Category: Film
Food for thought
In case you were getting too bullish about the prospect of a Comcast buyout of Disney, Variety magazine (Feb.16-22, p.67) throws some cold water on the idea:
A hefty 34% of Disney’s operating income is derived from its Theme Parks & Resorts division, a business which is struggling against a range of cyclical economic woes. Theme Parks is slated to eat up nearly 70% of Disney’s total capital expenditure ($900 million) next year. And Comcast has no expertise in this area.
The Disney retail stores have been on the sales block for some time, with no potential buyer identified. Plus Disney just lost its deal with Pixar, the source of its big animated hits, and much of Disney’s income comes from overseas. Comcast has virtually no experience in the international arena. Well, there is always ESPN…
If pigs had wings
The Disney board just turned down the current Comcast offer. Of course Comcast is free to come back with better terms. The first bid was considered no more than an opening salvo in a longer bidding battle. Disney already has hinted it would consider a better offer.
Now if a better Comcast offer for Disney made sense, what would this imply?
1. It would mean that cable operators are correct in wishing for an earlier release of films to television. DVD releases would end up speeded up as well. Moviegoing would become more of a social event, rather than the only means of seeing a given film. Date movies and large screen spectaculars probably would become more popular in the theater, as they would offer a more unique product. Moviegoing as a whole might well decline in popularity. Large-screen televisions would increase in appeal.
The big gainers would be the cable companies, who would capture a share of the revenue currently going to DVDs. The big losers would be Hollywood and, to a lesser extent, companies such as Wal-Mart and Best Buy, which sell large numbers of low-priced DVDs (they would make back some money on TV sales). In part the offer is an attempt to yank DVD revenue away from movie producers and put it in the hands of a company that pipes movies into your home. The age of video on demand would finally arrive, Comcast is known for its strong promotion of this concept.
2. A takeover would signal a final end to the privileged position of the major networks. Don’t forget that Disney owns ABC, so the biggest cable company would now own a major network. Network programming would end up driven by the demands of cable television. Cable and satellite TV already account for the bulk of American viewing; only 14 percent of the American viewing public does not have either cable or satellite TV. In addition local news would continue to decline in importance and TV will become racier, given the looser role of the FCC in supervising cable content.
3. A takeover would later be seen as a turning point for the convergence of all media with the Internet. Cable supplies most of the bandwidth, and the ascendancy of cable companies will enable your TV, Internet connection, and other electronic devices to talk to each other. With a cable company leading the charge, and controlling and owning the relevant content, it could more easily internalize these benefits and charge you for the integration.
But reread the first word of the title of this post, “If.” Here is Rudyard Kipling’s poem If.
Can’t all this happen without Comcast buying Disney? If these outcomes are value-maximizing won’t arms-length transacting get us to the same place? You can bet on this question with a phone call to your broker. But before making your bet, read about this attempt to use stem cell technologies to grow pig wings.
A cinematic renaissance
Two years ago, every one of Phnom Penh’s 33 cinemas lay disused. In the 1960s, Cambodian-made films were famous across Asia, and movie-going was a national obsession. But cinema culture was one of the many victims of the genocidal Khmer Rouge of 1975-79 and the two decades of civil war and Vietnamese occupation that followed.
N.B.: Hollywood is not the only reason why cinema is struggling in many locales.
Today, however, Phnom Penh is in the midst of a cinematic boom. Theaters are opening or reopening across the country. The last eighteen months have brought nine new cinemas. A ticket costs about a dollar, the same as per capita daily income.
And what is the most popular genre, by far? Horror films.
The quotation is from “Phnom Penh’s New Rage,” The Financial Times, Saturday, February 14. Here is an account from The Cambodian Times.
Cambodia, of course, provided one of the more extreme examples of government support for the arts. Prince Sihanouk produced, directed, and wrote the musical scores for twenty-eight movies. He was often scriptwriter and star as well. So if the print says “Director’s Cut,” I’m sure they mean it.
Oscar odds
There is more betting on the Oscars than ever before. Variety magazine reports that on-line betting on the Oscars has grown 300% over the last three years. The U.K. site Betonsports.com has led the way and expects more than one million dollars worth of Oscar wagers this year. The most heavily wagered category, surprisingly, usually is “Best Director.” Presumably there is too much agreement about what movie will win Best Picture in a given year. Here is one set of odds, not surprisingly Lord of the Rings is a favorite for best picture and director. Sean Penn (Mystic River) and Charlize Theron (Monster) are favored to win leading actor and actress respectively.
Spellbound
I once took a seminar on film from Roger Ebert and he said “A movie is not what it is about, it is about how it is about it.” Bear this in mind when I recommend, Spellbound, a movie “about” the Scripps-Howard National Spelling Bee championship. It’s also about immigration, ambition, IQ, poverty, high school and the pressures of competition. Brilliantly edited and fascinating on many levels the film’s only weakness is the pointlessness of the core activity. But that too is part of the point.
Spellbound is just now out on DVD. Hat tip to Craig Newmark whose earlier recommendation I followed.
The economics of Netflix
Lately I’ve signed up for Netflix.com. You pay $20 a month and you get mail order DVDs, free shipping, and you can keep them as long as you want. The limit is three to a customer. Once you return what you have, you can order some more. This is a big business and Wal-Mart is entering the market.
I am finding that Netflix changes what I watch. Service is prompt but there is a lag between ordering and viewing. The only late fee is the rather abstract opportunity cost of not being able to order more films. So I can order a DVD and not watch it for a week or even a month. I can engage in a kind of artistic deficit spending. I find myself ordering more movies that I feel I “ought to watch,” but won’t necessarily enjoy. After all, the consequences of my decision lie further in the future. I find myself especially altruistic toward my wife, and what she wants to watch. I am more willing to order long movies. I could never bring myself to rent The Shawshank Redemption, which is compelling yet sappy and well over two hours long, but now I have seen it.
Netflix reminds me just the tiniest bit of democratic voting. I order films to feel good now about my ordering, and not necessarily to watch them. Overall Netflix has improved my movie viewing and induced me to experiment more. Fortunately it is a supplement to other ways of choosing movies. When it comes to what I really want to see, nothing beats getting in the car and driving there, pushing through the yellow light to make sure I don’t miss the previews.
The culture that is French
Concern over France’s diminishing importance in world cuisine has prompted the government to create a gourmet university, which it yesterday promised will be nothing less than the “Harvard for the art of French cooking”.
The university will open in October in Reims, in the heart of Champagne country, and admit 70 French and 30 foreign students in its first year, according to Renaud Dutreil, minister for small business and consumption.
And why is French haute cuisine in crisis?
The suicide of Bernard Loiseau, France’s best-known three-star chef, drew attention to the difficulties the best restaurants experience in reconciling innovative menus and silver service with the commercial realities of high wages and massive fixed costs.
Mr Loiseau’s suicide coincided with widespread frustration at international criticism claiming that French chefs have failed to move on from nouvelle cuisine and have fallen far behind Spanish, Italian, American and even British rivals.
… many restaurateurs have been frustrated by the government’s failure to lower VAT on sit-down meals.
The election pledge by Jean-Pierre Raffarin, prime minister, to reduce the rate to 5.5 per cent from the current 19.6 per cent is facing German opposition in Brussels.
Did you get that right? London is now a more interesting dining spot than Paris. The core problems involve an overregulated French labor market and excessively high French taxes. Here is the full story.
On a related note, it is now the case that 35 percent of all French movies are shot outside of France, most commonly in the Czech Republic. French filmmakers are asking their government to set up a specially subsidized studio complex, to restore French cinematic competitiveness. It is time we start realizing that government regulations involve an aesthetic price, not just an economic burden.
Addendum: Here is additional commentary on relative French culinary decline, with useful links.
The continuing rise of the DVD
In 2003 a new DVD issue was released every 57 minutes, giving us over 9000 titles for the year (Entertainment Weekly, Jan.23-30).
The film industry is changing accordingly. Hollywood now has greater incentives to issue movies for male taste. DVDs are often impulse buys, and men are bigger impulse buyers than are women, at least in the DVD market. Movies for children are favored as well, since children love repeat viewings. Note that in 2002 DVD sales and rentals accounted for 62 percent of moviemaking income. At least four-fifths of this sum came from DVD sales.
Fear of losses from piracy is causing accelerated DVD releases. If you wait too long with your DVD, illegal competitors will fill the market. Pirates of the Caribbean, for instance, was released on DVD only four months after the film’s release. Video releases, in contrast, used to come after six to twelve months. Some European films have been released simultaneously on DVD and in theatres, despite the protests of rental chains. Some insiders expect simultaneous or near-simultaneous release to be common practice in the future. Simultaneous release, of course, raises fears that one market will cannibalize the other. But one commentator noted: “I’m one of those who believes that ultimately everything will be available at a price. So, if you want to see it at home when it is at the theatres you can, but it will be a premium price.”
The bottom line: I’m psyched. DVDs are a wonderful medium for foreign films, subtitled films, complex films requiring explanation and accompanying disks, historical classics, and action movies. All of these I love. DVDs have opened up the entire world of Bollywood cinema — usually in Hindi — to easy subtitling and thus to American viewers. If these movies are too long for your taste, just flick to your favorite songs and dances, much easier than trying to do the same with a VCR. As the DVD rises in popularity, the quality of the best scene in a movie may become increasingly important.
The further decline of the mass audience
Total U.S. movie box office just barely held its own for 2003, as reported by the January 5-11 issue of Variety (not on-line). The number of moviegoers declined by three percent. A few major movies, such as “Finding Nemo” and “Return of the King” did very well, but the overall picture was flat. Elizabeth Guider writes: “…unleashing dozens of $150 million films aimed at the global mainstream audience is an increasingly losing proposition.” Audiences for network TV have been poor as well.
Where is everyone going? Are you all reading blogs instead? That I doubt. The big cultural winner for this year is the DVD:
Check the year-end reports from the various sectors of the entertainment industry, and it’s clear that DVD stands alone as an unqualified sensation. It’s such a success that it might even be eclipsing – and cutting into – other leisure pursuits.
Total DVD revenue last year hit $17.5 billion – $12.1 billion in sales, $5.4 billion in rentals – according to new industry totals from market tracking firm Adams Media Research. That surpasses the most optimistic expectations and overshadows spending on movie tickets, music CDs and video games.
Here are some numbers from the side of the consumers:
Hours spent with home video increased 18% from 1997 to 2002. For the average person that means an increase to 58 hours each year, while time spent listening to music, watching network TV and reading books, magazines and newspapers dropped.
This year, movie fans spent an estimated 67 hours watching discs; that is expected to jump another 46% over the next four years to about 98 hours per person per year…nearly a DVD a week…Meanwhile, total TV watching is expected to rise only 3% (with network TV dropping 3%) and moviegoing 8%. Listening to music is expected to fall 19%.
So what does this mean for culture? People are watching the same movies over and over again. Over time we can expect movies to stand up better on multiple viewings, which is the whole point of the DVD format. Movies should become deeper. It is an open question whether the number of movies issued will rise or fall, but I am an optimist. On one hand repeated viewings mean less time to sample extra titles. On the other hand, the compact and popular DVD format gives filmmakers a new way of reaching audience. It will benefit the blockbusters, such as Nemo, but also will help niche films. For instance many people now order otherwise unavailable foreign movies through netflix.com.
Addendum: Do you resent your loyalties to DVDs? Here is a lengthy and excellent post, from Michael of www.2blowhards.com, on how to think about and revitalize your reading. However his remarks will spur your further interest in cinema as well.
The end of the French cultural exception?
The French cultural exception may be coming to an end, but not because of American pressure. The EU, that darling of the French, has decided that film subsidies should not be tied so closely to domestic production. After all, that would be discriminatory. Under the new proposal, a government could demand only that fifty percent of the subsidized film, in revenue terms, is made at home. Currently the figure stands at eighty percent. So they could shoot French films in Greece and still get the subsidies. More generally, the proposed change would force French filmmakers into more co-production agreements with other European nations. Here is the full story from the Financial Times.
Many of the French fear that we would get a bland cinematic “Euro-pudding” as a result. Note, however, that the renowned film Amelie was a French-German co-production, yet it retained a distinctive French flavor. The more likely “problem” is that the domestic political coalition behind French subsidies will be disturbed and may not survive in the long run.
The decision is not yet final, but Brussels can strike down the subsidies without approval from the French government and is expected to do so. Several weeks ago Brussels ruled that the French can no longer ban the advertisement of novels on television. The French feared that blockbuster novels, fueled by aggressive TV campaigns, will drive out more serious literature.
It should be clearer than ever that the French will have to give up their vision of the American bogeyman. France and America have many common interests. The real fear of (many of) the French is modernity and commercial culture, not American culture per se. In fact American culture, and the American presence on the world scene, might in the long run give France an appropriate counterweight to an EU that is growing in power and influence.
French revenge on Hollywood?
Henri Crohas’s company, Archos SA, makes a small hand-held device, like a bulky Palm Pilot, that can record and then play back scores of movies, TV shows and digital photos on its color screen or a TV set. The gadget — which in effect does to movies what Apple Computer Inc.’s iPod does to music — already has sold 100,000 units world-wide during the past six months, beating the big consumer electronics makers to the U.S. market.
Archos’s device, which costs about $500 to $900 depending on the model, ignores an anticopying code found on a majority of prerecorded DVDs. That means consumers can plug the Archos device into a DVD player and transfer a movie to it. Users also can transfer recorded TV programs and digital music files to the Archos device.
Yes this item is from a small company in France, here is the full story. Stay tuned for further developments. The bottom line is that the Internet is not the only means of pirating music and movies.
Movie Cramming
So many great films to see, so little time. Return of the King, Mystic River, Monster, House of Sand and Fog – all are Oscar contenders and all are showing now. Roger Ebert rates Monster as the best film of 2003 despite the fact that it opened – in NY and LA only – on December 24. Of the last 25 Best Picture Oscar winners, 12 were released in December and only 3 were released in the first half of the year. Why?
I think the main reason is the pull of the Academy Awards – this year the awards are on Feb. 29 and voting occurs in late January and early February. The studios figure, probably correctly, that Oscar voters have poor memories so a film that opens late in the year has a better chance of winning than one that opens early. (The theory is a little hard to test because of the self-fulfilling prophecy problem but I think there is some truth to it.)
The unfortunate result is to reduce total movie revenues. We and the studios would probably be better off if the good movies were spread throughout the year, giving us more time to see each one, but such a situation is not stable because opening late gives a movie an advantage even if that advantage tends to disappear when all the studios act similarly (the prisoner’s dilemma).
Can the problem be fixed? The Academy could ask for ratings several times a year although this would require rating on absolute scale (like 1 to 10) rather than just voting for the best film. A graduated tax based on release date would do it in theory but I’m not optimistic about the practice. What I’d really like to see is other organizations such as the LA Film Critics go to a fiscal-year award cycle and make their awards in July. I know, it’s an idea only an economist (or an accountant) would like.
House of Sand and Fog and Preferred Children
Economists like to say that behavior reveals preferences. I just finished watching House of Sand and Fog, which reveals a most discomforting preference, albeit in extreme form. Be warned: I’m going spoil the plot, so don’t read any further, unless you’ve seen the film or don’t care to.
The movie is about a woman (Jennifer Connelly) who loses her home as a result of tax delinquency. An Iranian immigrant (Ben Kingsley) buys the home at auction, hoping that the difference between the auction price and the market price will pay for his son’s college tuition. The woman and the Iranian immigrant get into a violent confrontation, resulting in the accidental shooting of the man’s teen age son. Here’s where revealed preference comes into play: When the Iranian man sees that his son has not survived being shot, he kills his wife and himself. The character does not believe life is worth living if his son is dead… however, his newly wed daughter is still alive!! Conclusion: The character believes life is only worth living for his son, not his daughter.
Just another case of twisted movie logic? Maybe not. I’d venture that this is an extreme case of favoring sons over daughters. Steven Landsburg discusses some strong evidence that this is the case, even in contemporary America – census data shows that couples with female children are 5% more likely to divorce. In Viet Nam, having a female child increases the chance of divorce by 25%!! A lot of people seem to believe daughters are not worth sticking around for, and Kingsley’s character takes this to an extreme.
Readers are invited to email me extreme or strange examples of films, or other popular culture, showing characters favoring sons over daughters.
The ten greatest business movies
According to Forbes, that is. Here is the list:
Citizen Kane, The Godfather: Part II, It’s a Wonderful Life, The Godfather, Network, The Insider, Glengarry Glen Ross, Wall Street, Tin Men, Modern Times.
Most of these movies portray business in a negative light. See a short comment from Professor Bainbridge and a long comment from Larry Ribstein.
Addendum: Here is some good commentary and some different picks, including a favorite of mine, Joe vs. the Volcano.
The Return of the King, French style
I just saw the third installment of Lord of the Rings in a French cinema, on the Left Bank. The crowd loved it, although they kept on laughing at all the faux endings. (I’m not giving anything away by noting that the movie is longer than it needs to be. In the last fifteen minutes it repeatedly feels as if it is just about to end.) Interestingly, “Frodo,” in the subtitles, is presented as Frodon. You know, like “Napoleon” and “Michelin.” That is just in case you might have thought that Frodon wasn’t French. Yes I know about the silent n, still I thought this was ridiculous.