“These guys even figured out what’s going on here at the Studio. Because the Studio is nothing more than an instrument of capitalism. Yeah, so we blindly follow these laws like any other institution. Laws that these guys figured out. The Studio makes pictures to serve the System. That is its function! That’s really what we’re up to here.” Baird Whitlock, “Hail Ceasar,” Universal Pictures, 2016
One thing we enjoy doing for relaxation and escapism is to save all of the Hollywood “trades” for several weeks and then mindlessly flip through the headlines.
We don’t read the entire articles because those are just the La Brea Tar Pits of details that become thick, gooey, sticky, messy and mire you down in details – individually interpreted details.
You know, we’ve had industry shut down after industry shutdown forcing studios to start, stop and start projects that have opened with fantastic fanfare.
Sure, record makers/breakers have done modestly well at the box office and surprises have bubbled up giving reporters – and executives – reasons to believe/hope that things are back on an even keel.
The movie business has been defining and redefining itself since the 1940s to take on the real and perceived threats so it can economically and profitably meet the world’s mercurial entertainment desires and demands.
It ain’t easy!
The industry got its mojo back more than 50 years ago with a string of great films like The Graduate, Clockwork Orange, Lawrence of Arabia, Manchurian Candidate, 2001: A Space Odyssey, The Godfather, Jaws and Star Wars. They seemed to set the stage for a better, stronger and more profitable industry.
Then the industry got hit by the growing popularity of television which both hurt and helped the studios and crews.
Screen Time – More and more people have gotten “out of the habit” of watching movies on a huge theater screen when it’s easier to simply go to the family room, turn on/tune in, enjoy.
Home viewing entertainment became easier and more economic than sitting in theater seats with stale/expensive popcorn and a bunch of strangers, except for those increasingly rare occasions when the major films (tentpoles) demanded a huge screen, darkened room and Dolby sound.
But it didn’t hurt the studios much because they had more opportunities to sell secondary films to networks and a predictable cashflow from shows and series.
Even streaming services looked like an added sales opportunity until they became a powerful competitor for projects, talent, viewers.
A few folks have dubbed the movement as the “New Hollywood,” which is perhaps typical of the industry that thrives and lives on sequels.
As closely as we can determine, this is the third or fourth New Hollywood since the ‘60s.
The pandemic, periodic strikes and looming questions regarding AI have increased the pressure on the studios and development/production folks to turn the creative industry into something stronger, better and more profitable than before.
While studios struggle to determine what genre what project is going to produce a decent return on investment, global streamers reached out for new creations around the globe.
Even with all of their data, it’s difficult to anticipate viewer interests that have become overridingly important since most families have become extremely comfortable in watching shows/films on 50-55-in home screens.
Anywhere Screen – One of the conveniences of streaming content is that if you can get a dependable signal, you can watch a movie … home screen, computer, tablet or the always with you iPhone screen. If that wasn’t bad enough, the younger audiences have decided that the small screen in their hands and a set of earbuds deliver all of the entertainment satisfaction they need.
With the audiences setting the bar so low, it has become difficult for studio management to determine how they can attract the small screeners back to the large screen and move the couch potatoes into theater seats.
The well-established industry suddenly … isn’t.
Studios, networks and streamers are all working to predict the unpredictable.
Studios – okay, theater chains – need the $100M tentpoles. And perhaps more importantly, the viewing audience needs the excitement that goes beyond collector popcorn boxes.
Barbenheimer, Inside Out 2, Bad Boys 2, Twisters, Alien: Romulus showed people wanted the best old Hollywood had to offer with a new twist and that they didn’t need to be record box office to be successful.
But the idea that the studios should venture into their libraries of pre-existing IP (intellectual property) to ensure seats are in seats won’t work.
Folks have gained so much exposure to different themes, different ideas, different genres that taking the safe route and recycling stories simply won’t work.
Environmental Impact – The old movie formulas almost always go up in flames because consumers want a fresh landscape to look at … more meaningful movies that either resonate with them or jolt them.
New old toy stories, rewrinkled superheroes/villains and vanity projects don’t resonate with audiences that have become their own critics and no longer rely on professional critics to guide them as to what is in good taste or even better entertainment.
For all of the interest and adulation, the motion picture “industry” has sucked for years and is drastically in need of an overhaul that focuses more on the audience than on the beauty and drama of the movie house.
Studios actually only make about 55 percent of the ticket sales with theaters and distributors – yes, the distributor is often the studio, so it pays itself but … – taking the rest.
To supplement their 33-35 percent of the sales, theaters take 33 percent of the ticket income and add concessions into the picture their profits rise to 56 percent, according to people who have access to the inside data.
So obviously, they want – need – all of the best projects first and for as long as possible to enhance their bottom lines.
That benefits the movie houses but doesn’t automatically translate into a profitable Hollywood–especially when you also factor in the more or less fixed cost of the production/post teams and marketing budgets needed to hopefully get people into the theater.
Mini Margins – Industry trades like to hype multi-million dollar openings and global grosses for new theatrical releases but at the end of the year, profitable films just aren’t that profitable. It’s a matter of averages.
So, despite the bright lights and glamour, Hollywood is a tough business, according to realists like Nash Information Services (The-Numbers) and film data researcher Stephen Follows.
Historically, studios made up the difference with income from TV networks, hotel/airline placements, merchandising (something Disney has perfected) and DVD/Blu-ray sales.
With Peak TV in full swing and disc sales shrinking, it’s little wonder that streaming has become such a competitive arena.
Easy Future – Studios saw how tech firms were gaining direct contact with “their” audiences and knew they could do better because they know content better than those guys but they quickly found that the new day is … different.
It’s little wonder that what the techie firms have done in reaching folks not just in their homes but around the globe looks like the promised land.
The major US studios – Universal, Paramount, Warner Bros, Disney, Sony – no longer have to juggle release calendars so they have the best Fall and Winter dates, smartly market the individual projects to get people into the nearly 200,000 (12,500 in Americas) cinemas around the globe this year to see the film the way producers/actors would like you to see them.
Instead, they can focus on capturing the attention of the estimated 1.72B worldwide TV households (125M in US) to watch not only one film but also more of their multi-billion-dollar film and show library.
And yes, if they simply must, they can watch on their 7.1B iPhones, smartphones.
After years filled with the pandemic, strikes and yo-yoing theater attendance, the industry has to reassess, reevaluate and reapply itself and along the way catch a break or two.
Everything is relative.
The industry has always had to plan a year or two out.
Creation without Borders – Hollywood has come to understand movie distribution is a two-way path as major studios around the globe not only create great content but it’s also appreciated by viewers around the world often with the same/greater appeal and at a lower cost.
The major studios here in the US as well as global houses including China’s Hengdian; Japan’s Toho, Toei, Shochiku, Kadokawa; India’s Ramoji, Red Chilies, Dharma; Africa’s Atlas, Cape Town, Killarney, FilmOne; Europe’s Cinecitta, Babelsberg, Pinewood, Sunderland, MPC and others around the globe, don’t produce films for this year but 2025, 2026 and beyond.
With each setback and reset, the industry participants have spent vast budgets (time, money) fighting to retain the status quo rather than trying to determine what new opportunities might exist.
Some of today’s studio leaders have become curators and brand stewards rather than exploring new options/opportunities.
Many will say that Paramount, WarnerBros and others around the world have lost the ability to be flexible, react and respond to potential change opportunities and challenges supporting today’s business while creating/producing tomorrow’s.
The home entertainment shift to streaming isn’t new. YouTube, Netflix and Disney’s Hulu have been delivering content over the internet since the late 1990s.
In the early 2000s, it became a business.
Studio executives viewed it as a novelty and a nuisance rather than a new chance to reach the entertainment public more on their terms with their content when, where and how they wanted to enjoy it.
Changing Habits, Market – Movie ticket sales have been on a downward trend for years, as have the number of pay TV households. They won’t disappear but they have to adjust to a new level of normal/good. S
With streaming subscriptions topping 1B in 2020 and expected to be more than 1.5B by the end of the year, the MPAA (Motion Picture Association of America) tells us the trend toward streaming isn’t new.
Movie theaters will continue to struggle to build attendance now that people have more entertainment options.
Pay TV subscriptions will level out as a sustainable business once consolidation and the realignment of programmed and anytime entertainment settles in.
Calculated Risks – The key to studio success still lies with a strong senior management that understands the creative environment, process and team first then can align the process to the consumers entertainment interests. Then they can listen to Wall Street rather than letting the business side lead.
It’s not a giant leap, but it’s not without its challenges if the organizations don’t have strong management and that also means a solid understanding of the creative industry and the creative processes.
Streaming isn’t some magic carpet that is going to miraculously carry studios, the stuff they make into the viewer’s device(s) and return with volumes of profits that really never came to be except in the movies.
In addition, despite what AI hawkers say, the technology won’t be the crutch or savior for the industry.
Okay, it may be a sound replacement for many of the layers of studio decisionmakers.
It could also be a time-saving assistant for writers, directors, cinematographers, lighting/sound engineers, audio/video editors and a few other folks.
But it will still require trained sets of eyes and ears to see, hear, feel when the emotional message is there, regardless of the genre.
Creative Tomorrow – Just because the entertainment industry has changed, it doesn’t mean the old ways are dead. It’s just new, different and requires attention to the opportunities in the new environment. Source – Lionsgate
The traditional studio norm doesn’t work and probably hasn’t worked for a long time; but it ain’t dead.
Studios – at all levels – need to get back into the business of generating, testing and fine-tuning ideas that creatively appeal to, interest and most of all excite the viewing audience that has become spoiled by too many mediocre/good choices.
Management and the system have to get over their own lofty image of being entertainment shape definers and take on the responsibility of reconnecting with, listening to and over delivering quality entertainment real people want.
There’s no going back to the Hollywood folks read about in the industry trades and saw on the big, big screens.
It’s no longer internal entertainment where people think and act like Eddie Mannix did in Hail Ceasar when he said, “A marriage doesn’t have to last forever; but, DeeAnna having a child without a father would present a public relations problem for the Studio.”
Studios now need to be responsive and responsible to the global entertainment audience and understand that those aren’t just ticket buyers and/or subscribers, they’re the people who expect a few hours of relief/escape.
Satisfying those expectations can and should be a helluva lot of fun.
Andy Marken – andy@markencom.com – is an author of more than 800 articles on management, marketing, communications, industry trends in media & entertainment, consumer electronics, software and applications. An internationally recognized marketing/communications consultant with a broad range of technical and industry expertise especially in storage, storage management and film/video production fields; he has an extended range of relationships with business, industry trade press, online media and industry analysts/consultants.