THE NIGERIAN FILM INDUSTRY - DECEMBER, 2007

Observations and Comments by Rob H. Aft

as published in The Lagos Guardian newspaper, December 21, 2007
 

I had the privilege of visiting Nigeria between the 2^nd and the 9^th of December, 2007 at the invitation of the Lagos International Film Festival and the Nollywood Foundation, a US-based non-profit group that promotes Nigerian cinema (www.nollywoodfoundation.org).  I have been a member of the advisory board of the Nollywood Foundation for the past two years and therefore knew a little about Nigerian cinema before the trip.  I had also made enquiries at the DGA about showing a few Nigerian films during the 2008 Nollywood Conference in LA and hoped to find good candidates for that during my trip.  I spent the first two days in Abuja and the balance of the trip in Lagos.  Abuja is the capital of Nigeria and more like Washington DC compared to the fast-paced life in Lagos which is more like New York (with Los Angeles traffic).

I have not referred specifically to the parties with whom I met (to preserve any confidentiality) and realize that I have not made an exhaustive study of a complex and evolving industry.  These are general comments that hopefully will provide useful background to people interested in pursuing opportunities in Nigeria.

OVERVIEW:

I went to Nigeria with as few preconceptions as possible.  I had heard all of the negatives that circulate about the country (including the warnings on the US State Department’s web site) but I had also spoken with many people – Nigerians, British and Americans – who told me that it was a safe and hospitable country provided that you knew people on the ground who could look after you.  In short I found this to be absolutely true and the biggest dangers I found were from Nigerian drivers who stop at literally nothing to get around the go-slows and no-goes that are frequent.  Lagos is a difficult city to navigate and probably not a great place to visit as a tourist (yet), but if you know people and don’t mind a little traffic it can be a wonderful experience.  Nigerians are vibrant, proud, industrious, spirited and creative people.  I was lucky to be traveling with Sylvester Ogbechie, a professor of art history who had entrée into the homes of famous Nigerian artists, gallery openings, etc., and I found the contemporary art scene to be thriving.

It is necessary to have a car and driver to maneuver both Lagos and Abuja (though taxis are available and safe in Abuja).  Hotels are good with world-class hotels available at a steep price (pre-booking well in advance essential) with other good hotels available with pricing based as much on security as anything else.  Food was delicious and interesting and I didn’t have any problems with it.  There are western-style restaurants available but the cleanliness standards in the local restaurants were quite high and I highly recommend trying them.  Generally prices seemed high for a developing country, possibly due to the decline in the value of the US dollar and inflation caused by high oil prices in an oil-fueled economy.  International exchange is getting easier with good rates being offered inside hotels and automatic teller machines accepting cards from the major systems (though I don’t know at what rate).  I suspect that the hotels are offering the best rates these days – the Sofitel Lagos was giving 125 Naira to the dollar with the “official” rate at 117. 

Recent reforms in the banking and insurance sectors have had a major stabilizing effect on the country as a whole and specifically the business community.  Meetings with a venture capital firm and a bank confirmed that investors are confident that the reforms have had the desired effect and that they will continue.  Improving investor confidence and attracting foreign investment are clearly important to near-term growth in non-petroleum industries.  The stock market is surging and there will undoubtedly be problems down the road, but the growth of a substantial middle class and a decline in graft seem to indicate sustainability to one of the world’s fastest growing economies.  Nigeria is eager for foreign expertise but also anxious not to give up control in key industries.  This creates opportunities for consulting and investment in certain sectors, and importantly for this report, in the area of media. 

THE NIGERIAN FILM INDUSTRY:

As my visit progressed I became increasingly uneasy with the term “Nollywood”.  A number of key industry figures dislike this term and feel that it implies either a case of “copying” Hollywood or Bollywood or simply a cheap, assembly-line style of filmmaking.  This may have been true of Nigeria’s direct-to-DVD market, but not true of the new wave of directors making films for theatrical release.  I have decided to avoid the use of the term Nollywood and will refer to “the Nigerian Film Industry” instead. 

I won’t go into much of the history of the industry there (significant information available about this on-line), but as many people know, Nigeria has become famous for quickly made, inexpensive, straight-to-video or DVD movies with very low average budgets (in the $20-30,000 range).  Estimates are that between 2,000 and 3,000 films are made there each year.  This particular industry was launched in 1992 and is therefore still quite young.  The films are very popular across Africa with a complex distribution system involving chains of video outlets.  Most revenues are generated in the first several weeks of release with the films then experiencing severe piracy (both physical units and through the Internet) across Africa and throughout the Nigerian and English-speaking African Diaspora.  There has been little or no cross-over into non-African audiences.  Many of the filmmakers have successfully transitioned to television production and stations such as African Magic are quite popular.  There are wild estimates of the “value” of the film industry in Nigeria.  The economic impact is certainly significant but I’d hesitate to repeat any of the figures presented in the press.

I was informed that a decline in revenues has started for many of the titles released.  This is due to a glut of product as well as a demand for higher quality levels by audiences.  Budgets have been creeping up and stars are demanding higher salaries.  These factors will ultimately have a positive impact on the quality of the films and therefore the industry and the potential for exploitation outside of Nigeria. 

One of the drivers for increased quality will certainly be the growth in the cinema market.  There are currently (I think) 19 screens in Lagos and at least 7 in Abuja.  The north of Nigeria has a greater cinema-going tradition than other parts.  Most of the screens seem to be owned by the South African Nu Metro group.  Everyone expects that the number of screens will continue to increase dramatically as shopping centers are constructed.  The growth in the consumer culture is really quite stunning.  One of the government’s goals has been to create a strong middle class and they seem to be succeeding.  It was generally agreed that as the quality of local films increases, they will push non-Nigerian films off of many of the screens.  While I was there many of the current new releases from the US were playing including BEOWULF, THIS CHRISTMAS, etc.  Ticket prices were relatively high – between $6 and $12.  Filmmakers are aware that in order for the films to look good in these cinemas, they have to shoot them with better quality cameras (quality Sony HD cameras are becoming increasingly common – no Panasonic in sight but I don’t doubt they are there somewhere) and the sound quality has to dramatically improve. 

It is widely believed that as the cable market increases (currently there are probably around 700,000 subscribers out of a population of about 140 million), the theatrical market increases, and the DVD market declines, many producers and directors currently shooting features will segue into TV production while a new generation will shoot films for cinemas (and potentially the international marketplace).

INDUSTRY PROBLEMS

Producer Issues:

As with all producers worldwide, major complaints included poor distribution, improper accounting, piracy, and lack of government support for the industry.  I explained that these were problems in Los Angeles, New York, London and everywhere else that films are produced or distributed.  There are certainly significant structural problems in the distribution system that create extreme inefficiencies.  I got the impression that these issues were being addressed, but more importantly that they may become moot as the market moves to realize greater theatrical and TV revenues and sheds its dependence on the DVD market. 

The producer-director-distributor system seems to be fading as well as the creative people realize that they have to depend on distribution professionals for the revenue streams.  Again, as the theatrical and TV markets play greater roles and budgets increase, producers and directors will take on increasingly specialized roles and will not have time to be directly involved in the distribution process. 

Part of that role for the producer will be dealing with the greater finance requirements and complications.  The producers I spoke with realized this and knew that they needed to become better versed in banking, insurance, international distribution and dispute resolution in order to step up to the challenges of greater budgets.

Quality Issues:

One of the biggest barriers to entering the international distribution system (or the local theatrical system) is production quality.  It is highly unlikely that there will ever be a straight-to-video market for Nigerian films outside of Africa and the Diaspora communities.  The principal outlets will be in art house cinemas and on television.  Broadcast standards in Europe are very high, particularly for sound.  Of course, enjoying a film in a cinema requires that the picture be sharp on a big screen and that the sound be clear when played through a quality sound system.  That will require better cameras, lighting, recording, and sound mixing.  All of these elements are beginning to be put into common use in Nigeria, but it is slow in coming and things such as Dolby 5.1 surround sound are not yet in general use there. 

Sony is aggressively entering the market with quality equipment and there are excellent sound engineers in the Nigerian music industry.  However, producers need to be convinced that they will see a benefit from better quality recording and mixing and must be willing to pay those technicians competitively for their participation (a problem cited by a major music producer).  MTV required a higher quality for the music videos that they play on their channels and Nigerian video producers stepped up.  If film producers are able to manage the same production quality they will eliminate this concern.  The use of sound stages for feature production will also help.

Chain of Title Issues:

One of the issues I had identified before my trip through contact with local attorneys was the lax observance of common chain of title (copyright ownership) issues.  The licensing of the creative output of actors, writers, musicians, directors, etc. is often (usually) not properly documented to international standards.  This means that there are sometimes not actor contracts/releases, writer agreements, music licenses, etc.  Distribution agreements outside of Nigeria will usually require clear chain of title as well as Errors & Omissions (E&O) insurance that can only be acquired if the documentation is in order.  A number of local copyright attorneys are working on this issue but have had a difficult time convincing producers of the need for this documentation. 

However, a number of producers, particularly of higher-budgeted features, are leading the charge to get the paperwork in order.  I have also discussed the preparation of a set of basic contracts and licensing agreements that will help producers make sure that they secure title to their own work. 

Producers and directors also need to understand issues related to trademark infringement and other potential legal pitfalls.  As I tried to point out to people in Nigeria, these are complex issues that are often misunderstood or laxly applied in Los Angeles by people who went to the top film schools.  Producers around the world don’t like thinking about these things and often have to pay the price later when they try to fix the problem in editing – which is always more expensive than doing it right in the first place.  In a very positive step and in recognition of the importance of copyright issues, the LIFF invited Richard Owens, Director of the Copyright and E-Commerce, Technology and Management Division of the WIPO (The World Intellectual Property Organization) as the keynote speaker for their opening ceremonies.  He emphasized the importance of Nigeria becoming a signatory to the two most recent updates to the Berne Copyright Convention. 

INDUSTRY OPPORTUNITIES:

The Theatrical Market:

Nu Metro and other operators have been putting in new screens in Lagos, Abuja and other cities in Nigeria at a rapid pace.  As I mentioned above, there are about 19 of these new screens in Lagos and 9 in Abuja.  I was also told that the northern areas (the Hausa region) have always had a cinema-going tradition that has continued uninterrupted.  As noted above, most of the Nigerian films are not suitable for screening in cinemas, but a growing number are being made for theatrical release.  This is a very positive step as it will require greater budgets, better technical quality, and overall a different level of artistic quality than previously expected by the audience. 

I am told that audiences are already getting more demanding and developing tastes that will push the filmmakers to be more creative, thoughtful and focused to get their attention.  Several filmmakers I spoke with are already responding to the challenge with not only better cameras and sound, but with full-blown script development taking place over months rather than weeks and shoots lasting three to four weeks rather than the more common seven to ten days.  This can only be good for the development of films that can achieve international success.

Currently the screens feature a mix of US and African films (“This Christmas” and “Beowulf” were playing while I was there along with a few South African comedies).  However, I can certainly imagine a time when the screens are dominated by Nigerian productions.  The National Film & Video Censor Board can play an active role in helping nurture the theatrical industry in Nigeria by implementing and enforcing screen quotas in the way the TV quotas are currently in force.  Though this can have the effect of making filmmakers lazy (as it did previously in the UK) I don’t think this will be a problem for Nigeria given the current output of films.  There will be substantial competition for screen time and favorable treatment for local films should not have a negative impact on quality.

The Nigerian TV Marketplace:

Currently stations such as African Magic play Nigerian films and soap operas and as the number of offerings increases there will be good opportunities for filmmakers to segue from features to TV.  It is also likely that increased TV offerings will lead to a decline in DVD sales.  The local Internet boom is also likely to have a deleterious effect on the video market.  It is likely that TV will absorb a huge number of production hours.  Nigeria is fond of saying that they have the second or third largest film industry in the world, but when you look at numbers of hours of “programming” produced, the 2,000-3,000 features only amount to 4,000-6,000 hours plus the soaps.  In terms of hours of entertainment product produced this would put the country well down the list of producers. 

Therefore once the focus of producers shifts to theatrical and TV production as it has in most of the world, I would expect the number of hours of entertainment product to drastically increase.  It is clear that Nigeria could support at least ten channels of purely indigenous material.  Even accounting for reruns, news programs, etc., this will still require tens of thousands of hours of programming per year.  Funding for these programs will certainly increase as cable subscriptions rise and advertising strengthens with the growth of the middle class and the internal consumer market.

In many places with quickly growing film and TV businesses (such as Korea starting in the late 1990’s and China from about the time period) TV and film are symbiotic with many cinema stars coming from TV and many film producers also making movies and programs for the TV markets.  I would imagine that Nigeria will take a similar course with cinema stars starting in the music and TV businesses.  

Sponsorship/Product Placement Finance:

Given the modest budgets and wide reach of many Nigerian titles, entire budgets are occasionally supplied by large companies who seek nothing more than advertising of their services in exchange.  This product placement can be nothing more than featuring the company’s billboards in shots or showing the actors using the company’s products.  So far this has been a great source of revenue for producers and I have not heard of any consumer backlash.  This should continue to be a good source of additional income for producers even if the amounts do not cover the entire budgets of pictures.

The International Marketplace:

Once the issues of theatrical quality and chain-of-title are resolved Nigerian titles will be able to compete for revenue in the international marketplace.  I had many discussions with producers and others about how this system works and won’t go into detail here, but there is an established system of rights trading in the theatrical, video, and TV markets at events around the world (Cannes Film Market, American Film Market, European Film Market in Berlin, MIP-TV, MIPCOM, NATPE, etc.).  The major studios as well independent production and distribution companies and major producers from Europe and Japan are all involved in this lucrative trade and there are established protocols, standards, etc. that govern the market. 

Nigeria should be ready to enter these markets in the next few years and at first this will probably be through existing, non-African sales companies.  However, I hope that some Nigerian producer or distributor will see the value of establishing an African sales company in the near future.  One problem that I stressed to producers in Lagos was that all producers feel that the people handling their distribution are 1) doing a terrible job; and 2) stealing from them.  This is true the world over at all levels and there is just no avoiding it.  Research (including discussing the distributor with his other producers), good contracts, financial controls, and vigilance are crucial. 

Resources:

More information about international distribution markets is available at www.ifta-online.org.  I also recommend checking out Daily Variety (www.variety.com) for information about distribution and everything else related to the film industry and the many books on film business topics including “The Movie Business Book” edited by Jason Squire.  The best web site for learning about who made what in this business is www.imdb.com.  I highly recommend that people in the Nigerian film industry start to post their credits on the site.  This is an easy process and something that people all over the world will check to see what they have done in the past. 

Attracting International Productions:

Once the production infrastructure is in place and local people are trained to handle higher level productions, Nigeria should be an attractive place for filmmakers from around the world to shoot.  Offering location services has become an extremely competitive industry with governments offering significant incentives to attract filmmakers.  I have co-written a pamphlet on the subject which is available for free at http://www.ifta-online.org/Uploads/Issues/36.pdf.  South Africa offers significant incentives and Kenya and Morocco regularly attract international productions.  There are many benefits to having films come to shoot in Nigeria including improvements in production infrastructure and training.

THE GOVERNMENT’S ROLE:

I had extensive conversations with Emeka Mba, the Director General of the Film & Video Censor Board.  He is impressive and has a deep understanding of the issues that face the industry.  To the extent possible I believe that he will work diligently to achieve a truly world-class regulatory and support structure for the film industry.  Of course, this is a monumental task that is made all the more difficult by the fragmentation within the industry and competing regional interests and guilds.

These are problems faced by every regulatory or industry board and Mr. Mba seems to be weathering the controversies well and moving ahead with projects to support and promote the industry.  Notably, the US has no such office and the federal government provides little or no assistance to filmmakers and is even reluctant to help them with specific problems such as Internet piracy or foreign trade promotion – areas that Nigeria is already addressing.

Regulation:

Attempts to fight piracy are meeting with little success on the ground, though the licensing of video dealers seems to have shown some results (though notably they still stock what are clearly pirate versions of non-Nigerian films and TV programs).  Internet piracy has seriously hurt potential revenues but this is something that no one anywhere in the world has come to terms with.  Internet piracy has had a devastating effect on the video markets in Spain, Korea, etc. and top people around the world are working on a solution with no success yet.  Nigerian producers have to realize that there is little or nothing that their government can do to stop this illegal trade in copyrighted material.  A regulatory framework that allows for prosecution of Internet pirates might help if aggressively applied.

The NFVCB has responded to concerns of producers related to the rating of movies within two weeks of submission (much faster than the MPAA deals with US titles) and is responsible for a huge volume of material which they seem to process efficiently.  Producers will always feel that they should do better, but the NFVCB seems to listen to their concerns.  Ultimately it is important to address societal problems with objectionable material while balancing the creative desires of the filmmakers.  If Nigeria figures out how to do that I hope they can share the secret with the US. 

Training:

Providing funding and support for training programs would be a great step to take to increase the quality of the pictures being produced in Nigeria.  This could be done directly by the government or through private initiatives encouraged by the government.  Specifically whenever outside productions come to shoot in Nigeria there should be programs in place to require or fund trainee/internship positions on those productions and for the knowledge gained to be shared throughout the industry.

Infrastructure:

I was quite impressed by the Abuja Film Village initiative and anxiously await the results of that effort.  It appears that the government is willing to commit resources to the film industry and if they can follow through with training on an international level and possibly incentives for developing other infrastructure projects associated with TV and animation production/soundstages, post-production facilities, etc., that will certainly speed the development of top-quality work.

The Lagos Business School is already moving forward with media business education and is providing crucial leadership in the organization of the business aspects of the industry.

NEXT STEPS:

Things are moving so quickly in Nigeria that by the time you read this it may all be out of date.  However, I think that outside of the steps being currently taken, it is important to move to establish a generally accepted framework for many of the items above.  Specifically the banking, insurance and finance sectors will require that everything be done in a way that conforms to internationally accepted accounting and finance and legal procedures.  Chain-of-Title issues, tracking of distribution revenues, contracts with talent, finance, or distribution entities, budgeting, insurance, etc. will all have to be done in a way that everyone understands and recognizes.  There will have to be a clear manner of dispute resolution and rights confirmation. 

I have already spoken with a number of local attorneys, bankers the Lagos Business School, and The Nollywood Foundation about presenting a framework and sample agreements to make this a reality.  I hope that these entities will be able to come together in a forum at some point in 2008 that will also attract the business and government leaders necessary to move the program forward quickly.  Of course, these measures need to be widely accepted and there will be costs involved (most notably attorney’s fees).  Standard contracts that require a minimum of adjustment for each new transaction should speed adoption of the process. 

Most important will be demonstrating why an outside system needs to be imposed on the existing system.  In particular financiers will drive some of these changes and producers will certainly see the advantage of attracting capital to the industry.  Bankers and financiers need to know that there will be no ownership or copyright questions and that distribution systems will accept claims of copyright ownership and rights of exploitation.  Banks also need to put protocols in place for collection accounts and direct assignment of distribution revenues – bypassing the necessity for funds to be collected by producers and then passed along to banks or investors.

CONCLUSIONS:

I went to a great Gospel service while I was in Lagos and the preacher used a wonderful analogy based on Lagos traffic.  I’m going to steal that idea and relate my feelings regarding the potential for the Nigerian film industry to Lagos traffic.

Lagos traffic is challenging.  This is due to a number of things including the fact that the economy is booming and infrastructure is not keeping up with demand.  Drivers are also causing problems by not following the rules and driving obsolete and poorly maintained vehicles (I actually saw a van’s wheel come entirely off in traffic and roll to a stop in the middle of the road).  It’s possible to get around Lagos and sometimes it’s even possible to do it quickly (Wednesday nights between 2 and 4 in the morning).  Everyone in Lagos knows exactly what needs to be done to get traffic moving and they mutter it under their breath or scream it at the top of their lungs every day when they are in a go-slow.  BUT, everyone knows that things have been getting better or at least not getting worse as quickly as they might.  There are already better roads in some places, the old cars and vans will be retired, the police say they are going to stop people driving the wrong direction, etc. 

The Nigerian film business is like that – it’s challenging right now and going through a lot of transition and growing pains.  If you talk to film producers they know exactly what they, the distributors and the government need to do to make it better.  While they talk, things move forward and improve.  Infrastructure is being built, rules are being put into place - structure is coming.  Some people are going to miss driving their beat up cars the wrong direction on the roads.  They’ll be left in the dust by drivers who have cars built for the new world of high-speed toll roads and 15 minute trips from V.I. to Ikeja.  Many people I spoke with could already see this better world where Nigerian films premiere in glittering theatres in Lagos, win prizes at international festivals, get released in cinemas in the US and Europe and have budgets in the millions of dollars.  And producers will still complain about lack of finance, poor distribution and lack of recognition just like the do in Hollywood (while stuck in horrible traffic on our freeways). 

The film industry requires dreamers and doers and I met plenty of both on my trip.  It’s an exciting time for Nigerian cinema and I highly recommend you take time to visit, meet the industry people at O’JEZ at the National Stadium in Surulere, Lagos for some palm wine and get ready for a wild ride.

I want to conclude by thanking my hosts – the Lagos International Film Festival and it’s CEO, Madu C. Chikwendu, and The Nollywood Foundation and it’s founders, Dr. Egbe M. Dawodu and Prof. Sylvester O. Ogbechie as well as its Board of Directors including Dapo Otunla and Lisa Poole.  I would also like to thank all of the people with whom I met and who shared their insights and in particular Mr. Emeka Mba, the Director-General of the National Film & Video Censor Board.  Finally big thanks to Toluwa Amune, administrative assistant to Egbe Dawodu for her tireless efforts to make my stay in Nigeria as efficient and welcoming as possible.