Sunday, September 14, 2014

What's Happening to Hollywood?

John Nolte, writing for, has commented on the decline of Hollywood revenues in his piece, HOLLYWOOD CODE RED: 2014 ALREADY A WRITE OFF, 19% OF JOBS CUT. While he does nail a couple of things, he's also missed a few spots.

Nolte's sources are the following stories:
Now, I'm not a movie industry analyst. I'm not a mogul. My opinions are simply those of a moviegoer who keeps his eyes open. Even so, I'm the guy who chooses to spend... or NOT spend... his money, and if the film industry wants to avoid a downward trend, it would probably serve them well to listen to some people who aren't analysts. And you might notice that most of my examples here are science fiction movies, but that's usually what I go to see. It's the principle that's important.


Nolte rightly notes that the general cost of seeing a movie has become more expensive over time. Two trips to the theater with my family could by an Android tablet. It could buy five blockbuster movies on disk for home release. And that's just admission. One of the things I learned when I worked as an assistant manager for Plitt Theatres was that theatres don't really make any significant profit on the box office, which is why the concessions are so expensive. Expensive or not, it's the concessions that keep the place in business, not the blockbuster titles. It's not that there aren't millions of dollars to be had... it's just that the distributor is going to get 95% of it for the first week, with only a shallow reduction in that percentage for the following weeks.  As a result, the cost to you, the viewer, is far greater than if the theatres were allowed to negotiate more reasonable terms. "Reasonable" is, of course, relative. These are the terms that have always existed, long before I was totalling box office receipts in the late '70s.

Popcorn pays the rent
Box office receipts, therefore, track very closely with what the studio is actually raking in. Except it isn't. Most studios separate themselves from distributors even when they're "really" the same company (as with Walt Disney and Buena Vista). Now, even when they're closely tied, production companies and distribution companies construct their contracts in such a way that almost no movie makes a profit, at least not on paper. Often this is to prevent payments to those who were stupid enough to negotiate a share of "the net". This is common knowledge, as is the fact that even when they "don't make a profit", they really do... which is why A-list actors and actresses can negotiate a $20 million payday for one month's work. Those box office receipts go to paying off investment, and the rest of it is gravy, with very little reserved for any actual expenses.

You might imagine that an environment like that might promote a little corruption.

So there's one reason why your visit to the theatre is so expensive: studio greed which forces the venue manager to jack up concession prices. Buy the Skittles anyway... it's not their fault.


But what about that ticket price? It's going up and up. That's the fault of the studio execs and the directors who have faulty ideas about what "the audience wants to see". Because there are so many millions at stake, they're often afraid to make a mistake, and thus over-produce a movie to a ridiculous extent.

Take as an example John Carter. It made a very respectable $280+ million at the box office, which should have made a few sing hallelujah. However, that didn't happen. It was considered to be a flop. The reason... it cost $250 million to produce, which in "Hollywood accounting" takes over half a billion dollars to recoup. Don't do the math, it will just make your head hurt. Keep in mind that most of the people who called it a "flop" are studio accountants. The film itself wasn't bad. And the critics who've called it "derivative" simply display an embarrassing ignorance. If it looked as if elements of the story had been "done before", that's merely because "A Princess of Mars" was the first of its genre in print.

What's missing?
But did the audience know that? How could they, when the studio did their best to hide it? Let's look at the poster, shall we?

What's missing? Maybe "Of Mars"? Or Edgar Rice Burroughs' name? These references were deliberately removed by Disney's marketers. In trying to "appeal to a broader audience" the studio suits removed the sort of thing that would have brought in a larger audience. As a result, many moviegoers... especially the younger ones who are most prone to visit the box office... didn't know what the movie was about. If they'd been honest about the source material and done their marketing right they would have significantly increased the amount of money this film brought in. The critics would have known what they were reviewing and the studio might have hit their box-office target.

Even so, the film did well enough, and could have done better had it not been over-produced.

I view myself as the ideal target audience for this film. I read the "Barsoom" books of E.R. Burroughs as a child and have re-read them several times since. This had been on my cinema wish-list for years. But when I or anybody else who's read a classic say that, it means that they want to see the story brought to life. They want to see what they've read. When a studio gets involved they start analyzing it and focus-grouping it and they start rooting around looking for a "fresh take"... Then they get caught up in the visuals and it all goes crazy. The flying ships of Helium are recognizable as ships in the books, and warships at that. In the movie they're sprawling, spidery, fragile, feathery things that seem designed simply to maximize the cost of CGI modeling. In the book, the city-state of Zodanga not only stays put, but is a veritable fortress, surrounded by walls 75 feet high and 50 feet thick. In this movie the city of Zodanga inexplicably walks around on complicated clumpy feet. And so on. The filmmakers are so busy trying to gee-whiz us with their "skillz" that they forgot what the movie was supposed to be about. Nothing of the baroque visuals added to the story, but it added to the price, all right.

Disney could have chopped the production budget in half and still made their $280 million, and I don't think that's an unreasonable statement at all. Hell, with production costs of less than a million dollars, The Asylum managed a successful direct-to-DVD release of A Princess of Mars. It sucked in comparison to John Carter, but it didn't lose money, and some of the visualizations were better. Disney has no excuse for such waste.

This kind of bungling is commonplace. Hollywood over-produces everything, and they over-produce the wrong things. So they waffle over sociology when they should just conclude that a book's success equates to "this is what people want to see". There's a reason that the top-grossing films of the last decade are faithful adaptations of popular books: Hunger Games, Harry Potter, Lord of the Rings, etc. Marvel anything is successful because they took control and are making live action comics like the ones they print rather than worrying about realism. Now Marvel unapologetically put a talking tree and raccoon on the screen, and as a result exceeded expectations for "Guardians of the Galaxy".

Of course, these are the kinds of movies that Nolte describes as "aimed at teenage fanboys". The statement betrays a misunderstanding of the superhero and sci-fi genres, but that's OK.


If you're adapting a wildly successful book to the big screen and you decide to depart from the source material significantly, then you're an idiot who deserves to be parted from his investment. Of course, by that standard, Hollywood studios are mostly staffed by idiots.

On the flip side, if you're bringing something "new" to the screen it would be best if there were a bit of originality to it. By this standard Hollywood is still mostly staffed by idiots. If anybody makes a movie that's successful, then for the next five years you'll see variations of that same movie over and over and over again. I'm not kidding.

They couldn't find a fat black woman?
To illustrate, I was going to use the most ridiculous example I could imagine, and compile for you a list of movies in which thin black actors dress up like fat black women. Then I remembered that this is the Internet, which means that somebody somewhere thinks that's porn, and according to Rule 34 the list must already exist. Kaynahorah, the list does exist! Not only that, it's a Top Ten list. I'm amazed, not only that they could find ten, but that they had to cut it off there.

In the same vein, you're not going to get just one of a successful movie from the same studio. There will be sequels. And the sequels will generally be worse, mostly because they're not about being creative. Instead they're about checking under the sofa cushions to make sure they've got all the money they can get from you.

Meanwhile, analysts like Doug Creutz of Cowen & Co. express surprise that sequels of remakes aren't performing as well as they expected. For crying out loud, dude, do we have to draw you a picture? Of course consumer habits are changing!


Nolte writes:
"Hollywood is making fewer theatrical films, and a huge majority of those are either aimed at teenage fanboys or the hoity-toity who attend festivals that should be called: Arty Pretentious Shit No One Will Ever See".
Touché. To all outward appearances, "Hollywood" believes you're an idiot. There are a handful of art films that win obscure awards from critics and a severely restricted list of filmmaking peers; but these seem to be created mainly to stroke the egos of the directors. They rarely make it to distribution. Don't worry, you're not smart enough to watch one, even if you could find a back-alley college cinema that's screening it.

Rather, to Hollywood, you have the attention span of a goldfish. Directors seem to think you'll forget what time you walked into the theatre, which ironically enables you to sit through a three-hour movie so long as there's a shitload of motion and color on the screen. And that's what they believe you need to see. A new movie like Orson Welles' Citizen Kane wouldn't be hailed as a classic today. It would be roasted as a snooze-fest. To make Miracle on 34th Street today you'd need to add some wacky hijinks and an elf with an attitude. The only reason people sit through older films like this today is because they've been told they're great. And upon watching them, they find that yes, they're great. But no studio could convince themselves of the fact today, to the extent that they'd be willing to back such a thing financially, regardless of genre.

You're held in that seat for three hours to justify ticket prices that are hiked up to pay for costs that are inflated because the studios pump money into "production". Meanwhile, small movies can still be great, and people will still pay a reasonable price to sit and be entertained for an hour and a quarter. Theatres are beginning to figure this out, and they're starting to capitalize on the digital technology they've been forced into by using it in other ways. Because a modern projector is basically a heavy-duty projection computer monitor, it's possible to project video from any source... not just film, but live theatre, concerts, sporting events. and conferences. Think Superbowl Sunday on steroids. Companies can use them for global teleconferencing. Everyone gets a great comfortable seat, an unobstructed view, and excellent sound. And while the classic distribution system is still in place, there's really no technical reason that a theatre can't show whatever they want so long as they deem it to be profitable. And being profitable is far easier when you can negotiate a reasonable percentage of the box office, and when the filmmaker is not burdened with the expense of printing and shipping physical film stock. With the draconian distribution process out of the way, everybody gets a bigger slice of a smaller pie.

Contrary to Doug Creutz's analysis, I think that theatre chains will adapt and do just fine.


I've invested in a few Kickstarter projects, including indie movies. Typically these guys need a few tens of thousands of dollars or so to create a movie, and they're having to stretch that money pretty far. The cast isn't going to retire on it, and the whole production is hoping to break even. I invest in these because they're attempting to make a movie that I want to see. They tell me in advance what they're going to make, they tell me who they've got on the production staff and how they intend to use the money. Instead of selling me a ticket or a DVD, they're asking me to invest in the project, and my return is nothing less than the story I want to see. Everybody knows I want to see it before they get started, and no money exchanges hands unless there are enough investors like me to provide the production costs in full. And all during production I get regular status updates, pictures, and "making of" videos that make me feel like a part of the team.

HELLZ YEAH. That's how it's done, and if it bothers the studio heads in Hollywood that they're not making enough off of one movie to allow 500 guys like me to retire in reasonable comfort, then screw them. This is the new reality: you can either produce what people want to see and hope they pay for it, or you can tell them what you have in mind and ask if they want to be a part of it. Amazingly, people will readily spend $40 bucks to invest in a modest movie that they really want to see. That's the same $40 bucks that Disney spent $250 million to wrest out of my hands for "John Carter".

So, disappointed with a film like JJ Abrams' Star Trek, I invest in projects like Axanar, which is smaller, more intimate, and a thousand times smarter. And it can't be just me... these guys asked for $100 grand and received over $600 grand to get started. And their sales pitch is a 20 minute prelude that lets you put eyes on the quality of the finished product.

Oh, and there's one more thing about indie films... they're not tied to Hollywood, and the artificial, ridiculous expense associated with being located in "the Golden State" (by which they mean you should bring some gold with you... you're going to need it). Already, big films are made in Toronto or New Zealand because it's cheaper to ship a cast to another country and film than it is to stay put. Why should a movie need to be made by union labor in a studio in California?

Am I going to cry for Hollywood? No. I welcome the new model. Anybody who wants to make a movie, can. They need talent and ideas, which they take straight to the audience. The big studios can still survive, but not if they keep to the same path. If they can go bigger and bigger they'll eventually die out like dinosaurs. Or they can reign in the madness. Once upon a time a studio cranked out a movie a month. Films were affordable, and people saw a lot of them. But we could help them out by ditching the unhealthy fascination with discovering who "won" the "box office wars" every season. There's no such thing, and it's a stupid thing to track anyway. So long as you're seeing movies you want to see, who the hell should care whether somebody else sold more tickets?

P.S. I have to comment on Nolte's statement that "the music industry has been 'disrupted' in to oblivion." Of course that's not true, but it has changed. It is no longer necessary for someone to sign with a record label to become famous, or even earn a living. Today there are more musicians making more music heard by more people than ever before. You can get on YouTube or iTunes, and if you have talent you can get famous. And just like with film projects, many musicians like Zarni have found financing for their albums through Kickstarter.

You may not get signed to a contract and bought a car, but if every musician who's had something to say about it is to be believed, that's not a terrible thing. This is a system that needs to die. But it hasn't. The end goal of big productions like "The Voice" or "American Idol" or "The X Factor" is a recording contract, and that doesn't work out for everybody. Keep in mind that the recording business has always been a minefield for most musicians. Only a very select few ever found lasting fame and fortune.


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