In any period of evolutionary change, there are those who adapt and those who don’t. As the working environment changes, the old lifeforms thrash about in a desperate effort to cling to the traditional ways while previously minor players adapt to the new model and begin to systematically expand and dominate.
Unless it involves media. Then only the old fossils really know what is what. Well, that seems to be what film and TV producer Gavin Polone is telling us. A few weeks ago he wrote a blog piece entitled Why TV Networks Don’t Need to Worry About Netflix and Hulu’s Original Programming. It’s worth a read. He makes some good points. Never have I seen a man so anxious to align himself with the dinosaurs while the killer asteroid is streaking across the sky.
Polone is correct in arguing that some of the key executives within the established entertainment industry may actually know what they’re doing. In any business, a few rational and intelligent people will make it to the top. In many regards, the system is designed to prevent that, but a few capable folks do manage to sneak through. So not every suit in Hollywood is a duplicitous self-serving narcissistic idiot (but they have to act like one if they want to fit in with the rest of the club).
Likewise, not every master of the digital realm is particularly well-versed in the demands of media entertainment. Some even resemble Polone’s backhanded description of what he sees as the geek brigade (“…they are all comfortable with each other’s ugly clothes and sexlessness.”). Odd thing, in every photograph I have located of Polone, he looks like he just spent a long night eating Pop Tarts while surfing the Net. So I’m not quite sure where he’s going with his sartorial critique.
However, Polone is extremely accurate in his comment about the current methodology being used by such large companies as Netflix and Hulu. He notes that “…they don’t appear to be developing much on their own, just buying stuff from big-name producers.” That is correct. Basically the large Internet providers are focused on doing original programs that are designed to replicate TV programming. It’s not so much a bad idea as a dumb one. But who cares? Netflix and Hulu are not the future. They’re merely transitional stages in a process of evolutionary change.
It has happened before and it is happening again. By the 1930s, radio had become the dominant form of narrative programming in American popular culture. As TV began its commercial development, it basically copied radio. When Fred Allen quipped that TV was just radio with pictures, he was right. Heck, even many of the early successful shows on TV — like Dragnet and Gunsmoke – were adapted from their original radio versions.
Then everything began to change (as Marshall McLuhan noted). First, TV devoured radio programming (and radio began copying the pace and structure of TV). Then it moved increasing into a different model of programming and presentation. It was a different medium. Despite the limitations imposed by its commercially-dominated structure (I think a lot of advertisers secretly preferred the simpler days of radio), TV created an extremely different environment in American popular culture. I am not a big subscriber to the McLuhan school of thought, but he was basically right on some of his major points.
It’s the same deal (but even more so) with the emerging digital form. As happened before, the old model attempts to stitch itself onto the new form. Polone and many other Hollywood figures assume that the Net will simply function as an ancillary market for film and TV. At the moment, this is pretty much the main commercial structure in use. It is understandable that they would mistakenly think that the Internet is simply TV without the rabbit ears.
But the reality will be a tad closer to what someone once said in a lecture about the possibility of alien visitation: It will be something we can’t understand from someplace that we don’t know. Polone is right in arguing that the seasoned TV executives and producers know more about producing TV than any digital geek. But the digital future is really not going to be about TV. It isn’t really even going to be about movies. It’s going to be about something that, at best, may resemble a strange hybrid of film, television, social networks and elements yet to be conceived.
And the folks in their ugly clothes and sexless forms are the ones who will be, for better or worse, stumbling their way into this form. The best that Polone can do is hack his way through Zombieland 2 (but it will be in 3D because Polone is a really hip and groovy guy). Contrary to his assumption, Polone is not part of tomorrow. He is barely a part of today (and by the way, I seem to recall that Polone’s most successful movie was Zombieland, which was actually somewhat “borrowed” from the infinitely superior British film Shaun of the Dead).
The future of the new digital form will be determined by the people working in that media. Their lack of experience in the old models (both traditional film and TV) will be a problem at first. Then it will become a major plus. It is a new form and it will result in a variety of new business models. These are the people who will be learning and creating the new rules. Their lack of experience in the old model may even help them in the development of new models. After all, they will not be burdened with the clutter of dead knowledge. This is all part of an evolutionary change.
Meanwhile, Polone may want to examine his clothes closet. He ain’t exactly a modern day Beau Brummell.
About two and a half years ago, I argued that the suits running Hollywood didn’t know what they were talking about in their long-term projections on the economic development of the business. Back then, they were insisting that the industry was recession-proof and that it was capable of weathering the economic turmoil until recovery.
Of course that was based on the idea that the Great Recession would follow the standard economic model. Unfortunately, the Great Recession has not cooperated. Sure, technically the recession ended two years ago, but it didn’t seem to get the memo. We’re supposed to be in a state of economic recovery that is shaky at best, with plenty of room for debate.
But the grim fact that is basically agreed all around is that the recovery has, at best, been extremely limited and has primarily been felt by an extremely narrow pool of major financial interests. Everyone else has seemingly been left to eat cake.
Which is where the film industry gets into a bind. By and large, movies are a form of discretionary spending. Nobody really has to see a movie in order to live (except for a few middle-aged men who are really hardcore Scarlett Johansson fans). Increasing numbers of people are finding it easier to skip the theaters and wait to see movies by any other means possible.
Hollywood was braced for a six-month recession and was determined to pursue a strategy devoted to a decreasing number of productions, primarily focused on the $150 million to $200 million budget range. Theater attendance would be beefed up through the allure of 3D projection as the new standard. The rapidly developing online trade was viewed as a potential menace, but it was also considered minor because the audience would want to see the movie in a theater.
It’s two and a half years later and the master plan is way undone. The national economy still resembles a massive pile-up on I-95. The current real budget for a major movie is now hovering between $250 million and $400 million (these are the best estimates that can be made of the real figures extrapolated from the lower figures publicly released by the main companies). A few of these films will make about a billion plus in global box office. Most will come in at about $500 to $600 million. Increasingly, many will barely go over the $100 million mark.
The vast bulk of these movies are playing to various levels of loss. With decreasing revenues in DVD sales and rentals, the majors are not recouping these losses. Most studies currently suggest that 3D has been good for animated productions but increasingly detrimental to many others. The current threat by Sony to charge moviegoers for the glasses is not exactly a tribute to the financial success of the process.
Theater attendance is down (somewhere between 5 and 20 percent, depending on whose figures you trust — the fact that there’s such a wide gap suggests that someone is playing with the math). Online viewing of movies has accelerated. With its move into the VoD market, Netflix demonstrated the validity of the process. Of course it then demonstrated the negative effects of bad business decisions with virtually every move made since then, but it did prove the initial point.
The original model that Netflix pursued for its expansion into the VoD market was based on the idea that many people would upgrade to a home theater design using a large screen TV connected to the Internet. The reality appears to be that a lot of folks are simply watching on their laptops and PCs. This is the low end of the market, but many viewers are willing to cut corners on the quality issue while saving big bucks.
Hollywood is quite aware of this trend. They are desperate to control the VoD market. Their effort is based upon a two-step approach. First, the MPAA, major guilds and many of the main production companies have applied ample pressure on Congress to pursue legislation that would tightly regulate the Internet in a fight against online piracy. Their concern is actually quite valid. However, there is some strong indication that the most severe forms of online piracy (by which I mean good-quality digital copies as opposed to the cheapskate cell-phone-in-the-theater stuff) have roots within the actual industry. A certain amount of the piracy is an internal security matter. But the companies have decided to go after the Internet itself (which is a bit like a bank that discovers it has a vice president who is embezzling, so it penalizes the customers instead).
The result — if not the primary focus — of this political effort is to create a “secured” Internet in which Hollywood can then develop a vertical monopoly on distribution. Considering the history of the film industry (after all, classical Hollywood was based on a vertical/horizontal monopoly), this is no surprise. But so far the models of the emerging Hollywood online distribution system have been insane. For example, Universal considered making Tower Heist available for VoD three weeks after it opened. The press largely focused on the uproar that ensued from the theaters (and Universal did back down). But few looked at the price tag that Universal was planning to hawk it for: $59.99.
Almost every economic and business move currently being made by Hollywood is based on a steady (even mammoth) upping of the ante. Production costs will continue to rise — the recent go-around that Disney had about the budget for The Lone Ranger film is a farce, since they were rolling back a preposterous $250 million cost to a merely crazy $200 million budget and the movie will undoubtedly go over its budget no matter what. Meanwhile, they are responding to a decreasing (and increasingly cash-strapped) audience by upping ticket prices at every level. Likewise, they are convinced that they should control the VoD market and gouge the entire system. At the same time, they insist that they are not seriously affected by the current economic crisis because… well, at this point they seem to lack any clear answer, but it sort of sounds as if they are too big to fail.
Which makes it very tempting to start an Occupy Hollywood movement. Considering the financial thinking that is going on, I would strongly suggest a move toward complete institutionalization of the system. Heck, straitjackets, rubber rooms and electroshock therapy just might work.
According to the IRS, filmmaking is a hobby, not a business. Or at least that is the stand the IRS has taken against filmmaker Lee Storey in its attempt to collect $300,000 in alleged back taxes concerning business deductions she attempted to take from her documentary Smile ‘Til It Hurts.
The Storey case made lots of headlines within the indie trade last summer when Judge Diana Kroupa of the US Tax Court in Arizona ruled that documentary films were made to “educate and expose” and did not serve as a profit-making business. Since the core argument being made by both the IRS and Judge Kroupa is that filmmaking is not a for-profit enterprise, Storey (and any other filmmaker out there) is not entitled to the many business deductions available to any business (especially small businesses) attempting to stay afloat.
Storey’s case is still pending, and she is currently being supported by an amicus brief filed by the International Documentary Association, Film Independent, National Association of Latino Independent Producers, Women Make Movies, National Alliance for Media Art and Culture and the University Film and Video Association. The Storey case is extremely important simply because the IRS seems determined not only to strip various important business deductions away from indie filmmakers, but also to add insult to injury by reducing the whole field to a backhanded status that resembles stamp collecting. Though the “educate and expose” claim made by Judge Kroupa refers to the perceived function of documentary filmmaking, the full ramifications of the IRS case affect every form of movie making.
Despite what the IRS thinks, filmmaking is a business. OK, it is often not a very profitable business. I seem to recall that Spike Lee once speculated that selling tube socks on a street corner could be more profitable. At best, filmmaking is an extremely uneven business with a few highs and a lot of extreme and dismal lows. The process is virtually designed to break your heart forever as the business devours egos with the mindless enthusiasm of a hungry shark at a swim fest. This is why filmmakers really don’t need the IRS coming around to tell them that they are a bunch of losers (well, that is one result of this “hobby” theory they are pedaling).
For now, the case is still pending (a reminder that the obvious mascot for the court system should be a snail, not a half-naked lady with a sword and scale). But the effects are still being felt in countless blog pieces as folks in the indie business (yes, it is a business) find themselves reflecting on the particular nature of this business (yep, I am going to keep using that word in hope that the IRS notices the direction I am trying to steer it in). A few months ago, Ted Hope did an interesting breakdown on what kind of money an indie producer can make. The piece is extremely informative but a tad depressing, since selling tube socks on a street corner may indeed be more profitable (depending on the corner). But hey, I didn’t say it was an easy business. Heck, if it were an easy business it would be more like a hobby, right?
But what I have really been struck by is a recent blog piece at the Huffington Post by Josh Welsh, the Director of Artistic Development at Film Independent. Entitled Studying the Economics of Independent Film: A Proposal, Welsh’s article correctly zeros in on the lack of business data available in regards to indie filmmaking. Heck, many hobbies have more business data than indie filmmaking does (especially the people who do model trains).
I strongly urge anyone involved in the indie business to read Welsh’s blog piece. Even more important, I very strongly urge the pursuit of the type of study that Welsh proposes. It isn’t just the question of the IRS and crazy statements made by a judge in a tax court. The study that Welsh is suggesting would be an invaluable report for indie filmmakers. It would actually take the vast and nebulous state of indie film financing and create a clear and precise structure for the field. In other words, it would be a solid way of finding out just what the heck is going on out there.
However, I have a few suggestions for the study. Welsh is quite aware of the difficult nature of defining the phrase “independent movie.” These days, the term is only half-relevant, since almost all movies are technically “independent.” But for the purpose of this study, the field can be easily narrowed down by the budget. Basically, we would be looking at any movie made for a production cost of $20 million on down. If we wish to be a real hard case on the subject, then $15 million on down.
The parameters for the study would need to focus on a defined time period. Due to the rapidly shifting realities of current economics as well as radically changing distribution structures, the study would be best advised to focus on the most immediate past several years. Let’s say indie films made between 2008 and 2010. Likewise, titles should be selected on the basis of their release dates within these parameters. Production dates for certain indie movies can go on for a while, but the release date is when the movie is put into play and should be usable as the target for the study.
Welsh’s suggestion to use the list of entries at the Sundance Festival is half OK. Sundance is a major clearinghouse for titles. But it also has a system that too often weeds the selections down to a much too narrow range for the purposes of this type of study. A combination of titles from both Sundance and Slamdance would present a more diverse (and ultimately better) sample. It might also be useful to mix in titles from that same time period from the IFC cable system.
Then we would have to narrow the process down to the key variables needed for the study. Oh, did I mention that it would be very helpful if we got somebody to bankroll this project? Maybe the IRS? They seem to have a vested interest in the subject….
Last time I checked, the only boom profession offering employment is “Somali pirate.” Unfortunately, the work conditions are horrible, the benefits are non-existent, and the Navy SEALS turn out to be pretty good shots. So it isn’t a great career move.
But digital piracy is a major enterprise. Well, kind of. The recent posting from TorrentFreak of the Top Ten Most Pirated Movies of All Time presents some fascinating figures. For example, who would have guessed that Kick-Ass was almost as popular as The Dark Knight (though personally I have no doubt that Hit-Girl could whoop Batman’s butt).
The estimated totals for illegal downloads represent the kind of astronomical figures that have Hollywood shaking. The most pirated movie is Avatar, with an estimated 21 million downloads. If you translate that figure into a basic estimate of lost revenue (using a figure of 12 as an extremely low-ball figure for individual box office and DVD returns), at least $252,000,000 is roughly projected in lost profit. Even with the movie’s $2.8 billion in global returns, this is a pretty hefty chunk of change. James Cameron might even have to brown-bag it every so often.
Even more extreme is an item like The Incredible Hulk. With an estimated download of 14 million, this suggests a lost revenue of something in the area of $168,000,000 (again, a low figure). Since the movie’s global take was $263.5 million (with a production budget of $150 million, which probably means something more like $200+ million), the film has taken a major hit from piracy.
This is why everybody from US Congress to the MPAA to the European Union to the Hollywood craft guilds are all hopping mad and demanding major action. Late last year, US Immigration and Customs Enforcement lowered the boom on five major web sites involved in alleged acts of piracy (actually, ICE took out 82 sites, as noted by TorrentFreak in their more detailed report).
The cost of film piracy has been estimated at anything from $1.3 billion to as much as $6 billion. Obviously, this is a lot of stealin’ going on. But it also rises a question (which isn’t exactly being asked in some circles): what kind of money is actually being made by these digital pirates? Since we can all agree that this is a type of criminal activity, and most crime is committed for some form of profit, just what do these folks make by providing illicit downloads of recent movies?
Basically, they make nothing from the download. Most of these sites offer the movies for free. Sites that do charge are often not the preferred place to go (after all, if you have to pay you might as well get something that’s legal). There’s even a strong rumor concerning a suppressed marketing study that suggests that many digital pirates are some of the film industry’s biggest consumers. In some cases, they’re buying multiple copies of the DVD and then downloading it to the rest of the planet. Some digital pirates are motivated by a form of mad love rather than criminal drive.
So the actual money is for the most part not generated by the illegal material. The loot is derived from advertising. An extremely interesting blog piece by journalist/filmmaker Ellen Seidler details Seidler’s attempt to track down the advertisers who financially propped up the pirate sites that were illegally offering her movie And Then Came Lola. Basically, she discovered that the companies behind the advertising that operated behind the pirates were connected in various ways to Google, Sony, Pixar and Netflix.
In other words, the major Hollywood companies are being ripped off by digital pirates who make their money through adverting provided, directly and indirectly, by the major Hollywood companies. Which also means that at least some of the money that these companies are loosing from the piracy they are actually picking up on the other end of the system. Which is also kind of convenient, since they don’t have to deal on that end with all of those messy royalty payments and stuff. Which also means that the real losers in this situation aren’t the major companies so much as all of the second-tier players from the guilds and stuff who might be dependent on the upfront money made from the movie itself. Well, those folks as well as some indie filmmakers who stand to actually lose real money, which is how Ellen Seidler got involved in tracking down this information.
Personally, I do not in any way condone digital piracy. It really is immoral, unethical and illegal. It may also be fattening, but I haven’t seen the data on that issue. However, it is also a lot more complicated (and devious) than anything admitted to by the MPAA or any of the suits in Hollywood. As often happens, the major players are busy attempting to cover their bases on all ends of the equation. Only the little people (that is, the vast majority of us) actually stand to lose.
This gets even more complicated when the piracy issue is used by the major companies as a reason for increasing government regulation of the Internet. As many open net advocates have argued, much of the proposed legislation is designed to give corporations a greater degree of control over Internet content and access.
In principle, the companies are arguing that this will help control piracy. It all sounds a bit like an insurance company hiring an arsonist to burn down some of the property they insure just so they can jack up the rates on the remaining houses.
There are two reasons for going to any film conference. The first is networking. The second is… well, there is a second reason, though I’m having trouble remembering what it is at the moment. Free food if you’re lucky, but that’s more of a perk than a reason.
OK, educational development and hands-on training from professionals are the main focus for any conference. But networking opportunities are an extremely important component to the process. That’s one of the major promises made for the upcoming Film Production & Finance Summit on October 24 in New York. Well, networking and a lot of presentations by a long list of notable names in the field of indie film financing and entertainment law.
A quick scan through the Summit’s speaker list is impressive, including such folks as Lucie L. Guernsey from Woodland Bay Capital, Ltd., and Stephen Hays of 120 dB Films. There will be such exciting topics as Basic Mechanics of Film Finance and Updates on US and Canadian Tax Incentives. OK, some of the topics are pretty dry even if important, and unfortunately the Summit’s $495 a ticket price tag makes it an event largely reserved for well-heeled accountants and lawyers. Stuff like tax incentive programs are high on the need-to-know list, but gee gosh golly, it does sound a bit like the party Rick Moranis was having in Ghostbusters.
Too bad, because many of the conference speakers and topics are important to indie filmmakers. Unfortunately, most indie people will not be able to afford the admission price, either. And by the way, the Jolly Madison Hotel has only a few Deluxe rooms left for this date, with a price tag running close to the ticket cost. Sleeping on a subway train all night is not advised but may be necessary.
Of possibly greater interest to the average indie filmmaker will be the IFP and IndieWIRE Presents: Killer/Hope Masterclass on November 5. This day-long presentation by Ted Hope and Christine Vachon should function as a complete graduate course in the fundamentals of indie film production. Between the two of them, Hope and Vachon are responsible for many of the best-known titles of current indie cinema and have enough awards and honors to stuff a modest-sized museum.
People who have seen Hope doing this type of presentation tell me he is an incredible teacher. I’ve seen Vachon in action and she is an extraordinary and extremely thorough presenter. The Masterclass will be worth the cost, which is a pretty modest $125 early bird, $150 regular ticket price. So the biggest issue will be finding someplace to stay in NYC. I’ve already located my crash pad and will be looking forward to a lovely autumn in New York.
But not everything is happening in New York. From October 20 to 23, the Austin Film Conference will be offered, concurrent with the Austin International Film Festival. This year the conference is heavily focused on scriptwriting, with a sizable (and pretty solid) lineup of veteran screenwriters from both film and TV and a special presentation by Lawrence Kasdan. The scheduled topics cover a broad and extremely useful range, and the networking opportunities should be stupendous. The local food, music and scenery are also pretty darn good. The cost of the conference varies based on how many days you want to attend (check their website for full details). If you handle your accommodations by camping, just watch out for the rattlesnakes.
Of course the other major event in Austin isn’t until March 2012, when the SXSW Festival presents SXSW Startup Village: Networking – Mentoring – Funding. The SXSW event is more like a combination of trade show, conference presentation, party haven and all around meet-and-greet fest, with a major emphasis on bringing together young filmmakers, possible investors and seasoned pros. It has become one of the major indie trade events with an average attendance of around 5,000.
To be honest, a lot of us often act as if music in films is kind of an afterthought. It isn’t. It is also hard to do, even for experienced composers. The Billboard/Hollywood Reporter 2011 Film & TV Music Conference offers two solid days of workshops and presentations devoted to the soundtrack score. Held at the Renaissance Hollywood Hotel in Los Angeles on October 24-25, the event carries a steep price tag ($550 for the full program), but it’s a rare opportunity for musicians and composers to completely focus on their craft.
Prior to this one, you can also drop in at the Digital Hollywood Fall Event, which will be held October 17 to 20 in Marina del Rey. With a special emphasis on issues relating to Urban Media and Cross Platform Content, and with guests ranging from Quincy Jones to Brett Ratner, it should be lively. I have only flown over Marina del Rey, but I got the strong impression that the beach scene alone is worth it.
Back in New York, you can dive into the Digital Hollywood New York conference on November 17 to 18. Despite its title, the conference actually covers a broad range of topics related to digital applications, not just in film and TV but also in magazines, newspapers and advertising. Since the digital universe is based on a total synthesis of forms, this stuff is all interrelated, and there should be some good material to be had at the various presentations.
Finally, for those who are really hungry for the power lunch bunch, there is always the long list of events staged throughout the year by Variety. Just go to and scroll through enough conferences on both coasts to keep your travel bags packed and your bank account near empty. Just hope that food comes with the price of a ticket.
Two years ago, I switched. And, to better understand my sleek, shiny, beautiful new gadget, I found myself spending more and more time at the Fifth Avenue Apple Store.
I discovered Apple was attracting - employing – young people from all walks of life (even Wall Street dropouts) who wanted to share their knowledge with customers and be part of a positive phenomenon.
I watched how customers came in droves to fondle these beautiful objects with their eyes, and sometimes their wallets, many of them completely oblivious to (and certainly none intimidated by) the complexity of the technology inside.
Could structured finance achieve a transformation like this? Become something whose inside is as beautiful as its outside? Be adopted by young people as a tool to support their values and ideas financially, through collaboration and crafting the right incentives?
Socrates once said, “The only true wisdom is in knowing you know nothing.” Obviously, he was anticipating the current state of the indie film industry. Based on several recent articles, it would seem that there are not only two sides to every issue but also three or more issues to every side.
Last month The Economist published a short but spiffy piece on The Revival of Independent Film. According to their analysis, indie movies are poised to make a major market comeback because… OK, this is where the article gets little thin. I’m not so much arguing with their point. I’m just trying to figure out how they came up with it.
One of the examples they use is the recent success of The Weinstein Company with the release of The King’s Speech. Of course that was last year, and so far in 2011, The Weinstein Company has been striking out everywhere they turn. Two other companies they refer to, CBS Films and Open Road, are too recent to truly analyze (heck, Open Road still has their website under construction). So far, the track record for both companies is less than promising.
Likewise, the article’s observation about European financing — added to American production and distribution — may have taken a huge hit from today’s ruling by the European Court of Justice. Selling movies country by country has been a major plus to various indie filmmakers, and the legal requirement to deal with the entire European Union throws some gigantic monkey wrenches into the negotiation process.
But that’s OK, I guess, because The Economist also assumes that the collapse of the DVD market will be a boon to the indie trade, since it will possibly force the audience back to the theaters. To be honest, there is no rational explanation as to how they came up with this one (though what is stated in the article sounds more like a plea than a theory). Personally, I am of two minds on this issue. Might be nice if it develops that way. Too bad it just ain’t gonna to happen. The staff at The Economist sound as if they’re hoping for a return to the art house theaters of the 1960s, where coffee was served instead of popcorn and the word “existential” flowed through the lobby like a fine French wine.
But a better assessment of current trends can be found in a blog piece from last February by Roger Goff and a more recent piece by Nick DeMartino at TribecaFilm.com. To get an even better idea of what is really going on, just add last month’s interview with Todd Wagner of Magnolia Pictures regarding their VoD approach, along with a copy of Selling Your Film Without Selling Your Soul by Jeffrey Winter, Orly Ravid, Jon Reiss and Sheri Chandler. If this were a classroom rather than a blog, this would be the reading list for the intro course. As a teacher, I would only have to throw in a few obvious comments in lieu of a lecture and hope to collect a paycheck.
What is happening is that indie cinema is making a comeback, but not exactly in the way it used to be. There is still a market for modestly priced productions (despite its historical setting, The King’s Speech had a remarkably low budget of $15 million). Occasionally, there will be a surprisingly hot indie event like Paranormal Activity (which magically turned a $55,000 investment into $183 million in worldwide gross). But mostly, the future for indie will be in the direction of digital distribution, VoD release and other developing forms of online and mobile access.
There is no doubt that this is the immediate future of cinema. Every aspect of the developing technology is steering in that direction. Even current technological applications by the major Hollywood companies (such as 3D) are driving the system into the direction of an increasingly decentralized structure that is economically more suitable for the indie filmmaker. A careful reading of Cinema Projection in the Age of Digital Distribution outlines part of this development. So the distant shoreline has already been sighted, softly green in the sun’s dappled light. The only question is, how do we sail toward this land without hitting any hidden rocks close to shore?
In other words, how the heck is anyone ever going to make money out of this emerging new system? In many respects, the technology has surpassed the economic structure of the industry (which isn’t exactly surprising, since the economic structure of film is still a partial relic of the silent era). But certain aspects of the new economic model are already apparent:
- The current fixation by the major companies on big-budget production will eventually implode. The economic structure to this model is totally lacking in sustainability and can only exist as long as the financial backers (mostly large lenders and multinational corporations) are willing to prop it up.
- The emerging new model will be based on what DeMartino calls the “transmedia” movement. The primary focus on financial return on a movie will continue to shift away from theaters and will be increasingly focused on a mix of digital screenings and VoD distribution.
- YouTube and other forms of online presentation are in the process of creating new forms that create a heightened (and extremely different) sense of engagement with the audience. The results will be equivalent to an evolutionary change within both the business and the art form.
- Everything we currently know, think we know, or even hope to have learned from past experience will most likely prove to be wrong.
Or as that other great philosopher Doris Day once sang: “The future’s not ours to see.”
On the surface, Nikki Finke‘s Autopsy Report on the recent failure of I Don’t Know How She Does It is a good hoot of a read. It offers some stinging observations on the largely stalled career of Sarah Jessica Parker while allowing Harvey Weinstein plenty of room to develop his newly honed impersonation of a cranky geriatric patient.
Not much is really surprising in the article. Aside from Sex and the City, Parker doesn’t really have much of a film career. Despite his boast that 2011 would be a banner year for The Weinstein Company, old Harvey can’t win for loosing. As for Harvey’s theory that the movie was sucker-punched by The Lion King, well that’s still an extremely popular movie (and its conversion to 3D almost makes sense, since the movie was using 3D graphic effects in the first place). Maybe, just maybe, Harvey Weinstein is simply paranoid about Disney. So what. Many of us are paranoid about the Magic Kingdom.
But what is really interesting are the comments to the article. Especially the running themes in some of the comments (skipping the cheap shots at Parker’s looks). Several of the comments go after Weinstein’s notion that Parker has an immediate access to female viewers under the age of 30. Obviously this is a no-brainier. I haven’t a clue what appeals to women under the age of 30, but I know it isn’t Sarah Jessica Parker. No wonder some people in the business have had questions about whether Harvey is firing on full thrusters or not. His gut instinct for the box office needs a strong dose of Maalox.
Quite a few of the comments are refreshingly blunt about their disinterest in the comedic “angst” of a well-to-do upper-class housewife. Many of them reference the movie in terms of the current economic situation and make it clear that they have no interest in (and even a rising hostility toward) an illusory presentation of the current economic order.
In other words, they are mad as hell and they’re not going to take it anymore. This is not a surprising development, but it will come as a surprise to many people working in the film industry. The real problem with a movie like I Don’t Know How She Does It is not that it sucks (though there is a sizable body of argument in that direction). The problem is that it is totally irrelevant to the rapidly emerging new reality. About ten years ago, it might have slipped by as OK. Now, many people are acting as if they’ve just been whacked over the head by a fossil from some prehistoric shopping mall.
We have already given up on the concept that movies are recession-proof (much as the economy has gone past the concept of recession). The current economic situation has reached the point where fear and panic are more easily traded than stocks and bonds. A year ago, I painted a grim picture of the emerging conditions. In retrospect, I think I was too kind in my presentation, and now I don’t even like discussing the economy. Maybe we could talk about something more thrilling, like death or colon exams or any number of other more “fun” topics. However, I also keep getting the distinct impression that there is a major change taking place. Or should I say changes.
A lot has been written about the major changes taking place in virtually every aspect of the film industry, from computer graphics to digital presentation to video-on-demand and download streaming. But there is also a change taking place with the audience. Hollywood is vaguely aware of some of the changes (such as the changing age level of the audience demographics). They are beginning to hear the first rumors of the ethnic and racial changes taking place both within the American public and the audience. In both cases, they have barely made any rational move toward adaptation. Mostly, they hire Morgan Freeman as a means of covering both bases. Good thing Morgan is a strong actor with a high audience likability factor.
So I’m not sure that anyone in the biz is prepared to deal with an audience that is going broke, getting worried and generally just feeling totally pissed as hell. Heck, it’s no wonder the romantic comedy has gone belly-up as a genre. This is not a romantic crowd. It isn’t much of a surprise that three of the biggest comedy films of 2011 so far are The Hangover II, Bridesmaids and Horrible Bosses. The humor is more hostile than screwball, and these movies seem to provide a lot of people with a safe venting zone in the theater.
A major shift in audience sensibility is by no means unprecedented. It has happened several times before. For example, there was a slow but very steady shift that took place between the 1950s and the end of the 1960s. But a much more rapid change actually took place during the transition from the silent cinema to the sound era. It wasn’t just the technological change. The American cinema of the 1920s was heavily dominated by the Jazz Age image of slick and dapper leading men and wild, flirtatious flappers. But with the start of the Great Depression, this all came to a screeching halt as the audience just didn’t care anymore. Instead, the ideal leading man of the 1930s was flippant, with a working-class attitude and a hard-edged sensibility that would inspire a generation of French philosophers.
I suspect we are going through a similar process. Exactly how it will evolve remains to be seen. But one thing is for sure, Sarah Jessica Parker better hold on to her day job with the perfume company. I would hate to see her panhandling for her next pair of Blahniks.
A couple of years ago, when Moneyball was about to start filming and Sony pulled the plug on the production, I predicted that it would end up as a George Clooney flick like Leatherheads. OK, the smart-aleck who wrote that was wrong, and I will be sure to take it up with myself at my next “staff” meeting.
Certainly the past effort at adapting a book by Michael Lewis would give many of us a pause for thought. The Blind Side was an extraordinarily successful movie loved by many (I liked it) and loathed by few (my attorney spent nearly thirty billable minutes telling me why he hated the film). But it wasn’t exactly the financial and business issues in football that Lewis was writing about.
Moneyball is much closer to the material. Sure, the book has been condensed like crazy, and the screenwriters are heavily focused on the most dramatic aspects of the material while skipping past Lewis’s own unique wry humor that makes the book a smooth and fun read. The movie does not take the more radical semi-documentary approach that director Steven Soderbergh got fired over (though some documentary footage — both real and recreated — is used). Incredibly strong performances are delivered by both Brad Pitt as a semi-irresistible force and Phillip Seymour Hoffman as a nearly immovable object. In many regards, Moneyball is an outstanding movie and will no doubt be on the roster at next year’s Academy Awards.
But how well does it handle the subject of the book? Lewis’s main concern was with the experimental application of statistical methodology into the tradition-bound world of professional baseball. As the general manager of the Oakland A’s, Billy Beane found himself faced with rebuilding the team on a $39 million budget against other teams with $150 million-plus bank accounts. Since he couldn’t afford the normal approach to recruitment (which is largely based on waving a blank check in front of a guy’s face), he turned to statistical science.
Moneyball does present a half-way reasonable introduction of this issue to the general public. Despite the repeated (but fleeting) appearance of spreadsheets, printouts from databases, and quick glimpses of numerical formulas, the movie tries not to tax the audience on mathematical understanding. Dramatically, this was a smart move. Most people do not stay awake long during math lectures. So it makes sense that a lot of this subject has been shifted into the personal confrontations between the old guard and the new ideas that Beane is trying to introduce.
Of course, some of this gets muddied up in the process. It provides a quick reference to Bill James and the early development of sabermetrics. In reality, Beane and his assistant general manager, Paul DePodesta, adapted and combined several methods in their approach. It might also be noted that one of the movie’s major false steps is the converting of the rather lanky DePodesta into Peter Brand, a chubby nerd who looks like he just wandered out of Comic-Con. DePodesta actually played baseball in college and had some understanding of the traditional elements of the game before he went to work revamping it.
Likewise, various aspects of this new approach were not really new to the Oakland A’s. Their longstanding status as an underfunded ball team had already sent them in various “creative” directions. The team’s owner was already steering them in the direction of sabermetrics (contrary to the movie’s presentation), and while some members of the old guard in the scouting camp were not happy about this, others were willing to give it a try.
The use and application of a statistical based cybernetics model for business and economic analysis is the rapidly emerging norm in many areas of finance and business planning. But certain professions, such as baseball and filmmaking, have remained largely resistant to the process. In both cases, the reasons are pretty much the same. Many people in the film industry insist that it is all based on gut instincts, blind luck and a profound sense of show business intuition. They also claim that they do it for the art and are not running a business.
In reality, the film industry is a multi-billion dollar enterprise run in an incoherent manner based on a strange combination of magical thinking and half-baked, extremely subjective impulses. Though the catch phrases and slang terms are different, the chatter in Moneyball from the baseball scouts can also be heard in every major studio office. Access to large sums of cash is the only thing that keeps the system afloat.
In that sense, the film industry is not a business. It is a catastrophe in the process of happening. But the business is strongly opposed to any moves to change, and has largely resisted any efforts to adapt to modern systems of analysis. The few systems the industry has tried have mainly been focused on the misguided attempt to predict success. They miss the point made by DePodesta in the book: “It’s looking at process rather than outcomes… Too many people make decisions based on outcomes rather than process.” This is the key point to cybernetic methodology.
The movie almost conveys that point. It doesn’t quite pull it off and inadvertently reduces the debate to the bogus issue of human instinct versus mathematical figures. Actually, there is no conflict. Cybernetic analysis is a process, not an end result in and of itself. In the film, the nerdy guy stares at his laptop and produces answers like a magician pulling rabbits out of his hat. It doesn’t work that way. A major drawback to the movie version of Moneyball is that it accidentally reduces the process to another (more technical) form of magical thinking.
But at least it introduces the concept. Hopefully, some folks in Hollywood will actually read the book. Then, just maybe, a couple of them will actually give it an honest-to-goodness serious try.
Sometime back, I suggested that one can learn more from a movie that has failed than from any ten flicks that were hits. At the time, I used the disastrous British opening of Motherhood as the prime example. But to be honest, that movie was kind of thrown out there in a haphazard experiment that was doomed to fail.
The movie Creature has achieved failure the old-fashioned way. Last weekend this movie had the single worse national release in box office history. It took in a mere $327,000 despite playing on 1,507 screens, averaging approximately $221 per screen, which roughly breaks down to about 28 viewers per screen during the whole weekend. By the end of its run (which may be this coming weekend), Creature will be lucky to hit the $500,000 mark. In fact, it may barely be able to reach the $400,000 mark.
This failure is most notable because Creature is a horror film, and normally horror movies will have an opening weekend of around $12 million to $30 million. Of course, after that opening weekend the bottom drops out of the market (normally), and it becomes a quick run to the DVD stand. But the first weekend is usually pretty OK within a certain predictable range. With this in mind, the failure of Creature is truly fascinating. It’s as if they worked extra hard at blowing it.
Since we like to pretend that we are indie movie financial hotshots (we even have a database), I thought it might be an interesting experiment to crunch the numbers through our system. Who knows, maybe something would pop up as a critical factor. At the very least, I could use the mental exercise with a software program that hasn’t been getting any major workouts lately.
So I did an initial crunching of the data on Creature and discovered that our own prediction for the US box office was $2,172,549. Not very good, but a heck of a lot better than what is happening. But the US box office figure isn’t the important one in our system. The real results are contained in the predicted revenue range, which for this flick is $50,011 to $4,440,819. The predicted box office is simply a basic average, but the revenue range is what will be most likely achieved by the film with the variations representing the different effects caused by certain other variables.
In the case of Creature, one of the important variables is the distributor. The movie was both produced and distributed by The Bubble Factory. Though the company has been around for 14 years, it has yet to produce a movie that has significantly scored at the box office. Until Creature, it had never previously tried distributing a movie on its own. Personally, I don’t think a struggling production company is in any position to move into distribution.
If Creature had been distributed through a larger and more established company, it most likely would have done slightly better. But only slightly. The database figures indicate an improvement of only a few percentage points. Besides, The Bubble Factory had managed to get this sucker into a lot of theaters, so they were getting a fair amount of the job done. Most likely the biggest problem was lack of publicity rather than distribution itself.
The relative inexperience of the movie’s director and certain key technical personnel didn’t matter. This part didn’t surprise me, since horror movies are traditionally a good starting point for many people, and inexperience isn’t necessarily a drawback. People have to start somewhere, and the horror genre is that somewhere. Likewise, the basic lack of any known names in the cast makes little difference. A better-known cast only resulted in an increase of a few percentage points. Besides, a better-known cast would have forced the producers to spend more than the $3 million that they used for producing the movie.
The issue of casting is one of the most illusory concepts in film production. People who invest in movies like to invest in stars. People who go to movies largely don’t care. Few of the so-called marketable stars have any real box office clout. Mostly, they sell magazine covers. The unimportance of the star is especially true in the case of horror movies. As long as the cast members can run and scream, they will do fine regardless of name recognition (or lack thereof).
The leading actor in Creature brings up another issue. Mehcad Brooks has some name recognition from his TV career. The filmmakers were especially banking on his role for one season on the cable series True Blood. Unfortunately, few people who do well on TV ever successfully make the leap into movies. George Clooney is a rarity. Most will never make it as far as Tom Selleck (and he’s back working on TV). This has little to do with the person’s merit as a performer. Heck, I like Tom Selleck on TV, but he comes off too flat on the big screen. It has to do with the strange nature of the movies.
Ironically, the $3 million budget was the one factor that made a noticeable difference in the database analysis. If Creature had been produced for $15 million, the projected revenue moved to a range of $269,899 to $24,413,736. Again, this is not a fantastic improvement, but it’s a heck of a lot better than what they got. Oddly enough, horror movies tend to play best when they have a production budget somewhere between $12 million and $15 million. Any significant amount either below or above this range is a problem. The minute a horror movie goes past the $18 million mark, forget it. Some might point out that Paranormal Activity did phenomena business and it was made for $15,000. But that movie wasn’t exactly a horror flick. It was an indie event and had a very different audience from the average horror film.
I hate to say it, but they didn’t spend enough on this sucker. By the way, don’t ask why that would make a difference. Even with a database, there are many areas in the film business that defy rational explanation.