres. New films tend to get too much capacity, not always, but often too much compared to an older film that could have gone better. Simply because you don't know how well it will go, and you want the capacity in case people show up. I discuss this a lot with the cinemas -- I think that since we became digital, they can spend more time adjusting the programming. (...) Adjust during the weekend when the business is happening. It's useless to wait until next Thursday."

When a film is finally released, the distributors rarely make significant changes to the strategy. In 2019, all home entertainment release dates were set well before the cinema premiere and none changed. There was some room to adjust the marketing, but mainly to reduce it when a film failed completely.

> "We do an assessment on the Monday, or more likely during the opening weekend, on how the marketing campaign is going. Digitally, we adjust all the time as we see what material works and what doesn't, but we tend to stay with the original budget. Of course, if it falls completely flat we might cut it and not run advertisements for the second weekend, but that very rarely happens with Norwegian movies".

When *Ut å stjæle hester* opened better than expected, Nordisk Film Distribusjon did not increase the spend. However, the company did attempt to leverage the film's popularity among older audiences.

> "There was no room to increase the media spend or anything like that. If anything, we could have reduced the spend as it was already doing well. But we had a lot of upcoming events, and worked with the cinemas to get them to do senior screenings, particularly. They went very well -- many cinemas had to cut the danishes in half to get enough for everybody. (...) We also did some ads where we got permission to use quotes from regular people's Facebook posts."

Digital ads and social media platforms are a large part of the marketing spend, but for the bigger projects, traditional media still has the largest part of the marketing spend.

> "It varies, but on a smaller movie it could be 60-70% digital. On a bigger movie like *Askeladden* we have an outdoors campaign, we have TV ads, so it could be 20-30% digital.

Other marketing efforts such as product placements and third-party marketing campaigns are initially the responsibility of the production company. However, when it comes to the actual marketing campaigns, the distributor usually comes in to coordinate. With *Kaptein Sabeltann og den magiske diamant*, a brand of soap, Lano, was a major contributor to the television spend.

> "Previously, we would have thought that we could have reduced our marketing budget, since Lano spent a lot on television ads. Now we don't cut the budget anymore, just because we are desperate to get the opening weekend as big as possible. Instead, we coordinate theirs and ours TV campaigns to cover more ground."

With December 25 releases, such as *Tunellen*, ad spending has to be adjusted compared to a traditional marketing campaign. The trailer for *Tunellen* first premiered on the TV2 news on Saturday, October 26. However, before Christmas both advertising costs and consumer attention come at a premium, so Nordisk Film Distribusjon chose to start the marketing push late and concentrate the spend close to the premiere.

> "We've been lying low because we want it to appear big and blow it up close to the launch. (...) There will be some ads before Christmas, but we're going heavy in the week after, when it's also cheaper to buy media.

With the exception of *Spionen*, Nordisk Film Distribusjon was awarded the maximum marketing support by NFI for all of its 2019 titles. SF Studios got the maximum amount for *Amundsen*. The total marketing spend for these titles, especially *Amundsen*, *Kaptein Sabeltann og den magiske diamant* and *Askeladden -- I Soria Moria slott* which had campaigns financed by third parties , might therefore be considerably higher than the minimums listed in Table 6.

Both SF Studios and Nordisk Film Distribusjon conduct awareness tracking of local titles, which is something the other local distributors don't have the resources for. However, while increased marketing spend gives higher awareness, both distributors stressed that successfully marketing a movie was not only a question about getting people inside the cinemas. The film also has to deliver on the audience expectations that the marketing has created. With *Tunellen*, Nordisk Film Distribusjon was worried that audiences were expecting a disaster movie in the vein of their previous successes *Bølgen* (*The Wave*, Uthaug 2015) and *Skjelvet* (*The Quake*, Andersen 2018).

> "We've been trying to avoid the disaster movie genre tag. While it's nice that *Skjelvet* and *Bølgen* get a mention in the press we're getting, \[*Tunellen*\] isn't a spectacular film like they were. It's a more claustrophobic drama, and it's important that people don't go in expecting extraordinary spectacle."

Reflecting on the disappointing cinema results for *Amundsen*, SF Studios felt that the message from marketing might have been one of the reasons.

> "Maybe we were not honest enough in the trailers and communication that this is a biographical movie, and not an action film mainly about the race to the South Pole. (...) The movie is great, great story, great directing, but people don't get what they are expecting."

###### Table 19: Cinema performance of SF Studios' foreign titles released in 2019

| Norwegian title                     | Premiere     | Admissions | 2019 Rank |
|-------------------------------------|--------------|------------|-----------|
| The Mule                            | January 11   | 13,223     | 109       |
| Second Act                          | January 18   | 10,770     | 123       |
| The Informer                        | January 18   | 5,961      | 170       |
| Vice                                | February 1   | 13,889     | 105       |
| Mia and the White Lion              | February 8   | 12,227     | 116       |
| Legofilmen 2                        | February 15  | 93,743     | 35        |
| Cold Pursuit                        | March 1      | 16,568     | 98        |
| Kule Kryp 2                         | March 8      | 23,109     | 82        |
| Britt-Marie var her                 | March 22     | 10,550     | 126       |
| Shazam!                             | April 5      | 69,717     | 43        |
| Asterix: trylledrikkens hemmelighet | April 12     | 42,257     | 59        |
| Teen Spirit                         | April 26     | 1,954      | 252       |
| The Curse of La Llorona             | May 3        | 21,334     | 87        |
| The Hustle                          | May 10       | 22,648     | 84        |
| Pokémon: Detective Pikachu          | May 10       | 141,155    | 23        |
| UglyDolls                           | May 24       | 13,152     | 111       |
| Godzilla: King of the Monsters      | May 31       | 36,340     | 68        |
| Booksmart                           | June 21      | 9,070      | 135       |
| Annabelle Comes Home                | June 26      | 95,916     | 33        |
| Blinky Bill Filmen                  | July 5       | 10,039     | 130       |
| It: Chapter Two                     | September 9  | 151,604    | 21        |
| Blinded by the light                | September 27 | 3,031      | 221       |
| Joker                               | October 4    | 452,807    | 3         |
| Hustlers                            | October 25   | 29,670     | 75        |
| Familien Addams                     | November 1   | 51,148     | 51        |
| Doctor Sleep                        | November 15  | 18,426     | 94        |
| Sauen Shaun filmen: Farmageddon     | November 22  | 41,360     | 71        |
| Black and Blue                      | November 29  | 1,393      | 295       |
| Western Stars                       | November 29  | 1,563      | 280       |
| Countdown                           | December 25  | 27,093     | 127       |

###### Table 20: Cinema performance of Nordisk Film Distribusjon's foreign releases in 2019

| Title                     | Premiere date | Admissions | 2019 Rank |
|---------------------------|---------------|------------|-----------|
| Hunter Killer             | January 4     | 16,417     | 103       |
| The House That Jack Built | January 25    | 4,180      | 217       |
| Green Book                | February 1    | 118,572    | 26        |
| Lords of Chaos            | March 22      | 3,633      | 214       |
| On the Basis of Sex       | April 5       | 7,949      | 149       |
| After                     | April 12      | 51,213     | 49        |
| Journal 64                | April 12      | 6,858      | 162       |
| Long Shot                 | May 3         | 17,045     | 97        |
| Rutete Ninja              | May 25        | 147,346    | 22        |
| John Wick: Chapter 3      | May 31        | 89,175     | 37        |
| Midsommar                 | July 26       | 18,228     | 95        |
| Angel Has Fallen          | August 30     | 33,227     | 70        |
| Quick                     | September 27  | 5,614      | 174       |
| Knives Out                | December 6    | 71,187     | 53        |

In contrast with their local slate, Nordisk Film Distribusjon's foreign releases leaned heavily towards spring, only two foreign titles were released in the competitive autumn months.

SF Studios' foreign releases followed the general pattern of foreign releases found in chapter four. Foreign movies were released quite evenly throughout the year, with the exception of a dip in July and August and a spike in November. The Warner movies generated 1.1M admissions of a total of approximately 1.5M admission on SF Studios' foreign titles.

Both SF Studios and Nordisk Film Distribusjon also released a number of foreign titles directly to the home entertainment market. In 2019 SF Studios registered 120 VOD titles for the Norwegian home entertainment market in Videogramregisteret and Nordisk Film Distribusjon registered 85 titles. In at least one case, a foreign movie was released in cinemas largely to gain value in the home entertainment markets.

> "There are some films that \[the cinema division\] doesn't want to release, where we see potential in later windows. "What does the cinematic release cost, can we break even?" (...) *\[Title\]* did just about break even in cinemas, and now it is doing great on digital platforms. (...) You have to take a wider perspective and see the whole calculation, and I think that is the best partner a producer can have, even if they largely live in the cinema world."

#### Home entertainment release strategies

For a home entertainment release the major strategic decisions are when to release the title in the different formats followed by choosing a price point. While it is important to achieve prominence on the platforms, the distributors had limited means of achieving this, as most platforms did accept paid placement of titles.

Both SF Studios and Nordisk Film Distribusjon handled the home entertainment market internally and had people dedicated to it, as opposed to the low-resource distributors who tended to either use a sub-distributor or have the same people juggle home entertainment and cinema releases.

For local movies, the home entertainment market was much smaller than the cinema market, both in terms of value and in terms of absolute audience numbers. The smaller returns result in smaller marketing campaigns and leaves the local titles disadvantaged with the major platforms where the sheer number of titles is huge.

Working with the various local platforms also has its challenges. These are generally run by companies that have traditionally not been a part of the film industry, but are cable providers, electricity companies and internet providers. The lack of film background is not perceived by the informants as a problem in itself, as they can work closely with the platforms. However, the bigger challenge is that film dissemination is a small piece of what these companies do compared to their main businesses.

> "It's not a challenge that they, in general, don't have a film background because the important thing is to see what is commercial, and what is right for the audiences and make sure there is a variation. We do spend a lot of time working with them and give them input on having the right mix and not just the obvious number one hits because that doesn't show the breadth of the service. (...) It's probably a bigger challenge that film is a very small part of their business, compared to TV channels and set-top boxes and internet service. (...) The development of software and hardware is also generally slow, so changes in the market take a long time to be absorbed into the organisations."

The informants largely felt that the digital home entertainment market was still developing rapidly, and they were actively endeavouring to make it more profitable.

> "We want to build an EST market for the future. To get people to start buying and collecting movies."

While EST was their best hope for replacing lost home entertainment revenue, it was still not generating enough.

> "We've put great resources towards EST and made campaigns for EST. We see that it works. It just doesn't work enough".

One informant felt that they did not prioritise home entertainment enough, and that it should be a part of the strategy from the first talks with the producers.

> "It's very important that the producers don't just talk to the cinema people about contracts and possibilities and rights if they don't have the complete picture."

##### Window length

From 2008 to 2018\[\^54\] SF Studios tended to have slightly shorter cinematic windows than Nordisk Film Distribusjon, and that both distributors had shorter windows than the other local distributors. While no such pattern is evident from the 2019 releases\[\^55\], both SF Studios and Nordisk Film Distribusjon expressed that it was important to keep the windows relatively short. However, when it came down to each individual film, many practical concerns shaped the decision on the final date.

The main reason for pushing for shorter windows is to keep attention on the cinematic release, especially as the revenue from home entertainment has dwindled.

> "The big difference is that I have less to spend. When you released a movie, and it did 20 million kroner, and now it does 2 million kroner, it says something about how much you can spend. (...) So we work a lot on getting attention to the cinema release, where we have a bigger spend and create a lot of attention. Which lasts for a while, and then it will naturally fall because so much else is coming, and there will always be a window, but I try to shorten it if I can."

The length of a cinematic window is decided by the distributor on a title by title basis. There are no general agreements or regulations that enforce window length, but distributors are mindful that cinemas have certain expectations.

> "It is always an internal discussion (...) on each title. How long or short windows do we operate with. What is strategic, for both \[home entertainment and cinema\]? When are we stepping on the toes of the cinemas, when are we not? When are we stepping slightly on their toes, but the pain will pass quickly? And you're always looking if there is anything special happening -- holidays, other events, competing movies."

While the distributors do not have discussions directly with the cinemas about window length, they must reach agreements with producers, who often are more concerned about cinemas than the distributors are. At least in SF Studios' case the standard contracts specify a four-month cinematic window, which means that in with the exception of *De dødes tjern* all the contracts had to be renegotiated before home entertainment release. *Swingers* had the shortest cinematic window of all the SF titles of 2019, and the producer was initially hesitant to such a short window of only 73 days.

> "My argument was revenue. The producer's argument was to be considerate of the cinemas, afraid to step on their toes and cause harm to the most important revenue stream. (...) I respect the cinema window, and we don't want to step on their toes --- too much. But you also have to push it a bit. They should not be able to dictate to us when we see that it's not in the best interests of the project."

Neither SF Studios nor Nordisk Film Distribusjon adjusted their cinema windows based on performance in cinemas. In each case, the home entertainment releases were planned before the cinema premiere, and the dates were not changed.

The cinematic windows of SF Studios and Nordisk Film Distribusjon were flexible, SF ranged from 73 to 143 days and Nordisk, not counting the Christmas movie *Snekker Andersen og Julenissen: Den vesle bygda som glømte at det var jul*, ranged from 87 to 115 days. However, they were also somewhat conservative. Only *Swingers* and *De Dødes Tjern*, both movies that performed well under expectations, had genuine "dark windows" where they did not play in any cinemas at all. However, all titles reached more than 97% of their cinematic admission before EST, and all non-children's movies reached close to or above 99%.

Except for *Swingers* and *Operasjon Mumie*, SF Studios expressed that they would have wanted earlier home entertainment releases than they achieved. *Amundsen* was released slightly late to accommodate a campaign on the physical release and also to avoid the releasing in May which is considered a poor month also for home entertainment releases, while June is considered quite good. *Håp* was released slightly late at the producer's request to accommodate festival participation, and *De dødes tjern* was also released late because of a cinematic release in Denmark. However, since it was already a late release SF Studios opted to wait until Easter to release it as Easter in Norway is associated with crime, thrillers, murder and to a lesser extent horror.

The ideal dates for home entertainment releases generally overlap the ideal dates for cinema releases. The "dead period" of April/May apply in both cases, and Christmas releases are ideal at home as well. However, where few titles are released in cinemas in June, it is considered a good period for home entertainment and saw the release of both *Amundsen* and *Ut og stjæle hester*. The week before Christmas saw three releases from SF Studios and Nordisk Film Distribusjon, *Askeladden i Soria Moria slott*, *Kaptein Sabeltann og den magiske diamant* and *Swingers*. However, while Christmas is a good period, the first half of December is generally avoided now.

> "It is pretty interesting how that has changed. Earlier, it was extremely important to release the physical product in time for Christmas, so you had to release in the middle of November to get the Christmas sales. Now, there's no point in releasing anything before December 25. People don't have time, and it's not a gift anymore. It's almost a bad period to release a physical product before Christmas, since people don't have the time."

The variations in Nordisk Film Distribusjon's windows are also mainly explained by seasonal considerations. *Askeladden i Soria Moria slott* and *Kaptein Sabeltann og den magiske diamant* were released close together right before Christmas, which is considered a good period, as opposed to November/the first half of December, which Nordisk considered a bad period, as movies are no longer gifts and the period is very busy. *Ut og stjæle hester* was released in June, *Spionen* was released in time for the winter holidays, and *Tunellen* released in time for Easter. *Snekker Andersen og Julenissen: Den vesle bygda som glømte at det var jul* was released in time for Christmas in 2020.

None of the informants wanted any kind of fixed window arrangement similar to those found in Sweden and Denmark. However, there was a shared impression that it would be better for the movies if they could shorten the windows somewhat without negative reactions from the cinemas. The shortest window any informant proposed as ideal for a specific title was seven weeks, close to the 45 days that was the shortest cinematic window on record at the time of speaking.

> "\[On foreign titles\] we are very much affected by the mandatory windows of 120 days in Sweden and 122 in Denmark. If all the Nordic countries have the same release date, then they often want the same home entertainment date. Which means we wait for four months and lose a lot of attention from the cinema release. When I get to decide, I try to shorten that window as much as possible, until it is the right length. That could be as short as eight weeks."

One informant also suggested that shorter windows could benefit the cinemas as well:

> "We have seen that movies that still are in theatres get a boost when they are released to home entertainment. The cinemas don't like it, but there is no reason to take it down if it is still selling tickets. And it's the power of social media, when people write, "saw \[children's movie\], fun for the whole family," they don't say where they saw it, in what window. So, it might as well promote cinema."

One informant, however, related that cinemas had also reacted negatively to the practice of selling pre-orders.

> "What pre-order does is that it gives you some indications \[on how sales will go\], both physical and digital. The volume is low, people generally wait until it is available. (...) The visibility is good, and I think that it should be good for cinemas as well. But there are many cinemas that very negative about it. They imagine that you put in an order and just sit there waiting until it arrives. I don't believe that's a real threat. But then there are many cinemas that believe that there should be a four-month window and demand it. To me, that's backwards, and it contributes to giving us fewer new titles."

Ultimately, decisions about the length of cinematic windows are a matter of negotiation with the producers, and a number of factors and experiences are taken into account.

> "In the end, it is about money. There is no answer with double lines under; it's gut feeling, it's experience, it's analysis. What did we do on previous titles, how did they perform? And there are always things that are different, how is the competition? (...) There are many factors at play, but in the end it is a question of what we and the producer think will generate the most money."

With digital home entertainment market, there is also less transparency about release dates than with physical formats, when release dates were printed in industry magazines.

> "There is no systematic way to know about these dates. Sometimes you see iTunes publishing a date, sometimes you pick up rumours. (...) We had a better overview when the physical releases dominated."

With the exception of *Operasjon Mumie*, all of SF Studios' and Nordisk Film Distribusjon's local 2019 titles were released on EST before physical or TVOD. This was mainly because iTunes considers EST only titles to be in "early release" and give them higher prominence. This is not a strategy that the local distributors are particularly fond of, and one informant clearly stated that the important thing was to get "big money" from sales, whether they were from EST or physical, before "small money" from rentals.

> "In my world, EST and physical releases are practically the same, so if I made the decision alone, they would have the same date. I have done so several times, regardless of iTunes. Sometimes it's about practicalities, sometimes about production and logistics and campaigns. But there is a risk."

The EST exclusive window for the other titles varied from seven to 35 days. The lengths of the different home entertainment windows were adapted to the target audiences, and their expected willingness to pay for an EST title. Children's movies had the longest EST windows, as these films are viewed repeatedly.

> "Target groups and their willingness to pay plays a role. On *De dødes tjern*, I'll likely have a two-week window from EST to TVOD, and physical is likely to come at the same time as TVOD. For *Operasjon Mumie*, I'll probably keep a longer \[EST\] window. More people are likely to buy it, since renting it many times will be expensive. With *De dødes tjern* the target group is young, and they are less willing to pay, so it's likely that TVOD has the bigger share."

All SF Studios' and Nordisk Film Distribusjon's 2019 titles had a physical release, and all were released on Blu-ray. The distributors say they are still trying to get physical releases for all their titles, but that the end of physical releases is coming soon. One informant said that they really felt the end of physical releases getting very close.

> "I'm not sure how honest we can be about it, but it was very uncertain if at least two of our \[Norwegian\] titles would get a physical release, simply based on the economics of it. But we found models and partners that ensured we could do it. (...) We go to great lengths to make it work. Because when *we* stop, then it is truly the beginning of the end. But you have to at least be able to make break-even."

While all of the 2019 titles got a Blu-ray release, both SF Studios and Nordisk Film Distribusjon did DVD only releases in 2018. Blu-ray releases are a lot more expensive due to higher production costs and fees to Sony, so DVD only releases are not uncommon.

However, *Swingers* was a rare example of a movie released only on Blu-ray and not as a DVD. SF Studios decided to use the film as a low-risk opportunity to test an alternative strategy.

> "If I had done what I usually do, I would only have released a DVD. But I found out that the pre-orders for Blu-rays were higher than DVDs, and since I couldn't afford two formats, I decided to go for Blu-ray even if it is the more expensive format. (...) This is a movie that has a young target group, and they generally don't buy physical releases, they are more digital. So perhaps the better, more expensive format would work better for older audiences that care less about price and more about quality. So, it's a cool thing to try. The physical sales are not going to change much either way."

With titles that were expected to be large, physical campaigns were sometimes planned and sold before the cinema premiere. Which meant that chains and/or wholesalers participated in the risk to a larger extent. If the movie did better than expected the wholesaler would have gotten a better deal, and if it did less than expected the distributor might still do well even if relatively few physical copies are sold to consumers. For SF Studios, this saved some home entertainment revenue from both *Amundsen* and *Operasjon Mumie*.

While this means that for some titles the sale of physical copies can help shift the risk onto more partners, one informant considered the move towards digital home entertainment markets to be risk reducing overall.

> "I don't have stock, I don't have same production issues, there is less chance of delays. I've lost truckloads of movies that made me abandon campaigns, or there is a strike in Europe, or you get the goods but half the boxes are broken. We have new challenges, but overall the risk is a lot lower digitally."

The transition to digital formats had not, however, reduced the workload significantly.

> "We still do a lot of the same tasks. You need metadata, you need a cover -- in many variations. And with a lot of the things we don't do any longer, the extra costs were services we paid for. So, it's largely the same workload, but the big difference is the number of customers you have relations to. With 10 customers, I reach the entire globe, or at least the Nordic countries. It used to be that we were in direct contact with as many as 1,500-2,000 customers. "Meat, game and video", that kind of places."

##### Prominence and performance

When measuring or predicting the performance of a home entertainment release, the distributors use *conversion rate*, simply put the number of home entertainment transactions divided by the number of cinema admissions. In the DVD-era these could sometimes run as high as 50%, in other words a movie that sold 100,000 tickets would also sell 50,000 DVDs. However, in the current market, conversion-rates are much lower.

> "In general, the conversion rate has fallen. When the DVD-market was at its peak, it could easily be 25-30%, now 10% is more common. (...) But it's a lot more difficult to calculate conversion rates now, compared to when there were physical media. So, we probably don't have the right conversion rates any longer. Perhaps, when all revenue streams are calculated, it could be as high as 20% or 25%."

Conversion rates also vary strongly from title to title and genre to genre. While horror-movies used to one of the main staples of the video-stores, it is no longer a strong home entertainment genre, and horror movies generally have poor conversion rates. However, other classic video-genres such as action movies, light comedies, and World War II movies still to do very well on home entertainment.

> "I have to admit that for some reason helicopters, guns, and Nazis still work very well. And people find Norwegian war history very exciting."

Children's movies have also typically performed well in the home market, delivering strong EST numbers and therefore higher revenue per transaction. However, an informant felt that the stronger competition in the cinema window was also taking its toll in the home markets.

> "It is a challenge, unless you're Pixar or Disney or something like that, it's no walk in the park anymore. It was often a success earlier, but it's much more demanding now."

Compared to other genres, children's movies tend to live a very long time on the platforms and over time get a lot of visibility.

> "We see that they get a long tail. They live for a very, very long time and sell regularly, even if they don't peak as high in the first week as *Tunnelen* or other big productions."

While the distributors have awareness tracking on cinema releases, they do not have similar tools for home entertainment releases. They have no systematic tracking of the prominence of their home entertainment releases, but rely on market panels. In most cases, however, the platforms will inform the distributors on the level of prominence they can expect. While the distributor will try to achieve as much prominence as possible, it's a bit of a one-way process.

> "It's not so much a negotiation as it is a proposal. With some players, you have to convince them that this is a good title that deserves high prominence."

While some platforms might accept paid positions, in most cases the level of prominence any given title gets is decided by the platform. However, the local distributors get the sense that the bigger wallets of the international studios do come into play, simply by being able to create huge demand internationally.

> "You can affect \[prominence\] with the general marketing push. The more you invest yourself, the easier it is for \[the platforms\] to keep the prominence up. But that makes it difficult for us. With someone like Sony and a movie like *Angry Birds*, they can say that in all these territories we'll be using this much money. That makes it easy \[for the platforms\] to press the button and push it in all territories.

With the local platforms, the distributors have room to affect the visibility of their movies by promising to spend more money on marketing, sometimes directly with the platforms.

> "At the more local level we can say, "we will be putting this much into marketing, will you match it?". Then I'll put my money with them, and they'll run the campaign with both their and my money. At other times we make more general campaigns with a landing page where the consumer can choose the platform where the sale might happen."

Investing in marketing with or without direct involvement of a platform can therefore affect the level of prominence in editorial decisions.

> "That makes it difficult of course because you're up against Hollywood majors that work internationally and can do very different deals and promise marketing in all these different territories"

When a title underperformed at cinemas, the distributors adjusted their expectations in the next window on a per-film basis. In some cases, they believed that the high profile of the project would give good home entertainment numbers, as those who did not see it in cinemas were likely to be interested once it was available in the cheaper windows. In other cases, expectations in the home entertainment window were cut according to the underperformance in cinemas. Among the 2019 releases discussed in the case, there were examples where the distributors kept a high estimate and were disappointed, as well as titles where the high estimate was fulfilled.

> "We often say that if a film doesn't reach the last 100,000 of its potential, then it increases the potential in home entertainment. Because people still want to see it, they just didn't have the time or chose something newer after a while."

The distributors generally have high levels of insight into the numbers on TVOD and EST, but except for services they run themselves, they have no insight into SVOD numbers for the titles they have sold to streamers.

> "We don't have any numbers from streaming. Perhaps the conversion rate is great --- we don't know."

Informants also expressed that they wanted digital numbers to be shared, but also that they did not want the first out of the gate\[\^56\].

> "It would have been interesting to know how others are doing, and how you're performing relative to them. I'm not a secretive person, but the system has become like this. I think the streamers are setting precedent here, they keep everything very close-knit."

\
Table 21: Home entertainment performance for SF Studios' local 2019 releases\[\^57\]

| Title           | Highest weekly cinema ranking | Highest observed iTunes ranking | Home entertainment performance |
|-----------------|------------------|-------------------|------------------|
| Amundsen        | 1                             | 12                              | Below expectations             |
| Operasjon Mumie | 2                             | 8                               | Below expectations             |
| De dødes tjern  | 9                             | 37                              | Below expectations             |
| Swingers        | 11                            | 10                              | Well above expectations        |
| Håp             | 3                             | 87\*                            | As expected                    |

The home entertainment performance of SF Studio's two most ambitious 2019 movies were partially saved by DVD/Blu-ray deals with a supplier for a major supermarket chain. These deals had been made prior to the cinema release, and based on expectations that were not met. *Swingers* was, however, an even bigger home entertainment hit than expected. The film had more transactions in the home entertainment market than it had sold tickets in the cinemas, resulting in a conversion rate above 100%. This is almost unheard of for a Norwegian movie. These positive numbers did not, however, cover the losses made in the cinemas, especially for the producers who also would not receive ex post support.

> "It won't break even because our investment is too big to be able to recoup it in the home entertainment formats. I'm thinking that if NFI wants to see projects that have a digital first window, like they say they do, then it would be a better solution for these kinds of movies than cinema. If a comedy like this by some kind of miracle got NFI support."

SF was aware that *De dødes tjern* would struggle in the home entertainment market, as horror has generally had poor conversion rates. The film still underperformed in the market, despite being on the front-pages of iTunes and Blockbuster longer than *Håp*, which performed better in the cinemas and had a higher conversion rate as well.

###### Table 22: Home entertainment performance for Nordisk Film Distribusjon's local 2019 releases

| Title                                                                     | Highest weekly cinema ranking | Highest iTunes ranking | Performance                 |
|-----------------------------|---------------|---------------|---------------|
| Ut og stjæle hester                                                       | 2                             | 22                     | Slightly above expectations |
| Askeladden - I Soria Moria slott                                          | 1                             | 2                      | Slightly below expectations |
| Kaptein Sabeltann og Den Magiske Diamant                                  | 1                             | 1                      | As expected                 |
| Spionen                                                                   | 3                             | 10                     | Slightly above expectations |
| Snekker Andersen og Julenissen: Den vesle bygda som glømte at det var jul | 1                             | 1                      | As expected                 |
| Tunnelen                                                                  | 1                             | 1                      | Above expectations          |

Nordisk Film Distribusjon was generally happy with its home entertainment performance. *Tunellen* was a standout home entertainment success among 2019 titles, no doubt helped by the fact that it was released just before the first wave of pandemic lockdowns.

> "We had always planned to release it for Easter, which is traditionally a good period. It's worked very well, and when people are forced to stay indoors it is a very grateful market to enter now."

*Spionen* also met its initial home entertainment targets, despite its lack of performance in cinemas. Nordisk Film Distribusjon's assumption that the World War II spy story would work in the home entertainment markets were proven true, and the title received considerably higher prominence than other artistic path titles.

> "The prominence has been what we expected. I don't think it would have been much higher if it did well in cinemas, because Norwegian content gets priority as far as we can tell."

While all films tend to have the same ticket prices as the box-office, there are some variations in the home market. Titles enter the home entertainment market at different price points, and there are differences in how, when and if these prices change as the titles grows older.

The distributors set a fixed cost per transaction to the platforms, who are then free to decide the final consumer price. While there is no percentage share, as is common on computer games platforms, there are often set price-tiers. Thus, the distributors can in most cases know what the consumer price will be based on the price point they have set to the platform.

> "We can't dictate pricing -- that's illegal in Norway, so we don't use "suggested retail price" or anything like that. It's up to the platform to set the price they want, based on our deal with them. (...) We have different kinds of deals but for new titles it's mostly a fixed unit price, though sometimes it can be a percentage above a set minimum price and so on. The final price might vary from service to service, some might have a profile where they go lower on certain types of movies and so on."

SF Studios and Nordisk Film Distribusjon regularly have titles offered at discount prices as a part of various home entertainment campaigns. These are sometimes initiated by the distributors and sometimes by the platforms.

> "We do campaigns like this about twice a year. (...) We see that the platforms are very news-oriented in what they front. So, we have to put some effort into lifting films you might have missed. (...) We run some of it from our side. We have some titles that we want to push, and the platform might collect them under one banner, or they might create a category with other titles. (...) Sometimes the platforms come to us with requests, and sometimes we go to the market with a plan and the platforms choose to take part or not."

This lower price campaigns rarely generate substantial revenue. However, they generate prominence for the involved titles and is a way to extract some revenue that would otherwise be lost. This is particularly true for titles that are just about to fall off the radar after their initial home entertainment release.

> "Campaign weeks usually don't earn more revenue, but timed correctly they can keep the revenue steady at a point where it otherwise would have dropped. Transactions increase quite a lot, but payment per transaction falls."

TVOD was the biggest earning home entertainment format for almost all titles. Some titles might earn about as much in EST transactions as in TVOD transactions, but this is rare. No title does more in physical than digital sales. The distributors remained hopeful that the EST market could become more profitable.

> "We see that TVOD has had a small drop, while EST has continued to grow, and we have estimates that say that this will continue."

The Norwegian EST was also relatively larger than the Swedish and Danish markets. A trend that has continued from the DVD-era, when the Norwegian market was significantly larger than the neighbours per capita.

> "Norwegians are more interested in the format as well. But it has a lot to do with market structure. In Sweden, Telia are big in TVOD, and they don't have an EST product yet. And you need to have the market leaders make things happen."

While several platforms had about the same share of the TVOD market, iTunes was by far the largest EST platform. One informant linked this to the notion that Apple could be trusted to always be there, most likely on devices you already own, and that the service does not charge a subscription fee as customers were less likely to purchase movies through services if they risked losing access to those movies. The informant also felt that since Apple charge a fee of all purchases made within apps from the App Store, many platforms would not offer TVOD/EST through their iOS/TVOS apps, resulting in a poorer consumer experience for many customers.

> "That Apple takes a percentage of everything is a challenge. That you can't rent or purchase movies in the Viaplay app is horrible from a consumer perspective. I hope somebody somewhere sits down and thinks about what the consumer wants, instead of always trying to extract the most revenue."

Catalogue titles are also used to boost prominence and create expectations for upcoming titles. For SF Studios, this meant managing the exposure for *Børning* and *Børning 2* in the run-up to *Børning 3* being released in 2020, as well as releasing the 1952 version of *De dødes tjern* on a limited-edition DVD.

> "The more fans we have of *Børning* and *Børning 2*, the bigger the potential for *Børning 3* is. And they still sell in all formats. Even if it's not big money, it keeps trickling in. So, we were able to use all the windows we have, and could also try to create revenue on the films that have spent most of their life and made most of their money."

In the case of the *Børning* movies, this included selling them to Netflix, which added them to the service early in 2020\[\^58\]. However, informant also felt the negative impact of having much of the catalogue exposed to streaming services.

> "When working with the transaction-based sales, I notice how much better we have become at selling to streaming. Our catalogue is much more exposed to streaming-services, and the sale of catalogue titles in the transactional markets suffers as a result."

Even if the local catalogues of SF Studios and Nordisk Film Distribusjon have much higher prominence than other local titles, one informant still felt that they did not fully exploit their catalogue. With more people working in the industry, it would be possible to extract more revenue from the catalogue in both digital and physical formats.

> "I think it's beginning to dawn on those who work with physical media that there are opportunities. There are a number of movies that suddenly can't be found on streaming, and people think, "what do I do now?" Well, you can buy it on Platekompaniet or you can rent it digitally. There are opportunities, it's just that you don't know about them. There are no systems where you get the overview of what is available and where. I think the existing formats could perform again if we had that overview and made an effort with it. I think the industry could find millions in revenue, but it takes people, and it takes systems and insight. And everything around streaming is very closed."

Nordisk Film Distribusjon had an output deal with Viaplay that put all their 2019 movies on the service a little more than a year after the cinema release. However, in 2019, Nordisk Film Distribusjon announced a new deal with the Norwegian broadcaster TV2. Both TV2 and Nordisk Film Distribusjon are owned by the Danish Egmont corporation. In the new deal, movies from 2020 onwards would be available on the TV2 play service "nine months after cinema premiere". In the interviews, Nordisk Film Distribusjon described the new deal as "critical".

> "This is the premium SVOD window, and it's a very important window to get the economy working. Landing this deal, and it's a very good deal for us, was critical. It's also good to have a purely Norwegian deal, and it looks like TV2 will be pushing Norwegian films. We can work more long-term with this, which I think is very, very good. Without a deal like this we would have really been in trouble."

SF Studios had a limited output deal with C More in which most of the company's titles went to the streaming service. C More had few direct subscribers in Norway, but the service was available to both TV2 Play and Teliaplay subscribers. In 2022, it was shut down as an independent service in Norway, and its customers transferred to TV 2 play. It continues to operate in Sweden at the time of writing. SF Studios and C More were both previously a part of the Bonnier conglomerate, until C More was sold to Telia.

*Amundsen* also had a period as a "free-rental" on the Get platform. The broadband provider had invested in the movie and this was a part of that deal. While SF Studios was mildly sceptical to this deal, the informant was also sympathetic.

> "It was evidently critical in financing the project. So, you might dislike something and realise that it's necessary. (...) It doesn't seem like it had a negative impact on sales, we had gotten most out of it already."

One informant also stressed that it was best if they had all the rights and that while it was understandable producers sometimes sold rights directly, letting the distributor handle everything would yield a better total.

> "I think a producer will get more from a 360-degree deal with a distributor. Because we can use all the windows in a way that they overlap in the best possible way. (...) But for many producers, realising the project in the first place is the most important thing."

However, the informant also stressed that it was easy to get locked into deals that were not favourable, and as the digital film market was still evolving quickly long-term deals should be avoided.

> "We have a deal with \[platform\] that's running, and there is not a lot we can do about it. But if I could choose, it would be different. (...) It's mainly about the timing. When the deal was made, the people who wrote the contracts didn't think far enough ahead."

Payment from streaming services is also generally decided by the performance in cinemas.

> "Some contracts state that if you get such-and-such admissions, you get paid so-and-so much, so that \[title\] passed 100,000 is worth quite a lot. (...) It's pretty fine-grained; there are a lot of steps on that ladder. But not all of them are that relevant based on what films do these days. If you look at admissions, there aren't a lot of movies that do over 500,000 or over 700,000."

Speaking in 2019, none of the distributors were ready to skip neither the cinema window nor the transactional home entertainment windows and go straight to SVOD. For one informant, this was mainly a question of getting paid enough.

> "If we get paid enough, we'd be \[on SVOD\] the moment the films are available on home entertainment. The transaction-based formats are important for driving the different revenue streams, but from a consumer perspective, they could be streaming from day one. It's a question of getting paid."

Another informant felt that for most local films, remaining available in transactional markets was not just a question of revenue. However, they too remained open for other combinations in the future.

> "You should never say never, but it's clear that it undermines windows that are important to us. (...) There's also this feeling of exclusivity, even if some services have very high market penetration, and we want the Norwegian films to be able to reach everybody. (...) But there could be types of products that we could consider it. More event-based stuff that could have a very short cinema window and go straight to streaming. If it had a very specific target group in mind, but we don't have anything like that now."

However, informants in both companies felt that the increased dominance of streaming services with exclusive deals was a potentially dangerous development. One of these fears was that the increased siloing of content would lead to a re-emergence of piracy, something the informants felt was a minor problem in 2019.

> "Streaming has been advancing for years now, but it's getting very fragmented. Apple+ is right around the corner, Disney+ is right around the corner. Everybody's launching their own services, and it's becoming very fragmented for the consumer. (...) As a consumer, you generally don't think about what company a film comes from, with the exception of Disney. I think you'll see an increase in piracy because people can't be bothered to pay attention to all this."

Another concern was that from the perspective of a Norwegian distribution company, there was a risk of becoming collateral damage in a high-stakes streaming war.

> "It is forcing you as a consumer to choose, and how many subscriptions are you going to have? Will you be paying for each one or through a hub? It's going to be a big fight, and it's a market that will continue to mature. (...) Some will win and some will lose, and the question is who'll be pulled along. The more you tie yourself up to exclusive deals, the bigger the risk gets. It could be positive, but it could also be a hard blow for some. It's very difficult to tell how this will unfold."

Nordisk Film Distribusjon has, however, established Nordisk Film+, a streaming service that is available as a part of bundles from several cable and television providers. The company emphasised that running its own service offers it information not provided by other streaming services.

> "We're testing this. \[It\] is relatively new to us. But it's our attempt at trying this market, at finding out how it works and what kind of data we can get out of it. So far, it's been very positive. (...) We find out what movies work and, not least, which movies don't work, and we can create a service that's better for consumers."

#### Difficult, but deliberate changes

This case study confirms that, at least for SF Studios and Nordisk Film Distribusjon, the patterns and positions found in the previous chapter are largely results of deliberate choices. Both are trying to shorten the cinematic window and are increasing their reliance on local titles. Both prefer known content because it is safer, and they prefer certain release dates, and so on.

The differences between the two companies are also smaller in this case study than in the previous chapter. In strategic terms, their plans and perspectives were quite similar, and SF Studios seemed to be moving towards a position that was more similar to Nordisk Film Distribusjon, where owning production companies and investing (relatively) more in Norwegian films (and television) is a bigger part of their slate.

For Nordisk Film Distribusjon the increased commitment was the continuation of a strategy established before digitalisation. However, the company was also very aware that the digitalisation and globalisation of film dissemination made local content more valuable for them. SF Studios deliberately increased its commitment to Norwegian movies in a response not only to the falling value of foreign titles, but also to their becoming harder to acquire.

Still, while both companies saw that the digitalisation and globalisation of film dissemination had brought profound changes, there were limits to their ability to respond. Both remained dependent on producers, film policy, local cinemas, and Hollywood output deals, even when these had conflicting interests and were moving in opposite directions.
