06 Jul Film Fund-amentals: Coming Soon

There are various ways of guessing the future. In ancient Greece, the Oracle of Delphi is believed to have sniffed fumes from a crack in the earth. In other practices, people “read” the entrails of a goat or chicken. The prophecies could be pretty thin, but dinner was a sure thing. The legendary Nostradamus used chants, prayers and some form of mediation while staring into a bowl of water. His success rate was debatable, but he still puts in a regular appearance on the covers of supermarket tabloids (I think he even predicted the Al Gore sex scandal).

Then there is my technique. I call it educated speculations developed from current and emerging patterns. It is more widely known as blind guesswork. At least it isn’t as messy as goat entrails, and it has a fifty/fifty success rate (more or less), which actually places it ahead of Nostradamus’s 7 percent. Fortunately, the future trends in movies are more predictable, and the real question is not if but when certain changes will take place.

Take for example the rise of the digital cinema. Despite the high cost of converting to digital projection format (general estimate of $150,000 per screen), theaters are pressed to pursue the technology due to the 3D revolution. The 3D mania has resulted in a strange collaboration of studios, digital suppliers and lenders, who have created special funds to rapidly expand the use of digital projectors in order to increase the number of screens for 3D movies.

But the 3D revolution will most likely have a limited lifespan (I’m guessing that it will be very low-key by the start of 2011). While some films that are actually made in 3D will still have the long-term ability to attract an audience (especially if the filmmaker has a clue about how to use the format), most of the 2D-converted-to-3D movies are already leaving viewers with a bad taste for the process. Likewise, the steady increase in ticket prices for 3D movies is forcing many viewers (already strapped for cash) to rediscover a deep appreciation for the artistic merits of the flat screen.

So what becomes important is not the issue of 3D, but rather the total conversion of the theater system to digital projection and digital distribution. Since the cost of digital distribution is infinitely cheaper than using 35mm prints, the financial restraints placed upon small distributors and indie filmmakers vanishes. Economically, just about anybody can distribute a movie through the digital system.

What will stop them is the desire by the major companies to control the process. The Twilight Saga: Eclipse did more than make a lot of money this weekend. It also sucked up nearly 4,500 screens. Another 4,000-plus screens were busy showing Toy Story 3. Then 3,000 plus screens were stuck with The Last Airbender. Add in the next 6 major titles, and at least 25,406 screens in the US are currently tied up with the same 9 movies. There are roughly 37,396 screens in the country. The remaining screens are largely made up of either drive-ins (seasonal and largely marginal in their financial returns) or second-run screenings. So it is no surprise that indie movies have a tough time finding a place to show (for example, the indie movie Cyrus was the tenth biggest movie last weekend, but it’s only playing on 77 screens – which in indie terms is a very wide release).

The major companies like it this way. The old days when Hollywood maintained a total monopoly over the distribution system are gone, but the system still basically works that way. However, the economic drive of the digital approach is toward total decentralized control. The high cost of 35mm print distribution ($2,500 per print more or less) was ideal for large companies. Digital distribution removes the financial barrier and, in theory, opens the system to a wide range of small vendors.

Which is why the majors are going to work overtime to create every possible roadblock imaginable. For example, the rating system maintained by the MPAA has a financial price tag that can vary (depending upon a wide range of issues) from $10,000 to $250,000 per title. As a general rule, a very low-budget film cannot afford the fee to go through the rating process. In turn, a movie without an MPAA rating finds that its theater access is sharply diminished (mostly limited to the few “art house” theaters that still operate).

Directed ownership of theaters by studios was broken up in the late 1940s by the Supreme Court decision in the case of Paramount Pictures. In the 1980s, the rules were relaxed and various major studios went back into the theater business by buying large portions of stock (often around 47 to 51 percent) in many of the major theater chains. The advent of 3D and the cost of digital conversion has hastened this process (e.g. the manner in which IMAX has used the conversion as a means of gaining control over the screens that are converted). So the majors have sizable control over the distribution process.

Too bad the digital revolution just doesn’t give a damn. The recent failure by Viacom to roll back the “safe harbor” rule in its suit against YouTube is just one indicator of this trend. But even if Viacom were to succeed (perhaps by floating a bill through Congress — hey, it happens, as we all know), it still doesn’t matter. The nature of the technology (and the demands of commercial distribution) makes it virtually impossible to stop the process. Don’t believe me, then just look at the music industry.  The effort is impossible to enforce and manages gives the average hacker a bogus yet romantic allure (suddenly, all the geeks in their parents’ basement are flying the Jolly Roger while trying to figure out how to buckle a swash).

But the other irony of 3D and digital conversion is even more perverse. In principle, the move is designed to make film going an “event experience.” The cost of the conversion (with its ensuing ticket price increases) may actually drive away film viewers (current box office drops support this) and even force some theaters out of business. Instead of saving the theater business, 3D may be the last gasp of a dying enterprise as emphasis continues to move in the direction of various alternative distribution patterns. Likewise, digital distribution to theaters carries a weird double-edged point: the process makes it cheaper to do, and also makes it more feasible to simply skip the theaters altogether and go straight into the home market.

The actual future of movie theaters remains, at best, murky. But the special presentation of TV programs and “live” events will become increasingly more important to the theaters than simply showing movies. Eventually, the average megaplex will function more as a kind of social/community center than as a movie palace. It’s almost as if the theater system is rolling back to where it began over 100 years ago. Throw in a few more live acts and we could simply call it vaudeville.

These are just a few of the reasons why the major companies are heading into turmoil. They are also some of the means by which indie cinema will actually have a resurgence, though it remains to be seen in what form. The whole concept of indie filmmaking is undergoing major changes, and what will emerge from this process is still a vaporous presence. But it will be the future of film. The rest is merely the last stand of an old era.