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Film Fund-amentals: Phase Three

For all practical purposes, Phase One of the digital revolution is complete. Commercial film production is in the process of going all digital. Commercial film exhibition will do the same by the end of 2013. Likewise, streamed and VoD release is surpassing DVD rental and major retailers are shifting toward digital systems as a means of staying competitive. Digital movie distribution is not only rapidly expanding in the non-theatrical business but will eventually become the sole means for first-run theatrical presentation.

Phase Two is well under way. The Finnish movie Iron Sky is slated for worldwide release (including the US) this spring, making it already one of the most successful efforts yet at online feature filmmaking that combined a mix of traditional investors and crowdfunding sources, interactive production development with an international network of volunteers, and lots and lots of social media presentations.

More importantly, the first global hit has been achieved through digital production and distribution. In less than two weeks, the short documentary film KONY 2012 has scored over 78 million viewers on YouTube. This documentary has also scored lots of controversy, oodles of press attention and more viewers than an expensive space saga released in the same time period. Until KONY 2012, the average success rate of a straight-to-YouTube production has fluctuated between a couple of thousands to a bit over a million. Previous to this, one of the more successful online documentaries had been the Ridley Scott interactive creation of Life in a Day, which scored close to 5 million clicks.

Granted, KONY 2012 is less a documentary and more like that Humane Society of the United States TV ad that leaves everyone weeping. It has also garnered plenty of political criticism from both the Left and the Right. But I am not interested in the film from either an aesthetic or political position. I am addressing the phenomenon itself (which is extremely significant). After all, Disney would have sold its corporate soul to the devil for this large of an audience for the opening of John Carter.

The development of digital production and release has largely taken place under the radar. Most of the film industry is still primarily focused on the traditional model of production and distribution. Simultaneously, the industry is working on many individual components that are paving the way for the total digital approach (ironically, the drive toward 3D has been a huge force in this direction). Until recently, many in the industry thought that the unique collective experience of the movie theater would be strong enough to maintain some form of normative existence within the business. It is only now dawning on many people (especially theater owners) that this theory is wrong. Ironically, this mistake has been made by virtually every other commercial media industry imaginable (for example, newspapers and the music industry). This notion is sort of the Energizer Bunny of bad ideas.

Within a year (more or less), any theater that has not adapted to digital presentation will be gone. Oh sure, a few will try to hang in there as “museums” of “film art,” but access to non-digital material will quickly evaporate. Besides, most owners of theaters (including those who view themselves as running art theaters) are not capable of operating and programming for this type of structure under these extraordinary circumstances. At best, they would have to go for some type of non-profit organizational status based upon monies from civic and/or major business donations. No matter what, they will not ultimately have much to work with as the rest of the universe moves in a radically different direction. Quite literally, there will be no films.

Theatrical distribution is overwhelmingly controlled by the major Hollywood companies. They are hoping to do the same with digital distribution, which is a major reason for the development of the UltraViolet system. This is part of Hollywood’s “concern” about internet piracy (especially as they keep using that term as a catch-all for an increasingly wide range of digital activities — some of which are actually legal). Classic Hollywood existed due to a vertical and horizontal monopoly system. Modern Hollywood survives primarily because of this near-monopoly on distribution.

Which is why Phase Three of the digital revolution is of deep concern. Virtually all aspects of the industry are now dominated by the digital process. Likewise, a film can be produced and released with major viewing success via open digital systems, completely bypassing all levels of corporate Hollywood. With Phase Three, all emerging aspects of the digital process reach a state of total synthesis that results in a basically new and totally independent form of creative media. For want of a better term, we can call it the post-cinema future.

At first, it will be indistinguishable from the past. A collection of old forms in a new package. It will be a few years into Phase Three before people begin to notice the change. But we are now entering the most significant stage yet of media transmutation. All that has gone on before has merely been the beginning.

The real show is about to begin.

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Comments (4)

  • kiely


    not to nitpick but the statement “Commercial film production is in the process of going all digital” while true is a bit misleading. at least 60% of all features above $12M (meaning what you see in the theater) are still shot on film.
    you are absolutely correct about the digital presentation takeover … personally, i think that the dumbing down of the audience’s expectations to a 2K world is a very sad thing. the theatrical presentation is about to dig it’s own grave as the picture will not be any better than what is (or very soon will be) available at home for many consumers. certainly we are witnessing the birth of digital presentation but it is probably worth noticing that it is also the death of the theater that we are watching.


  • Dennis Toth


    You are correct that the current structure for large budget commercial filmmaking is still based upon film (with film being transferred to digital for theatrical presentation). However, the entire infrastructure for film is vanishing (labs, cameras etc). and that is pushing the issue straight into digital production. The question is not if but rather how long the major companies can try and resist the inevitable change. With the end of the infrastructure necessary for maintaining film production, it won’t be long.


  • Robert Livingstone


    I agree with everything Dennis says about the digital revolution. But there’s one caveat: to a large extent, marketing dollars drive the box office, fill the seats. For most filmmakers, getting digital marketing to succeed without spending money is difficult, if not near impossible. KONY 2012 is the rare exception. Those willing and able to spend — studios/distributors, with marketing budgets two to four (or more) times the size of the production budget — will continue to dominate the theatrical end of the business. Ask Kevin Smith. He worked his ass off to get Red State to break even. I’d love to hear from anyone who thinks there’s an alternative to this marketing dominance.


  • Farrin Rosenthal


    Another great article Dennis. Instead of leading with a bold vision, Hollywood studios are always pulled screaming and kicking into the future, fingernails scraping, trying desperately to hold on to the past. 2K is the future for home TVs, so 2K Cinema will not cut it, and theatres will have to upgrade to digital projectors capable of 4K or higher to really stay relevant.


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