Interesting Times

There used to be two basic kinds of Inuit villages.  Whale hunters and Salmon fishers. When the whalers landed a whale, times were fat.  There was plenty of everything because there is a lot to go around when you are living off of a whale.  Unless there aren’t any whales to hunt.  Put a pin in this one. We are coming back to it.

The entertainment industry is living in very interesting times indeed.  Well, we all are, but they have gone from interesting to fascinating.  

The theaters are famously shut down and no one knows when or how they are going to open up again.  Will it be limited seating and required social distancing? If so, will that apply to families? I mean, what parent is going to be comfortable staying six feet away from a three year, surrounded by strangers in the dark?  Will they be allowed to serve food (or at least foodlike substances)?  Because if they can’t there is no point in them opening up.  $10 buckets of popcorn are the only thing that keeps the doors open.

Biggest question of all being; will people still come to movie theaters?

There have been plagues before and people didn’t permanently give up going to plays. But movies maybe a different kettle of fish.  In plays the audience and the actors always interact to one degree or another.  That is not the case with movies.  

“The medium is the message.” – Marshall McLuhan.  

What McLuhan meant by is that the means used to convey a story to the audience has a profoundly deep influence and imprint on the story itself.

An actor on stage is never going to be able to convey the subtle emotions that can be portrayed by a close-up on screen.  Likewise, a film’s performance is locked in stone and is entirely indifferent to its audience’s emotional zeitgeist.  Whereas a positive feedback loop from an audience to performers on stage can push a showing of a play into new heights.

“The medium is the message.”

Television as a medium has undergone profound changes during my lifetime.  The first TV in my life had an enormous eighteen-inch screen and was black and white.  The performance of the actors had some built-in limitations.  William Shatner’s legendary over the top acting as Kirk was as much a product of the limitations of TV technology in the Sixties as was his personal inclinations. The fact was, he had to ham it up because the screens were too small for subtlety, and reception was frequently unreliable.  He often had to get his message across through a snowstorm of interference. Again, the medium was the message.

But now we live in a world where atmospheric interference has been banished by cable and a sixty-five-inch TV costs less than $700.  Decent sound systems don’t cost all that much either.

When you are only seated six feet away from that screen there is little difference between your living room and the medium of a movie theater.  Except, the guy with greasy hair isn’t coughing on you.

The second development is streaming services.  Everybody wants a cut of Netflix’s pie and soon the A-list content is going to be leaving the Big N and going home to their native studios. The streaming wars are already starting in earnest.  Disney Plus is now in existence.  HBOmax will launch next month.  Universal doesn’t quite have one yet, they are setting up an NBC network service called Peacock in July.  It looked to be last and least

However, Universal has taken advantage of the Corona Crisis and jumped into a new world with both feet. They launched Trolls 2 strictly as an On-Demand streaming rental with the absurdly premium price of $20 per rental.  More than a month’s subscription price to Netflix for only one movie. 

Why did they do it?

Well, I wrote about that recently.

“Corona has come along at a big turning point in Hollywood. Everyone is starting up a streaming service which is leading to something of a Young Turks Rebellion behind the scenes in Hollywood.

Young Turk Producer: Why are we pumping all this money into theater exhibited movies? The risk to reward is gigantic. It ties up a shitload of resources (which is to say money). And how big is the reward when you add it all up? Sure, Variety likes to go on about this billion-dollar blockbuster or that one but at the end of the day, but I ain’t seeing a billion dollars. The theater take is somewhere between fifty percent to seventy-five percent depending on the country. We have to pay a shit-ton in marketing. We get pealed on the exchange rates and then we also got to pay percentages to all the big stars in the production. And oh yeah, taxes. Look at the Force Awakens; worldwide gross two billion, profit seven hundred million.

Old Timey Mogul: That was seven hundred million Disney didn’t have before.

Young Turk Producer: How much money did they make on John Carter?

Old Timey Mogul: Point. So, what do you have in mind?

Young Turk Producer: Change how we do business. Our business is streaming movies now, so lean forward and commit. Forget the mega-tentpole films. We need a ton of medium budget content that we can make quickly and stream instantly.

Old Timey Mogul: But what about the theaters?

Young Turk Producer: Screw. The. Theaters.”

Trolls World Tour is a follow-on to the 2016 film Trolls, which was a modest hit at $346 million worldwide against a budget of $125 million. The domestic box-office take was $153 million.

Universal is now reporting that after three weeks Trolls World Tour has crossed the $100 million mark. Against a budget of $90 million.  

This has everyone in Hollywood pulling out their calculators.  

Normally a film has a fifty-fifty split with the theaters but here Universal is keeping 80% of the gross.  And keep in mind this is only week three of the $20 VOD price.  In addition, Universal is not reporting the FBO numbers yet.  But if the FBO is comparable then Universal is already modestly in the black.

The theater owners are taking this very seriously.   As of now, AMC is swearing that they won’t be exhibiting any more movies from Universal, and Universal doesn’t seem to be too upset over this.

It should be remembered; these are very outside of the box circumstances.  It’s a kid’s movie and a lot of parents want to shut their kids up right now and are willing to spend money to do it that they might not otherwise.  Also, this doesn’t look like a model that is going to gross a billion dollars.  If I was Disney, I would not be changing my plans for Black Widow’s release in the fall on the basis of this.

However, a single movie doesn’t have to gross a billion dollars for a studio to make bank.   The entire entertainment complex is going to recovering from this for years.  A new and lower-risk business model is going to have a lot of appeal to the entertainment industry.

Think of terms of switching from whale hunting to Salmon fishing.  There aren’t going to be any times of plenty, but things are never too bad either because you have a much more steady food supply.

Okay, I’m done here.