By David Poland email@example.com
Mike Fleming Rants… And Is Really Lost
One of the things I enjoy most about Deadline is that their sourcing is almost always unintentionally transparent. It is the nightmare of entertainment journalism in Los Angeles that it is driven almost completely by agents and unnamed executives. They talk. They seduce those journalists who want desperately to be seduced. And the agents/execs get those journalists – even some very, very bright ones – to sell the spin.
And this is who Mike Fleming talked to the last time he was in town… and what he got was some very bent, historically-challenged thinking.
Read it… and understand how the people who dug the hole they feel they are in just want to keep digging. The tyranny of the new is particularly powerful over the paranoid “old.” And seemingly, even more so over those who keep pushing for change when each NEW IDEA falls by the wayside in short order.
The DVD Bubble destroyed the perspective of a generation of Hollywood thinkers. The goal has devolved from figuring out the best way to create and exploit content to an obsessive lust to find “the next DVD.” But there is no “next DVD.” Why? Because even though more content will be available more easily to more people in higher quality in the next decades, the clock cannot be turned back on the pricing issues that the studios, greedy and overeager, created.
Netflix created the subscription model out of a need that the studios, conspiring with Blockbuster, created. DVD launched as a sell-thru product and the price point was so low that 15-20 views of a DVD in a subscription model made the disc profitable, even at retail. And Netflix wasn’t paying retail or even wholesale prices for long.
If you rented 3 videos a month, Netflix gave you an nearly complete library for less money each month. If you were buying DVDs, suddenly you could rent with great ease at a cost of about half of one DVD a month.
But it wasn’t Netflix – and certainly not Netflix streaming – that killed the video star. People forget that DVD for feature films started dying on the vine for years as Netflix grew and for years before Netflix seriously established streaming as an option for most of their customers… all before Redbox was a nationwide business. (Let’s no get into the Netflix stock price these days.) Besides rental and subscription rental, there was massive and wide-spread discounting on the retail product as well.
Meanwhile, at the studios, the DVD Bubble sent the spending on movies through the roof. $20m “stars” were all over the place. $80m set movies, comedy and drama, became average. $150m for action was a modest budget. And marketing budgets blew up in order to front-load theatrical so that they could get to DVD revenues a quarter later
Agents… the main source for guys and gals like Mike Fleming… LOVED this. They got insanely rich. But it was a bubble… because DVD sell-thru was a bubble. Now that the bubble burst, there is a new normal… but agents hate it. They want to know how they are going to get back to the bubble.
And execs saw their studios get hurt. The slowest to respond to the shifting revenue picture got hurt the worst. The grosses, for instance, for dramas, did not get smaller, as some idiots in media claimed. However, the cost of production was double what it had been, say, 4 years earlier. So a drama that would have made money with a $45m domestic gross was losing money for the funders.
Of course, agents and execs were also in a similar boat… their idea of “hurt” was flying commercial… they all want the jet back, gassed up and ready to take them to Aspen for dinner. And I get that. But shareholders, not so much. And if they knew how much was lost in profits in those fat, green DVD years, there would be blood running thick in the back lots.
The irony is, with all this whining, this summer is one of the most expensive summers ever. I count (roughly) seven films over $150m compared to four last summer. No one at the major agencies or studios can really be crying poor… just crying not as rich.
You know what’s confusing about the market right now? How much each post-theatrical revenue stream can generate, how quickly, and what will they look like in 5 years. High class problem.
And of course, the greatest irony of all… theatrical for features is clearly the most stable, highest-per-capita spend among all of the revenue streams. But this window, already under attack by the shortened window over the last 15 years, continues to the pointed at with disdain by “those guys.”
It’s not progressive thinking… it’s old man thinking… because they folks can’t get past the old model, where theatrical was 90% of the revenue. We’re decades past that. But still, it’s like something mommy did that adult children just can’t get over.
I’ll try to make it simple…
1. Post-theatrical is already a blur for consumers and it will only get more so. People will expect access at all times on any device for a low, low price… either in a subscription model or a per-use price point of $2 or less.
2. Theatrical will soon be the ONLY revenue opportunity that stands apart from that post-theatrical blur. No other revenue stream will ever again generate as much as $10 a person… or even $5.50 per person.
3. Consumers adjust to whatever window you offer. But history tells us, the shorter the theatrical-to-post-theatrical window for wide-release movies, the more cannibalism of the theatrical.
4. Just as the DVD bubble could not be pumped back up after it was deflated by pricing aggression, theatrical will not survive a significantly shorter window to post-theatrical as we now know it… and once it is broken, it will not be able to be fixed. And that revenue stream will NOT be replaced by what is now post-theatrical. It is simply money that will be lost, never to be recovered.
Theatrical will never be The Drink again. You’re looking at a 2 month window for most studio films vs decades of post-theatrical revenue opportunities. It’s not an even fight. But take a deep breath and look at the obvious… for theatrical to still be as much as 40% of the revenue of a studio film is bloody amazing. It’s not the past. It’s not ’39 or ’69 or even ’89. But it’s a LOT of money. And it is insane to take it for granted or to dismiss it, because there is no proof out there that I have ever heard that suggests that theatrical revenues gets in the way of post-theatrical revenues… only the other way around. Why? Because theatrical is the unique proposition. It’s post-theatrical that really has to compete with EVERYTHING the world has to offer.
Think about it. With very few exceptions, no one goes to the movie theater and then decides whether to pay for and see a movie or to do something else. In your home, whether on a computer, an iPad, or your TV, you have the choice of a wide world of internet options, movies you’ve already paid for in your cable/satellite packages, pay-per-view, subscription pay services, and a wide array of television options, including live sports and other appointment experiences. Oh yes… and DVDs, Blu or other, as well. Not to mention such old fashioned pursuits as, uh, books, newspapers, and other dead media. (ha!)
I was going to make Fleming’s piece the center of this analysis, but I think I have covered most of it already without slapping at him specifically.
A couple specific points.
1. “…Old style Hollywood journalism I practiced most of my career at Variety, where I would polish stories all day and turn them in at day’s end so I could tell you tomorrow what I knew today. Isn’t it better to let Hollywood know Chris Nolan’s agent Dan Aloni was leaving CAA while he was being escorted out of the building?”
Journalism, and specifically, the authoritative voice, has taken a HUGE hit in the name of reporting gossip as it’s happening. You know what matters? What does Dan Aloni leaving CAA mean? Why did he leave?
And none of that was answered as he was being escorted out of the building.
Yes, there is plenty not to like about once-a-day reporting. But there is something equally problematic about “tweet first, think second” as well.
2. Your friends may not have told you, Mike, but DVD is already dead and studios are already phasing out the format… including Blu-ray. The niche gets smaller every quarter… in part, like everything else, because the studios have already made up their mind. They are using Blu-ray as a delivery system for Ultraviolet and other streaming-first concepts that will roll out in the next 8 months. Try walking into a retailer that used to have a giant DVD section. Better yet, try finding 20% of the retailers who used to make a business of selling DVDs.
3. The Oscar stuff is, simply, idiotic. The most stupid question – and popular, too! – this Oscar season was “why can’t The Oscars be more like The Grammys?”
I refer you, simply, to the “On the Lot,” the quickly failed movie competition show. Movies are not a quick turnaround event. There isn’t a live performance business that is driven by taped performances, like music is. (Again, you might have asked your pals how musicians make most of their money… here’s a clue… it’s not making records.)
You can’t walk Meryl Streep out onto the stage and have her do 2 minutes from The Iron Lady. At least, not without laughing.
And let me understand this… your way of fixing the Oscars is to do a half dozen EXCLUSIVE scenes from upcoming summer movies… like fucking ComicCon?
Music is a live performance medium… and people watch the Grammys to see what those live performance stars will do live. Even theater, with the much lower rated Tonys, is a live performance medium and one reason to turn on the show is to see the live segments from a dozen or so shows now on Broadway… that by the way, you will have NO way of seeing in any other way.
Ask a film critic why the influence of critics is at an all-time low. General Answer: Because individuals have many more tools by which to make up their own mind about their buying choices, including, but not primarily authoritative film critics. Marketing. And what does Fleming and his cadre suggest? Turn The Oscars into another marketing opportunity. And trick 5 million more teens into watching awards being given out until they get to see a 2 minute clip from the next Twilight movie, because even though it would be awful television, the ratings would be improved.
Once again… a bunch of people are SCREAMING that the Oscars are on fire, so we have to burn down the brand in order to save the brand.
“Why not INVENT AN AWARD that gives the cast and filmmakers the chance to take a final bow in front of a grateful global TV audience?”
Because you have to EARN a place at The Oscars. You can’t buy it. What part of that can’t you understand?
Burn the brand and there will be no brand. Only more marketing… for a while… until being a part of it is more embarrassing than not.
Fleming is a smart guy. I wish he would use that brain and that access to come up with some new, considered ideas and not just continue to pound the bully pulpit for bad, old ideas that are too reactive to ever get ahead of the slow-moving, but clearly moving curve.