Friday, June 14, 2013

An Implosion Of The Movie Industry?

Recently, the Hollywood Reporter published this story where George Lucas & Steven Spielberg were talking about the future of the movie industry:

Do I agree with the assessment?  Not 100%.  I don't think that movies are going to end up like Broadway Productions with huge ticket prices and everything else being shown on a small screen.  In my opinion, there is a reason for the increased ticket prices and it goes back to the early 2000s.

If you recall, when digital cinema first came out, there was concern from theater exhibitors as to how they were going to fund the cost of upgrading their projectors and systems to be able to show digital movies.  Back then, the studios agreed to split the cost.  Theaters were able to recoup this cost by charging more for box office admission, and a hell of a lot more in concessions.  Almost overnight, the price of a movie ticket went up from about $8 (in Los Angeles) to $14.  That's where I think it all started.

Now, after over 10 years since the major multiplexes have converted over, you would think that they've recouped their original investment and can now lower prices to a more reasonable amount.  But this isn't the case.  Exhibitors are continuing with price gouging practices that need to stop, if they want to keep their customers coming back to the movies.

Don't get me started on the price of popcorn and soda.  I know that theaters make most of their profit from concessions since the cost of exhibiting the movies cuts into their box office revenue, but when the price of a soda and bucket of popcorn is almost the price of an entree at Morton's Steakhouse, we have a problem.  Really?  I mean, popcorn costs pennies to make.  But since movie-going audiences seem to have accepted these prices, I don't see them dropping.  In fact, concessions have gone up a lot over the past decade.

Since people are able to rent movies over the internet now, there's less of an incentive to go to the movie theater.  Sure, some movies need to be seen on a big screen, but when you can get a 72 inch flat TV from Best Buy and a kick-ass home theater system, why go to the multiplex?  To really save the movie business (from the exhibitor's side), prices need to come down.

Yes, I know there are other issues like video piracy, especially when movies are being cut digitally and without a film print.  That makes it easier for a pirate to steal a copy of the movie and distribute it illegally over the internet.  Recent work by the FBI to shut down some of the bigger offenders has certainly helped in this regard, as well as the successful legitimate downloading services like iTunes, and Netflix.  It's more convenient to purchase entertainment legally.  You'll always have outlaw hackers, but by making them have to work harder to steal, there's fewer folks willing to do it.

Back to the whole Broadway analogy.  Why are audiences willing to spend $100 on a ticket to a Broadway show?  Simple.  It's a live performance.  You are sharing the same room as the actors up there on stage.  It's a communal experience where both performer and audience are sharing the exact same moment in time.  You can't replace that with screened entertainment.   No matter how many monsters, explosions, shootouts, car chases, and other VFX you throw into a movie, you can't change the fact that it was photographed months if not years before, and put together in an editing room.  Every time you watch it, it will unfold in exactly the same way.  Doing it live is not only the oldest method of performing, but it's also the most unique.

That's why you don't have to worry about movies costing the same as Broadway.  After all is said and done, it's still only a movie.  Audiences know this.  At some point they are going to stop going to the movies altogether, if the industry doesn't wake up and pay attention.

Here's where I see the future.  Independent filmmakers and producers right now are coming up with better stories than your typical studio tentpole summer release.  And they're doing it for a lot less, often casting big name actors who are drawn to the material rather than a huge paycheck.  Because a lot of these movies end up winning Oscars, more and more actors are going to be willing to work in these productions.

Indie producers will "four wall" their movies, in order to qualify for the Academy, and then make most of their money back on video, Netflix, Amazon, etc.  Because they have a lower break-even point, they don't need to have a $100 million opening weekend.  Besides, most of today's big budget $100M openers actually cost over $300 million when you factor in marketing costs.  So as long as they don't drop off too much, they still make money, but the margins suck.

I predict that studios will soon discover that it costs less for them to acquire a completed independently produced film and spend $10 million marketing it, instead of making it themselves with a $150 million production budget.  Because technology has allowed small time filmmakers to produce films with really good effects and production values, very soon you will see a very commercial high concept feature film that was made for less than $5 million that looks like a $200 million movie.  Once that happens, the studios will get out of the production business (with the exception of renting out their soundstages and other studio resources to indie producers) and into a distribution only model.

So, if you're an indie filmmaker with a dream and a 5D Canon camera, be very very excited.  Soon you might find the big boys knocking on your door!