Friday, September 10, 2010

The Film Business Makes No Business Sense

In the last two years there has been a lot of talk in the media and on social media about the dramatic changes going on in the film business.  For anyone following the discussions it is obvious that there are serious problems in the business.  From the small independent to the big studio, everyone is effected by the same problem.

Some people blame the recession, but that seems like an easy excuse to toss out there (I thought the film business was suppose to be recession proof?).  Some people blame too many platforms that don't pay enough for content (others say so many platforms are the actual answer).  The problem with the film business is that it was always based on sensationalism and assumptions.

The film business started out with people from vaudeville adopting the new camera as a way to entertain.  Vaudeville in many ways is a lot like the old concept of the circus.  "Come see the bearded lady!" or "watch alligator-boy swim" or some other shocker to draw in a crowd. Then as films grew from short films to feature lengths they adapted the format.

In the early years of the film business the film studios owned the theaters.  This way they controled what the audience would see.  If every film shown in a cinema is owned by the same studio then it doesn't matter which one you want to watch because they make the money anyways.  But then the anti-trust laws were applied in the '50's which meant the studios couldn't own the cinemas.  TV also started to come into exisestence which now competed with what the cinema's charged.  Why go to the theater if you can watch something for free at home?  Then VHS came into existence and then DVD's, Bluray, and a ton of other platforms.  More and more content was being made.  And that is when the flaw caught up to the business.

Every business is based on the simple concept of supply and demand.... except the film business.  When a business, like the big three American(?) auto companies fail to follow this principle, then it pushes the businesses to bankruptcy (or asking for a bailout).  Making more of something with no proven demand for the rise in numbers is like gambling.  Either adapt to what the demand is and make more of that or cut back on what you are making if the demand is less.

The film business is not based on supply and demand it's based on assumption.  A-list actor + script that fits a selling genre +  previously successful director = financial success.  A good example are all the superhero movies that came out.  Since Spiderman did so well in the early part of the decade than the studios should all make more.  Who cares who the superhero is, just make it into a movie.  Or convert a popular TV show, like Transformers, into a movie and then make tons of sequels.  3D is another great one.  Since Avatar did so well and it had 3D lets make every movie with action into a 3D spectacle and we'll be a success... Remember Clash of the Titans?

The problem isn't with these movies it's the business model they're based on: assumption.  We all know what happens when we assume...

People say there is no way you can apply the business concept of supply and demand to the entertainment business.  Oh really?  They do it in television and music all the time.  In music it is called a "single" and in the television world it's called a "pilot".  With a single being played on a radio station they are able to create the demand for the entire album.  I would argue that they should just make the single before the money is spent on making the entire album and then releasing it on youtube and the radio stations.  This way they can gage if there is a demand for the entire album.  This risk prevention idea would save record companies millions of dollars each year and build a bigger following for their artists.

My first film, AMNESIA, I made the mistake of doing what everyone else was doing.  I learned the hard way that making a film on the assumption that others would want to watch my film is the most ridiculous business model.  Obviously I was not alone, it's how everyone in the business does it too.  I needed to run my film productions on the principle of supply and demand.  Nobody cares about your movie! (unless you give them a reason too!).

I've spent that last 2 years studying how to apply the principle of supply and demand and how to utilize it according to the changes in how the audience hears about and views their content.  This is why I have not gone into production on any feature films yet.

(My next post I will talk about Awakening and why it might be one of the most important things I ever make)

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