Production cost is a problem, and technology has made it worse. Look at that long, long list of animators and technicians at the end of any effects-heavy film today. A cast of thousands.
In the late 1990s, when I was working on physics engines for animation, I was talking to a major Hollywood director. He'd done some of the first films that had both live and photorealistic CGI characters. He wanted to get the cost down, so he could make $20 million movies. At $20 million, he could direct; at $100 million, he was running a huge operation that had to have everything pre-planned in great detail.
His model was the early CGI cartoon, "Reboot". Reboot was a weekly half hour cartoon made by a staff of about 30. He wanted to get to that level of productivity at theater quality - make a 2 hour film in a month with 30 people.
That didn't happen. Not even close.
It's been tried. "Sky Captain and the World of Tomorrow" started as a low-budget picture rendered on Macs. In that film, if nobody touches it, it's CG. Ended up costing $70 million. Worldwide box office $50 million. Fail. "Iron Sky" was made for €7.5 million. Worldwide box office $11.5 million. Fail.
There were successful low budget directors in the past, Roger Corman being the prime example. (His autobiography is titled "How I made a hundred movies in Hollywood and never lost a dime".) It's harder to do that today. Viewers today expect incredible production value. Most TV shows have more production value today than 70s movies did. Hollywood has so many people on set because they bring a team together on short notice to do a job, then disband the team. They need many competent people with different skills to make that work. If you cut corners, it looks like Youtube crap.
On big movies, we've mostly replaced set painters and carpenters with people who sit at workstations and do the same job with CG models. "Big" is now cheap, but "detailed" remains expensive. Procedural visual content generation can generate good landscapes and vegetation now (check out SpeedTree), but as yet, nobody has been able to procedurally generate one convincing block of a city street seen at ground level. Making GTA V cost $265 million. Not seeing an incoming reduction in production cost.
Netflix has no huge advantage. HBO is in the same position - they make content to sell to their own customers, and know exactly what sold. Data collection is retrospective. Trying to figure out what movies will be box office failures in advance remains hard. That's why Hollywood generates so many sequels - predictability.
I love movies. Whenever I visit my dad (other side of the country), we go to see movies. However, most of the year I live with my girlfriend who falls asleep in theaters and can't justify the cost. This leads to me not seeing movies in theaters anymore.
Now, I am subscribed to two streaming services. I don't pirate. I refuse to watch anything with ads, happy to pay, and somewhat ironically, the only ads I watch to completion are trailers that I haven't seen. I would love to catch movies as they are released but I have to wait until they're available on the streaming service. When they are available it is usually 5$ for a "rental". Is that a joke? I used to pay that at Blockbuster, and they had a physical location and employees! They've priced their digital content in such a way that I will only pay to see the movies that I really want to see. If it was cheaper, I'd be a constant consumer.
It seems that is how most things in society get priced. Not for ultimate consumption, but to maximize the profit curve. I get that is how capitalism works, but that logic doesn't make sense to me for digital goods. They are practically zero cost to distribute once they are manufactured and your competition is people pirating them. If you're worried about audience size, lower the cost. You'll enable a lot more people to see a lot more movies.
Assuming you are a software developer, I think you should reconsider your "price should approximate production cost" reasoning. I think it will hold you back if you eventually try something entrepreneurial.
When I started a small software company, I originally had a similar understanding. I subconsciously thought that the software should be priced to pay for its development cost, plus some profit. I was not very successful, until I realized that the product should be priced as a percentage of the value it delivered to the customer. Customers don't want you to do a lot of work, they just want their problem solved for a price that is reasonable relative to the benefit of the solution.
This idea reverses several of your conclusions:
1. The product should be priced based on how much value it delivers, and only those companies that can deliver the product for significantly less than that price will stay in business. Once a company finds a need that people will pay for, it generally makes sense to drive the cost of production down while maintaining the same benefit, thus maximizing profit.
2. The more value a company creates with the resources it uses (the greater its margin), the more left-over resources it will have to invest in producing still more benefits, or to return profits to its original investors.
So, going back to the cost of digital content, I am happy to pay for it, as long as I end up feeling the movie was worth watching for the price. And if they can produce great content without many resources (or with lower cost of delivery), all the better. My problem, right now, is that there is so much great content I cannot ever hope to watch it. But that is not a problem that really bothers me, I am happy to keep paying to have a long list of shows I'd like to watch, if I could just find the time.
A good friend of mine _wink_ has been a pirate since the golden age of IRC. I, uh He, always said he'd pay for digital content when they made distribution digital. And when they did, I was happy to start paying for it. I was happy to have every King of the Hill on someone else's hard drive finally.
Then the price for playing by the rules kept going up and up. Meanwhile there was less and less, and less, I cared to see. I can't even think of the last movie I actually itched to see. Maybe I've gotten old and don't have time to search for diamonds in the rough, but I don't see any more movies like Oh Brother Where Art Thou or Fight Club or Snatch that I can't get tired of.
They can't cry poverty when every time Adam Sandler squeezes one out it makes $75 million. I know creative accounting makes it seem like they break even, but I call BS on that. If companies besides Pixar would actually pay for writing that moves people, their wallets would come with them.
Supply and demand. A thing is worth what another is willing to pay for it.
Those $5 streaming "rentals" are for those actually willing to pay $5 to watch that movie right now. It's worth it to them. Eventually the $5 rental crowd is satiated, and the "not more than $4" crowd gets a chance as the price is lowered to match what others are willing to pay for it. Eventually that price tapers off to "$8/month buffet" and ends up on my Netflix queue.
They DO lower the cost - as those willing to pay higher prices do so, are satiated, and the audience temporal/economic demographics shift. It's not just about price per rental, it's price plus time per rental. Some movies I'll pay $15 to watch on day of release; some I'll happily "spend" time waiting for so I only spend $1 to watch it.
And yes, I'd happily get "that, here, now" for $5 rather than pile 4 people into the car, drive to Blockbuster, ask if they have it, find out the 2 copies are out, and wander the aisles for an hour reviewing what they do have and picking something ("Masters of the Universe"!) just to not completely waste the whole exercise (and decide that just leaving would have been better than watching "Masters of the Universe" only because it was the only thing vaguely appealing at the moment). Even with Redbox I at least have the option of looking for something new in particular and reserving it, from whichever of several nearby locations, for $2 from the convenience of my phone. Come John Wick 2 I'll have already pre-ordered it and be watching it, without the crowd, the moment it's available (and happy to pay the $19 to do so, having seen John Wick twice thanks to the $1 streaming specials).
> I get that is how capitalism works, but that logic doesn't make sense to me for digital goods. They are practically zero cost to distribute once they are manufactured and your competition is people pirating them. If you're worried about audience size, lower the cost. You'll enable a lot more people to see a lot more movies.
This echoes a drunk-blog that I wrote once, but basically I believe our current economic model no longer makes sense when talking about digital goods. We baked the manufacturing-cost of a product into each individual item, when it cost money to make an individual item. With digital goods, it only costs money to make the first item, every duplicate is essentially free. I think Kickstarter and the like are great examples of this, because they more accurately reflect how the costs actually influence the creation of the product.
>When they are available it is usually 5$ for a "rental". Is that a joke? I used to pay that at Blockbuster, and they had a physical location and employees! They've priced their digital content in such a way that I will only pay to see the movies that I really want to see. If it was cheaper, I'd be a constant consumer.
I don't see anything wrong with that pricing. Physical store and employees = time consuming and inconvenient. You should expect to pay a little more not evening having to leave your home to rent a movie, nor having to leave it again to return the movie.
That said, good point about a lower price driving more sales. I assume the current price is optimized for total revenue, but who knows. And yes, the more expensive the rental, the more some will pirate it instead.
> I would love to catch movies as they are released but I have to wait until they're available on the streaming service.
To be fair, the wait time used to be at least months, and then you still had to drive somewhere and hope they had something worth watching among their paltry selection. Things have gotten much better (yay progress!), but it has mostly been on the technology side. I also don't balk at the price so much, mostly because I am willing to go with SD (I don't judge the quality of movies by their resolution), and figure in inflation. Also, I am picky about what I watch, but that wouldn't change if the price came down . . .
I like movies too, but I haven't been to a theater in years. I mostly have my own adventures now instead of living vicariously through others', but it's more than that. I feel that Hollywood has lost it's way, and it's partly due to pandering. One of my all time favorite articles is about the decline of movie quality:
That was written in 2011. Now the article here talks about inefficiency, but I feel that if you aren't making good product, it doesn't matter how efficient you are.
that logic doesn't make sense to me for digital goods
It makes some sense. There is (effectively) no first sale doctrine for digital goods. One organization gets to set the price for every single consumer. There may be middlemen, but the licencing deal will (at least implicitly) control the lowest price the middleman can offer without turning the "rental" into a loss leader. The copyright holder can sacrifice possible sales/"rentals" today, to maintain the market's perception of what such a product is worth tomorrow.
A lot of people expected all digital stores to take Steam's approach to pricing. The steam store is known for the price of games dropping rapidly after release, and multiple deep-discount sales throughout the year. Even outside of sales, steam's "new" digital copies of aging games can be (and are often are) priced lower than physical shops selling used copies.
But things generally trend towards the PSN and Xbox route. Their stores are notable for keeping prices high. Even on aging titles, their prices can be higher than physical retailers selling (new, not used) copies. Retailers need both the shelf space and to cut their losses from over-ordering at release.
I'm sure they both have spreadsheets and models that explain how they'll make more money in the long run.
But, for either model to work AT ALL it was important to find a way around the first sale doctrine for digital goods. If resale existed on any of these platforms, prices would be forced to respond to market forces.
I'm kind of the opposite. I'm not a big fan of movies, and I only see a few a year. My problem is that I'm pretty picky, and it's tough to tell if a movie is worth seeing. When in doubt, I'll pass it up and do something else instead.
When I'm looking at a movie I think I want to see and it's a $5 rental, my thought is always, what if it sucks? And then I usually decide not to risk it.
What I don't get is why they don't offer the first 30-60 minutes of the movie for free. I'll be able to tell fairly confidently by then if it's any good, and would happily pay to see the rest once I'm hooked. Instead, I have to take a guess from badly edited and misleading trailers, and reviews from people whose tastes may vary enormously from my own.
Part of the problem is their model is based on people really wanting to see a movie. Then they fail to produce movies people really want to see. Star Wars 8 may be profitable, but Disney failed to make Star Wars 7 awesome and people are just not jumping through hoops for the next one.
There are plenty of stories worth telling, but Hollywood tends to lag between what people want to watch and what they started making 5 years ago. Making great movies is hard, and playing it safe never works for long.
I get your point that blockbuster had rent, tax, utilities, and employees' salaries to pay. but its worth pointing out that blockbuster also went bankrupt. not sure if that supports your point or detracts from it.
> When they are available it is usually 5$ for a "rental". Is that a joke? I used to pay that at Blockbuster, and they had a physical location and employees!
We're never going to get anywhere until people understand that cost+ pricing is not a thing.
You bring up a big issue I have with the streaming model. I used to be an avid movie watcher. A year before I moved to a different country, I watched 60 movies in the theaters, that is about 5 a month. This did not even include the hundreds of movies I watched at home.
Now I don't have the time to go to the theater even if I want to. All the streaming services get the movie 3-4 months after the release. At which point I usually would have lost interest. To add insult to the injury, rental is very expensive for the flexibility it provides (24-48 hours once you start watching) and the different price for SD vs HD (who watches SD anymore?).
I would gladly pay $20 (which is more than what the theaters typically charge) per movie if the studios let me stream the same day it released in the theater.
Off-topic, but my dad went through this and his quality of life has changed dramatically. Yes, I am a little paranoid now.
Sleepiness is when you fall asleep at a time or place that is not what you intended. You may fall asleep at a movie theater or while sitting with someone at lunch
Tell your GF to read this page [1] and check her symptoms.
I'm not sure what your economic situation is, but I feel that $5 is pretty reasonable - at least in the US.
Remember going to Blockbuster and then discovering the movie you wanted wasn't in stock? Along with the 2nd and 3rd options in your mind? I don't know about you, but I went home empty handed several times. (Yes, I had already gone through the greatly limited back catalog of interesting movies at all my local movie stores).
> When they are available it is usually 5$ for a "rental". Is that a joke? I used to pay that at Blockbuster, and they had a physical location and employees!
Blockbuster did not have to operate a huge IT infrastructure to bring you a movie.
Also, with Blockbuster you had to make a trek to the store, hope the movie was there behind that huge wall of movie boxes, wait in line to check it out, take it home, rewind it (in VHS days), and then make a trip to return it. With streaming or cable video on demand, you push a button and get better picture quality than DVD or VHS too. Even the device is cheaper: I can get a Roku or similar for less than $100, while VHS and DVD players were more expensive than that for a long time.
So in absolutely every respect it's a better product than Blockbuster, yet on an inflation-adjusted basis it is cheaper.
But if you are really looking for cheap content with potential for being a constant consumer, Netflix still ships DVDs, and cable operators are always offering free on demand movies.
>I used to pay that at Blockbuster, and they had a physical location and employees!
If due to piracy, newer entertainment options, etc., the number of people who digitally rent a movie is smaller, and the cost to make a movie is the same (or higher), then it doesn't matter whether blockbuster had employees, the costs could be similar to getting the digital version.
In other words, the differences in operating costs between digital Netflix and store-based Blockbuster might not be the major factor of the actual cost (and thus the price to rent).
Your post reads as if you chose digital streaming as an alternative to theaters. As such, streaming is ridiculously cheap - especially if you have multiple people watching.
I have a "good-enough" home theater. I don't want to watch movies in the theater anymore, because the experience sucks. I don't mind waiting for the movie to be out of theaters, but once it is, I really want it to be available for purchase. I would pay $20 for the blockbuster movies on iTunes, since that's less than the cost of 2 tickets. But they usually make me wait for months, usually until the end of the year, so I pirate it, guilt-free.
Until they make the proper decisions and make them available quicker, I will continue to pirate movies until they make them available when I want to watch them.
Exactly. Prices for digital content is insane. 5$ for American might be pocket money, but in some developing country that's still considerable amount of money and despite that, distributors charge the same. A good example is Netflix - in Eastern Europe it cost the same as in USA, but you can only watch a fraction of available content due to stupid regional restrictions. The problem is that entertainment industry is stuck in the golden age of 1960-1990 and refuses moved on.
> You'll enable a lot more people to see a lot more movies.
In addition to ttcpj's comment, it may be worth observing that this elasticity is only true up to a point. People only have so much time and, at some point, even if you give films away, people have some upper limit to how many they'll watch.
In fact, I'd argue that--among people willing to pay any non-zero price--I'm not sure renting movies in the $2-$5 range is a significant impediment to most people watching as many as they want to.
> An algorithm generally provided better suggestions than an actual in-store clerk.
Could use another pass or two of editing. And the whole thing smells like an anti-union hit piece.
Funny thing, I was just in a shared ride with a production person from Hollywood. They might agree on the face of it, "Hollywood as we know it is over", because you and me baby, we KNOW Hollywood. But that Netflix and Amazon have fueled an explosion of new content that is outside of normal channels and normal timelines. Production houses all over the country have more work than they know what to do with. If the title was, "Hollywood as we know it is transforming" it wouldn't sound so dramatic.
The article reads more like an anti-union piece than anything else. Yet, Hollywood has been making TV shows in Vancouver for the last 20 years to avoid this union overhead, so it's not really news to anyone paying attention.
Lord of the Rings was famously filmed in New Zealand and brought accents to our movies. Now you'd be hard pressed to watch a recent film without a couple accents.
Post-production is pretty much all that's left in Los Angeles.
Edit: Sorry, in my quick commenting, I meant to imply that accents are more a symbol that Hollywood films its big blockbusters outside the US now. In re-thinking it, it was a bad form.
The 'raindrop story' is meant to emphasize the union aspect, but the author apparently knows nothing about continuity in filming and editing. If the actor is supposed to have drops of rain on their shoulder, thats a part of wardrobe, and seeing a wiped off shoulder before it rained (because editing) is the reason they are so fastidious. For example, a filmed discussion over drinks where the actors glasses gradually fill up rather than empty.
The writer has little sense of history and doesn't understand what "Hollywood" as a business, is. Hollywood is content creation. When Netflix creates their own content, they are becoming part of that business. The theater business is a different thing and the author neglects to mention that long ago the studios also owned theaters, so integration of that kind is not new. The author thinks that the fact that the price paid for studios recently means something. The history going back thirty years or more is of companies paying too much for studios because of the glamour of the business and later selling when they realize they have no idea how this crazy business works.
It's the same people making the content, it's just different people paying for it. Netflix and Amazon are just wave number #928288919 of funding sources for Hollywood.
Which really isn't a bad thing. If we can kill off the big budget movie that is all terrible writing and only effects (Ben-Hur, $100 million budget, $26 million gross) and replace it with smaller budget movies with great scripts and acting (Hidden Figures, $25 million budget, $104 million gross), I'm completely fine with that.
Add in movie theaters like Metrograph in Manhattan, where I can buy an assigned seat for, say, a Kurosawa double feature, then I think we're moving in a good direction.
And it’s only a matter of time—perhaps a couple of years—before movies will be streamed on social-media sites. For Facebook, it’s the natural evolution. The company, which has a staggering 1.8 billion monthly active users, literally a quarter of the planet, is eventually going to run out of new people it can add to the service. Perhaps the best way to continue to entice Wall Street investors to buoy the stock—Facebook is currently the world’s seventh-largest company by market valuation—will be to keep eyeballs glued to the platform for longer periods of time. What better way to do that than a two-hour film?
This might begin with Facebook’s V.R. experience. You slip on a pair of Oculus Rift glasses and sit in a virtual movie theater with your friends, who are gathered from all around the world. Facebook could even plop an advertisement next to the film, rather than make users pay for it. When I asked an executive at the company why it has not happened yet, I was told, “Eventually it will.”
Really interesting point - would expect to see Facebook/Netflix converge on this idea, perhaps even enter some type of M&A action. If it were legal, perhaps Alphabet would be wise to move first and bolster YouTube with Netflix content to create a quasi monopoly on video content - both user created and studio produced. The other giant player to consider would be Amazon with Twitch and their original series as well.
Seems like a bit of a fight to the bottom, but I'm not sure what the margins/financials look like for these businesses.
* The first merely inconveniences people who already work in a given industry, by forcing them to learn new tools or workflows.
* The second unseats incumbents and fundamentally shifts power dynamics.
"Hollywood", "Film" et al have by and large not been disrupted yet, in the second sense. Digital change came late to film & tv. We are just now on the tail end of digital transformations that will enable the second wave of disruption.
The first is people incorrectly using the dictionary definition of the word without understanding Organisational Strategy. The second is the "canonical" definition of the term as defined extensively by Christensen.
The state of the film industry and streaming services fits into Christensen's parameters of "disruptive innovation" but it's a long way off given that something like 90% of houses pay for network TV services.
It occurred to me that the cinema as we knew it would be soon over as soon as I saw the first episode of Lost. Technology is definitely driving the price of content production but also content consumption to the bottom and there is no way escaping it, except maybe what Netflix is currently doing - original content - which they are getting better and bette at.
It is kind of a medium between hollywood productions and youtube - fun, engaging and most importantly agile. According to Netflix reports they spent a lot of money last year but the amount of original content produced in a single year is astonishing. That being said, younger generation prefer watching youtube which is 95% free - and I can see the appeal.
I doubt that we will stop watching movies anytime soon but I am more than certain that the format will change to make it bite-size, more engaging and instantly available for a small fee that makes it actually rather annoying to use torrents to consume pirated content.
Netflix is right there but what I find even more interesting is what Amazon is doing because of the way they package everything up into a single service. Let's be honest, the most annoying thing with subscription services, regardless how less you are charged, is the renewal. I know this first hand because I run my own SaaS. Amazon packages everything into their prime subscription which is annual and for a small fee not only you get to receive expedited delivery on many of the items but also original content and music and that is quite a killer feature that is hard to compete with. Combine this with the fact that almost every modern TV you can buy since 2016 is preloaded with Netflix and Amazon Video - you start to get the bigger pictures.
I am sure others such as Google and Apple will follow but they might be too late in the game.
The three act structure of most "film" is also killing it. Television, cable, streaming and Youtube have introduced much richer versions of content formats... a 100 minute action movie, or historical drama, will follow so many familiar beats nowadays that there's almost no way to make it compelling.
Article mentioned the CGI characters in Rogue One, but those ruined the movie for me, among other reasons. For one I think I've seen better graphics in video games and while I concede it must have been the contrast between real and fake, what really pissed me off is the realization that either they lacked the imagination to come up with a credible alternative story or that this was some sort of sinister "fan service".
The other thing that pissed me off is that in Rogue One, like in other recent movies, nobody is kissing anymore, but people dying of violent deaths is totally OK.
The primary reason for why Hollywood is having problems is because they make really shitty movies, full of CGI but with no story. I can even understand the violent deaths, after all, given the lack of story, you can't relate to those characters, so they might as well die spectacularly, before the audience dies of boredom.
Oh yes, I'm not from the US, so not sure what audience they are targeting, but it ain't me. I like some kissing to go with my action.
Unions and filesharing are not killing hollywood. (Did the mpaa write this?) The fact that 70% of revenue comes from overseas is to be expected. 70+% of people live there.
Unionized, wage earning, labour costs are not high. Look any large production. Compare the headliner (stars, directors etc) takehome to the union workers. The rise in production costs has far more to do with on-camera talent than cameramen.
"Hollywood" is dieing, but only if you are one of the old guard, the handful of old production studios that make up the mpaa. Netflix, youtube and amazon show us that there is plenty of money out there should you produce something people actually want to watch, delivered in a way people actually want.
Ditch the commercials. Stand up to your a-list talent during negotiations. Actually pay the writers (see the Goodfella fiasco). Cut the focus groups. And make something worth my time to watch.
> “We’re different,” one producer recently told me. “No one can do what we do.”
Any industry whose leaders make a claim similar to this is probably one you can safely bet on a severe disruption to come, if one is not already in progress.
Hollywood, as we know it is dead for 10+ years. The mass of super hero movies is appalling.
Where are the action movies and funny comedies, that were so great in the late 1980s, 1990s and earlier 2000s.
Last year's San Andreas was pretty good, but so many other movies are just boring, unfunny, too dark, too shaky camera, too much CGI, etc. That TV series got too much attention by Hollywood studies hurts movies a lot. The only TV series I saw last year was Silicon Valley, I don't know were people have the time to watch that many series - I would trade TV series for great movies all day.
Forget the action movies and funny comedies, where are the sci-fi movies??? And I don't mean some stupid movie about a guy living in what appears to be the modern world sans display screens and talking to his earphone, I mean movies with spaceships (and especially spaceships with elaborate corridors). The 70s and 80s were chock full of these movies. And no shaky-cam back then either. So far, all we've had is Star Wars--blah (yet again, Hollywood milking an old franshise), and Prometheus in 2012 (again, milking an old franchise).
Supposedly we're going to get a few spaceship sci-fi movies this year, including "Passengers" which looks promising. But we've gone quite a long time now without much in the way of sci-fi.
My parents have traded "regular TV" for netflix series. It's surprisingly easy to consume it quickly once you remove ads and other interruptions, as well as setting the schedule to fit your own.
No more wasting 15 minutes for it to start, no more waiting between episodes, no more waiting during the episode ...
> I don't know were people have the time to watch that many series - I would trade TV series for great movies all day.
This is where streaming without commercials wins big. In the space of a typical two hour movie you can watch:
* 2 episodes of an HBO/Netflix type show where "hour long episodes" are actually an hour
* 3 episodes of a TV show where "hour long episodes" are 40 minutes
* 6 episodes of a sitcom type TV show where episodes are 20 minutes
With series, it's much easier to try it out and decide if you like it. Then, when you find something you do like, there's more content for the viewer to enjoy plus the possibility for storytelling and character depth that movies simply can't match in 2-3 hours.
> I don't know were people have the time to watch that many series
Netflix exists solely because people want to binge watch their favourite series.
They're betting that once people have finished binge watching all of Friends in a weekend and are wondering what to watch next, they'll pick a Netflix Original™ from the list of suggested shows.
I don't have Netflix and rarely watch series (except those like Silicon Valley) but I know a lot of friends who do have Netflix and will happily spend an entire weekend watching a series from start to finish.
My personal belief is what will kill (and is killing) Hollywood is what (effectively) killed TV: Scale, and blandness. Hollywood had a hard enough time being interesting when it had to appeal to a broad swath of Americans. Now they want to make world-friendly films, which has already sparked a race to the bottom in terms of common denominator. This will continue as more and more markets are able to access maintstream films, and the end result will be nothing but the least-offensive, most-broadly-kinda-appealing pablum.
This is (to me) the most revealing quote of the article:
Some 70 percent of box office comes from abroad, which means that studios must traffic in the sort of blow-’em-up action films and comic-book thrillers that translate easily enough to Mandarin
[+] [-] Animats|9 years ago|reply
In the late 1990s, when I was working on physics engines for animation, I was talking to a major Hollywood director. He'd done some of the first films that had both live and photorealistic CGI characters. He wanted to get the cost down, so he could make $20 million movies. At $20 million, he could direct; at $100 million, he was running a huge operation that had to have everything pre-planned in great detail.
His model was the early CGI cartoon, "Reboot". Reboot was a weekly half hour cartoon made by a staff of about 30. He wanted to get to that level of productivity at theater quality - make a 2 hour film in a month with 30 people.
That didn't happen. Not even close.
It's been tried. "Sky Captain and the World of Tomorrow" started as a low-budget picture rendered on Macs. In that film, if nobody touches it, it's CG. Ended up costing $70 million. Worldwide box office $50 million. Fail. "Iron Sky" was made for €7.5 million. Worldwide box office $11.5 million. Fail.
There were successful low budget directors in the past, Roger Corman being the prime example. (His autobiography is titled "How I made a hundred movies in Hollywood and never lost a dime".) It's harder to do that today. Viewers today expect incredible production value. Most TV shows have more production value today than 70s movies did. Hollywood has so many people on set because they bring a team together on short notice to do a job, then disband the team. They need many competent people with different skills to make that work. If you cut corners, it looks like Youtube crap.
On big movies, we've mostly replaced set painters and carpenters with people who sit at workstations and do the same job with CG models. "Big" is now cheap, but "detailed" remains expensive. Procedural visual content generation can generate good landscapes and vegetation now (check out SpeedTree), but as yet, nobody has been able to procedurally generate one convincing block of a city street seen at ground level. Making GTA V cost $265 million. Not seeing an incoming reduction in production cost.
Netflix has no huge advantage. HBO is in the same position - they make content to sell to their own customers, and know exactly what sold. Data collection is retrospective. Trying to figure out what movies will be box office failures in advance remains hard. That's why Hollywood generates so many sequels - predictability.
[+] [-] TACIXAT|9 years ago|reply
Now, I am subscribed to two streaming services. I don't pirate. I refuse to watch anything with ads, happy to pay, and somewhat ironically, the only ads I watch to completion are trailers that I haven't seen. I would love to catch movies as they are released but I have to wait until they're available on the streaming service. When they are available it is usually 5$ for a "rental". Is that a joke? I used to pay that at Blockbuster, and they had a physical location and employees! They've priced their digital content in such a way that I will only pay to see the movies that I really want to see. If it was cheaper, I'd be a constant consumer.
It seems that is how most things in society get priced. Not for ultimate consumption, but to maximize the profit curve. I get that is how capitalism works, but that logic doesn't make sense to me for digital goods. They are practically zero cost to distribute once they are manufactured and your competition is people pirating them. If you're worried about audience size, lower the cost. You'll enable a lot more people to see a lot more movies.
[+] [-] ttcbj|9 years ago|reply
When I started a small software company, I originally had a similar understanding. I subconsciously thought that the software should be priced to pay for its development cost, plus some profit. I was not very successful, until I realized that the product should be priced as a percentage of the value it delivered to the customer. Customers don't want you to do a lot of work, they just want their problem solved for a price that is reasonable relative to the benefit of the solution.
This idea reverses several of your conclusions:
1. The product should be priced based on how much value it delivers, and only those companies that can deliver the product for significantly less than that price will stay in business. Once a company finds a need that people will pay for, it generally makes sense to drive the cost of production down while maintaining the same benefit, thus maximizing profit.
2. The more value a company creates with the resources it uses (the greater its margin), the more left-over resources it will have to invest in producing still more benefits, or to return profits to its original investors.
So, going back to the cost of digital content, I am happy to pay for it, as long as I end up feeling the movie was worth watching for the price. And if they can produce great content without many resources (or with lower cost of delivery), all the better. My problem, right now, is that there is so much great content I cannot ever hope to watch it. But that is not a problem that really bothers me, I am happy to keep paying to have a long list of shows I'd like to watch, if I could just find the time.
[+] [-] Pigo|9 years ago|reply
Then the price for playing by the rules kept going up and up. Meanwhile there was less and less, and less, I cared to see. I can't even think of the last movie I actually itched to see. Maybe I've gotten old and don't have time to search for diamonds in the rough, but I don't see any more movies like Oh Brother Where Art Thou or Fight Club or Snatch that I can't get tired of.
They can't cry poverty when every time Adam Sandler squeezes one out it makes $75 million. I know creative accounting makes it seem like they break even, but I call BS on that. If companies besides Pixar would actually pay for writing that moves people, their wallets would come with them.
[+] [-] ctdonath|9 years ago|reply
Those $5 streaming "rentals" are for those actually willing to pay $5 to watch that movie right now. It's worth it to them. Eventually the $5 rental crowd is satiated, and the "not more than $4" crowd gets a chance as the price is lowered to match what others are willing to pay for it. Eventually that price tapers off to "$8/month buffet" and ends up on my Netflix queue.
They DO lower the cost - as those willing to pay higher prices do so, are satiated, and the audience temporal/economic demographics shift. It's not just about price per rental, it's price plus time per rental. Some movies I'll pay $15 to watch on day of release; some I'll happily "spend" time waiting for so I only spend $1 to watch it.
And yes, I'd happily get "that, here, now" for $5 rather than pile 4 people into the car, drive to Blockbuster, ask if they have it, find out the 2 copies are out, and wander the aisles for an hour reviewing what they do have and picking something ("Masters of the Universe"!) just to not completely waste the whole exercise (and decide that just leaving would have been better than watching "Masters of the Universe" only because it was the only thing vaguely appealing at the moment). Even with Redbox I at least have the option of looking for something new in particular and reserving it, from whichever of several nearby locations, for $2 from the convenience of my phone. Come John Wick 2 I'll have already pre-ordered it and be watching it, without the crowd, the moment it's available (and happy to pay the $19 to do so, having seen John Wick twice thanks to the $1 streaming specials).
[+] [-] CaptSpify|9 years ago|reply
This echoes a drunk-blog that I wrote once, but basically I believe our current economic model no longer makes sense when talking about digital goods. We baked the manufacturing-cost of a product into each individual item, when it cost money to make an individual item. With digital goods, it only costs money to make the first item, every duplicate is essentially free. I think Kickstarter and the like are great examples of this, because they more accurately reflect how the costs actually influence the creation of the product.
[+] [-] SkyMarshal|9 years ago|reply
I don't see anything wrong with that pricing. Physical store and employees = time consuming and inconvenient. You should expect to pay a little more not evening having to leave your home to rent a movie, nor having to leave it again to return the movie.
That said, good point about a lower price driving more sales. I assume the current price is optimized for total revenue, but who knows. And yes, the more expensive the rental, the more some will pirate it instead.
[+] [-] npsimons|9 years ago|reply
To be fair, the wait time used to be at least months, and then you still had to drive somewhere and hope they had something worth watching among their paltry selection. Things have gotten much better (yay progress!), but it has mostly been on the technology side. I also don't balk at the price so much, mostly because I am willing to go with SD (I don't judge the quality of movies by their resolution), and figure in inflation. Also, I am picky about what I watch, but that wouldn't change if the price came down . . .
I like movies too, but I haven't been to a theater in years. I mostly have my own adventures now instead of living vicariously through others', but it's more than that. I feel that Hollywood has lost it's way, and it's partly due to pandering. One of my all time favorite articles is about the decline of movie quality:
http://www.gq.com/story/the-day-the-movies-died-mark-harris
That was written in 2011. Now the article here talks about inefficiency, but I feel that if you aren't making good product, it doesn't matter how efficient you are.
[+] [-] forgottenpass|9 years ago|reply
It makes some sense. There is (effectively) no first sale doctrine for digital goods. One organization gets to set the price for every single consumer. There may be middlemen, but the licencing deal will (at least implicitly) control the lowest price the middleman can offer without turning the "rental" into a loss leader. The copyright holder can sacrifice possible sales/"rentals" today, to maintain the market's perception of what such a product is worth tomorrow.
A lot of people expected all digital stores to take Steam's approach to pricing. The steam store is known for the price of games dropping rapidly after release, and multiple deep-discount sales throughout the year. Even outside of sales, steam's "new" digital copies of aging games can be (and are often are) priced lower than physical shops selling used copies.
But things generally trend towards the PSN and Xbox route. Their stores are notable for keeping prices high. Even on aging titles, their prices can be higher than physical retailers selling (new, not used) copies. Retailers need both the shelf space and to cut their losses from over-ordering at release.
I'm sure they both have spreadsheets and models that explain how they'll make more money in the long run.
But, for either model to work AT ALL it was important to find a way around the first sale doctrine for digital goods. If resale existed on any of these platforms, prices would be forced to respond to market forces.
[+] [-] mikeash|9 years ago|reply
When I'm looking at a movie I think I want to see and it's a $5 rental, my thought is always, what if it sucks? And then I usually decide not to risk it.
What I don't get is why they don't offer the first 30-60 minutes of the movie for free. I'll be able to tell fairly confidently by then if it's any good, and would happily pay to see the rest once I'm hooked. Instead, I have to take a guess from badly edited and misleading trailers, and reviews from people whose tastes may vary enormously from my own.
[+] [-] Retric|9 years ago|reply
There are plenty of stories worth telling, but Hollywood tends to lag between what people want to watch and what they started making 5 years ago. Making great movies is hard, and playing it safe never works for long.
[+] [-] minutillo|9 years ago|reply
[+] [-] digler999|9 years ago|reply
[+] [-] becarefulyo|9 years ago|reply
We're never going to get anywhere until people understand that cost+ pricing is not a thing.
[+] [-] vaishaksuresh|9 years ago|reply
[+] [-] fasteo|9 years ago|reply
Sleepiness is when you fall asleep at a time or place that is not what you intended. You may fall asleep at a movie theater or while sitting with someone at lunch
Tell your GF to read this page [1] and check her symptoms.
[1] http://sleepcenter.ucla.edu/sleepiness
[+] [-] chadgeidel|9 years ago|reply
Remember going to Blockbuster and then discovering the movie you wanted wasn't in stock? Along with the 2nd and 3rd options in your mind? I don't know about you, but I went home empty handed several times. (Yes, I had already gone through the greatly limited back catalog of interesting movies at all my local movie stores).
[+] [-] rayiner|9 years ago|reply
Of course that's how things get priced?
[+] [-] massysett|9 years ago|reply
Blockbuster did not have to operate a huge IT infrastructure to bring you a movie.
Also, with Blockbuster you had to make a trek to the store, hope the movie was there behind that huge wall of movie boxes, wait in line to check it out, take it home, rewind it (in VHS days), and then make a trip to return it. With streaming or cable video on demand, you push a button and get better picture quality than DVD or VHS too. Even the device is cheaper: I can get a Roku or similar for less than $100, while VHS and DVD players were more expensive than that for a long time.
So in absolutely every respect it's a better product than Blockbuster, yet on an inflation-adjusted basis it is cheaper.
But if you are really looking for cheap content with potential for being a constant consumer, Netflix still ships DVDs, and cable operators are always offering free on demand movies.
[+] [-] coldtea|9 years ago|reply
If due to piracy, newer entertainment options, etc., the number of people who digitally rent a movie is smaller, and the cost to make a movie is the same (or higher), then it doesn't matter whether blockbuster had employees, the costs could be similar to getting the digital version.
In other words, the differences in operating costs between digital Netflix and store-based Blockbuster might not be the major factor of the actual cost (and thus the price to rent).
[+] [-] BeetleB|9 years ago|reply
[+] [-] pfarnsworth|9 years ago|reply
Until they make the proper decisions and make them available quicker, I will continue to pirate movies until they make them available when I want to watch them.
[+] [-] kbart|9 years ago|reply
[+] [-] ghaff|9 years ago|reply
In addition to ttcpj's comment, it may be worth observing that this elasticity is only true up to a point. People only have so much time and, at some point, even if you give films away, people have some upper limit to how many they'll watch.
In fact, I'd argue that--among people willing to pay any non-zero price--I'm not sure renting movies in the $2-$5 range is a significant impediment to most people watching as many as they want to.
[+] [-] nandhp|9 years ago|reply
Pretty much. Redbox rents new release DVDs for $1.50/day; if you are in the US, you probably have a few boxes near you.
[+] [-] JohnJamesRambo|9 years ago|reply
[+] [-] sitkack|9 years ago|reply
Could use another pass or two of editing. And the whole thing smells like an anti-union hit piece.
Funny thing, I was just in a shared ride with a production person from Hollywood. They might agree on the face of it, "Hollywood as we know it is over", because you and me baby, we KNOW Hollywood. But that Netflix and Amazon have fueled an explosion of new content that is outside of normal channels and normal timelines. Production houses all over the country have more work than they know what to do with. If the title was, "Hollywood as we know it is transforming" it wouldn't sound so dramatic.
[+] [-] jarjoura|9 years ago|reply
Lord of the Rings was famously filmed in New Zealand and brought accents to our movies. Now you'd be hard pressed to watch a recent film without a couple accents.
Post-production is pretty much all that's left in Los Angeles.
Edit: Sorry, in my quick commenting, I meant to imply that accents are more a symbol that Hollywood films its big blockbusters outside the US now. In re-thinking it, it was a bad form.
[+] [-] banku_brougham|9 years ago|reply
continuity fails: https://m.youtube.com/watch?v=WibfRyQK0kY
[+] [-] gmarx|9 years ago|reply
[+] [-] Gargoyle|9 years ago|reply
[+] [-] mtalantikite|9 years ago|reply
Add in movie theaters like Metrograph in Manhattan, where I can buy an assigned seat for, say, a Kurosawa double feature, then I think we're moving in a good direction.
[+] [-] roymurdock|9 years ago|reply
This might begin with Facebook’s V.R. experience. You slip on a pair of Oculus Rift glasses and sit in a virtual movie theater with your friends, who are gathered from all around the world. Facebook could even plop an advertisement next to the film, rather than make users pay for it. When I asked an executive at the company why it has not happened yet, I was told, “Eventually it will.”
Really interesting point - would expect to see Facebook/Netflix converge on this idea, perhaps even enter some type of M&A action. If it were legal, perhaps Alphabet would be wise to move first and bolster YouTube with Netflix content to create a quasi monopoly on video content - both user created and studio produced. The other giant player to consider would be Amazon with Twitch and their original series as well.
Seems like a bit of a fight to the bottom, but I'm not sure what the margins/financials look like for these businesses.
[+] [-] iampliny|9 years ago|reply
* The first merely inconveniences people who already work in a given industry, by forcing them to learn new tools or workflows.
* The second unseats incumbents and fundamentally shifts power dynamics.
"Hollywood", "Film" et al have by and large not been disrupted yet, in the second sense. Digital change came late to film & tv. We are just now on the tail end of digital transformations that will enable the second wave of disruption.
I've written about this extensively, it's kind of my bag: http://endcrawl.com/blog/two-digital-revolutions-disruption/
[+] [-] anjc|9 years ago|reply
The state of the film industry and streaming services fits into Christensen's parameters of "disruptive innovation" but it's a long way off given that something like 90% of houses pay for network TV services.
[+] [-] _pdp_|9 years ago|reply
It is kind of a medium between hollywood productions and youtube - fun, engaging and most importantly agile. According to Netflix reports they spent a lot of money last year but the amount of original content produced in a single year is astonishing. That being said, younger generation prefer watching youtube which is 95% free - and I can see the appeal.
I doubt that we will stop watching movies anytime soon but I am more than certain that the format will change to make it bite-size, more engaging and instantly available for a small fee that makes it actually rather annoying to use torrents to consume pirated content.
Netflix is right there but what I find even more interesting is what Amazon is doing because of the way they package everything up into a single service. Let's be honest, the most annoying thing with subscription services, regardless how less you are charged, is the renewal. I know this first hand because I run my own SaaS. Amazon packages everything into their prime subscription which is annual and for a small fee not only you get to receive expedited delivery on many of the items but also original content and music and that is quite a killer feature that is hard to compete with. Combine this with the fact that almost every modern TV you can buy since 2016 is preloaded with Netflix and Amazon Video - you start to get the bigger pictures.
I am sure others such as Google and Apple will follow but they might be too late in the game.
[+] [-] jvagner|9 years ago|reply
[+] [-] bad_user|9 years ago|reply
The other thing that pissed me off is that in Rogue One, like in other recent movies, nobody is kissing anymore, but people dying of violent deaths is totally OK.
The primary reason for why Hollywood is having problems is because they make really shitty movies, full of CGI but with no story. I can even understand the violent deaths, after all, given the lack of story, you can't relate to those characters, so they might as well die spectacularly, before the audience dies of boredom.
Oh yes, I'm not from the US, so not sure what audience they are targeting, but it ain't me. I like some kissing to go with my action.
[+] [-] dbg31415|9 years ago|reply
* Kim Dotcom on Twitter: "How to stop piracy: 1 Create great stuff 2 Make it easy to buy 3 Same day worldwide release 4 Fair price 5 Works on any device" || https://twitter.com/KimDotcom/status/288199968932630528
[+] [-] sandworm101|9 years ago|reply
Unionized, wage earning, labour costs are not high. Look any large production. Compare the headliner (stars, directors etc) takehome to the union workers. The rise in production costs has far more to do with on-camera talent than cameramen.
"Hollywood" is dieing, but only if you are one of the old guard, the handful of old production studios that make up the mpaa. Netflix, youtube and amazon show us that there is plenty of money out there should you produce something people actually want to watch, delivered in a way people actually want.
Ditch the commercials. Stand up to your a-list talent during negotiations. Actually pay the writers (see the Goodfella fiasco). Cut the focus groups. And make something worth my time to watch.
[+] [-] espeed|9 years ago|reply
https://twitter.com/paulg/status/160491053080776706
https://news.ycombinator.com/item?id=3491542
Mission complete?
[+] [-] the_watcher|9 years ago|reply
Any industry whose leaders make a claim similar to this is probably one you can safely bet on a severe disruption to come, if one is not already in progress.
[+] [-] frik|9 years ago|reply
Where are the action movies and funny comedies, that were so great in the late 1980s, 1990s and earlier 2000s.
Last year's San Andreas was pretty good, but so many other movies are just boring, unfunny, too dark, too shaky camera, too much CGI, etc. That TV series got too much attention by Hollywood studies hurts movies a lot. The only TV series I saw last year was Silicon Valley, I don't know were people have the time to watch that many series - I would trade TV series for great movies all day.
[+] [-] Arizhel|9 years ago|reply
Supposedly we're going to get a few spaceship sci-fi movies this year, including "Passengers" which looks promising. But we've gone quite a long time now without much in the way of sci-fi.
[+] [-] nolok|9 years ago|reply
No more wasting 15 minutes for it to start, no more waiting between episodes, no more waiting during the episode ...
[+] [-] Merad|9 years ago|reply
This is where streaming without commercials wins big. In the space of a typical two hour movie you can watch:
* 2 episodes of an HBO/Netflix type show where "hour long episodes" are actually an hour
* 3 episodes of a TV show where "hour long episodes" are 40 minutes
* 6 episodes of a sitcom type TV show where episodes are 20 minutes
With series, it's much easier to try it out and decide if you like it. Then, when you find something you do like, there's more content for the viewer to enjoy plus the possibility for storytelling and character depth that movies simply can't match in 2-3 hours.
[+] [-] kogepathic|9 years ago|reply
Netflix exists solely because people want to binge watch their favourite series.
They're betting that once people have finished binge watching all of Friends in a weekend and are wondering what to watch next, they'll pick a Netflix Original™ from the list of suggested shows.
I don't have Netflix and rarely watch series (except those like Silicon Valley) but I know a lot of friends who do have Netflix and will happily spend an entire weekend watching a series from start to finish.
[+] [-] 1_2__3|9 years ago|reply
[+] [-] robert_foss|9 years ago|reply
[+] [-] ktRolster|9 years ago|reply
Some 70 percent of box office comes from abroad, which means that studios must traffic in the sort of blow-’em-up action films and comic-book thrillers that translate easily enough to Mandarin