Film Fund-amentals 2013: Things to Come

We are already well into the second decade of the 21st century and I still don’t have my own personal jet-pack or robot. Heck, I don’t even have a lousy iPhone.

But 2013 is almost here, and everyone is beginning to peek ahead at a coming year of changes within the film industry. Of course that means looking back at the immediate past in hopes of second-guessing the imminent future. It’s a tough call. 2012 feels a bit like the year when many of us were run over by a truck and we hadn’t even left the house.

So what have we learned from 2012?  Just last summer, the big worry was the steep decline of the American box office with Hollywood insiders blaming everything from the internet to sun spots. Now the hot story is the impending surge at the box office due to the sure fire nature of upcoming holiday releases. After a long year of despair, optimism has become a new hobbit among the studios.

OK, you can’t have it both ways, can you? One of these notions has got to be wrong. Perhaps? In some respects, both views are half correct. It won’t be until early next year before an accurate assessment can be made, but it will look a bit like this: The attendance drop in 2012 was so severe that almost anything better is going to look awfully damn good. Since many of the major releases in Spring and Summer 2012 went more flat than an armadillo on a Texas highway, the late burst of box office exuberance will help to artificially peek the year to a better record (based in part on how bad it was during the holiday period in 2011). Then it will be followed by the steep drop of 2013.

Sometimes the key is not in the individual numbers but the overall pattern. Movie audiences have been in a steady decline for years. Despite the occasional fluctuations, the decline will simply continue. The success of movies like The Hobbit  and Skyfall just don’t matter in the Big Picture.

The Big Picture is part of the reason why Hollywood is beginning to discover data analytics. Behind the scene of Les Miserables is an experimental application of a data system for handling budget and revenue projections. As a colleague of mine has recently argued, it isn’t the most rigorous test: the movie has several whopping big factors already in its favor, like audience awareness, well established original property and a big name cast. But it’s a start. Since it will undoubtedly succeed in hitting its projected mark, it will be a convincing case in favor of such systems. Sometimes an easy pitch is the best way to start.

2012 was the year that crowdfunding became the salvation of indie film financing. It was also the year that crowdfunding came to the attention of the federal government and the Security Exchange Commission. New rules are about to be applied to crowdfunding. These rules may or may not have a negative effect on the process for indie filmmakers. The true taste of the impending SEC rules on crowdfunding will not be felt until the middle of 2013 (by which time we will actually know what the rules are). It’s one of those moments when all I can think of is Sam Fuller’s infamous advise to the screenwriter in the Wim Wenders’ movie The State of Things.

This has also been the year when the imbalance between the US and European box office has become a critical factor in distribution strategy. Increasingly, major Hollywood movies are making the majority of their ticket sales overseas, with the differences averaging between 2 to 1 and 3 to 1 ratios. Likewise, many big budget movies are finding it advisable to open overseas first as a lead in to the weaker American market. At the moment, the overseas audience has a big appetite for Hollywood productions. In some cases, they have a bigger appetite than Americans for weirdly jingoistic movies (e.g. Battleship). It’s good business as long as the global economy doesn’t tank again (still a serious possibility), but how much longer overseas audiences will support Hollywood movies against their own national productions? Sure, it helps that most foreign production systems are currently extremely weak in terms of production and distribution access. But all that can – and undoubtedly will – change.

Which is why so many folks in the film industry are banking hard on the China strategy. The Chinese are looking to solidify and extend their holdings into various levels of American businesses. They are extremely interested in Hollywood. They have money, so Hollywood is extremely interested in them. The Chinese are already deeply involved in various major productions over here (for example, Iron Man 3). Hollywood suits are in China working on a wide variety of business deals and production arrangements. Ironically, few of these people are taking the time to try and learn anything about the Chinese beyond our Western stereotypes.

I don’t have that much direct experience with the Chinese in business matters. Some but not much. However, I would highly recommend a recent posting by my colleague Ann Rutledge who does have extensive Chinese business experience. Or a chat with an old film professor of mine, George S. Semsel. He has done a lot of work with the Chinese and they hold him in high regard.

I would also remind people in Hollywood of one thing: Garrison’s Gorillas. Right after Nixon made his visit to China in the early 1970s, a collection of old American TV shows got sold to the Chinese for broadcast. Among the various shows sent over were the 26 episodes of a largely unsuccessful (and pretty much forgotten) series called Garrison’s Gorillas. It became a hit in China. The Chinese saw it as a sterling tribute to the concept of team work and group discipline. Over here, most viewers just thought of it as a long pause between commercials. But hey, we ain’t Chinese.

Which is going to be a problem. The Chinese have a very different mind set. For one thing, they have minds, whereas the jury is still out on many people in Hollywood. 2013 may be the year for one heck of a cultural collision.

I’m just hoping for a ringside seat.