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Georgii Paksiutov

Postgraduate student, Lomonosov Moscow State University

Despite the economic and geopolitical rise of non-western emerging powers, the global film industry still remains, in many ways, western-centric. The West’s hegemony in the field of cinema, among other implications, yields the U.S. and certain European countries substantial political dividends. In fact, this hegemony is in part based on the western powers’ direct state intervention. However, nowadays, the global film industry is rapidly transformed by digital technology, as the tremendous success of Netflix streaming service clearly demonstrates. This situation offers the BRICS countries a chance to participate in the creation of a new, digital global film industry by jointly launching its own streaming service. Such an endeavour is not only commercially viable but also would shape the global cultural scene, making it more diverse and fairer.

In the recent decades, the West (defined in this study as the United States, Britain and the EU) has lost its uncontested dominance on the global arena in terms of economy and geopolitics, as the new economic powerhouses such as China have emerged and the globe has entered the era of the multipolar world order. However, there is a certain field in which the West still remains a singular hegemon: a field which has, as surprising as it may sound to some, significant importance for the international political affairs. This field is the global film industry.

A BRICS’ streaming service, for example, could be an ambitious and challenging venture, truly global in its scope. Swiftness in decision-making and the realization of the vision would be incredibly important for such a project, as its potential competitors like Netflix expand at outstanding rate.

The film industry is more than just an entertainment business. It is a means of communication, a medium which both allows people to express their worldview and shapes the worldview of its viewers. BRICS’ participation in the development of the global digital film industry could make it more diverse, could empower artists from around the globe who currently don’t have access to foreign audiences and thus contribute to the cause of international peace-building and to the creation of a truly democratic, multipolar global cultural scene.

Despite the economic and geopolitical rise of non-western emerging powers, the global film industry still remains, in many ways, western-centric. The West’s hegemony in the field of cinema, among other implications, yields the U.S. and certain European countries substantial political dividends. In fact, this hegemony is in part based on the western powers’ direct state intervention. However, nowadays, the global film industry is rapidly transformed by digital technology, as the tremendous success of Netflix streaming service clearly demonstrates. This situation offers the BRICS countries a chance to participate in the creation of a new, digital global film industry by jointly launching its own streaming service. Such an endeavour is not only commercially viable but also would shape the global cultural scene, making it more diverse and fair.

The West’s Hegemony in the Global Film Industry

In the recent decades, the West (defined in this study as the United States, Britain and the EU) has lost its uncontested dominance on the global arena in terms of economy and geopolitics, as the new economic powerhouses such as China have emerged and the globe has entered the era of the multipolar world order. However, there is a certain field in which the West still remains a singular hegemon: a field which has, as surprising as it may sound to some, significant importance for the international political affairs. This field is the global film industry.

The West's hegemony in this field rests on several pillars. First, although some countries challenge and even overtake the western leaders in terms of the number of national feature films produced, the international box office is dominated by American movies. For example, in 2019, the top-10 highest-grossing films in the worldwide box office were all American, English-language pictures. Second, western film industries — American, French, Italian — are extremely powerful brands. For a long time, they operated on the global market virtually without any competition and firmly cemented their place not only in the box office but also in tastes and minds of generations of movie-goers. American film companies, thanks to steady and substantial revenues both from the international market and the domestic market (which remains the world’s largest, despite the dramatic growth of China's), are able to produce large-budgeted blockbuster films with the leading movie stars and advanced visual effects; naturally, it is extremely hard, it at all possible, for foreign competitors to challenge these box-office juggernauts.

A less obvious but vitally important aspect of the West’s hegemony in the field of cinema is the fact that it actually hosts and controls all the world’s most notable film festivals and awards. The so-called “Big Three” of the world’s most prestigious film festivals (Cannes film festival, Venice film festival and Berlin film festival) are located in economically and politically leading European countries, and the American Academy Awards (Oscars) remain, by a large margin, the most important award ceremony in the field. It can be observed that these awards are disproportionately often given to European and Northern American countries [1]. By systemically awarding Western films and filmmakers, West-based festivals and award ceremonies endow them with prestige and strengthen the position of the West as the world’s cultural hegemon and arbiter.

Here is how scholar Roy Armes explains the West’s dominance in the field of cinema in his 1987 book, Third World Film Making and the West:

“Though now widely distributed throughout the world, the cinema is the product of only a limited number of Western countries at a particular recent point in their historical development. For all Third World countries, then, film is an imported form of communication. Moreover, whatever cinema may have become with the passing of time, its emergence cannot be ascribed solely to artistic aspiration or disinterested scientific endeavour.” [2]

Since the Armes book’s publication, the state of international affairs has changed dramatically. However, the West’s dominance in the field of cinema (which, as the scholar implies, was originally based not on artistic reasons, but on their economic power and governmental policies) remains unchallenged. Some of what he refers to as “Third World countries” have achieved substantial economic growth, but the West still controls the world's most important awards and, to a large extent, the film distribution system, which gives it cultural and political dividends.

The Role of Film Industry in International Politics

Over the course of the last few decades, considerable attention has been given to culture as a factor in international affairs. The concept of “soft power” developed by Joseph Nye has become particularly influential and is often used as a framework for numerous academic studies dedicated to this problem. Nye defined soft power as “the ability to affect what other countries want… [that] tends to be associated with intangible power resources such as culture, ideology, and institutions” [3]. These days, foreign policy strategies of numerous countries include statements of the importance of their national culture, and nations strive not only to possess military and economic might, but to exert cultural influence (or soft power) on the global arena.

One of the most widely recognized sources of countries’ cultural diplomacy is cinema. The film industry has been considered a resource of soft power of the USA, France, India and other nations. In a study dedicated to the role of the American film industry as a tool of U.S. soft power, researcher Yang Li vividly expressed this fact in the following manner:

"The American dream embodied by Hollywood movies appeals to people all over the world... As a result, the American dream gradually becomes a universal dream. By depicting the United States as a land of infinite possibility and opportunity, Hollywood movies win the hearts and minds of global viewers… thus greatly promoting American soft power."

A particularly important role in the creation of prestige and global cultural influence is played by institutions such as film festivals and other cultural arbiters. It is not uncommon, for example, that Oscar wins and nominations are considered to be important factors in international politics. To name a few such cases, Vlad Strukov’s article is dedicated to the discussion of soft power gained by Russia thanks to Oscar nomination received by Andrei Zvyagintsev's motion picture Leviathan [4] ; David Leheny argues that Japan’s foreign policy strategy has been influenced by Miyazaki Hayao’s Spirited Away being awarded with Oscar for Best Animated Feature.

Developed countries have always recognized the importance of film industry and used direct state support to strengthen their national film producers and awards to gain global cultural influence and soft power. For instance, consider the “Big Three” of elite European film festivals. The world’s oldest film festival — Venice festival — was founded in 1932 with “strong support from Italy’s fascist government”; Cannes film festival was established by the French government with the direct support from the U.S. and Britain specifically as an alternative for Venice festival to counter Fascist Italy’s cultural influence; Berlin film festival was initiated by the American officer and “functioned as an American instrument in the Cold War.” [5] As another example, the U.S. government’s alliance with the film industry dates to as far as “prelude to World War One”; state subsidies and support have played an important role in making Hollywood the global “dream factory.”

The actions of Western governments who had established their dominance in the international film system have been proven beneficial, as they still pay political dividends. However, nowadays this long-running system changes dramatically, as digital technologies transform film industry — offering emerging powers a chance to make it more equal, to substitute one hegemon with numerous cultural centers around the globe, to give the people from various continents a voice and representation.

Success of the “Netflix model” and the Birth of the New Global Film Industry

The process that transforms the global film industry is the advance of a digital business model pioneered by Netflix. Netflix, originally a DVD rental company, launched its streaming media service in 2007. The astonishing success of Netflix’s digital effort led entertainment and IT giants like Disney and Apple to follow their steps, as they launched their own streaming services more recently.

Table 1. Total number of Netflix’s paid subscribers (billion) and share of subscribers from countries other than U.S. (%), 2015–2019

Year Subscribers Share of subscribers outside U.S. (%)
2015 70,8 38,7
2016 89,1 46,2
2017 110,6 52,3
2018 139,3 58,0
2019 167,1 63,5

Source: https://www.businessofapps.com/data/netflix-statistics/#:~:text=billion%20(September%202019)-,Netflix%20User%20Statistics,the%20rest%20of%20the%20globe.

In short summary, Netflix streaming service operates the following way: its consumers pay for subscription to watch movies and TV series from its digital library. Originally, this library consisted of content produced by other companies, but in recent years Netflix actively produces its own series and films.

Table 1 represents the growth in the number of Netflix subscribers: from 2015 to 2019, it more than doubled, with the service’s consumer base expanding particularly swiftly on foreign markets. Netflix’s success is a clear demonstration of the digitalization trend in the global entertainment industry. Table 2 further represents this trend: it shows changes in the total size of the global theatrical (box office), digital (both home and mobile) and physical (DVD and Blu-ray sales and rentals) entertainment markets from 2015 to 2019. The digital entertainment market’s size skyrocketed, increasing almost threefold in four years.

Table 2. Total Size of the Global Entertainment Market ($bln), 2015-2019

Year Theatrical Digital Physical
2015 39,1 16,6 19,7
2016 39,3 22,8 17,2
2017 40,9 29,7 14,6
2018 41,8 39,3 12,4
2019 42,2 48,7 10,1

Source: https://www.motionpictures.org/wp-content/uploads/2020/03/MPA-THEME-2019.pdf

The reasons for Netflix’s success and its impact are discussed in detail in the article by Georgii Paksiutov [6]. First, Netflix employs the highly effective automatic recommendation system. Second, Netflix’s business model enjoys the benefits of vertical integration, as the company controls its whole value chain from the decision to produce the content to its final consumption. Third, Netflix uses advanced techniques of consumer behavior analysis which are based on machine learning algorithms: the thorough knowledge of consumers’ demand allows the service to produce the very content its subscribers desire to watch.

The scope and swift pace of digital services’ conquest of the global film market is so impressing that it is fair to call it a birth of a new film industry, rather than just a modification of the previously existing one. As renowned film scholar John Belton articulates it: "The advent of digital cinema… does not mark the death of traditional cinema but its resurrection in digital form" [7].

The COVID-19 pandemic has intensified the film industry’s digital transformation dramatically. Numerous states across the globe implemented social distancing and quarantine measures, with film theaters being closed or limited in operations. Release and production of some major motion pictures has been postponed, with the theatrical box office collapsing and people turning to digital services for entertainment purposes.

Nowadays, we witness the events which would shape the face of the global film industry for the decades to come. When the global film industry was taking its shape and scope in the first half of the twentieth century, there were no powers besides the West who had the economic, politic and cultural resources to step in and participate in this process. But nowadays, the situation has different — there are powerful non-Western states that can partake in the creation of the new, digital film industry and make it more equal and culturally diverse, if they seize this opportunity. The BRICS countries, particularly, are in a great position to take such actions.

Digitalization of the Global Film Industry: Possibility for BRICS

It would be a very promising endeavor to launch a joint BRICS project drawing on the experience of Netflix — not simply an Internet-based streaming service analogous to Netflix, but a project utilizing the strength of national film industries of the BRICS countries and suitable for their markets. In these countries, there already are similar Internet services (Chinese iQIYI and Russian Premier, to name a few), but a joint, cooperative effort could be much better suited to compete on the global arena.

First, a unique competitive advantage such service would have is the fact that the BRICS countries represent four continents — Europe, Asia, Africa and South America. Thus, BRICS’ joint streaming service would face no cultural barriers in advancing on virtually any of the film markets throughout the world.

Second, BRICS member countries have no shortage in film industry professionals and impressive talents. The countries also have some of the world’s most reputable learning institutions in the field of cinema, such as Gerasimov Institute of Cinematography (VGIK) (Russia), Beijing Film Academy (China), Satyajit Ray Film and Television Institute (India) and others.

Third, the BRICS countries have a significant record of successful efforts and a skilled workforce in the fields of digital technology, artificial intelligence and data analysis, which are vital components for a successful streaming media.

Another important reason why a joint effort would be more able to compete with the giants like Netflix than any service from a particular the BRICS country is the massive size of the combined BRICS film market. In 2019, China was the world’s second largest theatrical film market, India — seventh largest, Russia — tenth; combined BRICS film market would be the world’s largest. Many of these consumers are now turning to digital entertainment services, and this process was intensified by the COVID-19 lockdowns and restrictions. Having an immediate access to this vast market would be a great advantage for a BRICS’ streaming service.

Of course, such a project would face a variety of challenges including, but not limited by, the competition from already established services such as Netflix or Amazon Prime and the risk of losses caused by online piracy. However, if it fair to say that if a non-Western cultural power sets to achieve a global success, digital technology would be crucial for such an effort (like in case of K-pop, the South Korean popular musical industry which gained international prominence thanks to an effective digital transformation strategy [8] ), and this observation becomes especially relevant in the post-COVID-19 world.

BRICS’ streaming service could be ambitious and challenging venture, truly global in its scope. Swiftness in decision-making and the realization of the vision would be incredibly important for such a project, as its potential competitors like Netflix expand at outstanding rate.

The film industry is more than just an entertainment business. It is a means of communication, a medium which both allows people to express their worldview and shapes the worldview of its viewers. BRICS’ participation in the development of the global digital film industry could make it more diverse, could empower artists from around the globe who currently don’t have access to foreign audiences and thus contribute to the cause of international peace-building and to the creation of a truly democratic, multipolar global cultural scene.

Text published upon the results of the BRICS International School Contest for BRICS Young Leaders.

1. Georgii Paksiutov, "Soft Power and Cultural Capital of Nations: The Case of Film Industry" (In Russ.), World Economy and International Relations, 2020 (In print).

2. Georgii Roy Armes, Third world film making and the west, Berkeley: University of California Press, 1987, p. 35.

3. Georgii Joseph S. Nye, "Soft power", Foreign policy, 1990, pp. 166-167.

4. Georgii Vlad Strukov, "Russian ‘Manipulative Smart Power’: Zviagintsev’s Oscar nomination, (non-) government agency and contradictions of the globalized world", New Cinemas: Journal of Contemporary Film, 2016, №. 1, pp. 31-49.

5. Georgii Marijke de Valck, Film festivals: From European geopolitics to global cinephilia, Amsterdam: Amsterdam University Press, 2007, pp. 47-48, 52.

6. Georgii Georgii Paksiutov, "Netflix’s Business Model: Economic Value and Sociocultural Impact " (In Russ.), Vestnik of the Plekhanov Russian University of Economics, 2020, №. 3, pp. 145-156.

7. Georgii John Belton, "If film is dead, what is cinema?", Screen, 2014, №. 4, p. 466.

8. Georgii Jimmyn Park and Nobuko Kawashima, "Wrestling With or Embracing Digitization In the Music Industry: The Contrasting Business Strategies of J-pop and K-pop", Kritika Kultura, 2018, №. 30, pp. 40-41.

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