Thursday, July 11, 2013

A Billion Dollar Business

A dozen people forwarded the article (from Hollywood Reporter) to me when Spielberg and Lucas gave a talk earlier this month at USC predicting the movie industry was headed for an "implosion." (No need to click on that link: just Bing "Spielberg" and "implosion" later.)  I read it.  Spielberg could barely get Lincoln funded but perhaps it's hard to be sympathetic - he's still functioning in a post-WWII John Ford model [1] anyway.  He even still edits on film - the nerve.

The point was that the digital dilemma [2] has affected even the biggest players in the field, from Spielberg who at one point could have gotten funding to direct a phonebook - to George Lucas who first embraced digital (with those later - earlier Star Wars films) (a link to another article about digital in 1999 when Lucas tried to push it down our throats for the The Phantom Menace release has been removed, 'cause you already know he did that) but still can't write a decent 3rd act [3].

About a week later Lynda Obst wrote in Salon (article, June 15, 2013, no need for a link; I'll just stick the citation in) saying that the industry was completely broken; another high-end Hollywood player saying we're in trouble, no really [4], that the people in charge could no longer do the math.  It all no longer added up.

For once someone was talking sense. It all has to do with the DVDs.  In a development suspiciously similar (3 links, each word to a different one, that go to different books about how the music industry missed the digital revolution; that's one way to get a bunch of background citations out of the way) to the baroque go-go CD era of the '80s of the (now dead) music business, the new format was the way to print free money.  Everyone wanted to own films and with the explosion of home video most films nearly doubled their grosses [5] through DVDs and VHSs.  And it was all gravy - they didn't have to make the film again to reap the profits, just sell it on .90c discs in .50c plastic covers.

Hollywood didn't know what to do with all that money.  People bought everything rather than wait for it on cable.  The sense of ownership was too intoxicating.

But as we all now know DVD sales plummeted for 5 years in a row now. [6]  People are finally shaking off the hangover and reconsidering the reasons to have a copy of The Town (this link: a review of The Town; why am I pointing you in a direction you can already find yourself? Because I happen to agree with this one (and it's well written) and now I don't have to use any extra words in my post here discussing The Town for my back story) [7] in the house - they'll never watch it (certainly not through to the end(s) [8]. They don't need any copies of Pitch Perfect [9] or Fast and Furious 2,3 or 6 [10], or even all four (5?) editions of the Lord of the Rings (no footnote here - suffice it to note each word links to a different configuration of the trilogy - no need to click unless you want to get pissed off at how many versions of LotR you have to buy) trilogies, each with a different and essential set of extras.

There's so much content out there through Amazon, Hulu, Netflix, HBOGo, YouTube or bittorrentting people think there's no need (this links to the reason why you should horde content at home [11]) to horde content at home anymore.

The gravy went away.  No one could predict how much money a film would make during the critical years of 2008 - 2013, a time when the highs were very high (The Passion of the Christ, or Alice In Wonderland) and the lows were lower (John Carter (is he from Mars or not? (don't click on this link, just reports Andrew Stanton explaining why they dropped the word "Mars" from the title. And note that I "answer" the question I ask in the hot-linked words; nice, huh?), or Battleship).  All bets were off and limos were traded in for towncars, espresso bars were replaced by coffee urns and administrative assistants were told to become script girls or get on their knees and start charging for different services.

Now a film made as much money as it was likely to in the theatrical release, increasingly wider and shorter and that was about it. No long tail and studios were trading their analog dollars for digital pennies as Obst warned.  This is the direct analog to the music industry where once people got a taste of free on the Internet they didn't care about quality; quantity and choice trumped scarcity.

Profits halved, an amazing number. And if it's a $10 billion dollar industry 3 years ago [12] (and that #'s only the gross at the B.O.: possibly only 20% of that is free-and-clear profit) that means as little as $1 billion is actually still clearing the checking account or the funny accounting.  And as Spielberg and Lucas pointed out polite enough not to name any names when a handful of large budget films fall on their faces this year (After Earth, budget $130m+, marketing $100m [13]; The Lone Ranger, budget $250m+, marketing $150m+; Jack the Giant Killer Slayer, budget $190m, marketing $70m+) you just heard that billion in profit simply disappear.

Films come out faster and faster and the hits are merely doubles. Even a Pixar movie costs $200m (this link references someone who estimated the total amount, no official source so it may not have "earned" a footnote (so much for the internet link ecosystem. Dude gets no respect)) and they don't have to construct any sets (only software).

After marketing, it'll have to reach $600m to break even.  And it won't be doubling that on home video like in the old days.

There are no home runs.  Like the music industry Hollywood is now not so much the road to easy money.  People would do anything to be in show business.  Now that the stupid crazy money isn't a given, you gotta be into it - just to be in it. 

*   *   *

[1] Rather than giving you another link (which probably would have been to a review of War Horse in NYT) I did this footnote instead.  I wanted to make a point about Spielberg's recent retro style but a link would have sent you away faster than it had the time to suggest the underlying idea. So see what I did there? "John Ford" manages to be an short-hand review of Spielberg's latest films (Lincoln literally (almost hid another link there, to Ford's Young Mr. Lincoln (and would you have just thought I linked to the wrong film on accident?) and I also got in "Ford model" as a kind of nod to his throwback technological processes, which might have demanded another link (or a footnote (here? within the footnote?)) to Spielberg's penchant for still editing on film.

[2] This link - if it had been put in - would have referenced an article about the loss of old rep screens that can't afford the conversion; on Indiewire, Feb 23, 2012.  A footnote proper would have listed the title and complete information, and probably have included the online link.

[3] This clever link goes to the Rotten Tomatoes rating for Red Tails. I'm also including this footnote so you don't have to click to find out where it goes.  You probably thought it would be for Return of the Jedi, (and some bloggers make it a point to link to IMDB for every film they mention as if they have to cite and prove the film exists (their existence on IMDB not necessarily conclusive proof (that would have been where I would have linked to a couple fake or non-existent films to prove that point - which is that IMDB is no reliable source)).  If any reader needed to look up a film on IMDB I would like to think they could to that without the link to push them in that direction. Sheesh.) which also doesn't have a satisfying third act but you very well might have clicked just to make sure and I would have lost you.  Don't click on it, it'll just distract you and you'll start reading movie reviews.

[4] To emphasize "no really" the writer might have included the following link to those words: hoping you would have visited after you were done reading here, which talks about how piracy is bad.

[5] This footnote to a link (which is probably now starting to piss you off) notes that the citation linked above backs up the author's contention that DVD grosses increased profits, would in the old days normally would have been handled only as a footnote. Now it's a link within the text and you can't reference it until you click on it (and only if you doubt me) which means you'd leave the main page and probably never be coming back.  Proceed accordingly - or just take my word for it.

[6] That claim probably should have had some kind of citation to back it up.

[7] Longtime readers will note how much I avoid using extra words.

[8] This link is tied to a single letter (in this case to a site explaining the extended endings of The Town (no IMDB link needed, right?) which gets the point across (the added ending letter of the word - the added footage/alternate end of the movie.  But if you left to see, you never came back again).

[9] Cute story about trying to download Pitch Perfect for his kids, here.  (There, now I have a link in the footnotes that have been complaining about the links in the main text.)

[10] Link to the first 5 F&F films in a boxed set. Also, too many numbers.

[11] This is the page of OOP Criterion titles; don't click here.  It would just frustrate you that you didn't buy these when you could. You're welcome.

[12] I really need to stop footnoting my links.  It's hard enough avoiding linking my footnotes.  This link is a discussion of increasing profits of Hollywood which is ironically and perhaps significantly on a website devoted to online piracy.

[13] Here are some actual hard numbers and the citations should actually be supplied.  Here in a footnote.  Details from NYT:  And if I had put the link up there you probably would have ended up reading movie reviews from the New York Times.  My plan worked.

N.B.: Rather than properly cite my sources I've been seduced by common practice of the Internet to link to the appropriate virtual digressions as needed inline, a new kind of Internet economy of attention - or authenticity - or verification, and one that likely sent you away from here never to come back to finish my article.  So note, at least, that there are references and read through to them only if you really needed the goddam proof of my suppositions.

1 comment:

Steve said...

The person in charge of sacking the previous footnotes...
has been sacked.
We now continue with the footnotes.