Introduction
The Netflix effect
Netflix changed Norway. It was not only the first successful subscription-based video-on-demand (SVOD)1 service in the country, it was the service that made Norwegians, almost overnight, embrace digital delivery of film and television. Even if Netflix is gone by the time you read this, its impact on the Norwegian film industry will still be felt.
When Netflix was introduced in Norway in November 2012 it was not the first SVOD service in the country. Swedish broadcasting company Modern Times Group was the first to launch a SVOD service in Scandinavia. Viasat-on-demand, later Viaplay, was launched in 2007 (McDonald 2014). Yet Norwegian broadcasters were experimenting with web-based services as early as 2000, sometimes in collaboration with broad-band companies looking to deliver movies and television to their customers.
The first transactional-video-on-demand (TVOD)2 services were also launched around this time, in the early 2000s (Høier 2009). When iTunes began offering movies and shows for electronic sell-through (EST)3 in Norway in 2011, the infrastructure for digital home entertainment4 was in place.
Before Netflix, no SVOD or TVOD service had major impact on the Norwegian film industry. In 2012, DVD sales remained high, even if they had fallen slightly from the high-water mark of 2009. There was an incipient EST/TVOD market, but it was growing slowly and was nowhere near the size of the physical markets (Gaustad et al. 2018).
The Netflix effect, however, was immediately apparent, and DVD rentals were the canary in the coal mine; within a year, 80% of the market was gone (Gaustad et al. 2018). Four months after Netflix launched, almost every remaining Norwegian video store had closed down too (Staude 2013; Øfsti 2019). DVD sales did not fall as precipitously. Still, between 2011 and 2013 almost half of the market disappeared (Gaustad et al. 2018). Netflix, on the other hand, was making a mint. By 2013 the service reached 20% of the population, climbing to 43% in 2016 and a staggering 66% in 2021 (Gaustad et al. 2018; Schiro 2021). Still, the Netflix effect is arguably even more profound than these numbers suggest.
In the years since 2012, not only did Netflix grow, so did the other SVOD services. Existing services Viaplay and TV2 Sumo5 reached 10% and 15% of the population in 2014, compared to 4% and 2% in 2011. HBO Nordic6 launched in Norway in 2012, and after a slow start over the first two years, the service reached 8% of Norwegian households in 2015. In 2015 Norwegians spent NOK 1.6B on SVOD services, equalling what they spent on cinematic releases and all other forms of home entertainment combined. 2015 also saw EST/TVOD revenue double across the industry and poised to overtake revenue from physical home entertainment. Within three years of Netflix’ launch, the SVOD market had gone from a NOK 96M market to a NOK 1.6B market, and the TVOD/EST market had risen from NOK 80M to NOK 310M. But the physical video market had crumbled – from NOK 1.1B to NOK 348M (Gaustad et al. 2018).
Netflix was not only a major success and influence in terms of market reach. It was also the “killer app” for digital film and television dissemination. When Netflix arrived, Norwegians figured out how to use their set-top boxes and game consoles to rent and buy movies; they figured out how to connect their computers to their televisions; they considered buying smart TVs; and soon their DVD players were collecting dust.
The aims of this thesis
Ten years ago, when the film industry became “fully” digitalised, I and many others were optimistic about the possibilities in leaving physical copies of movies behind. We thought the digital marketplace, and digital cinemas, could lower the barriers to entry for smaller productions and to movies from smaller nations.
Five years ago, when I wrote the first outline of this thesis, that optimism had been eclipsed by a growing worry that not only had the cinema market become more difficult for Norwegian movies, they had little income and even less prominence in the home entertainment market. Digitalisation had not lowered the barriers to entry for smaller movies or movies from smaller countries – it had opened the floodgates for giant entertainment corporations, which could now more easily extend their reach into all corners of the world.
The aim of this thesis is twofold. On an empirical level, I seek to understand the challenges the Norwegian film industry continues to face at a critical juncture. On a theoretical level, I seek to develop frameworks that can further the understanding of the cultural industries in the streaming age, particularly in smaller countries.
The industry challenges
Netflix and digitalisation of film distribution have posed several significant challenges to the Norwegian film industry. The first was the massive loss of revenue that followed the collapse of the DVD market. The collapse of the physical home entertainment market also led to audiences turning away from local brick-and-mortar retailers to rent and buy movies and shows from digital platforms that were, more often than not, global services with American headquarters. On these platforms, the Norwegian market share was lower than in cinematic and physical home entertainment markets. Central voices in the Norwegian film industry expressed fears that the new home entertainment markets threatened the local film industry (Øfsti 2014).
Initially, Netflix and other SVOD services offered little to the Norwegian industry. Netflix bought the rights of a total of 41 Norwegian movies on launch and co-produced Lilyhammer (Skodvin and Bjørnstad 2012) with state broadcaster NRK and Rubicon. However, most of the Norwegian film and television industry saw little or no income from the streamer.
The next few years saw little change. The DVD market continued to fall, and while the TVOD and EST markets grew they could not replace the lost income. The number of Norwegian movies on Netflix even fell when the initial four-year deals lapsed and in 2016 only six Norwegian titles were available on the service (NFI 2016).
In 2019, this began to change. Both HBO Nordic and Netflix commissioned and financed the original series Beforeigners (Lien 2019) and Hjem til jul (Sørensen 2019). Netflix followed with an original movie, Kadaver (Herdal 2020) a year later. By 2022 SVOD-services were emerging as a viable way to finance Norwegian movies.
While investments such as these undoubtedly bring much-needed revenue to Norwegian producers, they have also upended the structure of the Norwegian film industry. Traditionally producers have been relatively influential in the Norwegian industry where their projects’ ability to attract public funding has been as important as their ability to attract audiences. When producing for commercial streaming services, they are for the first time since the 1960s not no longer relying on public funding (Iversen 2016). However, when the SVOD services foot the bill alone, they also get the final say.
All of these challenges have directly impacted local film distributors. With heavy losses in DVD revenue they have had to find strategies to extract as much as possible from the digital home entertainment markets quickly. Moreover, they risk being completely side-lined when producers deal with streamers directly. Studying their strategies will therefore offer valuable insights into how the Norwegian film industry is changing.
The knowledge gap
This thesis addresses two knowledge gaps. First, there is very little research on Norwegian film distributors and, particularly, on their function within the Norwegian film industry. In fact, only one peer-reviewed article specifically on the history of Norwegian film distributors exists (Bakøy and Øfsti 2021). In addition, the distributor organisation has published two books on the history of the Norwegian film distributors (Haddal and Hoenvoll 2015; Disen 1997), and there are also several book chapters on the topic by industry insiders (Næss and Ova 2002; Aalborg 2018). But neither of these discuss the function of distributors within the Norwegian film industry at any length. This thesis is therefore the most comprehensive examination of Norwegian film distributors to date.
The second gap is a theoretical gap. While there exists a body of theory on both distribution and on cultural industry strategies, none of the existing work can easily be applied to a small country like Norway and only some of it applies to digital markets. This thesis produces new knowledge in the form of a new theoretical framework, the cultural industries functions, and by applying a combination of existing cultural industry theory and strategy theory to a small nation industry.
The research question
While the questions I ask could also have been applied to the broader cultural industries, in response to processes that change how we produce and consume books, music, movies and television, this thesis is fundamentally about film and film distributors.
Most studies on Netflix frame the service and its competitors as an evolution of television (Afilipoaie, Iordache, and Raats 2021; Plothe and Buck 2020; Lobato 2019; Jenner 2018; Wayne 2018; Barker and Wiatrowski 2017; Curtin, Holt, and Sanson 2014). The rise of SVOD services came hot on the heels of “the third golden age of television” (Lavik 2014) and the (well-deserved) scholarly attention that brought. But even if television usurped films’ role as “Culture-Conquering Pastime” (Raftery 2016), film still matters.
Film is still a different art form than television. To paraphrase Siegfried Kracauer, film is uniquely suited to reveal “the big and the small” ([1960] 1997, 46). Some stories need the big screen because they are spectacular, attack ships on fire off the shoulder of Orion. They engulf their audiences in sound and vision. They draw upon the audiences to create big moments of being here and now. Other stories need the big screen because they are intimate, like tears in the rain. They invite their audiences to study every detail and listen for every sound. They draw upon their audiences to share small moments of communal experience.
Film has still a different economic model than television. Some movie budgets are far too high for television and can only be sustained by global audiences showing up and paying premium ticket prices. Other budget movie budgets are far too low for television. Television needs sustained and predictable delivery and that pushes even the cheapest production budgets beyond the reach of the truly independent. Films can still be made on shoe-string budgets and travel festival circuits and special screenings.
In the foreword to Douglas Gomery’s Shared Pleasure (1992), David Bordwell writes: “Film studies, though often thought to be a maverick discipline, remains curiously respectful of the boundaries separating the social sciences from the humanities.” (1992, ix). Gomery himself writes in the introduction that “[i]n Shared Pleasures I seek to take up the challenge of David Bordwell: ‘Most people who study film don’t recognise the centrality of money7’” (1992 p., xvii). This thesis is also about “the centrality of money”. It argues that the role Norwegian movies play, and can play, in society is not purely a question of the unique talents of the creators, but is also dependent on economic context (Allen and Gomery 1985, 132)
I’m also very aware that while I certainly look across the boundaries of the humanities, I am neither an economist nor a sociologist and I aim to be respectful of those disciplines. My work has roots in film studies and film history, and the analytical tools I draw on are mainly from culture industries scholarship.
Film distributors sit between those who make movies and those who sell access to them; they are the ones most directly impacted by the recent changes described above, and their strategic choices offer a unique window into the challenges the Norwegian film industry faces. The main research question is therefore:
- How have Norwegian film distributors adapted their strategies and their function after the digitalisation of the film industry?
In addition to the main research question, three additional questions are asked. The first two give context to the main question, while the third highlights the current industry concern about the availability of Norwegian movies.
- How was the Norwegian film industry affected by the emergence of a digital home entertainment market?
- What have been the strategies of the Norwegian film distributors since 2008?
- How does shifts in the circulation power of local distributors8 affect the availability of Norwegian movies?
Part 1: Theory, Methods, and Background presents the theoretical and methodological underpinnings of this thesis, as well as give a brief presentation of the recent history of the Norwegian film industry. It consists of three chapters: Chapter 1: Theory, Chapter 2: Ethics and methods and Chapter 3: How the Norwegian film industry works
Part 1 of this thesis also aims to answer the first of the secondary research questions: How was the Norwegian film industry affected by the emergence of a digital home entertainment market? In order to answer this question I developed the the cultural industries functions. This framework enabled not only better analysis of the changes digitalisation brought to the cultural industries, but also how these changes affect the cultural industries of small countries specifically.
Part 2: Strategies of this thesis uses Mintzberg’s “Five P’s For Strategy” (1987) to analyse empirical examinations of the strategies of Norwegian distributors. The aim of part two is to answer the questions; What have the strategies of the Norwegian film distributors been since 2008? And How do the strategies of Norwegian film distributors affect the availability of Norwegian movies? Part 2 consists of two chapters: Chapter 4: Strategies as patterns and positions: Norwegian distributor strategies after 2008 and Chapter 5: Strategies as plan and perspective: Case studies of Norwegian films released in 2019.
Chapter 4 is based on quantitative data and observations of digital home entertainment platform, and examines the strategies of Norwegian distributors in the period after 2008. Chapter 5 presents two case studies built on expert interviews. The first case study examines the strategies of the two major local distributors, SF Studios and Nordisk Film Distribusjon. The second examines the release of the award-winning Barn (Haugerud 2019).
References
In this thesis I use SVOD when talking specifically about streaming services that charge a subscription for access to film and TV shows.↩︎
TVOD is an industry term that refers to the practice of selling limited access, typically 24 or 48 hours, to a specific film or TV episode. In this thesis it is used interchangeably with “rental”.↩︎
EST is an industry term that refers to the practice of selling unlimited access to a specific film or TV episode. Although referred to as a sale, in most cases it is really a rental period without a specified end. EST purchases might therefore become unavailable. In this thesis it is nevertheless used interchangeably with “sales”.↩︎
In the film industry, “home entertainment” refers to all forms of sales, rental, subscriptions, broadcast, etc. that take place in the home as opposed to in cinemas. This thesis uses the same definition of “home entertainment”, and unless further specified it does not include other forms of entertainment consumed at home.↩︎
Now TV2 Play↩︎
Now replaced by HBO MAX↩︎
Scott Heller, “Once-Theoretical Scholarship on Film Is Broadened to Include History of Movie-Industry Practices,” The Chronicle of Higher Education, 21 March 1990, p A6.↩︎
This thesis uses “local distributor” to describe distributors that release local movies and “Norwegian distributor” to describe all distributors that release movies in Norwegian cinemas. Further discussion in Introduction Part 2.↩︎