Film Fund-amentals: The Hollywood Death Cafe

First published June 24, 2013.

According to the prophets, the major studios will soon implode into a vast dark pit while meteors will fall and the rain shall turn into fire and brimstone.

OK, that isn’t exactly what was said by Steven Spielberg and George Lucas, but it would be pretty easy to jack it up that way for the movie version. The recent presentation by the two grand men at the media center of the University of Southern California has stirred up debate through out the film industry. Obviously I am no stranger to preaching about the End of Hollywood. But I didn’t realize that they were already opening the Hollywood Death Cafe. At the core of their chat, Spielberg and Lucas both outlined the imminent demise of the current studio system. It seems ironic that they would bring this up about the same time that the movie Man of Steel would set a domestic release record.

But Man of Steel actually proves their point. The reasons are pretty straight forward.

Man of Steel is officially listed as having a production cost of $225 million (which suggests the real production was closer to $250 plus million). It was preceded in release with a remarkably old fashioned wall-to-wall PR campaign that easily could have cost another $200 plus million. Heck, the studio even went so far as to send talking points for Sunday sermons to ministers across the country. Quick note to Warner: as a kid I listened every Sunday to an extremely conservative Lutheran minister who was prone to giving pep talks about how comic books were the Devil’s plaything, designed to mislead good Christians into false analogies. May not be the best PR strategy when trying to woo the Bible belt!

Man of Steel’s record-breaking amount of product placement did produce a hefty income even before it opened (by one estimate, merchandising tie-ins were about $150 million) and its global opening totals were around $200 million. These figures are all high and wild and I just busted my calculator trying to tabulate the score.

But now it’s over. This coming weekend Man of Steel will, more likely than not, drop by at least 50 per cent in box office. Its overseas play has so far been below the domestic take, which is not a good sign. The vast array of product placement (so large, the movie should have been called Man of Sales) provided the flick with financial coverage but is otherwise meaningless. Nobody goes to Sears because of Superman.

Which means that Man of Steel will roughly break even and make a wee bit of profit. A few years ago, that wouldn’t be a problem. The real money would come from its DVD release. But it doesn’t work that way any more. The DVD market is basically dead. Don’t believe me, just check out a provocative piece by Lynda Obst called Hollywood’s Completely Broken. It presents an even more exact description of the process I have crudely drafted. And note the sly title. Obst seems to be implying something about the business.

Which gets back to a simple point that I have made many times before. The current business model used by Hollywood is totally unsustainable. The question is not if but rather when it will crash. It would appear that Spielberg and Lucas envisions what I would call the Hindenburg Model where it all goes in a gigantic blast. Personally, I lean toward the Whoopee Cushion Model, a slow but systematic series of steady collapse (sometimes accompanied by a noticeable odor).

Of course this leaves open the major question: What will be the new model? In a sense, this is where Lucas’ speculation about the future of theaters come into play. Personally, I don’t think the price for a movie ticket is going to hit $150 bucks. But theaters will increasingly become singular events reserved for hi-tech sensory experience. It started with digital 3D and continues with open bars and full menu restaurants, and I wouldn’t be surprised if the next phase included drugs designed to “enhance” the sensory experience – kind of a Brave New World approach. If this sounds ridiculous just remember that back in the late 1960s a certain amount of the audience for 2001 were dropping acid in synch with the movie’s experimental climax.

Quick note to Lucas: Your idea about pro-rating ticket costs to the production budget of the movie is not new. John Waters suggested the same idea back in the 1980s. I dimly recall that he even suggested a ticket price to Rocky 25 of $150.

But the real question is: What will replace theatrical distribution? Both Spielberg and Lucas are assuming VoD. At the moment, it is the only apparent answer. Well, VoD combined with a massive shift toward an increasing range of personal devises such as iPhones and iPads and iGizmos running out of the consumers’ wazoo. Personally, I suspect VoD will only be a transitional form until the next phase of the digital revolution appears. I don’t even know what that phase will be but I have a hunch there will be something else lurking just below the horizon.

Either way, the impending changes will be dramatic. Only the popcorn trade may stay the same.