How and whether contemporary cinema will survive

by on July 18, 2014 at 2:04 am in Economics, Film | Permalink

Liam Boluk has written an excellent four-part series, which should be read by anyone with an interest in movies or cultural economics.  He addresses whether movies are a dying or shrinking business, and the installments are here:

 

Here is one excerpt from number three:

One of the primary barriers to indie success and growth comes from screen distribution. In 2013, 50% of indie films were released on fewer than ten screens – nearly half of which maxed at only two. The reason for this is simple: the audience for the average indie film tends to be small and heavily concentrated in select cities (New York, San Francisco, Portland). As a result, expanding a film’s footprint into additional markets – even cities such as Seattle, Washington DC or Atlanta – can be financially destructive. Yet, even as the theater count is scaled, total performance can remain modest.

And here is Boluk’s blog.

1 dan1111 July 18, 2014 at 2:42 am

I’ll admit I haven’t read the series, but I have a hard time imagining how independent film making needs saving, in an era when my <$300 camera takes amazing HD videos, which I can publish to the world for free. There are virtually no barriers to independently filming and distributing anything–as long as there is an audience for whatever you want to make.

However, if you define independent cinema as "stuff hardly anybody wants to watch", then it is always going to be a bit problematic.

2 DJ July 18, 2014 at 5:37 am

I don’t think the barriers for independent cinema have anything to do the expense of cameras. Here are five successful films that were shot on a DSLR camera: http://lightsfilmschool.com/blog/5-successful-dslr-feature-films/2205/. There are certainty many other more significant costs than that of a camera.

And it seems that there still are barriers to independent filming and distribution. Just because you can in theory relatively cheaply film a movie and post it on YouTube doesn’t mean you can earn early nearly enough to make it worthwhile financially. The main distribution channels still seem important, especially in a day and age in which everything can be pirated.

3 Eel July 18, 2014 at 11:15 am

Right. The basic mechanics of making a film are cheaper than ever, but that means that there are more and more small films angling for a shrinking number of remunerative distribution options (multiplex screens are given over almost exclusively to mega-millions tentpoles, arthouse screens are struggling, DVD sales are collapsing). Those market conditions are making studios cautious about bankrolling anything that they think won’t make a profit, which means that plenty of “independent” directors that you’ve heard of can’t get a film made, because while their budgets might be modest (low seven figures) the chances said film can elbow its way to commercial success are equally so.

4 Millian July 18, 2014 at 6:29 am

So do it. If you don’t understand the difference between publication and distribution, though, I wouldn’t…

5 dan1111 July 18, 2014 at 7:53 am

I suppose my point is that there is a lot of hand wringing about traditional independent film struggling, but in the bigger picture technology has blown open the field in such a way that we are never going to have to worry about independent content thriving, even if it doesn’t fall into what somebody considers “independent cinema”.

Also, independent film seems to be defined as being unpopular, which means it can never really be successful by definition.

6 gibbon July 18, 2014 at 2:50 am

Beans instead of popcorn.

7 Steve Sailer July 18, 2014 at 4:04 am

What the theatrical movie industry needs is a third season when it is traditional to go to the movies beside early summer blockbusters and fall prestige releases. Those are actually pretty weird times to go to the movies: when the outdoors are really nice in May and June and when you are superbusy in late October through December.

The most obvious third period would be a late winter Cabin Fever season. Move the Academy Awards up from March to the week after the Super Bowl (early February). (The late date of the Oscars is a vestige of the old dilatory national roll-out schedules from before “Jaws.” But it keeps potential audiences looking backward at old movies that they don’t really care much about.) Use the Oscar telecast to promote heavily three or four weeks worth of upcoming movies that will start debuting the following Friday.

This season would stretch across Valentine’s Day, the President’s Day weekend, and into early March. These movies could target a more female audience than the more male summer blockbusters and a more populist audience than the Oscar-bait season.

8 Axa July 18, 2014 at 6:38 am

So, part II seems to explain what happens. Box office returns are important but they are not the main and only source of income. Most of time box office returns are not enough to recover the initial investment, but profit comes from TV licensing, DVDs, video games related to movie topic, toys, clothing and any possible licensed merchandise you can imagine.

With a little cynicism you can say that went you go to the movies, you don’t pay for a movie. You’re helping Disney to recover the investment they sunk in a 90 minute video advertisement for licensed merchandise.

The problem of independent films it’s not distribution, they are trapped in the middle XX century cinema business model. Since they can not sell merchandise or expect investment return from DVDs or TV licensing, they depend heavily on box office sales. Perhaps online licensing and distribution can save them.

9 Axa July 18, 2014 at 6:40 am

Sorry, it’s anothe part II from the same site: Future of Film II: Box Office Losses as the Price of Admission http://alturl.com/9jjua

10 chuck martel July 18, 2014 at 7:11 am

Who wants to go to a movie theater and sit next to some tattooed, chattering nitwits after paying exorbitant prices for soda and popcorn and then be blitzed by the latest special effects? Any sane person would rather watch Fassbinder’s “The Marriage of Maria Braun” at home on DVD where the fabulous scene of Herman’s return can be viewed two or three times. Movie theaters became obsolete with the availability of residential air conditioning.

11 The Engineer July 18, 2014 at 7:31 am

+1

I will say that with the advent of digital projectors, the movies themselves have much improved. I just saw a movie last week, and the 4000k presentation was excellent. Much better than the scratchy films of the pre-digital era.

Of course, you can get 4000k TV’s now, but the content is not there yet. Even so, a Blu-Ray on a large HDTV is hard to beat.

12 The Engineer July 18, 2014 at 7:31 am

Netflix is a killer app for independent films.

13 Ken Clean-Air-System July 18, 2014 at 9:34 am

‘Struth! If the same caliber of talent that is available to TV is available to indie films, there will be no stopping them. Who says they need to be released to a theater first anyhow? Let the internet take care of distribution.

14 Andrew' July 18, 2014 at 1:12 pm

I keep thinking there could be an independent film channel. But maybe that is what serial TV is becoming.

15 The Engineer July 18, 2014 at 7:33 am

Not only is the market for independent films limited to a few cities, the production of those films is concentrated in those cities.

Literally everyone under the age of 25 is making an “independent film” in Brooklyn, for example.

Quite frankly, I have no interest in anything that a “Stuff White People Like” person has to say.

16 The Anti-Gnostic July 18, 2014 at 8:51 am

The headline seems misleading. This really isn’t “how” and “whether” but more “why” and “what.” The tone is even a little frantic here, as in “why are the movies I like disappearing” and “what should be done to stop that from happening.”

17 Ken Clean-Air-System July 18, 2014 at 9:30 am

WRT video games, the author only presents half the story. It is no surprise that so-called ”triple A gaming ” is seeing a decline, as costs balloon and the experience of the big name games (your Call Of Duty, Gears Of War, Assassin’s Creed, and the like) has remained relatively the same in recent years. There are plenty of people who still want the new games, but they don’t innovate much from the old games and so fail to attract the new or marginal fan.

Compare that to the state of indie gaming, which still only requires a couple talented coders with a dream to be a success. Go on Steam sometime and tell me there isn’t anything worth playing that doesn’t cost an arm and a leg to develop or buy (you’ll be wrong).

I think what the graphs show is the industry figuring out what it wants; creative destruction if you will. Even as big studios go under, the truly talented people among them don’t blink out of existence, they just work on their own projects freed of the bureaucratic restraint that is anathema to creative people everywhere.

Again I’ll point to Valve Software here (one of the few studios with the foresight to hire an economist) as an industry leader. Yes, they have been developing Half Life 3 for longer than anyone likes, but they have been doing so while advancing (radically upsetting) both the traditional system of distribution and the console market, and oh yeah, releasing what may have been the best game of all time (Portal) meanwhile.

The author is not ignorant of this, it seems, but it is unfair to reduce all gaming to “big-name” and “mobile” markets. We’re in the middle of a slow upheaval and it’s too early to speculate, is all I’m saying.

18 Jeremey July 18, 2014 at 10:26 am

I think you’re talking about two different things. You’re talking about perception and the reality of the gaming public which is, needless to say, quite uninformed. I would also point out that there are numerous gaming companies that hire economists for their staff. Riot Games, Valve, the company that makes EVE Online, Blizzard has an economist on staff I’m pretty sure. Most games where in game virtual economies are expected to be a significant source of revenue are usually backed by the economically gifted on the back end.

I do think there is significant bifurcation in the ‘gaming’ market for ‘core’ gamers. There is a large significant portion of the core gaming public that does not see mobile gaming in the same light and bemoans the fact that mobile games are becoming so popular at the cost of what they feel are ‘real’ AAA gaming experiences. The truth is it takes something like a Rockstar, an EA, a Bethesda, etc. to make big budget triple A titles and gamers have themselves created a large portion of the problem via unrealistic expectations and a poverty entitlement attitude that believes once they pay for the game, everything else around it should be theirs as well.

For example, the outrage that struck when Capcom was revealed to have large amounts of character data on the disc of Street Fighter X Tekken for 12 characters that were on the disc but not playable in the game because they planned to polish them and release those characters as a DLC update for extra money. Consumers were peeved and Capcom looked bad for trying to find a unique way around the 60.00 price point for their game.

Anything that doesn’t strike of the most simple pricing model that doesn’t give them everything they want is instantly despised by this core gaming group. Or at least as a core gamer, this is how I feel about the attitudes of others I interact with on topics like this.

19 XVO July 18, 2014 at 12:26 pm

It’s no good to blame whiny gamers. Gamers want what they want, what makes them feel good. If what the studio does doesn’t make them feel good then the studio is not going to get their money it’s that simple. The problem with some of the AAA studios is that video gaming, like art, is subjective. You can’t know ahead of time whether a new game concept will be successful AND producing the same experience over and over again diminishes the value. Many AAA studios that have failed were arrogant (like say trying to pass off superficial changes as earth shattering) or didn’t realize this point.

20 Finch July 18, 2014 at 1:25 pm

> producing the same experience over and over again diminishes the value

Does it? Some franchises seem to sell games based in part on the appeal of familiar characters and plots. It strikes me that those values grow over time.

21 Jeremey July 18, 2014 at 10:18 am

As a gamer I really only cared about the fourth article, but I have to say it laid out the case very well. I’ve tried explaining this phenomenon to other less economically inclined gamer friends and they look at me confused so I might just forward this on to them and see if that helps.

22 Urso July 18, 2014 at 10:40 am

Here, I’ll save you a click: “niche developers” “back office synergies” “talent utilization” “user generated content” “nodes in a connected economy”

23 XVO July 18, 2014 at 12:18 pm

Sounds like a free market renaissance in the entertainment industry. This is great for consumers. The entertainment industry has to compete for our limited leisure time.

How long before the industry starts lobbying for 30 hour work weeks and pays us to consume their entertainment?

disclaimer: only read the 4th one

24 RZ0 July 18, 2014 at 6:21 pm

Hmm… To justify it’s headline, part one defines movies narrowly – box office revenues. It’s kind of silly, like saying the Green Bay Packers are in peril because game attendance never rises (every game has sold out for like three decades). You have to ignore growth in multiple revenue streams (merchandising, TV rights) and the creation of new revenue streams (the NFL Network).
Part four deals with video games, which by the definition of part one, are not part of the movie business.
I’ll admit I didn’t look at parts two and three, but from what I sampled, I don’t think I’m missing much.

25 Nathan W July 19, 2014 at 12:56 pm

You need a big market to support an indie scene. Except in some places. The exceptions are numerous, but indie-less small towns are certainly the status quo.

I think those independent minded folks, if they have reason to believe they are good enough, will leave such places for New York, San Fran, etc., where they can find other indie peoples to collaborate with to produce real cultural content which is not so carefully crafted for purely blissful and mind numbing entertainment and/or apparent propaganda and mind/opinion shaping purposes.

I don’t know whether the relevant audiences need to get together in front of a “big” screen. These days, a lot of smaller showing will happen in small cafes, etc., with a digital projector (under a grand) a screen (pick your size and cost) instead of a dedicated cinema facility.

This type of economics make it probable that market size will be less relevant in many respects, but the economics of mass marketing and Hollywood probably mean that it will not be any easier to graduate from the smallest cinemas to larger showing.

In the absence of such middling stages, it will be difficult to transition from small to large productions.

26 Master of None July 21, 2014 at 5:00 am

Here is a better (or at least shorter) explanation of why video game studios are “dying”:
1. Low barriers to entry
2. Low (perhaps negative) economies of scale
3. Steam, Kickstarter, GOG.com

All of this is good for people who like to play video games

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