5 ms·

What hollywood has going for it, is a track-record of executing on the operations behind producing movies that make money. People who invest in movies invest f

What hollywood has going for it, is a track-record of executing on the operations behind producing movies that make money. People who invest in movies invest for the same reasons all of us invest in anything-- to make money. Hollywood is a business, albeit one rooted in entertainment, but let's face it-- many artists are also just in it for the money. I don't think our world view of "entertainment" is going to shift the way that YC suggested in it's call for action. I think most of us (unfortunately) are still going to want to watch movies like Transformers 3 at a $200 million budget than a $1million dollar indie flick. So, once we've recognized that uprooting involves figuring out how to finance movie production instead of shifting the realm of entertainment (at least, for our generation, perhaps future generations will just want to watch WOW and starcraft online), then we're getting somewhere. Unfortunately, figuring out a way to finance a film that costs tens or hundreds of millions to produce is a pretty tricky endeavor. Still, it will be pretty awesome when Brad Pitt signs onto his first crowd-sourced flick =)

parka 15y ago
It may not be necessary to compete as directly as that. Filesharing sites compete against Hollywood in a different way (even though it's illegal) and they manage to grab their attention. What we need is something to give us the same amount of leverage.
- inkaudio 15y ago
  You missed the point. File sharing sites don't create content, they exploit Hollywood's archaic and stubborn method of distributing content.
  - parka 15y ago
    What you're saying is common knowledge. What I'm trying to say is: Don't compete directly. Apple didn't compete directly with the music/tv/movie industries but yet they too manage to have a huge leverage over them. And they managed that legally. There will be a certain metric that matters in competition. We just need to know what that metric is.
softbuilder 15y ago
You have to ponder the inefficiencies of an ecosystem that supports a $200 million movie. I'm reminded of Firefly. Such a great show, with lots of loyal fans. I guess it just wasn't a big enough fan base for Fox. I thought at the time that the producers should go independent and distribute straight to the consumer. Maybe that was too risky in 2002. I don't think it would be today.
- inkaudio 15y ago
  Not risky, it's just that back in 2002 there were less people watching videos online, many people still had dialup.
  - softbuilder 15y ago
    I was thinking DVD distribution at the time. I had used Netflix for a while by that point and could imagine subscribing to get a DVD in the mail from Joss Whedon every week.
- mbreese 15y ago
  Don't forget that this was the era when Fox also cancelled Family Guy and Futurama. Both of these series were able to be resurrected due to their DVD sales and syndication numbers. Fox made a lot of mistakes during that time, but were just learning about the secondary sales potential for their shows. I'd like to think that a similar set of shows would be able to stick around longer now. Those shows were able to be resurrected easily because they are animated. Firefly, not so much. But another show (Arrested Development) cancelled by Fox in that era is getting resurrected by Netflix, which while not straight to consumer is more direct than through the studios. Also, Joss Whedon (and the rest of Hollywood) I think learned a lot about distributing directly to the consumer with Dr. Horrible's Sing-along Blog. I think that this grand experiment was a good template for future direct-to-consumer productions. Unfortunately, you still have to deal with the problems of initially funding large movies. I can imagine a system where instead of having dedicated studios, you have smaller one-off production companies. These companies would then be funded VC style by funds that seek to mitigate their risk by diversifying their pool of movies. You could fund a few flops, so long as every now and again an Avatar comes along.
learc83 15y ago
>I think most of us (unfortunately) are still going to want to watch movies like Transformers 3 at a $200 million budget than a $1million dollar indie flick. At some point special effects are going to peak and the 1 million dollar indie flick will look exactly like the 200 million dollar one. There will still be other differences, but technology is going to go a long way towards leveling the playing field.
- ajhit406 15y ago
  "Peak" in popularity or in terms of return on expenditure? With cost reduction of special effects, I agree that the playing field will gradually level... ...but to contradict myself a bit, perhaps it won't ever level because new technologies will continue to be introduced to improve the entertainment experience that are proprietary and therefore expensive.
- inkaudio 15y ago
  We have tech, cost of tech is going down. But you still need talent to operate the tech, and the best talent are not cheap. The workers have unions and the ones that are not part of union do this full time and want to support at the very least a middle class lifestyle. For a hollywood movie, you don't want to use just any crew. You want the best film crew, the best makeup, wardrobe, casting, post & pre production. All the above cost money, lots of money.
  - learc83 15y ago
    That's all true for now. But eventually you'll be able to throw some actors in front of a green screen and do everything--makeup, wardrobe, special effects in post production, with one guy. Hell, when computers can generate photo real actors, actors will just be people in mocap suits (except that we won't need mocap suits by then), and they won't even need to be attractive. Eventually one person will be able to create the equivalent of a Hollywood blockbuster.
    - mooki 15y ago
      Video games are there today -- computers and mocap rigs all the way down. Still they are approaching hollywood movies in terms of budget. Tangled and Avatar are some of the most expensive movies of all time. There are no shortcuts to that level of polish. Doesn't matter how advanced your rendering is, you still need an army of 3D artists. Makeup isn't going to be much cheaper just because you do it in Maya.
inkaudio 15y ago
You pretty much nailed it. YC don't understand entertainment, just like the entertainment industry refuse to understand web technology. Transformers is really an edge case, many hollywood films can be made for half of that[1]. Not your typical YC type of investment, but still doable by tech industry, after all we have tech startups like color getting 40 million for an app. The question is will the Tech industry be willing to make investment in an industry it really does not understand. Contrary to some misconception being a great entertainer does require some kind of discipline and experience like being hacker. It takes time, many entertainers start young and spend many hours working on their craft, just like hackers. The stereotypical drugs and alcohol abuse come after. Hollywood type talent is not something you can just whip up. An interesting note, Mark Susters is a tech VC investing in entertainment[2] to disrupt the market. But Mark is working on the low end of the scale, with very low budget productions (compared to hollywood) and average actors and directors. This too is not enough. If YC is seriously going to attempt to kill Hollywood it's going to have to take on risk it never did before. The entertainment crowd is much different from the tech crowd. [1] The average cost as of 2008 is 106.6 million http://articles.latimes.com/2008/mar/06/business/fi-boxoffice6 http://articles.latimes.com/2008/mar/06/business/fi-boxoffic... in 2009 MPAA, the organization compiling and reporting the figures stopped. http://latimesblogs.latimes.com/entertainmentnewsbuzz/2009/03/mpaa.html http://latimesblogs.latimes.com/entertainmentnewsbuzz/2009/0... [2] http://www.bothsidesofthetable.com/2011/11/03/the-future-of-television-presentation/ http://www.bothsidesofthetable.com/2011/11/03/the-future-of-... In his presentation Mark Suster made some correct but to obvious observation, what I disagree is his take on talent, namely he thinks the cost of talent is going up. He's not completely wrong, in that the cost of mediocre talent has gone done, but talent that people want to see, the talent that can sell tickets and drive views, their pay is going up.
- tikhonj 15y ago
  I think you missed a level of indirection: YC does not want to revolutionize entertainment. YC just wants to fund a company that would revolutionize entertainment. I imagine that YC is not exactly full of healthcare or education experts, but they are perfectly happy to fund companies working in those fields; this is the same.
molmalo 15y ago
That's the problem. We can't aim to make $200 M movies from the start. But I think it is pretty much possible to build a platform where we can finance a TV series like The Big Bang Theory, by charging only $1 per episode to the subscriber. Just cutting the middle man and setting a deal with a dumb pipe channel like Google (YouTube), where they can make money from ads, and paying the creators some more money... That would be only $4 a month for a series you REALLY love. [1] And of course, the public wins A LOT, by avoiding unexpected cancellations, time slot changes, etc! I'd definitely pay for series like Battlestar Galactica, TBBT, MacGyver (lol! how would it be today)... And of course, if you make it GLOBAL, erasing regional restrictions, you can increase your audience at an enormous level! I see this model as something ABSOLUTELY plausible today. Why are we still paying to the middle men?!?! Let's make this happen. [1] http://www.tvguide.com/News/Top-TV-Earners-1021717.aspx http://www.tvguide.com/News/Top-TV-Earners-1021717.aspx
nextparadigms 15y ago
Think in a disruptive way. Actors don't have to be paid $10 million. Special effects don't have to cost tens of millions. Equipment doesn't have to cost millions either. Make the movies the way you would build a lean start-up. And bank on innovation in the movies and scripts, rather than recycling popular content and make it very flashy. But as I mentioned in another comment, I think to kill Hollywood you need incubators like YCombinator to seed the initial team and script, and attract young talent, and then help them find investors who would put a few millions into the movie, and also build a platform for distribution, like a Youtube for these movies, and a good business model to monetize them. Some kind of news/community sites would help too, not only to share information about the projects, but also get feedback and build a group of "early adopters" who will evangelize your movie later.
- inkaudio 15y ago
  This could work, but how good is YCombinator at judging an initial team & script ? The investors YC knows and work with, invest primarily in tech not entertainment. Will the investors be willing to take risk in a different sector ? Not every great talent has a hit on his/her first or even second try.
- molmalo 15y ago
  The problem with movies is that even when the argument may seem very interesting at first, the realization can make it a disaster. That's what differentiates an awesome director from a bad one. That's why I see hard to visualize crowd-financing to movies. The risk may be just too high.
- waterlesscloud 15y ago
  What you describe is largely how things work right now. Independent production companies, which represent the origin of most non-blockbuster films, work just like incubators now. They have a development budget which they use to find and develop scripts in what might as well be an early seed round. They then shop this developed project around to financing sources, of which there are a great number that are not tied to studios. These financing sources may require additional development or even "pivoting" of the project. Once financing is secured and the people providing the funding are happy, production can proceed. At this point, you're still wholly outside the studio system. You can completely finish your film outside the studios. This happens now, all the time, and it happens not just with Sundance style films, but with mainstream films with pretty substantial budgets. Sundance, as an aside, is not just a festival, but also a market for these independent productions. Festivals such as Cannes and Toronto are much the same. You'll see a number of stories over the next week about films acquired at Sundance. What this means is that distribution deals were signed for films that were produced using means independent of the studios. The distributors are often, but not always, arms of the studios. Someone mentioned Brad Pitt. He stars in independently financed projects all the time. In fact, he himself is often the indie producer, via his company Plan B which arranges for the financing through other entities.
InclinedPlane 15y ago
This is a somewhat misleading analysis, as the costs of Hollywood movies are not implicit relative to their production values. Movies do not have a typical accounting structure and that impacts their budgeted "costs". In a typical collaborative venture with some degree of risk one might expect for most of the principals (director, actors, etc.) to take most of their compensation in the form of profit sharing. However, this is untenable in Hollywood because the standard is to use a fucked up accounting structure which results in most movies showing no profit on paper. Instead, a small number of people end up taking home a percentage of the gross revenues of the movie and most of the earnings for everyone else are upfront in cash. This has several negative effects. For one it makes any movie staring a big star very much more expensive because you have to pay them $x million out of pocket. Also, because it raises the budget floor for making a top tier feature film it forces the industry to take fewer perceived risks, because a financial loss would be more devastating. But this is only Hollywood's poisonous culture, not a fundamental aspect for making films. A production company that was founded on firmer and more ethical financial ground could implement proper profit sharing for actors, directors, other creatives, and even effects houses. It would allow movies to operate on lower budgets and embrace higher risk projects.

parka 15y ago

It may not be necessary to compete as directly as that. Filesharing sites compete against Hollywood in a different way (even though it's illegal) and they manage to grab their attention. What we need is something to give us the same amount of leverage.

inkaudio 15y ago
You missed the point. File sharing sites don't create content, they exploit Hollywood's archaic and stubborn method of distributing content.
- parka 15y ago
  What you're saying is common knowledge. What I'm trying to say is: Don't compete directly. Apple didn't compete directly with the music/tv/movie industries but yet they too manage to have a huge leverage over them. And they managed that legally. There will be a certain metric that matters in competition. We just need to know what that metric is.

softbuilder 15y ago

You have to ponder the inefficiencies of an ecosystem that supports a $200 million movie. I'm reminded of Firefly. Such a great show, with lots of loyal fans. I guess it just wasn't a big enough fan base for Fox. I thought at the time that the producers should go independent and distribute straight to the consumer. Maybe that was too risky in 2002. I don't think it would be today.

inkaudio 15y ago
Not risky, it's just that back in 2002 there were less people watching videos online, many people still had dialup.
- softbuilder 15y ago
  I was thinking DVD distribution at the time. I had used Netflix for a while by that point and could imagine subscribing to get a DVD in the mail from Joss Whedon every week.
mbreese 15y ago
Don't forget that this was the era when Fox also cancelled Family Guy and Futurama. Both of these series were able to be resurrected due to their DVD sales and syndication numbers. Fox made a lot of mistakes during that time, but were just learning about the secondary sales potential for their shows. I'd like to think that a similar set of shows would be able to stick around longer now. Those shows were able to be resurrected easily because they are animated. Firefly, not so much. But another show (Arrested Development) cancelled by Fox in that era is getting resurrected by Netflix, which while not straight to consumer is more direct than through the studios. Also, Joss Whedon (and the rest of Hollywood) I think learned a lot about distributing directly to the consumer with Dr. Horrible's Sing-along Blog. I think that this grand experiment was a good template for future direct-to-consumer productions. Unfortunately, you still have to deal with the problems of initially funding large movies. I can imagine a system where instead of having dedicated studios, you have smaller one-off production companies. These companies would then be funded VC style by funds that seek to mitigate their risk by diversifying their pool of movies. You could fund a few flops, so long as every now and again an Avatar comes along.

learc83 15y ago

>I think most of us (unfortunately) are still going to want to watch movies like Transformers 3 at a $200 million budget than a $1million dollar indie flick. At some point special effects are going to peak and the 1 million dollar indie flick will look exactly like the 200 million dollar one. There will still be other differences, but technology is going to go a long way towards leveling the playing field.

ajhit406 15y ago
"Peak" in popularity or in terms of return on expenditure? With cost reduction of special effects, I agree that the playing field will gradually level... ...but to contradict myself a bit, perhaps it won't ever level because new technologies will continue to be introduced to improve the entertainment experience that are proprietary and therefore expensive.
inkaudio 15y ago
We have tech, cost of tech is going down. But you still need talent to operate the tech, and the best talent are not cheap. The workers have unions and the ones that are not part of union do this full time and want to support at the very least a middle class lifestyle. For a hollywood movie, you don't want to use just any crew. You want the best film crew, the best makeup, wardrobe, casting, post & pre production. All the above cost money, lots of money.
- learc83 15y ago
  That's all true for now. But eventually you'll be able to throw some actors in front of a green screen and do everything--makeup, wardrobe, special effects in post production, with one guy. Hell, when computers can generate photo real actors, actors will just be people in mocap suits (except that we won't need mocap suits by then), and they won't even need to be attractive. Eventually one person will be able to create the equivalent of a Hollywood blockbuster.
  - mooki 15y ago
    Video games are there today -- computers and mocap rigs all the way down. Still they are approaching hollywood movies in terms of budget. Tangled and Avatar are some of the most expensive movies of all time. There are no shortcuts to that level of polish. Doesn't matter how advanced your rendering is, you still need an army of 3D artists. Makeup isn't going to be much cheaper just because you do it in Maya.

inkaudio 15y ago

You pretty much nailed it. YC don't understand entertainment, just like the entertainment industry refuse to understand web technology. Transformers is really an edge case, many hollywood films can be made for half of that[1]. Not your typical YC type of investment, but still doable by tech industry, after all we have tech startups like color getting 40 million for an app. The question is will the Tech industry be willing to make investment in an industry it really does not understand. Contrary to some misconception being a great entertainer does require some kind of discipline and experience like being hacker. It takes time, many entertainers start young and spend many hours working on their craft, just like hackers. The stereotypical drugs and alcohol abuse come after. Hollywood type talent is not something you can just whip up. An interesting note, Mark Susters is a tech VC investing in entertainment[2] to disrupt the market. But Mark is working on the low end of the scale, with very low budget productions (compared to hollywood) and average actors and directors. This too is not enough. If YC is seriously going to attempt to kill Hollywood it's going to have to take on risk it never did before. The entertainment crowd is much different from the tech crowd. [1] The average cost as of 2008 is 106.6 million http://articles.latimes.com/2008/mar/06/business/fi-boxoffice6 http://articles.latimes.com/2008/mar/06/business/fi-boxoffic... in 2009 MPAA, the organization compiling and reporting the figures stopped. http://latimesblogs.latimes.com/entertainmentnewsbuzz/2009/03/mpaa.html http://latimesblogs.latimes.com/entertainmentnewsbuzz/2009/0... [2] http://www.bothsidesofthetable.com/2011/11/03/the-future-of-television-presentation/ http://www.bothsidesofthetable.com/2011/11/03/the-future-of-... In his presentation Mark Suster made some correct but to obvious observation, what I disagree is his take on talent, namely he thinks the cost of talent is going up. He's not completely wrong, in that the cost of mediocre talent has gone done, but talent that people want to see, the talent that can sell tickets and drive views, their pay is going up.

tikhonj 15y ago
I think you missed a level of indirection: YC does not want to revolutionize entertainment. YC just wants to fund a company that would revolutionize entertainment. I imagine that YC is not exactly full of healthcare or education experts, but they are perfectly happy to fund companies working in those fields; this is the same.

molmalo 15y ago

That's the problem. We can't aim to make $200 M movies from the start. But I think it is pretty much possible to build a platform where we can finance a TV series like The Big Bang Theory, by charging only $1 per episode to the subscriber. Just cutting the middle man and setting a deal with a dumb pipe channel like Google (YouTube), where they can make money from ads, and paying the creators some more money... That would be only $4 a month for a series you REALLY love. [1] And of course, the public wins A LOT, by avoiding unexpected cancellations, time slot changes, etc! I'd definitely pay for series like Battlestar Galactica, TBBT, MacGyver (lol! how would it be today)... And of course, if you make it GLOBAL, erasing regional restrictions, you can increase your audience at an enormous level! I see this model as something ABSOLUTELY plausible today. Why are we still paying to the middle men?!?! Let's make this happen. [1] http://www.tvguide.com/News/Top-TV-Earners-1021717.aspx http://www.tvguide.com/News/Top-TV-Earners-1021717.aspx

nextparadigms 15y ago

Think in a disruptive way. Actors don't have to be paid $10 million. Special effects don't have to cost tens of millions. Equipment doesn't have to cost millions either. Make the movies the way you would build a lean start-up. And bank on innovation in the movies and scripts, rather than recycling popular content and make it very flashy. But as I mentioned in another comment, I think to kill Hollywood you need incubators like YCombinator to seed the initial team and script, and attract young talent, and then help them find investors who would put a few millions into the movie, and also build a platform for distribution, like a Youtube for these movies, and a good business model to monetize them. Some kind of news/community sites would help too, not only to share information about the projects, but also get feedback and build a group of "early adopters" who will evangelize your movie later.

inkaudio 15y ago
This could work, but how good is YCombinator at judging an initial team & script ? The investors YC knows and work with, invest primarily in tech not entertainment. Will the investors be willing to take risk in a different sector ? Not every great talent has a hit on his/her first or even second try.
molmalo 15y ago
The problem with movies is that even when the argument may seem very interesting at first, the realization can make it a disaster. That's what differentiates an awesome director from a bad one. That's why I see hard to visualize crowd-financing to movies. The risk may be just too high.
waterlesscloud 15y ago
What you describe is largely how things work right now. Independent production companies, which represent the origin of most non-blockbuster films, work just like incubators now. They have a development budget which they use to find and develop scripts in what might as well be an early seed round. They then shop this developed project around to financing sources, of which there are a great number that are not tied to studios. These financing sources may require additional development or even "pivoting" of the project. Once financing is secured and the people providing the funding are happy, production can proceed. At this point, you're still wholly outside the studio system. You can completely finish your film outside the studios. This happens now, all the time, and it happens not just with Sundance style films, but with mainstream films with pretty substantial budgets. Sundance, as an aside, is not just a festival, but also a market for these independent productions. Festivals such as Cannes and Toronto are much the same. You'll see a number of stories over the next week about films acquired at Sundance. What this means is that distribution deals were signed for films that were produced using means independent of the studios. The distributors are often, but not always, arms of the studios. Someone mentioned Brad Pitt. He stars in independently financed projects all the time. In fact, he himself is often the indie producer, via his company Plan B which arranges for the financing through other entities.

InclinedPlane 15y ago

This is a somewhat misleading analysis, as the costs of Hollywood movies are not implicit relative to their production values. Movies do not have a typical accounting structure and that impacts their budgeted "costs". In a typical collaborative venture with some degree of risk one might expect for most of the principals (director, actors, etc.) to take most of their compensation in the form of profit sharing. However, this is untenable in Hollywood because the standard is to use a fucked up accounting structure which results in most movies showing no profit on paper. Instead, a small number of people end up taking home a percentage of the gross revenues of the movie and most of the earnings for everyone else are upfront in cash. This has several negative effects. For one it makes any movie staring a big star very much more expensive because you have to pay them $x million out of pocket. Also, because it raises the budget floor for making a top tier feature film it forces the industry to take fewer perceived risks, because a financial loss would be more devastating. But this is only Hollywood's poisonous culture, not a fundamental aspect for making films. A production company that was founded on firmer and more ethical financial ground could implement proper profit sharing for actors, directors, other creatives, and even effects houses. It would allow movies to operate on lower budgets and embrace higher risk projects.