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Monday, July 25, 2005

Film, video and audio-visual distribution


Canadians appeared to be more inclined to watch movies in their living rooms than in cinemas in 2003/04, according to new financial data from film distributors and video wholesalers.

A big jump in revenues from sales of DVDs and videocassettes more than offset a sharp decline in revenues from distributions to movie theatres.

At the same time, overall spending fell for the first time in a decade while exports of Canadian films and videos soared.

As a result, total revenues hit a record high of $3.4 billion, up 4.9% from 2002/03 when an 8.0% gain was posted.

In fact, film distributors and video wholesalers had a very profitable year, with a profit margin of 21.8% compared with 13.4% in 2002/03.

Revenue from distribution to movie theatres plunged 17.3% to $382.7 million, the first decline since 1991/92.

At the same time, revenue from the wholesaling of DVDs and videocassettes recorded its biggest increase in five years, hitting $1.8 billion. This was a 12.9% jump from 2002/03.

Data from the Motion Picture Theatres Survey showed that movie attendance fell in 2003/04 for the first time in more than a decade, in the wake of the SARS outbreak and a lack of blockbuster movies. In turn, this may have reduced the demand for films by movie theatres.

Note to readers

This release presents results from a survey of the 215 film, video and audio-visual distributors and wholesalers in Canada.

What Canadians are able to view at movie theatres and at home on their television screens depends largely on the particular interests and choices of Canadian distributors and video wholesalers.

Film distributors are companies engaged primarily in distributing film and video productions to motion picture theatres, television stations and commercial exhibitors. They are the film industry's intermediaries, the liaison between producers and the exhibitors. Distributors obtain the rights to market and distribute films and videos.

Video wholesalers are companies primarily engaged in the wholesaling of pre-recorded videocassettes, videodiscs and DVDs to retail outlets, which in turn rent or sell these products to the public.

Videos include videocassettes, videodiscs and DVDs.

Home-video market refers to the rental or sale of videos for playback on household machines.

Unless otherwise stated, revenues are in current dollars.

Foreign sales of Canadian-content films and videos hit a record $321.0 million in 2003/04, up 23.9% from the previous year. (This figure excludes productions distributed directly to foreign clients by producers.)

Pre-recorded videos garnering more revenue

Watching pre-recorded videos, especially DVDs, has become a growing and popular pastime for Canadians.

More than one-half (53%) of the $3.4 billion in total revenue of film and video distributors came from the wholesaling of pre-recorded videos, up from 49% in 2002/03 and less than 45% in 1997/98.

In 2003/04, DVDs accounted for 71% of the video wholesaling market. Four years earlier, their impact was almost negligible. In 2001, the earliest year for which data are available, less than 20% of Canadian households had DVD players according to the Survey of Household Spending. This figure had surpassed the 50% mark by 2003, up from 36% in 2002.

Pre-recorded videos continued to garner more sales even with the advent of movies on digital-television channels.

Products with Canadian content growing in popularity

Canadian content products continued to show improved revenues in 2003/04, especially in the television and the movie theatre markets.

In the pay-TV market, Canadian content accounted for 24% of revenues, up from less than 22% in 2002/03. The same is true for conventional television, where Canadian content captured 17% of the market, up from 14%.

At movie theatres, Canadian content improved its share to more than 4%, an increase from about 3% in the previous year and less than 2% in 2000/01. The increase in share at the movie theatre market was driven mainly by Quebec movies.

Higher levels of profitability

Film and video distributors and video wholesalers reported total spending of $2.7 billion in 2003/04, down 5.3% from 2002/03. This was the first decline in expenses in more than a decade.

This decline followed two years of increasingly slower growth in expenses. In 2002/03, growth in expenses slowed to 4.8% from a rate of 9.8% in 2001/02.

The result was higher profits, the third increase in five years. In 2003/04, profits represented 21.8% of total revenues compared with 13.4% the year before and 10.8% in 2001/02.

Licensing and royalty payments fell 13% from the previous year. Of the $838.8 million in total licensing fees and royalties paid out, 11% were for Canadian products, down from 12% in the previous year.

Available on CANSIM: tables 501-0001 to 501-0007.

Definitions, data sources and methods: survey number 2414.

Selected details from the Film, Video and Audio-Visual Distribution and Videocassette Wholesaling Survey in table format (87F0010XIE, free) are now available online. Data from the survey are also available by province and territory. Users can request special tabulations on a cost-recovery basis.

To obtain more information, order data or enquire about the methods, concepts or data quality of this release, contact Client Services (1-800-307-3382 or 613-951-7608; fax: 613-951-9040;, Culture, Tourism and the Centre for Education Statistics.

Film, video and audio-visual distribution and videocassette and DVD wholesaling by primary market1
  1999/00 2000/01 2001/02 2002/03 2003/04
  $ million
Domestic distribution 965.6  1,070.9  1,211.7  1,292.8  1,194.5 
Movie theatres 360.5 390.6 403.1 462.6 382.7
Pay TV 68.7 81.2 110.5 112.4 105.6
Conventional TV 369.3 409.6 465.5 471.3 433.6
Home video 147.6 165.8 213.0 227.0 244.9
Other (educational institutions, governments, etc.) 19.5 23.7 19.6 19.5 27.7
Foreign distribution 187.3  222.3  204.7  259.0  321.0 
Total distribution revenue 1,152.9  1,293.1  1,416.3  1,551.8  1,515.5 
Wholesaling videocassettes and DVDs 1,252.1 1,399.4 1,508.3 1,608.0 1,816.1
Other revenue 82.5 120.6 112.0 118.7 106.1
Total revenue 2,487.5  2,813.1  3,036.6  3,278.4  3,437.6 
Licensing costs (rights, royalties and other fees) 791.3 806.7 857.0 965.7 838.8
Videocassette and DVD wholesaling costs 640.3 660.7 776.8 724.6 745.1
Salaries and benefits 135.5 144.6 172.0 147.6 153.2
Other costs 648.9 853.9 901.8 1,000.0 950.0
Total expenses 2,216.0  2,465.9  2,707.6  2,837.9  2,687.1 
Profit (% of total revenue) 10.9  12.3  10.8  13.4  21.8 
1.Figures may not add to total due to rounding.

Canadian and foreign content share of revenue in the domestic market1
  2002/03 2003/04
  Canadian content Foreign content Total Canadian content Foreign content Total
Domestic distribution 9.2  90.8  100.0  11.1  88.5  100.0 
Movie theatres 3.1 96.9 100.0 4.2 95.8 100.0
Pay TV 21.7 78.3 100.0 24.0 76.0 100.0
Conventional TV 14.0 86.0 100.0 17.2 82.8 100.0
Home video 3.4 96.6 100.0 3.3 96.7 100.0
Other (educational institutions, governments, etc.) 34.8 65.2 100.0 30.3 69.7 100.0
Domestic wholesaling of videocassettes and DVDs 2.1  97.9  100.0  2.4  97.6  100.0 
1.Figures may not add to total due to rounding.

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Date Modified: 2005-07-25 Important Notices