Week Of April 3, 2006 - Mon / Wed / Fri

April 7, 2006

Life In The Bubble

So how do we escape the bubble?

Well, the first rule of being in the bubble is that we don't discuss being in the bubble. It's too damned hard to breathe in here if we allow ourselves to realize how limited the oxygen is.

The scary part about looking at the long-term prospects of this industry is not that people are dumb or that technology is dangerous, but that every step will be one more step in whatever direction the machine is rolling and not the "stop, look, listen, and act" method.

The oddly encouraging thing about this industry is that it still moves like an aircraft carrier. Things don't change fast. In fact, things change so slowly that selling TV shows for iPods seems like a sea change in the business. The entire sales program of TV shows for iPods has still generated less actual revenue than the half hour ad break on American Idol. Of course, that is still more than has been made by MovieLink.

The irony is that the massive conglomerates that own the Film Business are thinking farther out of the box than those of us who toil covering or those who appear to be making the day to day decisions. They may be thrilled to meet movie stars, but they bottom line what is most important and they can see right past the stars in their eyes when push comes to shove. But the hyperactive children whose work generates many billions in the endgame don't make a lot of sense in a bottom line world.

Big Picture: What sense does it make to launch 15 brand new products a year with enormous marketing costs and a massive price for the insurance of a familiar franchise or very popular talent?

Inside The Bubble: It's the big successes that drive profits and we need to spend more to attract attention in an inattentive world and once we start spending all that money, we are better off paying for insurance, because the insurance will probably pay for itself and, gee, if it doesn't work out, we need someone we can blame, other than ourselves.

Big Picture: How about making fewer pictures and making them better?

Inside The Bubble: Did you see the numbers on the Oscar movies last year? If we make fewer pictures, we have fewer shots at the brass ring.

Big Picture: How about making more pictures, spending less money on each, and hoping that one or two hits will pay for the whole slate?

Inside The Bubble: More pictures? Do you know how hard it is to make a decent movie? There are only 10 bankable stars in the world. And there are other companies competing for their time. And with a wider slate, maybe I'll have to delegate and maybe that one or two hits won't be mine and someone else will have my job next year.

Big Picture: Well, can't we at least save some money on marketing the movies?

Inside The Bubble: How can we open a movie if Studio X is spending $20 million more than us in the week before opening? I'll cut back on ad buys, but if it goes wrong, you better remember we told you so.

Big Picture: Okay… "we" get it. But don't people remember the movie four months after release? Do we really have to spend $25 million to market the DVD?

Inside The Bubble: But our competitors are spending more. And haven't you noticed that Coca Cola keeps advertising even though everyone knows their name? We have to keep the hysteria up. After all, a month after the DVD release, the title is nearly dead. We need to sell 'em while we can. Besides, we're making so much money in DVD, how can you begrudge us 10% - 15% spends on ads.

Big Picture: So the advertising really works? If you spend the money, it will create a return we can accurately estimate?

Inside The Bubble: Excuse me? You want guarantees in the film business? This is a business about artists and cultural swings and inspiring the world to come to our movies.

Bug Picture: So how the hell are we going to get these profit margins up? This is ridiculous. Everyone is making a fortune in this business except for us… especially you.

Inside The Bubble: You're paying for everyone who knows me and for my relationships. I know what I'm doing. Do you think Tom Cruise is going to return your calls?

Big Picture: So how do we unload this silly investment?

Inside The Bubble: I can tell you… but it's going to cost you 10% of the deal.

Sigh.

The math of digital projection has been the same for more than five years. And the same two issues are still keeping it from becoming a reality on a majority of screens. The quality and maintenance issues will never be fully answered until the industry switches over… but switching over is a risk and the rush to do it just isn't there.

The second question is, who will pay for it? And the answer to that has never changed. There is almost no financial benefit to exhibitors in the switch. And despite a $5 billion-plus cost to switch over, the distributors could pay for the whole thing and start making profit on the deal in less than five years…. and that is a conservative estimate.

And that, in a nutshell, is why the industry has had almost no changes that have not been foisted upon it. It forces the business to take a risk that could break the bubble. And no one wants to risk it.

This is also why you read, "the audience is demanding it" in so many stories about shortening the DVD window. There is no indication that the audience is demanding it. There is an indication that with more choices, there are more choices being made.

There is a strong indication that people who most of the country would consider wealthy want to have their DVDs whenever they feel like getting them… like now. They care about being current and they don't want to be hassled by actually going to the movies. How many more hours of movies would they watch if they had access to every movie day-n-date? I would guess about 45 minutes a week.

But what should the industry do about slowing revenues in theatrical and Home Entertainment? Start thinking like a woman and less like a bunch of college frat boys.

The film business has become embarrassing male. Big dick. Hard dick. Stick it in. Relief. Women like their pleasure too, but they have to think about the possibility of a pregnancy. Women's eco-structure is infinitely more susceptible to being disrupted by biological trends. It's more complex. Many in the movie business are anxious to just stick it ("it" being the DVD) in there and to get it over with. But they forget that foreplay is critical part of sex for the opposite gender, in this case the audience. You can force the issue, but at best it's bad sex and, at worst, it's rape. And that's when your girl - the audience - either leaves or starts cheating on/stealing from you.

To break the bubble, we have to break the bubble. It's just that simple and just that hard.

It's not about what the industry wants. It's not about what the media wants. It is - and this is unavoidable - about what the audience really wants and how much that audience will stretch their demands to allow the industry to maximize revenues.

It's Halloween. Ask the kids how much candy they want and they want it all. But give them all the want and eventually they will vomit and then temper their candy eating habits.

It's not one or the other. It's both… and neither.

Ironically, the best minds in the business cannot predict what audiences will want or whether the people they hire to make movies will deliver the best version of the initial idea. What can be predicted is behavior, year after year, within 20% or so. And that isn't enough to assure execs that they will keep their jobs.

And so, the air goes in the bubble. Nothing is really choice. It's all just that machinery moving, too fast to catch up. Soft landings.

Pop.

E Me: It's the weekend... what will you do with it?