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Filmmaking - in - Mexico - ISIC - 9211 (951799)
Filmmaking - in - Mexico - ISIC - 9211 (951799)
Filmmaking - in - Mexico - ISIC - 9211 (951799)
9211
Euromonitor International
May 2013
FILMMAKING IN MEXICO: ISIC 9211 Passport I
© Euromonitor International
FILMMAKING IN MEXICO: ISIC 9211 Passport 1
TRENDS
Over the period of 2006-2012 Mexico’s market for filmmaking grew by 58% without negative
consequences from the global economic hardship, and stood at Mx$8.5 billion in 2012.
Demand for filmmaking is driven by the size of the country’s population, which reflects a huge
potential market for domestic and foreign film producers. The market has shown signs of a
return to its golden age of the 1940s and 1950s. Business accounted for half of market
demand, while the same proportion was represented by households in 2012.
According to the United Nations, Mexico has the largest creative industry in Latin America,
and holds 20th position in the world. The country is the fourth-largest exporter of performing
arts among developing countries.
Mexican filmmakers are facing the issue of piracy, which has a direct hit in terms of lost box
office revenue and other potential sources of revenue in the distribution value chain. Around
60% of Mexicans have purchased a contraband DVD, mainly due to lower price. Therefore,
there are proposals to make the best-produced films affordable for all inhabitants.
Imports of foreign films and filmmaking services increased by 5% over the review period, and
comprised 11% of the market size in 2012. The review period saw the local market becoming
less dependent on foreign production as the share of imports contracted by six percentage
points. The main importers are the US (85% of imports in 2012), Argentina (3%), Ecuador
(0.3%), Spain and Brazil (0.2%).
Mexico’s filmmaking industry expanded by 59% from 2006 to amount to Mx$9.8 billion in
2012. Mexico was making quality films with box office potential and international recognition.
In 2012 Mexico produced almost 100 films. Mexican film After Lucia won an award at the
Cannes Film Festival in 2012. Four successful films were released in 2011, including
animated feature Don Gato, which was seen by three million viewers, Salvando al Soldado
Pérez with two million viewers, the documentary Presunto Culpable, with an audience of two
million, and La Leyenda de la Llorona, with one million viewers.
In general, Mexico’s industry enjoys the success both at home and abroad of its filmmakers:
Guillermo del Toro (Pan’s Labyrinth), Alejandro Gonzalez Iñárritu (Babel) and Alfonso Cuarón
(Harry Potter and the Prisoner of Azkaban). El Estudiante, directed by Gaston Pavlovich in
2009, has become one of the most successful domestic films. The film was seen by four
million viewers over 2009-2011. By the end of 2010 DVD sales numbered 130,000. Another
film, Miss Bala, directed by Gerardo Naranjo, premiered at the Cannes Film Festival in 2011.
It has been screened in 12 countries, and earned almost Mx$25 million at the box office. In
2010, Mexican films received 61 international awards.
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FILMMAKING IN MEXICO: ISIC 9211 Passport 2
Mexico’s filmmaking industry has several advantages. Firstly, it has human talent, filming
facilities, training centres, associated services and post-production laboratories. Filmmakers
usually have strong creative abilities. There is also the geographical proximity to the US, the
leading film producer in the world. Finally, Mexico’s competitive costs attract foreign
investment in production and post-production activities.
The country’s agreements for cooperation with many countries contribute to the success of
the industry. After Lucia was produced in cooperation with France, Don Gato with Argentina
and the UK, Pan's Labyrinth with Spain and the US, and Babel with France and the US.
Over the review period the number of Mexican productions increased as tax incentives were
able to consolidate “the seventh art” as an industry based on a model which involves
government and private sector financing. The country’s government distributes around
Mx$900 million to film projects per year. These funds included the Fund for Quality Film
Productions (FOPROCINE) and the Film Investment and Stimulus Fund (FIDECINE).
Mexican law provides for the setting up of a private capital fund, managed and distributed by
the Mexican Film Institute (IMCINE) via the EFICINE 226 incentive, introduced in 2006.
FOPROCINE financing supports the production of fictional features, documentaries and
animated films. FIDECINE is intended for the production, post-production, distribution and
screening of fictional features and animated films involving commercial showings and good
track records at Mexican and international festivals. For example, filmmakers whose films
have obtained 100% of financial assistance under this mechanism will get the same amount
for making a second film. Filmmakers could apply for only one financial fund at one time but
both funds can be combined with EFICINE 226. As a result, 207 film projects such as first
features, documentaries and animated films were financed with the help of these funds over
review period. In 2011, the country produced 67 feature films, with 58 of them financed by
government funds and nine with private capital.
Production of soap operas, called telenovelas, is another driver of increasing turnover.
Mexican soap opera is of limited duration, broadcasted five nights per week for around six
months. People tend to have their favourite TV shows and follow them faithfully. Even the
ABC network is developing an adaptation of Mexican telenovela Teresa for drama Saving
Grace.
Profits of filmmaking increased by 60% over review period and reached Mx$4.5 billion in
2012. The profitability ratio of the industry remained relatively stable and took up 46% of
turnover in 2012.
The total expenses of the industry sharpened by 59% as B2B costs, representing 92% of
costs in 2012, grew by 63% and labour costs, claiming 7% of overall costs in 2012, expanded
by 25% from 2006. Expenditure on human capital explained a 26% rise in the average wage,
even though the number of employees declined by a slight 0.3% over the corresponding
period.
Exports grew by 26% over the review period and comprised 18% of output in 2012. The major
Mexican export destinations at the end of the review period were Ecuador (28% of total
exports), Peru (17%), Venezuela (14%), Chile (12%) and Colombia (9%). Foreign filmmakers
choose Mexico for its creative talent, facilities and studios. Also, its geographical proximity to
the US, low relative costs and variety of landscapes and locations are attractive factors for
foreign producers. Mexico’s soap operas are especially popular worldwide, being translated
into other languages.
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FILMMAKING IN MEXICO: ISIC 9211 Passport 3
COMPETITIVE LANDSCAPE
Mexico’s filmmaking industry included 289 companies in 2012 – 14% more than in 2006. The
number of micro-sized firms with 1-9 employees increased by 16% and amounted to 244 units
in 2012, while the quantity of medium-sized enterprises, employing 50-249 workers accounted
for eight players in 2012. Medium-sized companies employing 20-49 people generated the
greatest proportion, with 68% of total production in 2012.
The industry is fragmented as there no participants large enough to lead. Well-known
Mexican enterprises are Technicolor Home Entertainment Services de Mexico S de RL de
CV, Paramount Pictures Mexico S de RL, Quality Films S de RL de CV, Argos Servicios
Informativos SA de CV and Estudios Churubusco Azteca SA.
Technicolor Home Entertainment Services de Mexico S de RL de CV provides post-
production and distribution services to content providers. The company engages in
processing motion pictures, and also offers creative/post-production, cinema distribution and
digital cinema services. The company also processes and prints dailies, answer prints,
intermediates and trailers. The company serves the broadcast, cable, feature-film and home
entertainment markets.
Paramount Pictures Mexico S de RL is engaged in motion picture and tape distribution. In
2009 the company operated as distributor in the production of the film The Cloud Painting
Machine.
Quality Films S de RL de CV provides film and video distribution services. The company has
delivered famous films such as Million Dollar Baby, Whale Rider, The Fall, Boogeyman and
others. Quality Films S de RL de CV offers content for television and cinema and also
operates in the marketing segment. The company operates as distributor for the production of
the film 7 Años de Matrimonio in 2013.
Argos Servicios Informativos SA de CV produces telenovelas, films and documentaries. The
company is also engaged in the production of television programmes, news and sports news.
Estudios Churubusco Azteca SA, a private company categorised under motion picture
producers and studios, offers services of post-production, sound, multimedia, stages, studios
and sets. The company contributed to the film La Nuera de Don Filemón in 2010, providing
post-production services.
PROSPECTS
The prospects for the industry are bright as turnover is projected to grow by 46% over 2013-
2018 and reach Mx$14.3 billion in the latter year. The boost of the industry will be driven by
the scheme of financial funding which increases the production and distribution of films.
Mexico’s rising population, predicted to increase by 6% over forecast period, indicates a
growing number of soap opera viewers and also a thriving turnover for filmmakers of
telenovelas. Also, the industry will be characterised by increasing quantity of co-productions
as films produced in cooperation with other countries are considered gainful.
Due to lower costs in Mexico, foreign filmmakers will be inclined to choose the country for
their films’ production and distribution. Continuing problems related to piracy will force
companies to produce movies that offer a superior viewing experience, for example using 3D
technology, and which are better viewed in cinemas.
INDUSTRY OVERVIEW
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FILMMAKING IN MEXICO: ISIC 9211 Passport 4
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FILMMAKING IN MEXICO: ISIC 9211 Passport 5
Source: Euromonitor International from official statistics, trade associations, trade press, company research.
Source: Euromonitor International from official statistics, trade associations, trade press, company research.
FIRMOGRAPHICS
Table 3 Industry Leaders: Company Production Shares in 2010
Production share
(%, 2010)
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FILMMAKING IN MEXICO: ISIC 9211 Passport 6
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FILMMAKING IN MEXICO: ISIC 9211 Passport 7
Source: Euromonitor International from official statistics, trade associations, trade press, company research.
Market Size (MX$ million) 6,175 7,165 7,283 7,411 8,124 8,511
Imported Products 16.4 13.8 14.0 11.6 11.1 11.5
inTotal Market (%)
Share of 83.6 86.2 86.0 88.4 88.9 88.5
LocallyProduced
Products (%)
B2B Sales (MX$ million) 3,236 3,741 3,769 3,759 4,124 4,295
Households 2,939 3,424 3,514 3,652 4,000 4,216
Expenditureon
Filmmaking(MX$ million)
Source: Euromonitor International from official statistics, trade associations, trade press, company research.
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FILMMAKING IN MEXICO: ISIC 9211 Passport 8
HOUSEHOLDS
Table 9 Households: Key Statistics 2007–2012
Source: Euromonitor International from official statistics, trade associations, trade press, company research.
© Euromonitor International
FILMMAKING IN MEXICO: ISIC 9211 Passport 9
Source: Euromonitor International from official statistics, trade associations, trade press, company research.
SUPPLIERS
Table 10 Supply Structure 2007–2012
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FILMMAKING IN MEXICO: ISIC 9211 Passport 10
LABOUR COSTS
Table 13 Key Statistics 2007–2012
Source: Euromonitor International from official statistics, trade associations, trade press, company research.
Source: Euromonitor International from official statistics, trade associations, trade press, company research.
© Euromonitor International
FILMMAKING IN MEXICO: ISIC 9211 Passport 11
Source: Euromonitor International from official statistics, trade associations, trade press, company research.
© Euromonitor International
FILMMAKING IN MEXICO: ISIC 9211 Passport 12
Source: Euromonitor International from official statistics, trade associations, trade press, company research.
© Euromonitor International
FILMMAKING IN MEXICO: ISIC 9211 Passport 13
Bargaining power over buyers: the measure is calculated as the industry’s average
percentage share in its three major buyers’ costs. It evaluates the potential power of the
industry to negotiate the price of its production and set other sales conditions.
Barriers of entry: a share of large companies in the total number of companies within the
industry. The share of big companies is a proxy for entry barriers and concentration measure
within the industry.
Foreign competition: average annual import share in market size, average of five years. It
shows how strong local companies are in comparison with foreign competitors.
Global opportunities: export share of industry’s production (turnover), the average of five
years. It shows the external industry’s possibilities to supply the foreign markets and implicitly
demonstrates the competitiveness of the industry’s products/services abroad.
The second part of the index reflects the industry’s vulnerability in economic downturn. It is
calculated during recessionary years (2008–2011) and based on several criteria:
Industry’s growth: the compound annual growth rate of production (turnover).
Dependence on capital purchases: ratio of non-investment (B2B) purchases of industry’s
products/services to investment purchases of industry’s products/services. Usually, goods
and services that are treated as capital by companies are pro-cyclical, their reaction to
changes in economic conditions is more sensitive in comparison with B2B purchases.
Dependence on household consumption: the average ratio of household consumption
expenditure to business purchases of the product is used to evaluate the sensitivity of the
specific production category. Usually B2B goods and services experience amplified
fluctuations in their demand compared to final consumption spending categories, which
exhibit lower levels of volatility and are less sensitive to economic downturn.
Durability of the industry’s product: time between the purchase and the complete wearing out
of a product/service. The longer the time the more durable the good is. Demand for durable or
semi-durable goods usually has greater sensitivity to economic slowdowns as time of service
can be prolonged for these goods.
Industry’s resistance to changes in a country’s GDP: measured as the elasticity coefficient of
how sensitively the industry reacts to changes in a country’s GDP.
Industry’s dependency on other industries (forward linkage): the variable, measured as the
horizontal sum of all coefficients of Leontief’s matrix inverse. It measures the cumulative
output decrease in the sector, if the final demand for the production of all sectors were to
decrease by one unit. In a period of economic downturn, it is a measure representing the
power of other industries to affect the industry of interest.
Industry’s ability to affect other industries in the economy (backward linkage): measured as
the vertical sum of the coefficients of Leontief’s matrix inverse. It shows how much influence
the industry has on other industries and how strong these links are. It measures the extent to
which a unit change in the demand for the product causes production increases in all the
industries of the economy. Being one of the key industries in the economy gives additional
strength and resistance to economic shocks.
Each measure of the industry’s performance is compared across all industries in the country
and is then attributed to a corresponding percentile judged on its performance (scale from 1 to
100). The better the value of criteria the higher percentile the industry reaches. The percentiles
are then weighted by their relative importance and the final score is calculated as the weighted
average.
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FUTURE OUTLOOK
Table 15 Forecasts 2013–2018
DEFINITIONS
Filmmaking
Filmmaking includes production of theatrical and non-theatrical motion pictures whether on
film, videotape or disc for direct projection in theatres or for broadcasting on television:
production in a motion picture studio, or in special laboratories for animated films or cartoons, of
full-length films, documentaries, shorts etc., for public entertainment, for advertising, education,
training or news information, processing of motion picture film, publishing of motion picture film.
It also includes supporting activities such as film editing, cutting, dubbing etc., activities of
sound-recording studios, distribution of motion pictures and videotapes to other industries but
not to the general public, including sale or rental of movies or tapes to other industries, as well
as activities allied to the distribution of films and videotapes such as film and tape booking,
delivery, storage etc., buying and selling of motion picture and video distribution rights.
© Euromonitor International