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In 2006 Nigeria's film industry ("Nollywood") produced 1,500 movies annually. But in just a few years, Nigeria climbed the cinematic ladder and pushed Tinseltown into third (with Bollywood in India holding the top spot). By 2008 Nollywood produced and distributes more films than Hollywood or Bollywood. Nigeria is inundated with aspiring moviemakers whose productions are generating multi-million-dollar blockbusters and the obligatory glamorous red carpet events.

Although its revenues trailed those of Bollywood or Hollywood at the global box office ($1.6 billion and $9.8 billion in 2012, respectively), officially Nollywood still generates, on average, $600 million annually for the Nigerian economy, with most of these receipts coming from the African diaspora. It is estimated that over one million people are currently employed in the industry (excluding pirates), which makes it Nigeria’s largest employer after agriculture.

But Nollywood used pirated products. Most Nigerian movie production companies pirated the Adobe software used in film editing. Without better copyright protection, Nollywood, had no incentive to improve the quality of its films, a move widely regarded as necessary to make the industry commercially viable.

The ubiquity of informal agreements and weak enforcement mechanisms have made it difficult to deter illegal film distribution. Reportedly, within hours of a film’s release, pirates are selling bootleg copies for a fraction of retail price. Demand for Nollywood films—particularly among the African diaspora—has also fueled a surge in the export of Nigerian films. In practice, the legal and illegal markets grew to coexist as Nigerian film marketers began to adjust their storylines to appeal to wider audiences, incorporating more diverse plot formulas.

Although Nollywood’s long-standing “informal” structure and rampant piracy initially helped to establish the country’s film industry, these same factors now inhibit future domestic and international growth. The industry relies on cash transactions and oral agreements (rather than written contracts) between local filmmakers, producers, and the marketers who finance and sell their works. As a result, competing claims on intellectual property rights are common, but with little to no documentation, few avenues for legal redress are available.

Foreign observers believe that if the industry was more actively regulated, particularly in the case of copyright enforcement, a million more jobs could be created within the sector. Consequently, the World Bank and private investors are helping the Nigerian government and local film producers to combat piracy and better legitimize its entertainment industry.

The industry’s informality and persisting high piracy rate has deterred international co-productions and closed the door on potentially lucrative investment and distribution opportunities in foreign markets where “chain of title” (the bundle of documents that prove ownership of the rights in a film) is a prerequisite. Moreover, the rise of low-cost Internet access has compounded Nollywood’s piracy problems, particularly through the unauthorized streaming of film.

With its Inagural edition in Port Harcourt, Rivers State, Nigeria, The Africa International Film festival was founded in 2010 by Ms Chioma Ude, an ardent film lover and entrepreneur. Her passion for the industry grew more intense after her involvement in the production of the 2007 Nigerian Film and Video Censors Board (NFVCB) UK Roadshow.

The growth of the satellite television market is a function of content more than price, and Nigeria's experience appears to follow that pattern. The industry only boomed when satellite firms began to offer the wildly popular Nollywood and Nigeria pop music content.

Nigerian films have a large following in Africa and among African emigrants around the world (over 30 million worldwide and growing). They initially gained popularity during the early 1990s, when camcorders replaced 35-millimeter film cameras and digital systems replaced celluloid as recording devices. These technology changes allowed rapid, low-cost production and distribution capabilities.

According to the British Broadcasting Corporation (BBC), producing a movie in Nigeria costs on average $25,000–$70,000 compared to $250 million for a top Hollywood film. Almost all Nollywood films are intended for non-theatrical release and tend to be of lower technical quality than Western films. Nonetheless, films can be produced within a month and are generally profitable within two to three weeks of release. Most titles are recorded in English and sell over 200,000 units (the usual break-even sales point in Nigeria).

To a large extent, the Nigerian film industry remains informal. Its structure benefits a cartel of Nigerian film marketers who have for many years controlled the financing, production, and distribution of films in Nigeria. These marketers operate networks of shops and other outlets and wield significant influence over which films are made and sold. Revenues are almost exclusively derived from home video rentals and sales, and this has worked primarily in the marketers’ interests. An early byproduct of this informal structure was the emergence of complex international piracy networks. Paradoxically, it was due to these illicit trade networks that Nollywood films first gained the attention of foreign audiences, and ultimately, established its global following.

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