The largest expense reported by surveyed firms was the cost of sales, which represented 45% of total expenses. Royalties, rights, licensing and franchise fees accounted for 23% of expenses, while advertising, marketing and promotions accounted for 12%.
Ontario firms dominated Canadian distribution, earning 83% of total operating revenues in 2006, while Quebec firms accounted for 14%.
Domestic distribution revenue offsets drop in exports
Data analyzed in the remainder of this release are based on establishments whose combined revenues account for about 95% of the industry's total revenues.
The two primary sources of revenue for the industry are distribution of film and video titles and wholesaling of pre-recorded videos. Revenues from the distribution of film and video titles accounted for 71% of total national operating revenues in 2006, while wholesaling revenues accounted for 28%.
Industry distribution revenues from exports dropped significantly from 2005. Foreign sales generated revenues of just $32.8 million in 2006, down from $90.2 million the previous year.
However, this drop in exports was offset by an increase in revenues from the domestic market.
Film and video distributors increased their distribution revenues in four key markets: motion picture theatres, pay and specialty television, conventional television and home video.
The largest revenue increases were from pay and specialty television (+11.1%) and conventional television (+17.9%) markets. Combined revenues for the motion picture theatre market and home video market increased 2.6% from the year before.
Film and video distributors generate the bulk of their revenues from distributing film and video productions. However, they also make money by wholesaling these videos. Firms that engaged in some wholesaling (as a secondary activity) saw their revenues edge down 0.6% from a year earlier.
Top four companies increase their share of revenues
The top four companies, ranked on the basis of revenues earned, continued to dominate the industry in 2006. These companies accounted for about 73% of total national revenues, up from 71% in 2005.
Expenses for the top four companies decreased 2% over the two-year period and as a result, profits rose from $284 million to $322 million in 2006.
The profit margin for the top four companies stood at 27% while the rest of the industry showed a profit margin of 20%.
The sources of distribution revenue for the top four companies differ from those of the rest of the industry. The top four companies generated almost 70% of their distribution revenues from the home video and conventional television markets, whereas the rest of the industry generated almost 65% of its revenues from distributing to the conventional television and theatrical markets.
Note to readers
Data for 2006 for the Film and Video Distribution industry should not be compared with published data prior to 2005, as significant changes were made to the survey. Data are now collected using a sample that accounts for firms earning 95% of the industry's total revenues. Administrative data are used for the smallest firms.
Data for this release include all provinces. However, provincial data are published only for firms in Ontario and Quebec to protect the confidentiality of survey respondents.
Film distribution companies are engaged primarily in distributing film and video productions to a variety of different markets including motion picture theatres, television stations and commercial exhibitors. They are the film industry's intermediaries, the liaison between producers and exhibitors. Distributors obtain the rights to market and distribute films and videos.
Data for 2005 has been revised.
Conventional television market contributes to increased market share in Canadian content
Distribution revenues from Canadian productions increased in 2006, especially in the conventional television market. In this market, Canadian content accounted for 13.1% of total revenues, up from 4.9% in 2005.
As a result, domestic distribution revenues from Canadian productions represented 11.2% of total domestic distribution revenues, rising from 8.1% in 2005.
In the pay and specialty market, Canadian content accounted for 40% of total revenues, unchanged from the year before. The same was true at movie theatres where Canadian content maintained its 3% share of the market.
| Selected financial statistics for the film and video distribution industry1 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total operating revenue | Salaries, wages and benefits | Total operating expenses | Operating profit margin | |||||||||
| Canada | ||||||||||||
| Quebec | ||||||||||||
| Ontario | ||||||||||||
|
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| Distribution revenue for the film and video distribution industry1, by Canadian and non-Canadian productions, primary market | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2005r | 2006 | |||||||||||
| Distribution revenue of Canadian productions by domestic market | ||||||||||||
| Theatrical market | ||||||||||||
| Pay TV market | ||||||||||||
| Conventional TV market | ||||||||||||
| Home video market | ||||||||||||
| Other markets | ||||||||||||
| Sub-total of domestic distribution revenue of Canadian productions | ||||||||||||
| Distribution of Canadian productions to foreign clients | ||||||||||||
| Total distribution revenue of Canadian productions | ||||||||||||
| Distribution revenue of non-Canadian productions by domestic market | ||||||||||||
| Theatrical market | ||||||||||||
| Pay TV market | ||||||||||||
| Conventional TV market | ||||||||||||
| Home video market | ||||||||||||
| Other markets | ||||||||||||
| Sub-total of domestic distribution revenue of non-Canadian productions | ||||||||||||
| Distribution of non-Canadian productions to foreign clients | ||||||||||||
| Total distribution revenue of non-Canadian productions | ||||||||||||
| Percentage share of domestic market | ||||||||||||
| Theatrical market2 | ||||||||||||
| All markets3 | ||||||||||||
|
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| Profile of the film and video distribution industry1 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2005r | 2006 | |||||||||
| Operating revenue | ||||||||||
| Total revenue from distribution of film and video titles | ||||||||||
| Wholesaling of pre-recorded videos2 | ||||||||||
| All other operating revenue | ||||||||||
| Total operating revenue | ||||||||||
| Operating expenses | ||||||||||
| Salaries, wages and benefits | ||||||||||
| Licensing costs (rights, royalties and other fees) | ||||||||||
| Cost of goods sold | ||||||||||
| Advertising, marketing and promotions | ||||||||||
| All other operating expenses | ||||||||||
| Total operating expenses | ||||||||||
| Operating profit margin (percentage of total revenue) | ||||||||||
| Employment | ||||||||||
| Full-time | ||||||||||
| Part-time | ||||||||||
| Contract workers | ||||||||||
|
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