10 ms·

Hollywood's Completely Broken

46 points by JDulin 13y ago

e3pi 13y ago
> "....He looked at me incredulously, as if to say, Haven’t you run a studio? Then he said very emphatically, “The implications are— you’re seeing the implications—the implications are, those studios are frozen. The big implication is that those studios are—not necessarily inappropriately—terrified to do anything because they don’t know what the numbers look like.” Regarding tech advance crushing DVD sales, 50% of profit.
sp332 13y ago
>“The DVD business represented fifty percent of their profits,” he went on. “Fifty percent. The decline of that business means their entire profit could come down between forty and fifty percent for new movies.” >If a studio’s margin of profit was only 10 percent in the Old Abnormal, now with the collapsing DVD market that profit margin was hovering around 6 percent. The loss of profit on those little silver discs had nearly halved our profit margin. This actually explains a lot about the studios' rabid antipiracy campaigns and their unwillingness to make everything available streaming. DVDs aren't a huge slice of the pie, but as a percentage of profit, it becomes a huge deal.
- EliRivers 13y ago
  Profits down, are they? Well, maybe if they didn't swear blind that they never made a profit on any film ever and that actually they made a loss so there won't be any taxes, I'd have some sympathy.
  - hobs 13y ago
    Frankly I have very little sympathy that their excuse amounts to "we spent too much money on stupid things and now we are broke." Fuck em.
jseliger 13y ago
This was, literally, a Great Contraction I think the basic problem is that contemporary movie studios are publicly traded companies whose goal is to grow by 10% a year (or at least hit market growth rates). In some businesses, that's just not possible because of limits to the size of the market; book publishers, for example, have only rarely grown at market or above-market rates. Books are an interesting example for a couple reasons: book publishers have been real businesses far longer than movie studios. In addition, studios for a long time set up businesses that relied on people repeatedly re-buying the same movie on different formats. Books have never really gotten away with that (although we might be seeing some re-buying like behavior in the shift from paper to digital). Now there's not an obvious successor to DVDs, and movie studios might become, or be becoming, more like book publishers. * Further background reading: Edward Jay Epstein, The Hollywood Economist.
dlg 13y ago
There are a few tech startups in Hollywood trying to help build a new model. I recommend this recent post for a sense of where things are going http://briannorgard.com/2013/06/14/rewiring-and-rethinking-hollywood/ http://briannorgard.com/2013/06/14/rewiring-and-rethinking-h...
deleted 13y ago
[deleted]
mtgx 13y ago
That's the thing with disruptions. The new business models can't support the old cost structures, but they can support the new cost structures from new businesses built around the disruptions. Hollywood would have to adapt, which means doing things in a very different way than they've done it so far, and that's not something they'd like to do. They'd rather try and hold on to what they have now for as long as possible.
- bornhuetter 13y ago
  > The new business models can't support the old cost structures, but they can support the new cost structures from new businesses built around the disruptions. Excellently put.
  - camus 13y ago
    "Disruption" , the new Start-Up LEITMOTIV , Ad Nauseam ... Except there is nothing to disrupt in Hollywood because Hollywood is not broken. It works as intended. Read the latest box office?
    - bornhuetter 13y ago
      Wow, what happened here? Rapidly got multiple downvotes on a day old post for a fairly innocuous comment.
- Vivtek 13y ago
  Especially since they're so big it's a continual temptation to force legislation to preserve what they have now. If they were smaller, so that this weren't even an option, they'd have adapted.
- wmf 13y ago
  I wonder if House of Cards has a lower cost structure.
  - ippisl 13y ago
transfire 13y ago
Let talk about the real problem with Hollywood: It's an enclave of nepotistic, narcissistic, over paid ninnies.
- VLM 13y ago
  No different that any other big industry. The "real problem" is their product is no good compared to the expanding competition for consumers (shrinking) entertainment budget. If the disposable entertainment cash budget of the median consumer is dropping fast enough, and it seems it is, then they could create the worlds best movie and no one would spend money on it. So if there's no money to get, just go thru the motions and collect the paycheck until it stops, the output is going to be a crop of shovelware, which is a pretty accurate summary of the current situation.
- deleted 13y ago
  [deleted]
- Helianthus 13y ago
  witness: the annoyingly breathless tone of the entire article.
iamwil 13y ago
I had two thoughts. 1) That the golden age for DVDs only lasted about 10 years. I think the golden age of cinema lasted from late 1920 to early 1960's. Acceleration in technology results in accelerated culture change and accelerated market changes. We're use to it in tech, but I didn't think much of other industries. 2) Along those lines, I was surprised this was such as revelation to the author. As soon as I saw Netflix go streaming, I knew this was the way I wanted my movies delivered. And the attitude in the OP seemed to be, "Hey, we can't make great movies and take risks on movies because you guys aren't buying DVDs." Innovative films never seemed to be big-budget anyway. And for an industry that's not use to change like technology is, they seem to fail to see that with new technology comes new business models, and new opportunities. I wonder how tech can educate hollywood on this.
- VLM 13y ago
  "Innovative films never seemed to be big-budget anyway." One interesting hidden assumption deeply embedded in the biz is that big budgets are only for special effects and certain stars, and sometimes costume/makeup/sets although thats all getting adsorbed into "special effects". Obviously big budget never means the writers or any part of the creative team that doesn't involve makeup or blood spatters. Unfortunately that shows pretty strongly. I would wager this budgeting anomaly is, in the long run, going to be a bigger disruptor to the biz than tech.
  - maxerickson 13y ago
    I think the difference between good and great writers and directors (and such) is pretty big, but I doubt the difference within the great is all that large, and I bet there are plenty enough to keep the studio dollars busy.
  - waterlesscloud 13y ago
    Directors, and even writers, on big budget films are paid very well. Even certain key behind-the-scenes people can easily make a million+ on a big film.
- Tloewald 13y ago
whazzmaster 13y ago
A couple of thoughts (including some commentary on the article itself- sorry I couldn't help it). The central idea of this article, which is that slowing DVD sales due to the explosion of streaming options are slashing profit margins, is fascinating to me primarily due to the relative absence of blame-shifting onto 'piracy.' There was a mention of it, but it seems Hollywood has finally moved past the 'Piracy is causing all our woes, DMCADMCADMCA' delusions of the late 90s/early 2000s. As a Slashdotter from back in the day that saw such scolding played out on the front page I find it strange (yet optimistic) that they finally saw the real writing on the wall. However, even though the central conceit of the article is interesting to me I find the language just goddamned terrible. I guess if you're looking for properly-flavored industry news then sentences like "[h]is first picture was the tentpole smash Rise of the Planet of the Apes, and he already had three television shows on the air" and "[m]ore recently, he released the smash Identity Thief, with Melissa McCarthy and Jason Bateman" are right up your alley. I'm suprised the author didn't describe some upcoming SMASH deal as BOFFO.
- Vivtek 13y ago
  When will they admit that they killed DVDs themselves due to their fear of piracy? The more copy protection they put on them, the less likely any given DVD was likely to work. In the 90's we rented a lot of DVDs. By the time Netflix came along, we finally gave up even trying DVDs from the video store, instead watching whatever drivel was on Netflix only because we had a reasonable expectation that it would work all the way through without a microscratch triggering the anti-piracy circuitry.
  - wmf 13y ago
    YMMV. In my life I've had one DVD that failed to play due to scratching and I have no way of knowing whether CSS contributed to that or not.
    - artsrc 13y ago
      If you want to find some DVD's that won't play due to scratches then I recommend that you borrow some children's DVD's from your local library.
od2m 13y ago
I stopped buying movies and going to the movies for the same three reasons: 1. The often unskippable advertisements, anti-piracy warnings and FBI warnings on Blurays. 2. Most movies now have 30 mins of advertisements before them in theatres. 3. Hollywood isn't making good films anymore. In other words, Hollywood is making shit products. They're just surprised that we're not buying them anymore.
- vinceguidry 13y ago
  You can't explain the decline of the DVD market with only your own reaction to the product. Most people aren't as unreasonable as you are.
  - everyone 13y ago
    Yes anecdotal evidence is useless, but you consider not agreeing to sit through 30 mins of ads before you see something that you already paid €10 for is 'unreasonable' !? In that case I am far more unreasonable. I dont support MPAA, RIAA, etc. involved companies at all. My reasoning is that by supporting them you are supporting their lobbyists who will then introduce crazy laws like ACTA and SOPA. I'm just patiently waiting for them to die off.
    - vinceguidry 13y ago
      > Yes anecdotal evidence is useless, but you consider not agreeing to sit through 30 mins of ads before you see something that you already paid €10 for is 'unreasonable' !? Yes, I do. Ads are a cheap way to make something profitable that would otherwise not be. You should be thankful we even have theaters these days. If you think it is unreasonable, why don't you find something better to do with your time and money? You could make a nice dinner for two with €10 and have a much better time than you would being angry at ads and those rich assholes in Hollywood. Nobody's forcing you to watch films.
      - everyone 13y ago
        Well, I dont. As I said above "I dont support MPAA, RIAA, etc. involved companies at all" However I think yer man above who does goto the cinema is not being unreasonable. Though I do agree he would be better of doing as I do as u suggested and give it all a miss.
everyone 13y ago
I guess this article is aimed at film industry people, but still it is an example of very obtuse writing. I could not understand it all as a consequence of the many terms and jargon often used in it. The writer could do well to expand their audience by writing more accessible prose.
saturdaysaint 13y ago
It's striking how little they learned from the music industry. Substitute "CD" for "DVD" and lower the budgets a few orders of magnitude and this could've been about the 90's/00's music industry. And the author doesn't seem to internalize what's become common knowledge in the music industry: the shiny savior disc (CD/DVD) was really masking the deeper disruptions in consumer behavior.
- ams6110 13y ago
  In retrospect, CDs and DVDs seem like a complete scam. They didn't offer any significant benefits over vinyl and tape. They were still a physical thing that you had to handle and store, and taking more than a few with you when you went somewhere was a major hassle. And they were far more fragile.
  - thaumasiotes 13y ago
    let's see... you can listen to a CD more than once in quick succession without permanently distorting it you can play a particular track on demand you can reproduce a disc without quality loss rewinding a DVD is pretty quick DVDs include subtitles; tapes didn't CDs and DVDs are significantly smaller and easier to store than records and VHS tapes - I have a pocket-sized container that will safely hold a couple dozen CDs, but that would be fairly difficult with records. In summary, CDs and DVDs are both vast technological improvements over vinyl and tape. And I have no idea what you're talking about with "And they were far more fragile."
    - icebraining 13y ago
      Don't forget making accurate backups, assuming it's legal where one lives.
  - __david__ 13y ago
    Are you kidding? CDs were miles better than vinyl and tape and were the dominant format for a very long period of time. Until the rise of mp3, there was no way to get high quality sound in a compact form. Have fun trying play vinyl in your car or on an airplane. CDs were a revolution and an amazing piece of technology, especially when you consider that they were created in the 70s.
Gobitron 13y ago
Based on the comments here, a key point of the article was missed. The quality of movies right now is crappy because it is being entirely driven by the international market, where they base things entirely on historical returns of specific actors and/or narrow genres. This shift to focus on international is due to the the loss of the DVD market. It's a lesson in how changing economics can impact the core quality of a product, not just "we're getting disrupted - damn the technology".
na85 13y ago
Wow, this article pissed me off. First, we're dealing with people who are LOADED. Why should I care if they can't afford to pay Tom Cruise, the director, the producer, and a bunch of other people 20 million dollars each? Oh darn, they'll only get paid 4 million dollars each. This is a classic case of old, technologically-inept white men whose business model was predicated on gouging the public for decades. The internet is killing DVD sales because of convenience and theatre revenues are down because the public is getting tired of superhero remakes and don't feel that the price of admission is worth 2 hours of watching 3 actors standing in front of a green screen and interacting with a bunch of CG extras, so they download it instead. All of a sudden Hollywood can't continue their price-gouging, and because they're basically Luddites, they fear change and can't adapt. So they'll inevitably turn to the courts instead of letting their business adapt to the free market that they all espouse to love. It's basically the situation that the American car companies found themselves in a few years ago. People are getting tired of their shitty products and aren't buying them any more. Instead of making better products that people would be willing to pay for, they curl up in the fetal position and cry.
- newnewnew 13y ago
  Nice casual use of racism you got there.
  - na85 13y ago
    I'm really not sure how it constitutes racism. Are you aware of many movie studio execs who aren't white men?
    - nicwolff 13y ago
      Well, there's Lynda Obst for one...
- ams6110 13y ago
  Would you feel better if they weren't white? What's race got to do with it?
wisty 13y ago
> “They said to me, ‘We don’t even know how to run a P&L right now.’” The look on his face expressed the sheer madness of that statement. “ ‘We don’t know what our P&L looks like because we don’t know what the DVD number is!’ The DVD number used to be half of the entire P&L!” > “What are the implications of that?” > He looked at me incredulously, as if to say, Haven’t you run a studio? Then he said very emphatically, “The implications are— you’re seeing the implications—the implications are, those studios are frozen. The big implication is that those studios are—not necessarily inappropriately—terrified to do anything because they don’t know what the numbers look like.” What does this actually mean? Is there simply high uncertainties in P&L predictions, due to the difficulty in predicting international sales? There's a hard limit to the number of foreign movies some countries, notably China, allows so there could be massive fluctuations depending on whether it's good enough to send to China; and international tastes might be hard to predict. Or is it because the profit forecasts for every movie they do a P&L for falls short of what they can accept, and they put a magic "international sales" estimate in to push it over the line?
- jbk 13y ago
  > What does this actually mean? From what I understand, that they don't know what part of the Plan will be the one actually getting the most profit. And so they need to multiply their offers (and that increases the whole cost of the movie). But to me, the important part is that this exact part is why we have yet another Spiderman and yet another Avengers movie on screens. Because as they are terrified, they are going to publish known beasts (movies), where they know the financial ratios.
- Balgair 13y ago
  It means they are gambling. If you are unable to figure out half your net revenue, that's like going to Vegas.
PaulHoule 13y ago
It's not that bad of a business. Many people still subscribe to cable. I don't, but on some months I spend upwards of $100+ on movie tickets and Blu-Ray disks (Yes, I buy them.) Other months I realize I can do a zillion other things (go to a zoo or play golf) for what movie tickets cost. Things are going to change, but the unique concentration of talent and intellectual property based around L.A. will be a force to be reckoned with for years.
alan_cx 13y ago
Well, call me a.... whatever... but reads to me like they want to blame everything other than their rubbish movies that are not worth having a permanent DVD copy of, and the stupid amount of money they insist on spending to make a movie. These days, it seems the best movies are low budget, and worth buying a DVD of to keep. The big expensive "block buster" movies are very often watch once, enjoy for the moment, and forget. That can be cinema, netflix, torrents, who cares? The movie isn't actually worth caring about.
- megablast 13y ago
  > their rubbish movies that are not worth having a permanent DVD copy of, You seem to think that making awful movies is something new? it is not. These guys do a lot of testing to make sure their movies are wanted. As much as anyone can.
- the_watcher 13y ago
  I actually disagree. I am more likely to go to the theater or buy a legitimate copy of a big budget movie than a low budget one, since I'll pay a bit extra for the highest quality experience of the effects. I still love going to the theater, so I see more movies there than by any other method, but for small movies like The King's Speech (not an example of a classic "low budget" movie, but hopefully you get the idea, the scale is small), I'm way more likely to wait for a way I can see it for free (or in one of the streams I already pay for: HBO, Netflix, Amazon Prime, etc.)
  - cclogg 13y ago
    It may also be your movie tastes differ from his too. Right now I am noticing basically two groups of people (not correlated to age): one group which enjoys the effects, 3D, epicness... and the other which is disillusioned with today's movies (ie yay another movie where I watch CGI dudes shoot around and then get a 3D fly-over the battle-field every 5 seconds). I think there is something to be said for the funneling of movie budgets into a few MASSIVELY costing movies (ie per the Spielberg interview that was posted on HN last week). I, myself, enjoy a good "Dark Knight", but also something like the King's Speech or The Tree of Life. The question is whether both can keep being made for their respective budgets, and both in film vs other media.
ChuckMcM 13y ago
That was an interesting read. Strangely it would make a good movie. But the really telling bit was the inaction. That is classically how disruptions happen. You see you get people who have been in "the business" (any business) their whole life and they have learned the ins and outs and "how its done" which is as much lore as it is practical advice. Now you change the rules and an outsider can see the new path but the person who "knows how it is done" is beset by doubt. None of their hard won information and learning applies (or nearly none of it) and they are being asked to make Important Decisions. Complete lockup. Lots of folks in the dot com world had the same experience when suddenly "no profit" / "no investment" became the required thing and all their slide ware and pitches were junk. This is why the stuff we learn from Netflix's experiments with funding shows, which changes the pipeline, will do. Soon we'll have the Netflix funded movie production and it will be another shift in the bedrock of whose ass you have to kiss to get a movie made. I feel sorry for the folks who were revered for their expertise before and are now worthless. But it is the way of these things. What the folks in the studios realize is that movies are still going to get made, but how they get made is going to change. And until the 'new' way has run a few movies through the pipeline and the new makers have figured out what it takes, its going to be scary.
Tichy 13y ago
Isn't that theory automatically refuted because films were successfully made before DVD and Video even existed?
robomartin 13y ago
The Innovator's Dilema: The studios should have started the streaming services. Instead they were busy continuimg to optimize their existing business model. It makes you wonder if any of those people even heard of the book.
raldi 13y ago
Is it me, or is this story impossible to read on an iPhone? I get about 1/3 of the way in, and the text gets covered with a dark gray overlay approx 9000px tall with a photo of Neil Patrick Harris in the middle.
cryofan 13y ago
all part of the propaganda war hollywood is waging in the media as part of their effort to get congress and the public on their side so they can get more laws passed to keep the public from using the internet to get entertainment.
te_chris 13y ago
This is just awesome. They blame the lack of DVD revenues yet refuse to license content such that full service stream services can set up in other markets (like my own New Zealand). Well, believe it or not, we've got brains and technology here too. As someone else said in this thread: Fuck 'em. Just for a comparison, I've pirated one album since I subscribed to spotify (yeezus to check it out when it leaked).
beloch 13y ago
Bluray (and HD-DVD) came out just a couple years before the big decline this article discusses, which is about the time they would have needed to get past the early-adopter stage and start making a significant market impact. These were the premium formats that were supposed to draw in people with their superior quality and command a premium price with a correspondingly premium net profit. These formats have not flopped, but neither have they given Hollywood the boost they were looking for. In fact, I'd be surprised if Hollywood execs aren't rather disappointed with Bluray sales. The problem now is that DVD's are widely seen as an inferior format. Superficially, they have all the disadvantages of Bluray with inferior quality even to online streaming. Sure, they're pretty cheap, but not cheap enough to justify the lack of both convenience and quality. If online streaming killed DVD sales, Bluray was certainly an accomplice. The reason Bluray hasn't gained as much traction as Hollywood hoped is that, in practice, its even more inconvenient for users than DVD's were. Bluray's are saddled with DRM so onerous that movies can take minutes to load and only a player with an internet connection to obtain updates has a chance to play the newest titles. Bluray discs almost universally have inferior user interfaces to DVD's, and the consistency is awful. BD-J discs often break basic player functionality such as auto-resume. On top of it all, Hollywood has continued to pile on more and more warning screens and advertisements. One of the selling features of the Bluray format, according to Hollywood, is that Bluray discs can download fresh new trailers online and show them to users instead of simply playing old trailers loaded on the disk. Yes, only Hollywood would call a program that downloads ads and makes you watch them a feature! Compare this to online video. The quality is still inferior to Bluray, but it won't be that way forever, or even much longer. Arguably, the quality edge Bluray has is already pretty slim on the majority of display's people are using. Hollywood should be serious about keeping Bluray competitive with online video. They make a lot more when you buy a movie on Bluray than they do if you watch it on iTunes. However, they clearly aren't. How do we know? They keep updating the encryption on Bluray discs, forcing people to keep up with updates to their players even though the updated encryption is frequently broken before the Bluray's using it officially go on sale. Every time a user has even slight difficulty playing a movie they just paid good money for, you drive another nail into the coffin of the Bluray format. They keep piling on trailers and warning screens. It still takes minutes to get to the movie with many Bluray's. Onerous anti-piracy ads are still being shown to the very people who have just paid for their content! Bluray menu interfaces remain inferior to those of DVD's, and consistency has not improved. The obvious answer for Hollywood is to treat their best (i.e. most profitable) customers like their best customers, but this is simply not being done. Instead, they're looking for the next big thing to fix everything. 3D Bluray's! 4K video! 3D fatigue has already had an impact on cinema sales, but it'll be great in the home! (Disclosure: I own a 3D projector and have yet to watch more than 10 minutes of 3D to verify that it works). Yes, 1080p isn't good enough! 4K will be the savior of Hollywood, nevermind that the average viewer can't tell 720p from 1080p! The number is bigger, so they will come. It's pretty hard to feel much sympathy for Hollywood these days.
Melcher 13y ago
Could the reason DVD sales have dropped so much simply be that Hollywood has released the back catalog of films? My guess is when DVDs first became the craze there were only a handful of titles, as more titles were added people bought more - often going out to buy their favorites and classics for the sake of nostalgia. In this way Hollywood was making money by just re-releasing a lot of old content. Now that all that 'catching up' has occurred and customers have already gone out and bought their favorite films, only new releases remain - and those are either a. underwhelming or b. not yet 'classic' status enough to bother owning.
Pxtl 13y ago
Since cutting the cord and going pure Netflix, I haven't seen a trailer since like, ever. This has a profound impact. I know longer know or even care what's coming out, or what's impending on DVD release. I know there's a new Star Trek movie, and the Hobbit came out a bit back, but I'm no longer edge-of-my-seat excited to see this because I haven't been being bashed about by promos for months. I'll wait for it to appear on Netflix, or maybe the Redbox thing. I saw Iron Man 2 on Netflix, so I figure I'll get to see part 3 there too.
- ars 13y ago
  Sounds like netflix could make some money by adding a trailers area. People could go there and watch whatever trailers they like (and I think netflix could even suggest what they might like), and netflix would get some advertising dollars.
paul_f 13y ago
Film, as an artform, will survive. The current studio system, hoisting this crap into the theaters will not. The faster we can end the current paradigm, the faster we can move to the new order.
artsrc 13y ago
If offer content in a way cheaper for you, and better for me then you might increase your revenue. Our family buys DVD's and watch them. DVD's are a pretty costly way to sell movies. Retailers take a big slice. You have to create packaging, deal with inventory, distribution costs etc.
dobbsbob 13y ago
Studios have never made so much money. Every trash superhero film is clearing a billion dollars in foreign box office. Chinese had zero interest in Hollywood until recently now they are the #1 film market.

46 points by JDulin 13y ago

e3pi 13y ago

> "....He looked at me incredulously, as if to say, Haven’t you run a studio? Then he said very emphatically, “The implications are— you’re seeing the implications—the implications are, those studios are frozen. The big implication is that those studios are—not necessarily inappropriately—terrified to do anything because they don’t know what the numbers look like.” Regarding tech advance crushing DVD sales, 50% of profit.

sp332 13y ago

>“The DVD business represented fifty percent of their profits,” he went on. “Fifty percent. The decline of that business means their entire profit could come down between forty and fifty percent for new movies.” >If a studio’s margin of profit was only 10 percent in the Old Abnormal, now with the collapsing DVD market that profit margin was hovering around 6 percent. The loss of profit on those little silver discs had nearly halved our profit margin. This actually explains a lot about the studios' rabid antipiracy campaigns and their unwillingness to make everything available streaming. DVDs aren't a huge slice of the pie, but as a percentage of profit, it becomes a huge deal.

EliRivers 13y ago
Profits down, are they? Well, maybe if they didn't swear blind that they never made a profit on any film ever and that actually they made a loss so there won't be any taxes, I'd have some sympathy.
- hobs 13y ago
  Frankly I have very little sympathy that their excuse amounts to "we spent too much money on stupid things and now we are broke." Fuck em.

jseliger 13y ago

This was, literally, a Great Contraction I think the basic problem is that contemporary movie studios are publicly traded companies whose goal is to grow by 10% a year (or at least hit market growth rates). In some businesses, that's just not possible because of limits to the size of the market; book publishers, for example, have only rarely grown at market or above-market rates. Books are an interesting example for a couple reasons: book publishers have been real businesses far longer than movie studios. In addition, studios for a long time set up businesses that relied on people repeatedly re-buying the same movie on different formats. Books have never really gotten away with that (although we might be seeing some re-buying like behavior in the shift from paper to digital). Now there's not an obvious successor to DVDs, and movie studios might become, or be becoming, more like book publishers. * Further background reading: Edward Jay Epstein, The Hollywood Economist.

dlg 13y ago

There are a few tech startups in Hollywood trying to help build a new model. I recommend this recent post for a sense of where things are going http://briannorgard.com/2013/06/14/rewiring-and-rethinking-hollywood/ http://briannorgard.com/2013/06/14/rewiring-and-rethinking-h...

deleted 13y ago

[deleted]

mtgx 13y ago

That's the thing with disruptions. The new business models can't support the old cost structures, but they can support the new cost structures from new businesses built around the disruptions. Hollywood would have to adapt, which means doing things in a very different way than they've done it so far, and that's not something they'd like to do. They'd rather try and hold on to what they have now for as long as possible.

bornhuetter 13y ago
> The new business models can't support the old cost structures, but they can support the new cost structures from new businesses built around the disruptions. Excellently put.
- camus 13y ago
  "Disruption" , the new Start-Up LEITMOTIV , Ad Nauseam ... Except there is nothing to disrupt in Hollywood because Hollywood is not broken. It works as intended. Read the latest box office?
  - bornhuetter 13y ago
    Wow, what happened here? Rapidly got multiple downvotes on a day old post for a fairly innocuous comment.
Vivtek 13y ago
Especially since they're so big it's a continual temptation to force legislation to preserve what they have now. If they were smaller, so that this weren't even an option, they'd have adapted.
wmf 13y ago
I wonder if House of Cards has a lower cost structure.
- ippisl 13y ago

transfire 13y ago

Let talk about the real problem with Hollywood: It's an enclave of nepotistic, narcissistic, over paid ninnies.

VLM 13y ago
No different that any other big industry. The "real problem" is their product is no good compared to the expanding competition for consumers (shrinking) entertainment budget. If the disposable entertainment cash budget of the median consumer is dropping fast enough, and it seems it is, then they could create the worlds best movie and no one would spend money on it. So if there's no money to get, just go thru the motions and collect the paycheck until it stops, the output is going to be a crop of shovelware, which is a pretty accurate summary of the current situation.
deleted 13y ago
[deleted]
Helianthus 13y ago
witness: the annoyingly breathless tone of the entire article.

iamwil 13y ago

I had two thoughts. 1) That the golden age for DVDs only lasted about 10 years. I think the golden age of cinema lasted from late 1920 to early 1960's. Acceleration in technology results in accelerated culture change and accelerated market changes. We're use to it in tech, but I didn't think much of other industries. 2) Along those lines, I was surprised this was such as revelation to the author. As soon as I saw Netflix go streaming, I knew this was the way I wanted my movies delivered. And the attitude in the OP seemed to be, "Hey, we can't make great movies and take risks on movies because you guys aren't buying DVDs." Innovative films never seemed to be big-budget anyway. And for an industry that's not use to change like technology is, they seem to fail to see that with new technology comes new business models, and new opportunities. I wonder how tech can educate hollywood on this.

VLM 13y ago
"Innovative films never seemed to be big-budget anyway." One interesting hidden assumption deeply embedded in the biz is that big budgets are only for special effects and certain stars, and sometimes costume/makeup/sets although thats all getting adsorbed into "special effects". Obviously big budget never means the writers or any part of the creative team that doesn't involve makeup or blood spatters. Unfortunately that shows pretty strongly. I would wager this budgeting anomaly is, in the long run, going to be a bigger disruptor to the biz than tech.
- maxerickson 13y ago
  I think the difference between good and great writers and directors (and such) is pretty big, but I doubt the difference within the great is all that large, and I bet there are plenty enough to keep the studio dollars busy.
- waterlesscloud 13y ago
  Directors, and even writers, on big budget films are paid very well. Even certain key behind-the-scenes people can easily make a million+ on a big film.
Tloewald 13y ago

whazzmaster 13y ago

A couple of thoughts (including some commentary on the article itself- sorry I couldn't help it). The central idea of this article, which is that slowing DVD sales due to the explosion of streaming options are slashing profit margins, is fascinating to me primarily due to the relative absence of blame-shifting onto 'piracy.' There was a mention of it, but it seems Hollywood has finally moved past the 'Piracy is causing all our woes, DMCADMCADMCA' delusions of the late 90s/early 2000s. As a Slashdotter from back in the day that saw such scolding played out on the front page I find it strange (yet optimistic) that they finally saw the real writing on the wall. However, even though the central conceit of the article is interesting to me I find the language just goddamned terrible. I guess if you're looking for properly-flavored industry news then sentences like "[h]is first picture was the tentpole smash Rise of the Planet of the Apes, and he already had three television shows on the air" and "[m]ore recently, he released the smash Identity Thief, with Melissa McCarthy and Jason Bateman" are right up your alley. I'm suprised the author didn't describe some upcoming SMASH deal as BOFFO.

Vivtek 13y ago
When will they admit that they killed DVDs themselves due to their fear of piracy? The more copy protection they put on them, the less likely any given DVD was likely to work. In the 90's we rented a lot of DVDs. By the time Netflix came along, we finally gave up even trying DVDs from the video store, instead watching whatever drivel was on Netflix only because we had a reasonable expectation that it would work all the way through without a microscratch triggering the anti-piracy circuitry.
- wmf 13y ago
  YMMV. In my life I've had one DVD that failed to play due to scratching and I have no way of knowing whether CSS contributed to that or not.
  - artsrc 13y ago
    If you want to find some DVD's that won't play due to scratches then I recommend that you borrow some children's DVD's from your local library.

od2m 13y ago

I stopped buying movies and going to the movies for the same three reasons: 1. The often unskippable advertisements, anti-piracy warnings and FBI warnings on Blurays. 2. Most movies now have 30 mins of advertisements before them in theatres. 3. Hollywood isn't making good films anymore. In other words, Hollywood is making shit products. They're just surprised that we're not buying them anymore.

vinceguidry 13y ago
You can't explain the decline of the DVD market with only your own reaction to the product. Most people aren't as unreasonable as you are.
- everyone 13y ago
  Yes anecdotal evidence is useless, but you consider not agreeing to sit through 30 mins of ads before you see something that you already paid €10 for is 'unreasonable' !? In that case I am far more unreasonable. I dont support MPAA, RIAA, etc. involved companies at all. My reasoning is that by supporting them you are supporting their lobbyists who will then introduce crazy laws like ACTA and SOPA. I'm just patiently waiting for them to die off.
  - vinceguidry 13y ago
    > Yes anecdotal evidence is useless, but you consider not agreeing to sit through 30 mins of ads before you see something that you already paid €10 for is 'unreasonable' !? Yes, I do. Ads are a cheap way to make something profitable that would otherwise not be. You should be thankful we even have theaters these days. If you think it is unreasonable, why don't you find something better to do with your time and money? You could make a nice dinner for two with €10 and have a much better time than you would being angry at ads and those rich assholes in Hollywood. Nobody's forcing you to watch films.
    - everyone 13y ago
      Well, I dont. As I said above "I dont support MPAA, RIAA, etc. involved companies at all" However I think yer man above who does goto the cinema is not being unreasonable. Though I do agree he would be better of doing as I do as u suggested and give it all a miss.

everyone 13y ago

I guess this article is aimed at film industry people, but still it is an example of very obtuse writing. I could not understand it all as a consequence of the many terms and jargon often used in it. The writer could do well to expand their audience by writing more accessible prose.

saturdaysaint 13y ago

It's striking how little they learned from the music industry. Substitute "CD" for "DVD" and lower the budgets a few orders of magnitude and this could've been about the 90's/00's music industry. And the author doesn't seem to internalize what's become common knowledge in the music industry: the shiny savior disc (CD/DVD) was really masking the deeper disruptions in consumer behavior.

ams6110 13y ago
In retrospect, CDs and DVDs seem like a complete scam. They didn't offer any significant benefits over vinyl and tape. They were still a physical thing that you had to handle and store, and taking more than a few with you when you went somewhere was a major hassle. And they were far more fragile.
- thaumasiotes 13y ago
  let's see... you can listen to a CD more than once in quick succession without permanently distorting it you can play a particular track on demand you can reproduce a disc without quality loss rewinding a DVD is pretty quick DVDs include subtitles; tapes didn't CDs and DVDs are significantly smaller and easier to store than records and VHS tapes - I have a pocket-sized container that will safely hold a couple dozen CDs, but that would be fairly difficult with records. In summary, CDs and DVDs are both vast technological improvements over vinyl and tape. And I have no idea what you're talking about with "And they were far more fragile."
  - icebraining 13y ago
    Don't forget making accurate backups, assuming it's legal where one lives.
- __david__ 13y ago
  Are you kidding? CDs were miles better than vinyl and tape and were the dominant format for a very long period of time. Until the rise of mp3, there was no way to get high quality sound in a compact form. Have fun trying play vinyl in your car or on an airplane. CDs were a revolution and an amazing piece of technology, especially when you consider that they were created in the 70s.

Gobitron 13y ago

Based on the comments here, a key point of the article was missed. The quality of movies right now is crappy because it is being entirely driven by the international market, where they base things entirely on historical returns of specific actors and/or narrow genres. This shift to focus on international is due to the the loss of the DVD market. It's a lesson in how changing economics can impact the core quality of a product, not just "we're getting disrupted - damn the technology".

na85 13y ago

Wow, this article pissed me off. First, we're dealing with people who are LOADED. Why should I care if they can't afford to pay Tom Cruise, the director, the producer, and a bunch of other people 20 million dollars each? Oh darn, they'll only get paid 4 million dollars each. This is a classic case of old, technologically-inept white men whose business model was predicated on gouging the public for decades. The internet is killing DVD sales because of convenience and theatre revenues are down because the public is getting tired of superhero remakes and don't feel that the price of admission is worth 2 hours of watching 3 actors standing in front of a green screen and interacting with a bunch of CG extras, so they download it instead. All of a sudden Hollywood can't continue their price-gouging, and because they're basically Luddites, they fear change and can't adapt. So they'll inevitably turn to the courts instead of letting their business adapt to the free market that they all espouse to love. It's basically the situation that the American car companies found themselves in a few years ago. People are getting tired of their shitty products and aren't buying them any more. Instead of making better products that people would be willing to pay for, they curl up in the fetal position and cry.

newnewnew 13y ago
Nice casual use of racism you got there.
- na85 13y ago
  I'm really not sure how it constitutes racism. Are you aware of many movie studio execs who aren't white men?
  - nicwolff 13y ago
    Well, there's Lynda Obst for one...
ams6110 13y ago
Would you feel better if they weren't white? What's race got to do with it?

wisty 13y ago

> “They said to me, ‘We don’t even know how to run a P&L right now.’” The look on his face expressed the sheer madness of that statement. “ ‘We don’t know what our P&L looks like because we don’t know what the DVD number is!’ The DVD number used to be half of the entire P&L!” > “What are the implications of that?” > He looked at me incredulously, as if to say, Haven’t you run a studio? Then he said very emphatically, “The implications are— you’re seeing the implications—the implications are, those studios are frozen. The big implication is that those studios are—not necessarily inappropriately—terrified to do anything because they don’t know what the numbers look like.” What does this actually mean? Is there simply high uncertainties in P&L predictions, due to the difficulty in predicting international sales? There's a hard limit to the number of foreign movies some countries, notably China, allows so there could be massive fluctuations depending on whether it's good enough to send to China; and international tastes might be hard to predict. Or is it because the profit forecasts for every movie they do a P&L for falls short of what they can accept, and they put a magic "international sales" estimate in to push it over the line?

jbk 13y ago
> What does this actually mean? From what I understand, that they don't know what part of the Plan will be the one actually getting the most profit. And so they need to multiply their offers (and that increases the whole cost of the movie). But to me, the important part is that this exact part is why we have yet another Spiderman and yet another Avengers movie on screens. Because as they are terrified, they are going to publish known beasts (movies), where they know the financial ratios.
Balgair 13y ago
It means they are gambling. If you are unable to figure out half your net revenue, that's like going to Vegas.

PaulHoule 13y ago

It's not that bad of a business. Many people still subscribe to cable. I don't, but on some months I spend upwards of $100+ on movie tickets and Blu-Ray disks (Yes, I buy them.) Other months I realize I can do a zillion other things (go to a zoo or play golf) for what movie tickets cost. Things are going to change, but the unique concentration of talent and intellectual property based around L.A. will be a force to be reckoned with for years.

alan_cx 13y ago

Well, call me a.... whatever... but reads to me like they want to blame everything other than their rubbish movies that are not worth having a permanent DVD copy of, and the stupid amount of money they insist on spending to make a movie. These days, it seems the best movies are low budget, and worth buying a DVD of to keep. The big expensive "block buster" movies are very often watch once, enjoy for the moment, and forget. That can be cinema, netflix, torrents, who cares? The movie isn't actually worth caring about.

megablast 13y ago
> their rubbish movies that are not worth having a permanent DVD copy of, You seem to think that making awful movies is something new? it is not. These guys do a lot of testing to make sure their movies are wanted. As much as anyone can.
the_watcher 13y ago
I actually disagree. I am more likely to go to the theater or buy a legitimate copy of a big budget movie than a low budget one, since I'll pay a bit extra for the highest quality experience of the effects. I still love going to the theater, so I see more movies there than by any other method, but for small movies like The King's Speech (not an example of a classic "low budget" movie, but hopefully you get the idea, the scale is small), I'm way more likely to wait for a way I can see it for free (or in one of the streams I already pay for: HBO, Netflix, Amazon Prime, etc.)
- cclogg 13y ago
  It may also be your movie tastes differ from his too. Right now I am noticing basically two groups of people (not correlated to age): one group which enjoys the effects, 3D, epicness... and the other which is disillusioned with today's movies (ie yay another movie where I watch CGI dudes shoot around and then get a 3D fly-over the battle-field every 5 seconds). I think there is something to be said for the funneling of movie budgets into a few MASSIVELY costing movies (ie per the Spielberg interview that was posted on HN last week). I, myself, enjoy a good "Dark Knight", but also something like the King's Speech or The Tree of Life. The question is whether both can keep being made for their respective budgets, and both in film vs other media.

ChuckMcM 13y ago

That was an interesting read. Strangely it would make a good movie. But the really telling bit was the inaction. That is classically how disruptions happen. You see you get people who have been in "the business" (any business) their whole life and they have learned the ins and outs and "how its done" which is as much lore as it is practical advice. Now you change the rules and an outsider can see the new path but the person who "knows how it is done" is beset by doubt. None of their hard won information and learning applies (or nearly none of it) and they are being asked to make Important Decisions. Complete lockup. Lots of folks in the dot com world had the same experience when suddenly "no profit" / "no investment" became the required thing and all their slide ware and pitches were junk. This is why the stuff we learn from Netflix's experiments with funding shows, which changes the pipeline, will do. Soon we'll have the Netflix funded movie production and it will be another shift in the bedrock of whose ass you have to kiss to get a movie made. I feel sorry for the folks who were revered for their expertise before and are now worthless. But it is the way of these things. What the folks in the studios realize is that movies are still going to get made, but how they get made is going to change. And until the 'new' way has run a few movies through the pipeline and the new makers have figured out what it takes, its going to be scary.

Tichy 13y ago

Isn't that theory automatically refuted because films were successfully made before DVD and Video even existed?

robomartin 13y ago

The Innovator's Dilema: The studios should have started the streaming services. Instead they were busy continuimg to optimize their existing business model. It makes you wonder if any of those people even heard of the book.

raldi 13y ago

Is it me, or is this story impossible to read on an iPhone? I get about 1/3 of the way in, and the text gets covered with a dark gray overlay approx 9000px tall with a photo of Neil Patrick Harris in the middle.

cryofan 13y ago

all part of the propaganda war hollywood is waging in the media as part of their effort to get congress and the public on their side so they can get more laws passed to keep the public from using the internet to get entertainment.

te_chris 13y ago

This is just awesome. They blame the lack of DVD revenues yet refuse to license content such that full service stream services can set up in other markets (like my own New Zealand). Well, believe it or not, we've got brains and technology here too. As someone else said in this thread: Fuck 'em. Just for a comparison, I've pirated one album since I subscribed to spotify (yeezus to check it out when it leaked).

beloch 13y ago

Bluray (and HD-DVD) came out just a couple years before the big decline this article discusses, which is about the time they would have needed to get past the early-adopter stage and start making a significant market impact. These were the premium formats that were supposed to draw in people with their superior quality and command a premium price with a correspondingly premium net profit. These formats have not flopped, but neither have they given Hollywood the boost they were looking for. In fact, I'd be surprised if Hollywood execs aren't rather disappointed with Bluray sales. The problem now is that DVD's are widely seen as an inferior format. Superficially, they have all the disadvantages of Bluray with inferior quality even to online streaming. Sure, they're pretty cheap, but not cheap enough to justify the lack of both convenience and quality. If online streaming killed DVD sales, Bluray was certainly an accomplice. The reason Bluray hasn't gained as much traction as Hollywood hoped is that, in practice, its even more inconvenient for users than DVD's were. Bluray's are saddled with DRM so onerous that movies can take minutes to load and only a player with an internet connection to obtain updates has a chance to play the newest titles. Bluray discs almost universally have inferior user interfaces to DVD's, and the consistency is awful. BD-J discs often break basic player functionality such as auto-resume. On top of it all, Hollywood has continued to pile on more and more warning screens and advertisements. One of the selling features of the Bluray format, according to Hollywood, is that Bluray discs can download fresh new trailers online and show them to users instead of simply playing old trailers loaded on the disk. Yes, only Hollywood would call a program that downloads ads and makes you watch them a feature! Compare this to online video. The quality is still inferior to Bluray, but it won't be that way forever, or even much longer. Arguably, the quality edge Bluray has is already pretty slim on the majority of display's people are using. Hollywood should be serious about keeping Bluray competitive with online video. They make a lot more when you buy a movie on Bluray than they do if you watch it on iTunes. However, they clearly aren't. How do we know? They keep updating the encryption on Bluray discs, forcing people to keep up with updates to their players even though the updated encryption is frequently broken before the Bluray's using it officially go on sale. Every time a user has even slight difficulty playing a movie they just paid good money for, you drive another nail into the coffin of the Bluray format. They keep piling on trailers and warning screens. It still takes minutes to get to the movie with many Bluray's. Onerous anti-piracy ads are still being shown to the very people who have just paid for their content! Bluray menu interfaces remain inferior to those of DVD's, and consistency has not improved. The obvious answer for Hollywood is to treat their best (i.e. most profitable) customers like their best customers, but this is simply not being done. Instead, they're looking for the next big thing to fix everything. 3D Bluray's! 4K video! 3D fatigue has already had an impact on cinema sales, but it'll be great in the home! (Disclosure: I own a 3D projector and have yet to watch more than 10 minutes of 3D to verify that it works). Yes, 1080p isn't good enough! 4K will be the savior of Hollywood, nevermind that the average viewer can't tell 720p from 1080p! The number is bigger, so they will come. It's pretty hard to feel much sympathy for Hollywood these days.

Melcher 13y ago

Could the reason DVD sales have dropped so much simply be that Hollywood has released the back catalog of films? My guess is when DVDs first became the craze there were only a handful of titles, as more titles were added people bought more - often going out to buy their favorites and classics for the sake of nostalgia. In this way Hollywood was making money by just re-releasing a lot of old content. Now that all that 'catching up' has occurred and customers have already gone out and bought their favorite films, only new releases remain - and those are either a. underwhelming or b. not yet 'classic' status enough to bother owning.

Pxtl 13y ago

Since cutting the cord and going pure Netflix, I haven't seen a trailer since like, ever. This has a profound impact. I know longer know or even care what's coming out, or what's impending on DVD release. I know there's a new Star Trek movie, and the Hobbit came out a bit back, but I'm no longer edge-of-my-seat excited to see this because I haven't been being bashed about by promos for months. I'll wait for it to appear on Netflix, or maybe the Redbox thing. I saw Iron Man 2 on Netflix, so I figure I'll get to see part 3 there too.

ars 13y ago
Sounds like netflix could make some money by adding a trailers area. People could go there and watch whatever trailers they like (and I think netflix could even suggest what they might like), and netflix would get some advertising dollars.

paul_f 13y ago

Film, as an artform, will survive. The current studio system, hoisting this crap into the theaters will not. The faster we can end the current paradigm, the faster we can move to the new order.

artsrc 13y ago

If offer content in a way cheaper for you, and better for me then you might increase your revenue. Our family buys DVD's and watch them. DVD's are a pretty costly way to sell movies. Retailers take a big slice. You have to create packaging, deal with inventory, distribution costs etc.

dobbsbob 13y ago

Studios have never made so much money. Every trash superhero film is clearing a billion dollars in foreign box office. Chinese had zero interest in Hollywood until recently now they are the #1 film market.