The Implosion of Film

You possibly heard about it: Steven Spielberg and George Lucas predicted an implosion for the film industry in the upcoming years when even proven talent can’t get their movies in the theaters. According to Paul Bond, some ideas from young filmmakers

“are too fringe-y for the movies,” Spielberg said. “That’s the big danger, and there’s eventually going to be an implosion — or a big meltdown. There’s going to be an implosion where three or four or maybe even a half-dozen megabudget movies are going to go crashing into the ground, and that’s going to change the paradigm.”

The remarks of Spielberg and Lucas provoked mixed reactions from film critics. Most interesting was the number-crunching verdict of Laremy Legel, who predicts that big budget movies are here to stay but smaller dramas addressing an adult audience appear as financial risks:

An “implosion” is definitely coming, but it’s not going to happen because of the $250 million dollar flops, it’s going to happen because of the mid-level flops, which, in the aggregate, are much more devastating to a studio’s bottom line.

And further:

The major studio systems now have a playbook they execute each time out. Sure, they tinker around the edges, but true innovation is routinely watered down with focus groups or preferably avoided altogether. If it’s not going to play overseas, to a generally “English as a second language” crowd, then it has got to go.

This reminds me of a lament written by Mick Harris on the occasion of the release of Christopher Nolan’s mega-success “Inception” in which he states that

it has never been harder for an intelligent, moderately budgeted, original movie aimed at adults to get onto movie screens nationwide.

“Inception” was the perfect blend of smart, intelligent but nonetheless blockbusting entertainment, still it owed its existence only to the huge success of Nolan’s “The Dark Knight”, which gave the director enough bargaining power to talk the studio bosses into putting money in his “fringey” idea before he would finish the next Batman movie. “Inception” would have been never realized if Nolan would have been an aspiring young film maker with no commercial success in his vita. Instead, studio executives throw money at

an adaptation of a comic book. A reboot of an adaptation of a comic book. A sequel to a sequel to an adaptation of a comic book. A sequel to a reboot of an adaptation of a TV show. A sequel to a sequel to a reboot of an adaptation of a comic book. A sequel to a cartoon. A sequel to a sequel to a cartoon. A sequel to a sequel to a sequel to a cartoon. A sequel to a sequel to a sequel to a sequel to a movie based on a young-adult novel.

The pattern is similar in other cultural areas and is one of the complicated and twisted ways in which digitization influences the cultural industries: users and amateurs are empowered to enter a before closed marketplace (they win), big mainstream media concentrates even more on globally marketable and easy to sell products (they sometimes lose, but in the long run they always win), only the middle class of professional and independent artists and producers, who actually embody cultural diversity and innovation, finds itself in an environment where it is harder and harder to make a living from their art.

At this point, many would point at arthouse series like “Mad Men”, “Breaking Bad”, “Homeland” and others produced by Pay-TV channels. In the before mentioned talk, George Lucas called cable television “much more adventurous” than film nowadays. But it is crucial to understand that this “new golden age of TV” is based on a monopoly as Adam Davidson writes in his piece “Mad Men Economic Miracle” for the “New York Times”:

Secure in their quasi-monopolistic dominance, cable providers have found that they can steadily raise rates and not lose too many customers. The average cable bill has more than doubled over the past decade, and viewers currently pay nearly $90 billion a year for their service. This is more than enough to support a profitable system in which networks can afford to broadcast expensively produced shows. Everybody profits, everybody wins (even viewers).

In this system, cable-TV is some kind of black box, where viewers without subscribing to them are actually cross-funding HBO, AMC and others investing in quality series aimed at niche audiences. HBO and AMC on the other hand are able to raise their prices since the cable-providers can’t afford to lose series with a small but strong and devoted following. This black box has led to a quality war which is “built on a brilliant (and maybe evil) business model”. But this business model is slowly dying since younger generations are not willing to pay steep bills for cable-TV and will stick to online streaming. Adam Davidson finishes his analysis with a rather bleak prospect:

Competition is obviously preferable to a monopoly. Yet without the existing system, it’s hard to imagine that the quality war will rage on. Will there be enough content providers willing to gamble on expensive programs with big stars, lavish wardrobe budgets and huge overhead — only to sell episodes online for less than a dollar? If there are no oligopolistic profits, no cartel monetizing our eager anticipation, will there be as much great stuff to watch? For people, like me, addicted to not only “Breaking Bad” but also “Mad Men,” “Game of Thrones,” “The Killing,” “Homeland” and others, this future is scary because the answer is probably no.

The streaming service Netflix is now challenging HBO with its own quality series “House of Cards”. The company’s chief content officer Ted Sarandos boasted recently that “the goal is to become HBO faster than HBO can become us.” In a profile, GQ quotes Netflix’s CEO Reed Hastings:

Within the next decade, probably the next five years, he figures, ours will be a seamless, multidevice on-demand world, a place where services like Netflix will be so fat with content that the idea of paying a $150 monthly cable bill for a bundle of unwatchable crap will seem as quaint as gathering around the Sony Trinitron with Ma and Pa on Tuesday at 8 p.m. for All in the Family.

But if Netflix is able to turn high quality story telling into a profitable business model is as questionable as their Google-like mission statement about their own entrepreneurial culture. GQ again:

Giants from Amazon to Apple TV to Hulu are throwing money at their own streaming services, driving the cost of licensing exclusive content into the ozone. Amazon and iTunes charge per episode or movie, which means they’re able to stream newer stuff. (Subscribers to Amazon’s $79-a-year Prime shipping service get free access to a growing selection of content.) Meanwhile, Netflix hasn’t been able to add subscribers at the swift pace it promised shareholders lately, a trend that could make it much harder to establish the “virtuous cycle” it’s chasing—that is, subscription fees enabling Netflix to acquire content that in turn attracts new subscribers, which will pay for more content.

There is possibly an implosion to come, but it is still unclear how it will turn out. More and more consumers want to watch movies and quality TV on the day it is released. Many want the Hollywood studios to get rid of their theatrical windows at all and  “let consumers watch movies at home for a higher price rather than trek to the cinema“. But movie theaters are not owned by the Hollywood studios and theaters could fight back if one of the studios would first start releasing their films online. Being boycotted by the movie theaters is no risk any of the major studios is willing to take. For the time being, Hollywood will continue to throw its money at the next sequel to a sequel to a reboot of an adaptation of a comic book. Until an implosion happens.