1. Introduction to the Future Film Value Toolkit

2. The original UK Film Council brief was to:- Produce a ‘toolkit’ which would help British film companies to analyse the likely impact of changing market conditions, brought about by the creation of new forms of delivery, on the financing of British independent films considering the following:- new digital platforms changing prices a shift away from the historical models copyright theft and infringement changing windows and release patterns

3. Through the model, the UK Film Council’s aim is to :- Stimulate and inform the debate amongst all interested parties. Help put the current varied views about a VoD driven future into a financial context. Inform those negotiating deals of the possible future value of VoD rights and hopefully prevent an undervaluing of the same. Help financiers understand the impact of how films may be consumed in future and aid development of new financing models. Help Film companies consider possible new business models for exploitation of film or plan for their future.

4. What does the model actually do? Enables user to analyse forecast revenues from different forms of exploitation, constructed in a way to show the possible financial effect of audience shifts from one medium to another. It is a standard Excel spreadsheet with drop down selection boxes and a few simple macro buttons to help users compare and contrast different scenarios easily. It does not try to predict potential income returns to rights holder/investors. Do not use it as such. For further information contact info@ukfilmcouncil.org.uk See also Screen International 18 May 2007, issue No. 1597nfo@ukfilmcouncil.org.uk

5. Brief overview of the model Forecasting is driven by hard wired correlations from a small sample of actual values and audience figures gathered from some actual UK Film Council funded films. (Note, none of these had received any VoD income). There are six key variables for the user to input and amend, with the resulting forecasts driven by those hard wired correlations. The main output is shown in graph form and is a comparison of income derived from up to four “what if” scenarios. A second input sheet contains the ability to override correlations with a much wider range of inputs. (NB this version is only available on request). Income shown is net available for rights holder, i.e. at distributor level, to avoid the huge variances raised by the deal making process, e.g. MG verses gross deals. All income is discounted to today’s net present value.

6. Six key variables UK, US & Rest of the World theatrical box-office. This drives all other correlations. Rate of DVD decline (measured as % of today’s DVD volumes. Rate of TV revenue decline (as % of today’s price levels). VOD transaction volumes, download prices and possible advertising revenue shares. Option to assume VOD is day & date with theatrical release. A piracy factor.

7. Future work Future updates may be undertaken at some point, although at present no specific decision to do so has been made. Updates could include:- A more sophisticated method of calculating possible advertising revenue from ad driven VoD platforms. Changing the relationship between the VoD and Video/DVD numbers contained in the model. Any other suggestions for improvements and queries are welcomed. Please contact: info@ukfilmcouncil.org.uk