Tallinn Film Cluster: Realities, Expectations and Alternatives
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
http://www.bfm.ee/about-bfm/bsmr-journal/
Article
Tallinn Film Cluster:
Realities, Expectations
and Alternatives
Indrek Ibrus, Tallinn University, Estonia; email: ibrus@tlu.ee
Külliki Tafel-Viia, Tallinn University, Estonia; email: ktafel@tlu.ee
Silja Lassur, Tallinn University, Estonia; email: silja@tlu.ee
Andres Viia, Tallinn University, Estonia; email: viia@tlu.ee
6Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
Abstract
The article takes a close look at the entrepreneurial
practices of the Estonian film industry and at how these
particular practices may be understood to influence the
evolution of the film production cluster in Tallinn. It asks
how these processes of institutional evolution of the local
film industry may be understood to influence the specific
nature of audiovisual culture in contemporary Estonia.
The article is based on a study that was conducted in mid
2012. The study consisted of interviews with the repre-
sentatives of the local film industry, including respondents
from production companies (“studios”), post-production
companies and distributors. The second phase of the study
was a confirmative roundtable with the select group that
included the previously interviewed filmmakers and a
few additional industry insiders. The key research ques-
tions were: (1) what are the existing co-operation practices
between companies like and (2) considering the further
evolution of the industry cluster in Tallinn, what are the
companies’ specific expectations and needs. The current
status of the cluster’s competitiveness was evaluated by
using Michael Porter’s model for analyzing conditions of
competition (Porter’s diamond). Also, development per-
spectives of the cluster were evaluated, considering the
needs and expectations of entrepreneurs. Key results of the
research were divided into two basic categories: (1) current
state of clustering of AV enterprises and (2) perspectives
and alternatives of further development of the AV cluster.
Introduction The enhanced dynamism and productivity
Clusters of firms and other institutions that is also expected to spread within the clus-
contribute to the production of culture are tered industry and that is eventually ex-
important in at least two ways. Firstly, as pected to also spill over into related local
will be demonstrated below, they are ex- fractions of the economy, generating eco-
pected to strengthen the industrial base nomic growth in the region. Secondly, as it
of the production activities in terms of its has been emphasised especially within the
economic rationales – i.e. will facilitate an evolutionary economic approach to creative
increase in exchange dynamism and will industries (see Potts and Keane 2011), in
therefore condition additional surplus val- the case of creative industries such clusters
ue for all integrated production processes. have a potential to constitute the ground-
7Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
work for a diverse and dynamic cultural potential of the Estonian film industry. The
milieu that provides the broader ‘national entrepreneurial practices within Estonian
innovation system’ with much needed cir- creative industries in general were inves-
culation of alternate ideas and reflections. tigated in 2011 (Tafel-Viia et al. 2011) in a
That is, creative clusters also have a poten- study that focused on the growth potential
tial for operating as purpose driven incu- of Estonian creative industries’ start-ups
bators for innovative artistic thought and housed in the relevant incubators in Tallinn
experiments, facilitating heightened artis- and Tartu. One of the findings of that study
tic and cultural dynamism in the particular was that compared to start-up companies
region or a city where the cluster is located of other subsectors of the creative indus-
in. It is due to such dual functionality of cre- tries the young micro-companies of audio-
ative clusters and their impact on general visual content production were relatively
societal evolution that they should be care- more inclined towards achieving growth and
fully studied. That is, an academic quest international operations. What is more, the
for evidence is in place, in order to inform film-sector start-ups were also more inter-
the relevant policy process in Estonia and ested in moving their operations to dedicat-
elsewhere. ed production facilities that could then also
The above-described rationale was operate as ‘physical infrastructures’ for the
also among the motivations for a study con- potential cluster. Our new study, presented
ducted in Tallinn, Estonia’s capital in 2012. here, expanded on these findings, the new
In more concrete terms, from the perspec- aim was to investigate the further potential
tive of Estonia’s leading institutions of the of cluster development in Tallinn, based on
audiovisual production sector (Estonian motivational varieties of all kinds of compa-
Film Institute, Film Estonia) there was a nies and institutions constituting the film
need for research into the clustering poten- production industry in Tallinn.
tial in Tallinn. The latter institutions there-
fore commissioned a two-part study from Overview of Estonian film
Tallinn University’s Estonian Institute for production sub-sector
Futures Studies. The present article reports Although only limited data exists on the
on the rationales and findings of that study. economic scale and scope of the Estonian
In more detail the aim of the study was to in- film industry, still the following sections are
vestigate the then existing realities of entre- aimed to contextualize our study by intro-
preneurial practices in the local film indus- ducing some of the basic economic data
try together with their potential cluster-like on the Estonian film sector. Most of the
relationships and other related tendencies. relevant information is taken from a recent
Such a study of clustering in the mapping of the Estonian creative indus-
Estonian film industry was to an extent un- tries conducted by the Estonian Institute
precedented. The operations and practices of Economic Research (2013).
of Estonian audiovisual content production
industries have been generally studied only Incomes
very little. In the last ten years the Estonian There were 363 companies of audiovisual
Institute of Economic Research has mapped content production (the statistic does not
the scope and structuring of Estonian separate between film and television pro-
creative industries including audiovisual duction) officially registered in Estonia in
content production sub-sector three times 2011 (138 companies more than 4 years
(2005, 2009, 2013)1 by mainly combining earlier, in 2007). The number of people em-
all the existing statistical and market data. ployed in the sub-sector in 2011 was 1092.
In 2007, a consultancy called Peacefulfish The gross income of the subsector was
conducted a cost analysis of the clustering €50.7 MM. Income from sales was €43.7
MM, constituting 86.3% of gross income.
1 See http://www.ki.ee/ Public funding for film production consti-
8Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
tuted an additional 12.3% (€6.2 MM), local and 234 people were involved with screen-
governments contributed €27 000 (0.1%). ing films (operating cinemas). Turnovers
Lastly, production support from internation- were highest in screening business, produc-
al funds was 1.3% (€700 000). Gross profit tivity in post-production.
of audiovisual (AV)-sector companies was
€3.5 MM – constituting 0.08% of Estonia’s Films produced
private sector gross profit. At the same 187 films were produced in 2011. 25 of
time, AV-sector turnover constituted 0.12% these were “cinematographic films”, includ-
of private sector turnover in 2011 – the ing 13 “feature length” films, and 162 “video
difference pointing to comparatively lower films”. The 25 “cinematographic films” could
productivity in audiovisual content produc- be suggested to to be part of a standard
tion in relation to the rest of the economy. film industry value chain – i.e. films being
When it comes to public funding, screened in cinemas and sold on DVD/VOD.
the main funding agency is the Estonian The other “video films” were either advertis-
Film Institute (before 2013 known as the ing, promotional films or various produc-
Estonian Film Foundation) that distributes tions for TV.
money that mostly comes from the state
budget – in 2011 €3.1 MM for film produc- Audience
tion support. The second biggest contribu- The size of home market has been in Estonia
tor is the Estonian Cultural Endowment that as problematically tiny as elsewhere in
gets its funds mostly as a share of Estonian Europe. In 2011, Estonian films were watched
alcohol, tobacco and gambling taxes – in in cinemas by 172 290 people, which makes
2011 contributed to film-related activities 7% of all film consumption in cinemas. In
(not only production, but also support for 2012, the numbers were respectively 195 488
festivals, grants for travels, etc.) in the people and 7.6%. The most viewed Estonian
amount of €1,4 MM. The rest of state fund- film in cinemas was “Lotte ja kuukivi saladus/
ing comes straight from the budget of the Lotte and the Moonstone Secret” with
Ministry of Culture (€523 000 in 2011) 63 800 viewers – which took it to 6th place
together with some appropriations by the in the “most viewings” ranking list in Estonia.
Council of Gambling Tax (€12 000 in 2011). A year later the most viewed Estonian film
The main source of business revenues is was “Seenelkäik/Mushrooming” with 73 700
the production of TV commercials and other viewers and 4th place in the ranking. One of
TV content. Incomes from ticket sales, VOD the major challenges limiting the potential
(video on demand) services and DVD or growth of these numbers is the small number
license sales may vary, but is not always of regularly operating cinemas in the coun-
insignificant. Unfortunately, especially try. There was only 12 cinemas that operated
the latter three are currently unknown in the three biggest towns, elsewhere films
variables – there is no data available to were shown publically only irregularly – on
make justified assessments of their scales. semi-improvised screens and as secondary
activities in museums, theatres and other
Structure public buildings. The 12 cinemas in opera-
As elsewhere, the film industry is divided tion had altogether 74 screens, 15 of them
into the following sub-divisions: production digital (18 in 2012). The small number of dig-
(“studios”), post-production, distribution, ital screens undermines further efforts to
and cinemas. Out of these 198 companies strengthen the home market scale.
and 390 people were involved in producing With an approximate one-year delay, most
“films”; 64 companies (155 people) were films also make it to local TV channels where
busy with producing TV programmes; the audience numbers are normally multiplied
63 companies (160 people) were employed by tens, however the income to production
in post-production; 15 companies (25 peo- companies from these local TV license sales
ple) were doing distribution; 7 companies is normally financially insignificant.
9Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
International reach Clusters in
There is no data comprehensive enough creative industries
on film-sector exports (both license sales Generally, economic clusters are considered
and services), but when it comes to inter- to be agglomerations of interconnected en-
national marketing efforts there is infor- terprises and organisations of an industry
mation of 9 “market screenings” at Cannes that are all located in the same geographi-
and Berlin film festivals (“The Graveyard cal area (Porter 1998). There are two main
Keeper’s Daughter”, “A Friend of Mine ”, schools of thought that provide the concep-
“Letters to Angel”, “Rattrap”, “Idiot”, “Farts of tualisation of a cluster. Firstly, an economic
Fury”, “Cubaton”). When it comes to festival approach that departs from a point of view
screenings 79 films were screened at inter- of economic statistics defines a cluster as
national festivals in 2011 (344 screenings an agglomeration of enterprises in a certain
altogether) and 185 films in 2012. territorial unit and focuses on how the links
between enterprises could be used more
Organisation and education efficiently. Alternatively, social scientists
There is a variety of institutions that and geographers tend to postulate sets of
shape, delimit and drive the film industry certain minimum requirements (concerning
in Estonia. The Estonian Film Institute as the types of relationships between enter-
the main funding agency, which also takes prises and the intensity of communication
care of some of its general development between them), the existence of which justi-
work (marketing, heritage digitisation, etc.) fies the application of the term ‘cluster’.
is normally perceived as the driver with These disciplinarily different ap-
clout when it comes to local production is- proaches to cluster conceptualisation have
sues. Film Estonia is the institution respon- not been mutually exclusive. Cluster con-
sible for marketing Estonia’s film produc- cept has widened as well as diversified over
tion services and also manages a post-pro- time. Several (additional) characteristics,
duction facility as a rental service. When it including deeper understanding of the
comes to self-organisation of professionals actors and their activity patterns, spectrum
and the industry then these processes are of goals of the cluster, different types of
very fragmented – there is a weak all-en- partnerships between cluster participants,
compassing Estonian Filmmakers’ Union etc. have emerged as analytically relevant
with mostly older generation filmmakers as when explaining the development of clus-
members and a multitude of smaller associ- ters. Gordon and McCann (2000) have dis-
ations for producers, directors, DOPs (direc- tinguished three different types of cluster
tors of photography), studios, documentary models that historically emerged at differ-
filmmakers, animators, etc. Such structuring ent points in time. The first is the classic
keeps the industry fragmented and hinders model of agglomeration based on either
its further integration, including potential local resources, demand or other advan-
clustering. An institution that may contrib- tages offered by the local economic envi-
ute towards integrating the industry is the ronment (Marshall 1925; Hoover 1948); the
regionally vital Tallinn University Baltic Film second is the neo-classical model that fo-
and Media School (BFM) – with its new pur- cuses on value chains based on direct eco-
pose-built house in downtown Tallinn that nomic links between enterprises (Moses
also accommodates two studios, as well as 1958; McCann 1995); and the third is post-
the post-production facility of Film Estonia. industrial social network or club model
BFM has a potential to function as a space based on social relationships and trust be-
that brings the industry professionals and tween the members of a cluster (Harrison
its offspring together. When it comes to 1992; Granovetter 1985). These different
industry evolution BFM with its more than approaches have also been somewhat
400 registered students is important in convergent; we may recognize that cluster
terms providing a trained workforce. models based purely on economic factors
10Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
have evolved over time to include as well as fostering the export activities of
socio-cultural dimensions. enterprises. In terms of the development of
The researchers studying the specific a cluster, this signifies an opportunity for
nature of creative industries’ clusters more efficient local interactions and coordi-
(e.g. Pratt 2004; Roodhouse 2006; Davis nation of activities, but also for more direct
et al. 2009; Evans 2009a) tend to suggest links with related dynamics globally.
that compared to more conventional clus- In terms of the structure of the cultural
ters the objectives of creative clusters are labour market, one of the main character-
connected to either social or cultural goals istics of a network society is the increas-
in addition to economic and growth targets. ing individuation of the society, which may
Therefore, we propose that in order to strengthen the standing of individuals in
explore the evolution of the film cluster in labour relations, production processes and
Tallinn we need to analyse cluster charac- industry structures. Networks condition in-
teristics and the related developments on dividuation as the “nodes” of networks are
the one hand, and the specific peculiarities now constituted by the individuals rather
of actors (enterprises) in audio-visual sec- than different communities or institutions.
tor in particular, on the other hand. What is Managing the flow of information in a net-
more, in this article we take the approach work society is increasingly the responsi-
that an agglomeration of enterprises and bility of individuals, and consequently, the
organisations located in a common region same applies to labour relations and crea-
is only a potential cluster. We proceed from tive activities. In addition, the decreasing
an understanding that, for the formation of cost of technologies of media production
an actual cluster to take place, two parallel must be mentioned since this allows for
processes have to amplify each other: first, smaller production units that replace the
economic cooperation between enterpris- huge studios and other “industrial” produc-
es and, secondly, communication between tion facilities of the past. Additionally, the
the key individuals of those companies that increasing specialisation within the knowl-
creates synergy and establish trust. edge-based industries must be taken into
Proceeding from the need to investi- account as this has led to the evolving com-
gate the relationships that constitute and plexity within creative industries – where
shape the modern creative clusters we pro- a specific service can often be acquired
pose that the specific networking dynamics from only a very small set of adequately
in such clusters and therefore the nature skilled individuals or enterprises. Also the
and evolutionary dynamics of clusters are dynamics characterising most media mar-
also affected by an ongoing socio-cultural kets – that these tend to evolve towards oli-
circumstance, i.e. the evolution of the “net- gopolistic structures – may often condition
work society” (Castells 1996; van Dijk 2006). that the sheer majority of companies in the
What this concept refers to is that most so- audiovisual sector is constituted by micro-
cietal relationships tend to be structured by sized independents. Resulting from all the
the Internet as an infrastructure that condi- aforementioned causes, the audio-visual
tions people to form networks for almost all sector of the network age consists increas-
activities regardless of whether it includes ingly of micro-enterprises with only a few
production, consumption or experiencing. employees.
The paradox of networks lies in their strong One of the consequences of this for
ties to a location but also in their irrevers- creative entrepreneurs is that planning
ible connection to the largest of global net- their career and securing an income entails
works. This causes all networks to func- a greater risk. Work is becoming unsteady,
tion at their most efficient on the local level irregular, temporary and project-based; of-
while being more or less directly influenced ten, individuals work part-time for several
by international dynamics, thus supporting companies fulfilling various roles. In this
individuals in making international contacts context, individuals always have less
11Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
influence and power than larger communi- to grow together. On the other hand, it is the
ties to secure their jobs. At the same time, trust between individuals and the opportu-
Gill (2007) has pointed out a paradox that nity for like-minded people to create
creative individuals value this situation as something together.
one that allows for more freedom and inde- The former aspect (overlapping of
pendence. However, it must be understood human and business relationships) is con-
that the individuation of a network society nected to the statements about the wider
is not of the isolating kind but the trend is horizontalisation of relationships in the
instead towards a “hyper-social society”. creative sector. Wirtz (2001), among others
“Networking” or the conscious creation and has suggested to that it is increasingly
managing of contacts is developing into the justified to talk about the complexity of
main method of managing risks involved in “value nets” instead of linear value chains.
individuation. Gill has demonstrated that “Co-opetition” is another well-known con-
conscious and purposeful networking strat- cept, which refers to the fact that coopera-
egies are characteristic of “independents” in tion and competition might not be mutually
a wide array of creative industries. exclusive in modern creative sectors. These
As several researchers (Banks et al. concepts must simultaneously refer to the
2000; Deuze 2007) have demonstrated, the increasing complexity of value chains and
central factor of such networking activities business models during the Internet age
is trust between creative individuals. As (plurality of parallel business models, their
mutual trust and habits of cooperation mutability and therefore the unclear bar-
develop, especially when the often project- gaining power of enterprises) and also to
based practices of creative industries is the horizontalising effect that the Internet
taken into account, we see the same or sim- is often considered to have.
ilar teams working on a string of projects. Based on this logic of increasing ambi-
Organising work in such a manner is very guity of relationships between micro-enter-
characteristic of producing audiovisual con- prises and on the related market uncertain-
tent. The fact that relationships in creative ties, Potts et al. (2008) have proposed a new
industries may directly condition how work concept for describing the modern creative
is organised points to the question of cor- industries. It is called “social network mar-
relation between the social relationships of kets”. This concept recognises that in the
individuals and the exchange relationships case of creative industries we must look
between enterprises in the sector. As ex- beyond the “industry”-centred interpreta-
plained above, creative sectors are charac- tion. The central characteristic of creative
terised by the importance of both of these industry is not the inputs and outputs of a
aspects: horizontal relationships between production process but first and foremost
people and vertical relationships (value the specifics of markets or more precisely
and supply chains) between enterprises. their ambiguity. The nature, value and ulti-
However, in the case of micro-enterprises, mately the prices of cultural products are
these verticals can almost overlap; this is always unknown variables to consumers
important because, as previously demon- and to a certain extent also to the produc-
strated, the Estonian film industry mainly ers themselves and therefore difficult to
consists of micro-enterprises. In other determine. Resultingly, the economic and
words, both economic and social dynamics financial relations are not easily stabilised
are behind the development of a cluster in creative industries and there is therefore
in the film industry. On the one hand, the also no place for price competition. This
economies of scope logic may lead to the ambiguity is alleviated by social networks
formation of clusters – the need to de- that link both producers and consumers. As
crease production costs while making pro- was previously mentioned, social networks
duction more efficient, the opportunity to are characterised by trust between their
discover synergy between enterprises and members and a certain similarity in value
12Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
systems. Therefore, the central factors on a agglomerate in more organic ways as many
market full of ambiguities are the choices of creative projects are implemented one after
other trusted network members and recom- another in cooperation among loose sets of
mendations for consumption made on the creative individuals/micro-companies. Such
basis thereof. In the creative industries of clusters are therefore formed on the basis
the networking age, decisions to consume of real cooperation and existing dynamics
or produce are made primarily on the basis – where there is activity, more will follow if
of feedback from networks. the circumstances are right. Several stud-
Based on Potts and his colleagues, ies have demonstrated that it is relatively
contemporary creative industries should more characteristic of creative clusters to
not be interpreted simply as subsidised arts converge in a small territory (Lazzeretti et
or the “cultural industry” or “creative busi- al. 2008; Evans 2009a, b). The convergence
nesses” but as a large number of specific of creative enterprises often means they
goods and services that are always “new” are located on a single street or in the same
and without a clear “use value”. In order to quarter. Such spatial proximity is expected
determine their value, network participants to promote intense everyday communica-
must rely on the filtering capability of their tion between creative individuals and com-
social networks. Due to this, the adjusted panies. According to a widespread view,
definition of creative industries is as most creative clusters are de facto cultural
follows: “The set of agents in a market char- quarters and not economic clusters as de-
acterized by adoption of novel ideas within fined by Porter. Strong agglomeration is also
social networks for production and con- generally characteristic to AV companies
sumption” (Potts et al. 2008). The arts are al- that are, pursuant to geostatistics, some of
ways striving towards new representations the most highly concentrated companies
and are therefore valuable for the society in Europe. Over 60% of the enterprises have
and economy due to their ability to gener- converged to a certain territory; these clus-
ate new meanings and ideas; therefore, the ters are generally situated in capital cities
communicative dynamics of networks help and located in city centres (Boix et al. 2011).
to filter out the most valuable. Therefore, Similarly to the previously described proc-
the networks of the creative sector can esses, the formation of AV-industry clusters
be seen as coordinating mechanisms for is not so much dependent on the proximity
innovation processes. In this context the of their customers as on the higher concen-
evolution and the specific nature of creative tration of creative individuals and, therefore,
clusters as networking hubs can be consid- on the related socialisation opportunities in
ered significant in terms of generating an inspiring environment. What is more, con-
innovations with economic value as well as cerning the specific nature of clusters that
for facilitating broader cultural dynamics in have specialised in producing audiovisual
a particular culture/society. What is more, it content, Lorenzen (2007) has drawn several
is the dynamics of internet-mediated ‘social conclusions from his analysis of the world’s
network markets’ that can be suggested (large) film clusters about the aspects that
to facilitate the increasing emergence of ensure sustainability. Two of these aspects
‘virtual clusters’ in the creative industries. also have direct relevance for small clusters
Due to the dual functions of not only in small countries and also for the discus-
generating economic growth, but also cul- sions in this paper. The first of these is that
tural dynamism, creative clusters are not the frequency of cinema visits and the pur-
usually formed in the same manner as ge- chasing power of the home market influence
neric industrial clusters, the agglomeration the number of films produced. Secondly,
of which is often based on the strengths of public sector policy influences the home
the local markets or the existence of insti- market and the export of most film clusters.
tutions that develop technologies (universi- That is, the public sector policy is an im-
ties). In case of creative clusters, companies portant factor influencing the development of
13Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
film clusters. However, there is still no un- either the owners of the companies or with
ambiguous data about which kind of inter- their senior executives (often having both
ference of the public sector helps the clus- roles).
ters achieve the best results. According to a The interview schedules consisted of
study of cluster initiatives (Sölvell 2003), it 57 questions divided between five sections:
is possible to presume that interference by (1) personal profile of the entrepreneur,
the public sector is more successful when a including educational background, social
contribution is made to an existing cluster activity, previous career; (2) the motives for
that has a relatively uniformly understood becoming an entrepreneur; (3) company
common vision about increasing its com- profile, including a) organizational structure
petitive edge. and management, b) business model such
In the light of the above, our study as competitiveness factors, pricing practice,
aimed to focus on the nature of the existing profile of the target group, market position,
companies in the film industry (their prac- and c) cooperation partners and forms;
tices, motives, capabilities and cooperation (4) the development perspectives of the
patterns). On the one hand, this is due to company, including the growth patterns and
the fact that organisations and networking strategies, activity plans, success factors;
are one of the most important factors from and (5) requirements from support
the point of view of cluster development; structure, including the practice of using
therefore, when assessing the potential of public sector support, the expectations
a cluster, it is important to consider how towards the cluster in terms of services,
“organic” the current cooperation of enter- location and members. Majority of the
prises and creative individuals belonging questions were open-ended; nine questions
to it is. had a finite set of predetermined answers.
All interviews were recorded and tran-
Methods of data scribed verbatim that resulted in 420 pages
collection and analysis of interview texts.
The data and findings presented in this The interviews were analysed using
article are based on the research project text analysis method and combining various
carried out in 2012. The data was collected coding practices (Hsieh 2005; Lahe-
using semi-structured in-depth interviews. rand 2008). Based on the grounded theory
The interview corpus was composed on approach the main themes (problems,
the basis of the following principles: (a) to opportunities, strengths, etc.) related to the
encompass representatives from all key film industry were identified and the typol-
subfields in the local film industry includ- ogy of enterprises was developed contain-
ing representatives of production com- ing three following types: growth-oriented
panies (“studios”), post-production com- enterprises; enterprises with features of
panies and distributors; and (b) to include growth-orientation; and lifestyle orientation
entrepreneurs with both shorter and longer enterprises. In the following, the situation of
entrepreneurship experience in order to clustering of Estonian film companies was
evaluate how the differences in the devel- analysed on the basis of “Porter diamond”
opment stages of the company influence framework (Porter 1990, 1998. 2001), which
the attitudes towards clustering. The final analyses the competitive advantage by us-
corpus formed by following the “snow-ball ing four factors: (1) factor conditions, (2) de-
method” (Atkinson and Flint 2004) and prin- mand conditions, (3) firm strategy, structure
ciple of corpus saturation – i.e. the number and rivalry, and (4) related and supporting
of respondents proves sufficient if one can industries. Factor conditions can be seen as
observe repetitive patterns in interview dis- advantageous factors found within a coun-
courses. Representatives of a total of 19 en- try that are built upon and further developed
terprises of the local film industry were in- by companies – for instance, highly skilled
terviewed. The interviews were made with workforce, the presence of necessary
14Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
Factors Interview topics
Factor conditions a. Education and professional background of
the interviewee
b. Relevant factors of location for the company
c. Actualisation of intellectual property rights
d. Entrepreneurial environment and access to
finances
e. Relevant infrastructure
f. Financial incentives and entrepreneurial support
from public sector
Firm strategy, structure and rivalry a. Description of the company (age, employees,
structure, etc)
b. Description of the company’s business model
today and after three years
c. Competitive situation (advantages and
disadvantages of the company)
d. Cooperation models, -partners, -networks
Demand conditions a. Demand for the company’s products and/or
services
b. Market orientation (home vs. foreign)
c. Factors that hinder the demand
Related and supporting industries a. Cooperation partners in related industries today
and in the future
b. Reactions to the new possibilities
(e.g. derived from technological developments)
Table 1. Interview topics related to Porter’s four determinants.
Source: Study “The enterprises of the audiovisual sector – the situation and needs for clustering”;
conducted by the authors.
15Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
infrastructure, established financing es regarding the competitiveness of the
mechanisms, etc. Demand conditions Estonian film cluster. Thirdly, we describe
describe the specifics of home-market the future alternatives for the Estonian film
demand for the products or services of the cluster. See also Figure 1 that describes our
particular industry. Firm strategy, structure interpretation of Porter’s four factors in the
and rivalry encompass factors such as how case of the Tallinn film cluster in more detail.
companies are organised and managed,
as well as the nature of domestic rivalry. Supportive factors of
Related and supporting industries concern Estonian film cluster
the presence or absence of supplier indus- The main supportive factors of the Estonian
tries and other related industries. The ad- film cluster can primarily be associated
vantage forms if these kinds of industries with two of Porter’s factors: the ‘factor
are closely intertwined, their actions are conditions’ and ‘firm strategy, structure
well coordinated, they work together for in- and rivalry’. Altogether the study identified
novation and achieving cost-efficiency. The six main aspects that speak for the forma-
interview topics corresponding to each of tion of a competitive film cluster in Estonia.
the four factors are presented in Table 1. Three of these relate to the business prac-
An analysis of the four factors was tices of Estonian film companies. The first is
used to assess the strengths and weak- the general growth orientation and interna-
nesses of the competitiveness of Estonian tional ambition of film companies. Although
film sector. After this the development the landscape of Estonian film is diverse –
alternatives for Estonian film cluster were consisting of tens of micro and small com-
identified that derive from the synthesis panies and representing a wide spectrum
analysis of the Porter’s factors. At this stage of different kinds of business models and
scenario analysis (Burmeister et al. 2002; activity patterns, the results indicate that
Heijden 1996) was used that enabled the about half of the respondents have plans
stimulation of alternative future perspec- for expansion – to develop the organisa-
tives. Eventually the most common model tion and increase the number of employees.
– the four-variant structure – was used. The Growth was normally seen to be generated
four alternatives were modeled by cross- by launching international operations and
ing two axes that reflect the most important entering foreign markets. Even those com-
variables or trends relating to the studied panies that exercise lifestyle-type business
phenomena. Our analysis proceeded in two models (characterised by having broader
steps. First, we identified the most diver- social goals, also non-monetary motivation-
gent opinions among the interviewees, and al factors and non-hierarchical structures
second, singled out the areas where the and informal relationships) considered in-
biggest development opportunities were ternational orientation important, at least
seen by the interviewees. in the future perspective.
The second factor relates to the coop-
Findings: Supportive eration pattern of Estonian film companies.
and deterring factors of The results indicate that film enterprises
the film cluster in Tallinn already have tight and functioning coop-
Although one can find supportive and eration patterns. People in the film sector
deterring aspects within each of the four are often engaged in each other’s projects,
of Porter’s factors, it can be suggested that, even managers or owners of a film com-
overall, some of these tend to be more pany are often involved as professionals
developed and influential than others. We (e.g. as DOPs, directors, editors, etc.) in the
introduce the findings in three parts. Firstly, projects of other film studios. Certain dif-
we present the main supportive factors ferences in cooperation patterns appeared
of clustering in the Estonian film sector. among companies with different business
Secondly, we introduce the main weakness- models. Growth-oriented companies
16Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
(companies that intend to increase the qualified human resource. The majority of
number of employees, that consider hiring the respondents have graduated from uni-
a manager or have already done so, or that versity and two third of the interviewees
have an explicit growth strategy) represent had obtained education in audio-visual me-
rather stable teams on their own and coop- dia. However, a significantly small number
erate with other companies more on an or- of entrepreneurs have a business-related
ganisational level. The networking pattern education. Entrepreneurs evaluate their
among lifestyle-oriented companies again competences rather high, but this applies
is very variable, depending on projects and first and foremost to their film-related pro-
people. But irrespective of the business fessional competencies. The interviewees
model, cooperation works both in terms of also expressed rather systematically that
horizontal as well as vertical relationships. experienced and well-educated workers
Our study confirmed what was already stat- constitute their competitive advantage. The
ed in the literature overview: the creative well-qualified workforce in Estonia’s film
sectors (and potentially: clusters) are char- sector can, at least partly, be related to the
acterised by both kinds of relationships be- fact that a higher education institution of-
tween enterprises as well as professionals. fering film and media education is situated
Furthermore, the cooperation pattern in Tallinn. Tallinn University Baltic Film and
of Estonian film companies also follows the Media School can be considered a separate
co-opetition model. This indicates that co- factor supporting the further clustering of
operation and competition are not mutually Estonian film companies.
exclusive, on the contrary. One day the com- The clustering is also supported by
panies may compete for external financial the existing agglomeration of the Estonian
support, the next day they may be working film sector to Tallinn; moreover, most of the
together again on their next project. They are companies are located in the city centre or
‘colleague–competitors’ as one interviewee in its close neighbourhood. For most of the
said: companies, the most decisive factors when
choosing the location were: (a) good access
...in Estonia, we only compete with – both for employees and clients, (b) rea-
other companies at the same level – sonable rental price, and (c) the existence
in the sense that whether or not they of other companies of their kind nearby, the
have better ideas than us, so that ac- latter associates with typical creative clus-
tually we are in the same group with ter characteristics described previously. In
these companies, so we are colleagues addition, high-speed Internet, vibration free
and competitors, it is a positive com- environment, the height of the rooms and
petition /.../ we tend to see people with other similar factors were also considered
a similar competence as competitors, important. Quoting the interviewee:
they are in a similar situation, search-
ing for interesting ideas and think in Where we are located is extremely im-
the same way, at some point we will portant. Environment has to be such
share experiences and exchange ideas that you want be there and want to go
anyway; /.../ So in this sense, it is sort there, that inspires you. /…/ For us it is
of like challenging each other as col- important that we have a parking space
leagues in order to develop. [18]2 and that around us there are other crea-
tive people from other fields of art. And
The next three supportive factors relate in that we have a fast Internet connection.
different ways to Porter’s ‘factor conditions’. And that there is no electricity disrup-
The first is the relatively well-educated and tions or that rain would not pour in. [5]
2 The number refers to a respondent. Numbers were
given to grant respondents anonymity.
17Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
Deterring factors of ronment is not favourable for film pro-
Estonian film cluster duction. This is the main problem that
The main factors deterring the further at the moment sets us on a weak
evolution of Estonian film cluster relate competitive position. [16]
primarily to Porter’s other two factors: first
of all the ‘demand conditions’, but also to Analysis of the demand situation also re-
‘related and supporting industries’. vealed one of the biggest differences among
‘Demand conditions’ of Porter’s dia- the film sector actors. There is a clear
mond turned out to be the most problem- distinction between film producers and
atic factor for the Estonian film cluster. The post-production companies. When the
study revealed that small local market and majority of film producers indicated that
low domestic demand are the most critical demand for their products or services is
factors, which impede the development of rather limited then all post-production
film cluster. More than half of the respond- companies admitted that demand for their
ents claimed that Estonian market is too services is high or even increasing.
small to make a living. Thus, the majority of The second hindering factor that sup-
film companies seek opportunities to orient presses the growth of domestic demand is
themselves to international markets (which the limited access to Estonian films by the
also explains the high rate of international local audiences. The small numbers of cin-
ambition of Estonian film entrepreneurs). emas operating across the country causes
International examples of successful film this. Currently there are cinemas that op-
clusters (although mostly outside Europe) erate daily in only the three largest cities
are predominantly supported by the notable in Estonia. The inability of inhabitants of
purchasing power of the domestic market. smaller towns to consider cinema-going
Demand for servicing foreign productions for entertainment (or enlightenment)
has also been rather modest. Although, purposes curbs the domestic demand for
several interviewed film entrepreneurs em- Estonian film. The interviewees empha-
phasised that servicing foreign produc- sised also that VOD services are still un-
tions in Estonia continues to be an under- derdeveloped. Only a few interviewed en-
used opportunity and a line of business trepreneurs indicated that a share of their
that has to evolve and should be promoted. income comes from digital distribution.
The respondents saw benefits especially Nevertheless, the majority of the respond-
in getting new experiences and contacts. ents saw that several new opportunities
At the same time, Estonia is positioned could emerge based on the further devel-
rather poorly compared to other countries opment of new media platforms and
in attracting foreign productions to film in distribution opportunities.
Estonia due to the lack of dedicated tax Certain shortages related to film pro-
exemptions in Estonia. duction infrastructure can also be consid-
ered as barriers to clustering. The interview-
What makes the situation difficult for ees claimed that, in general, the technology
us is that increasingly more countries and equipment necessary for film produc-
are offering tax exemptions to foreign tion are accessible to them. However, the
film producers. And as Estonia does absence of a proper large-scale film studio
not offer these, it may often happen together with related services was high-
that the producer chooses a studio lighted as a growth barrier to the Estonian
in a country that offers these exemp- film sector (including to servicing foreign
tions. So it may happen that won’t win productions in Estonia). The need for the
a competition and get some available new studio was also one of the topics
job not because we don’t measure up where the opinions of the interviewees
to quality- or pricing standard but be- diverged most often. One group of inter-
cause in our country the general envi- viewees argued that the new studio would
18Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
be an important prerequisite for strength- one hand, the entrepreneurs consider it too
ening the sector’s capacity. The others were risky and, on the other, the banks are not
again sceptical about the cost-effective- eager to lend to markets that are generally
ness of the related investments. Even if perceived to be rather unpredictable for all
the Estonian film production sector would the aforementioned reasons.
attract more foreign productions to Estonia, The study also revealed that the
the numbers of local professionals to Estonian film sector significantly lacks ties
cover the whole flow of film production are with other sectors. When it comes to other
still limited – which would question the fields of art then strong and effective part-
rationale behind developing new expensive nerships have been built between film and
infrastructure. the performing arts – theatre and music.
Also, the dependence on public fund- The interviewees praised the cooperation
ing could be seen to hinder the clustering with actors and musicians and their um-
of Estonian film sector. In most cases, the brella organisations that have helped to for-
Estonian film production activities rely only malise clear standards, for instance, for re-
on public sector funds. There is no indica- muneration among other aspects. The links
tion that the volume of state funding could with other sectors and industries are sub-
increase in the (near) future, this in turn stantially weaker. However, closer coopera-
limits unavoidably the potential to increase tion with other sectors, especially with the
the volumes of the (local) audiences. information and communication technol-
ogy (ICT) sector, was seen as an opportunity
If about two or three motion pictures by the majority of the interviewees. When it
are produced in a year here, then they comes to such potentially interdisciplinary
just disappear into the rest of the cooperation then one of the hindrances is
mass and well, you must train a person also the lack of cooperation with research
to watch locally produced films in and development institutions. None of the
the same way. If we were to produce respondents in this study indicated that
8 films a year for 10 years, then people their company is cooperating with research
would sort of learn and grow to watch institutions.
these films. [2] One of the deterrents to clustering is
the relative weakness of the film-sector’s
There are only a few examples of involv- umbrella organisations – an aspect influ-
ing private sector finances (e.g. loans, in- encing its inherent coherence. There are
vestments, sponsorships). This can be ex- multiple associations and unions that as-
plained to an extent by the limited financial sociate themselves with the film sector in
competencies of film sector entrepreneurs. Estonia, but many of them are rather inac-
But this is also due to the small size of the tive. The interviewees argued that the um-
local market and other limitations to the lo- brella organisations are too fragmented
cal demand described above that may curb and do not speak with one ‘voice’. According
the motivations of potential investors. Also, to interviewees these are also of little use:
Estonian production companies tend to be they are especially weak in organising joint
focused on producing art house films rather cross-border activities, similarly in finding
than targeting either mass audiences with partners and fostering cooperation projects.
more entertainment oriented content or Still, one can observe several positive devel-
producing genre films (for instance horror, opments in the recent years. While the mul-
sci-fi) for the long tail of global niche audi- tiplicity of umbrella organisations contin-
ences. ues to keep the sector fragmented, new in-
When it comes to financial capabilities stitutions have emerged that have facilitat-
then the overall ability and openness of film ed new forms of joint international opera-
companies to take loans to support their tions. The establishment of Estonian Digital
development goals is rather modest. On the Centre and Estonian Film Commission both
19Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
increase the reputation of Estonia as a companies, for example, and anima-
location for film production. tion studios and let us say sound stu-
dios, and then, that they are together
Development alternatives a group that produces material for TV
for Estonian film cluster and cinemas. Then there is the game
Here we introduce the possible develop- industry and the Internet industry that
ment alternatives for the Estonian film also use people with similar skills. [8]
cluster that were derived from the synthe-
sis analysis of Porter’s four factors. We start The second factor relates to the infrastruc-
by describing the two factors, which formed ture and environment conditions necessary
the basis for the construction of the devel- for cluster development. The need for the de-
opment alternatives. The first factor relates velopment of the infrastructure and environ-
to the diversity of actors and fields related ment that supports the development of the
to the cluster. On the one hand, several in- film sector was commonly understood and
terviewees expressed their doubts about valued, although the choices for that were
strengthening cooperation with other in- seen differently. One group of interviewees
dustries. Some of the interviewees even clearly favoured the development of physi-
questioned the need for strengthening the cal infrastructure, including the film pavilion.
cooperation within the audio-visual sector For them the lack of necessary infrastruc-
as film producers and television producers ture was a barrier to the film sector’s devel-
or film producers and post-production opment and the establishment of a physical
companies are supposedly different kind of edifice with contemporary technology would
actors with varying development needs. In bring growth opportunities for the film sec-
order to find solutions to the development tor. The other group of interviewees consist-
problems bigger fragmentation was seen as ed of those who, although they saw the need
a solution. Quoting an interviewee: for the development of a new production fa-
cility, doubted the cost-effectiveness of the
For me it is very important, for many investments. This was explained with the
film makers it is very important to rapidly changing technology and the low de-
draw a thick red line between film pro- mand for these technologies in real terms.
ducers and television producers. The
production specificity is too different. I am with those that think that we
So, if we have film producers then only don’t need to build (a studio) here. This
film producers. The associations for di- is such a bit naive dream. Close to us
rectors and screen writers pronounced similar things have been built, also
also that they don’t want to get in- Russians have built their own. But
volved with TV work since the work many I hear are staying empty. This is
specificity is different. [14] quite like: “let’s try, let’s invest!” But
this is too big to simply try out. I don’t
On the other hand, the cooperation with understand where is the enthusiasm
other fields was seen as an opportunity for of these people coming from? How are
strengthening the capacity and competi- they going to staff all these…? /…/ And
tiveness of the film sector. Collaboration long will the payback period be for this
was seen with the fields that offer syn- investment? [6]
ergy and amplification for film sector: ICTs,
games and media sector were mentioned On the basis of these two factors (axes) the
most often. study identified four development alter-
natives for Estonian film cluster (see also
I can see that there are many ele- Figure 2). The following describes the prin-
ments that create synergy between cipal characteristics of each of the four
companies. So let us take production alternatives.
20Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
FACTOR FIRM STRATEGY, STRUCTURE AND RIVALRY
CONDITIONS + orientation towards internationalisation
+ educated and + tight cooperation between enterprises
competent human + cooperation and competition go hand
resources in hand
+ concentration to
the city centre – small and weak enterprises
+ accessibility of – project based activities predominantly
technology
+ state financing
system
+ Tallinn University
Baltic Film and
Media School
DEMAND
+/– Estonian Digital + development
Centre, Estonian of cross-media
Film Commission
– small home market
– lack of – missing Estonian
competences in wide cinema
marketing, financial network
and juridical fields – small international
– dependency of reputation
public sector
financing
– lack of private
investors
– missing film
pavilion
– fragmented and RELATED AND SUPPORTING INDUSTRIES
non-active + tight cooperation with creative industries
representative (performing arts)
organisations + television as a possible output channel
– lack of specific
support schemes, – weak cooperation with ICT enterprises
e.g. no tax (for the development of production technics
exemptions for film and technologies)
Figure 1. The strengths and weaknesses of the competitiveness of the
Estonian film cluster based on Porter’s diamond model.
21Baltic Screen Media Review 2013 / Volume 1 / ARTICLE
Alternative 1 – Studio based film clus- post-production and distribution) or to ex-
ter for film companies – is a cluster which pand and involve actors from other indus-
encompasses film sector companies with tries. Another fundamental choice is based
dedicated production facility. It aims to en- on the question of whether there is the need
hance cooperation efficiency among film for a built production facility that integrates
sector companies and improve the quality different actors or if the virtual network is
of film production and services. The actors enough to strengthen the cooperation with-
in the cluster cover the whole flow of the in the film sector as well as between film
film production process, from production to and other sectors.
distribution. The majority of the film sector
companies move to the new facility that is Discussion and
developed around a new large-scale studio policy suggestions
together with supporting services, includ- The purpose of this study was to evaluate
ing renting equipment, lightening, casting the ongoing clustering of film enterprises
services, sound engineering, post-produc- in Tallinn, and based on this, to assess the
tion services, distribution, etc. Alternative 2 prospects for the further development of
– Film with partners around the studio – is a a cluster. To conclude the results, it can
cluster which has similarly developed next be suggested that the AV-cluster forma-
to the new production facility, but it encom- tion in Tallinn is not going to slow down. The
passes not only film sector enterprises, but Estonian film industry can be characterised
also companies from several other fields by close horizontal and vertical relation-
such as online media, ICTs, television. The ships between the enterprises and creative
aim of the cluster would be to enhance in- individuals and also by their further readi-
ternational competitiveness of the whole ness to cooperate. Collaboration and com-
audio-visual sector in Estonia and the main petition go hand in hand: enterprises com-
potential is seen to emerge from the syn- peting for external funding at one moment
ergy of different industries located together. could be cooperating on another project
Alternative 3 – Cloud cluster for film compa- the next moment. Most of the entrepre-
nies – again encompasses solely film sector neurs in the Estonian film industry also be-
companies, but is a virtual-social network lieve that they can benefit from a cluster in
without a concentrating production facil- several ways. Entrepreneurs felt that the
ity. It proceeds from an understanding that cluster could play an important role in im-
in the context of limited resources the main proving business cooperation further and
effort for strengthening Estonian film clus- enhancing communication among indus-
ter capacity is to invest into improving the try fractions. This could also help gain bet-
information exchange, joint marketing and ter access to foreign funding and/or to en-
export activities instead of investing into able work on larger foreign projects. These
developing new infrastructures. Alternative aspirations are especially pronounced in
4 – Mixed community in the cloud – is also a the answers provided by the younger entre-
network-based cluster, but it encompasses preneurs in the industry. This may be due
several other fields besides film sector. It to their relatively smaller involvement in
aims to make use of the competencies and the social networks of the industry and the
synergies of different fields to support the slightly more marginal position of their en-
innovation in the audio-visual sector. terprises in the dynamics of the audiovisual
To summarise, all of the four alterna- industry so far. The further organic develop-
tives for the Estonian film cluster are based ment of the cluster is supported by the fact
on the enhancement of collaboration in the that enterprises have already agglomerated
film sector, but differ from the range of ac- in the centre of Tallinn and in the nearby
tors involved in that cooperation. The fun- district of Põhja-Tallinn (northern part of
damental question is whether to stay within the city). The majority of the interviewees
the frame of the film sector (together with expressed a need for better production
22You can also read
