Australian audiences watched 100 local features films more than 101 million times across multiple platforms in the three years to 2009, according to Screen Australia’s Beyond the Box Office report.

It’s research that backs the cultural imperative of the local film industry even if three films – Australia, Mao’s Last Dancer and Knowing – attracted almost half (45.7 million) of those viewings.

However, the research also shows that a disturbing majority of Australian films released during that period were not watched at cinemas, but rather on TV screens, while very few of those viewings were converted into profit for filmmakers, prompting some important public policy questions as the government conducts its convergence review.

The top 20 local films (which all earned more than $1 million) at the box office during the three-year period accounted for 87 per cent of viewings at the cinema.

The report shows that while strong box office performance tends to lead downstream viewings, the top 18 films that had screened on either free-to-air or subscription TV (Knowing and Mao's Last Dancer were yet to screen) achieved lower cumulative ratings than the 60 films which had screened from the bottom 80.

To put it another way, 62 per cent of viewings of the worst box office performers were on television compared to just 13 per cent for the top 20 box office performers. This is not good news for filmmakers.

Universal McCann boss Mat Baxter told a Screen Australia panel in Sydney that even media agencies have little bargaining power with networks. “They’ve got the asset base to deliver those eyeballs and they don’t pay anyone very much money."

There are plenty of stories of networks paying incredibly low rates – below $20,000 – for the first rights to an Australian film. Bran Nue Dae – held out as an interesting case study by Screen Australia as it outperformed Baz Luhrmann’s Australia in terms of TV ratings – is an exception, albeit a rare one.

The ABC was involved in the development of Bran Nue Dae for many years and it provided a large proportion of the film’s funding (understood to be a substantial pre-sale commitment of less than $700,000). A key requirement of such deals by the ABC is minimising the time between the theatrical release and free-to-air screening.

Bran Nue Dae's free-to-air screening still followed Roadshow’s DVD release, although the film bypassed the traditional pay-TV route. The ABC’s other recent feature film investment – Samson & Delilah – was shown on the ABC just three days after its DVD release, also achieving strong ratings.

Again, the ABC made a substantial financial commitment at an early stage of development – an unusual situation. Pay-TV channels like Showtime largely ended their investment in Australian features some years ago, preferring to invest in their own programs, such as upcoming mini-series cloudstreet.

ABC director of television Kim Dalton told IF magazine last year that investing in feature films at an early stage costs it between 10 to 15 times more than buying an Australian film after its theatrical and DVD run.

So while Bran Nue Dae has certainly reached audiences (it also grossed $7.6 million at the box office), it is disturbing that the film’s writer-director Rachel Perkins says she has not made any money – “not a cent” – out of the film.

It prompts questions about the sensibility of an uncapped Producer Offset scheme, which encourages film production with a 40 per cent rebate compared to 20 per cent for TV. Would many local films attract just as high an audience (and a higher license fee and revenue) if they were aimed directly at TV screens, at a lower cost to taxpayers? Are many Australian films, effectively, telemovies?

Concerns remain around the level of regulatory protection already received by broadcasters (although the Screen Producers Association of Australia’s concern about increased in-house production by networks doesn’t appear to have happened).

Nonetheless, the questions remain, at least for as long as sustainability remains one of the government's goals for the local feature film industry.