The wider picture

The global filmed entertainment business has annual revenues of approximately $70 billion, with compound annual growth forecast at up to 6%. Cinemagoing has proven to be resilient during times of economic downturn. The UK is an important hub for both production and consumption.

Most films nowadays secure their production finance from more than one source. Even the US studios may share the costs of a big production or split the distribution rights between say the US/Canada (domestic) and the rest of the world (international). Some films are licensed piecemeal, territory by territory; other releases are handled by the same company via its network of offices worldwide. For local distributors, dubbing or subtitling may be an additional release cost.

Worldwide web: The story of a powerful financial institution embroiled in global arms dealing, The International was an energetic thriller starring Clive Owen and Naomi Watts. Shot on locations including New York, Istanbul, Milan and Berlin, the film was launched with a packed press conference at the 2009 Berlin International Film Festival, attended by a panel of cast and crew members.

Evolving distribution patterns

Traditionally, films would open first in US cinemas, then roll out gradually in other countries. Today, in an effort to combat intellectual property theft and to capitalise on global publicity, the gap between the US and international releases is shrinking. Indeed, more and more films open practically 'day and date' (simultaneously) in many parts of the world. With master prints arriving in each country ever closer to launch date, such releases represent huge logistical and technical exercises for the distributors involved.

Intellectual property theft, of great concern to the entertainment industry, feeds organised crime networks to the tune of hundreds of millions of pounds a year, cheats consumers of the full viewing experience, and can reduce local jobs and future investment. Distributors take steps to protect the security and integrity of the properties they are releasing. But films are especially vulnerable to illegal copying during the early or pre-release stages of their existence, and pirated copies may be disseminated very quickly online and on DVD. FDA has partnered with Crimestoppers, the independent charity that helps to solve crime. You can report local film piracy activity - anonymously - either by calling Crimestoppers on 0800 555 111 or via the website www.crimestoppers-uk.org

Blockbuster status conventionally applies to the minority of films that gross more than $100m in US cinemas, although today's biggest openers can pass that figure in their first week. It's now common for films to earn more internationally than domestically, a trend that will endure as many European, Asian and African markets continue to develop.

Economic multiplier effect

With box-office ticket sales currently worth around £850m a year, the UK is the no.1 cinema market in Europe and the third most valuable in the world after the US/Canada and Japan. When you factor in the extra amounts consumers spend during a cinema visit on food, drink, travel and other items, the theatrical market alone pumps around £2.5 billion a year into the UK economy. FDA tracks the wider impact of theatrical distribution year by year.

In addition to the UK, cinemas in the Republic of Ireland yield annual box-office takings equivalent to about £90m.

The performance of British films here in their local market can have a significant influence on the attention they receive and their commercial prospects overseas. Nevertheless, releases that perform well in one country's cinemas will not necessarily do well in all countries, and may need to be positioned and marketed differently. One distributor may succeed with a film that loses money for another distributor in another territory. Distributors' expert knowledge of local tastes, cultural sensitivities and market conditions guides a film through its openings around the world.

Despite perceptions that piracy is victimless, the trade in stolen film copies has serious repercussions in the UK. It feeds serious, organised crime networks to the tune of hundreds of millions of pounds a year, cheats consumers of the full viewing experience, and may also reduce jobs and future investment. As downloading speeds continue to accelerate, so the threat from digital piracy increases.

Discover more at the dedicated websites www.fact-uk.org.uk and www.piracyisacrime.com

Simon Hewlett: On the dark side of piracy Play clip >

Cinema release boosts subsequent prospects

Although most films do not recover their production and launch costs from the theatrical release alone, cinema revenues constitute a minority of the total a film can earn.

With a title's profile and stature established, substantial income may be derived from the subsequent licenses - DVD/Blu-Ray, download, video on demand, pay-per-view, terrestrial television. Indeed, when overall DVD/Blu-Ray revenue is also taken into account, the UK rises to become the world's no. 2 market for film. Some titles, especially in the action or horror genres, may perform better - relatively -in the home entertainment sector than in cinemas.

Notwithstanding the haemorrhage from film theft, cinemagoing has been positively affected by new media formats coming on stream. Most films that succeed theatrically go on to do well throughout their release cycle - the relationship is symbiotic, the audiences complementary.