For context I watched the force awakens last night at iMax (premium recliner chairs which was nice!) for $43. But you can't see a movie in Australia for less than about $23 these days. We're directly funding hollywood's lifestyle.
This is basic supply and demand. Harrison Ford has a monopoly on Harrison Ford, so if you want Harrison Ford, you have to pay what Harrison Ford wants for it.
Much like making music, filming technology is already commoditized at the entry level... it's distribution costs that remain high (hard to reach a large audience without massive ad $$, known actors, and an established publisher). Netflix would seriously disrupt that, boosting "indie" film making in the same way that Spotify / youtube / myspace / etc seriously boosted non-mainstream music. We still have A-list musicians but the long tail is seeing far more success than before.
But Indie music is better in the personal preference category and usually no worse in production values. And on the other hand what we see in regular tv: we see increasing abundance of content , and most people flocking more and more to the highly rated content which usually has high production values and often some measure of high brand.
That's probably because they don't want to risk an hour of their time. On the other hand , listening to a new song ? who cares if it's bad - it's only a minute to switch to something else , and it's a social custom too.
I think some of the low to medium budget movies will make the transition to simultaneous streaming releases where it may be easier to recoup money early on. This may or may not force a similar thing to happen with big budget films, but too many lifestyles would be affected for this to happen in any short to medium term.
Pretty much what happened to authors of novels.
I know authors usually use publishers for review / editing / publication, but I'm not aware of a time where the relationship was not "publisher gets X% cut of revenue". When was it "author gets X million dollars"?
The same applies to music. Pretty much every creative industry outside film is paying the performers or creators a percentage of sales. Its just harder for that to scale to endeavors that take thousands of people like modern blockbusters.
For performers, actors in plays, members of an orchestra, backup dancers behind a pop star... most are getting paid per performance or per period of time, not royalties. Royalties are more common for people who can take a majority responsibility for the end product, e.g. a solo artist or an author.
(Royalties aren't rare either, but a lump sum agreement isn't eyebrow raising in the least)
Hard to imagine how that would be possible...
Young Harrison Ford in the late 1970s might have been willing to trade away the use of his likeness in future Star Wars films for a relatively small consideration.
In the future, if a studio can find a relatively unknown actor who wants the work, it's possible they could do with a digitally-produced likeness, in case the original actor doesn't want the job. (Sort of an augmented version of the SNL contract)
The market decides these things.
It's difficult to argue that there isn't enough profit on a movie that has grossed over 1.5 billion dollars in three weeks to pay A-list actors A-list salaries.
A-list actors don't make that kind of money because movie studios are generous. They make it because their presence puts butts in seats.
Sure, the "Star Wars" name would be enough to put butts in seats but without Ford, Fisher and Hamil, this movie would have made less money.
If I'm not being forced to pay it, I don't care what someone else makes.
In three weeks, that is over 15 million dollars just where it's been released so far. Think about China and the rest of Asia. Think about on demand viewing and DVD/Blu-Ray.
As I said, we don't know for sure but it's a pretty safe bet that Ford, Fisher and Hamil being a part of this movie will pay for itself in increased revenue.
Right, and I think the market is unfairly inflated at the moment, and has been for a long time. Movie ticket prices have more than doubled in the last ~ 10 years. The presence of streaming new blockbuster movies is likely to disrupt the traditional cinema if it is allowed to get off the ground.
And that's basically the point I'm trying to make. If movies were to transition into the Steam model where the cost is brought down but has higher reach, the gross is going to go down, and so should the marketing and actor budgets of such films.
> If I'm not being forced to pay it, I don't care what someone else makes.
Yes, going to the cinema is optional, no one is forcing you to go. But if you want to see a movie within 3-6 months of release you have to pay the cinema ticket price. There is no other option. I don't care how much the actors make, I care how much I pay at the ticket box, which appears to be viciously increasing cycle of actor demands more -> prices go up -> more gross is made -> actor demands more. To account for this, studios are spending more and more on advertising to get people to actually go to the cinema, further driving ticket prices up.
And it's the non blockbuster movies that are going to fail. Ticket price is $x regardless of the quality of the movie. The blockbuster budgets are going to price the smaller movies out. No one is going to pay $25 to see something they might enjoy but doesn't have the kind of budget to warrant a cinema viewing. Streaming services that offer these kinds of movies at release date I think will bring the whole scam crashing down.
That's not exactly how movie economics works. The script calls for a male character, 30-40 years old, good-looking as he's the subject of romantic story. The casting operation calls a few agents and comes back with data that Tom Cruise will want $3m, Ryan Philippe will want $2m, some known actor who's currently in a TV series wants $500k, or a no-name actor showing promise will do it for $80k.
It's up to the studio heads and producers to circle down on an option they consider reasonable. They are aware that a portion of movie revenues is generated by having a brand-name actor, i.e., there will be 200,000 extra tickets sold if Tom Cruise's name is on it. Tom Cruise is also aware of this dynamics, which explains the premium.
But it's also not that simple. Actors like to pretend they're in this industry for the sake of "art", not "money", which means that if you have an interesting script and an "artistic" director with a potential of making to Sundance or Cannes, you might then get a brand-name actor for essentially free (you'll have to pay some union-mandated salary). Every big name actor has this "artistic" no-budget movie in his belt, to showcase their "range" and to signal to public that it ain't about the money, which leads to more public attention and larger check for the next franchise movie, as the actor is still "hot".
Why would they? Why would a studio decide to reduce their gross and therefore their net by going with a less profitable model?
Streaming services that offer these kinds of movies at release date I think will bring the whole scam crashing down.
No more than Honda and Toyota put an end to the "scam" of American automakers.
One party providing a service or product at a specific price and other parties choosing to purchase or not purchase it is not a scam.
I don't think the bigger ones will in the short to medium term. But if the gross is lower, then they're also paying less to actors and marketers (streaming services will "freely" market what they think will be popular titles), reducing the overall budget, and reducing the risk profile. The studios themselves may end up making more profits. In any case, that's why I mentioned the smaller budget films transitioning to such a streaming model may force the bigger ones to follow suit.
> No more than Honda and Toyota put an end to the "scam" of American automakers.
Scam was the wrong choice of word here, but do you understand the point I'm trying to make? A similar analogy that works in my favour is Steam as a distribution channel, undercutting physical disk distributors. Games became a lot cheaper, but the AAA titles still ask for and receive quite a high price comparatively.
At some point, in the distant future, it's likely that movie distribution will be radically changed. PPV and streaming from day 1 but that's highly unlikely.
For that to happen, alternate means of distribution would need to be more profitable for the studios than the status quo. If movie attendance drops enough that it will bring in more money to partner with Netflix, Hulu or some as of yet uninvented streaming service; then and only then will it happen.
We already have the straight to video model for small budget films and Mockbusters. For those, it makes sense. They are made on limited budgets because the producers know that there's never going to be a theatrical release and the target market is very narrow.
There's also the wrinkle that digital projectors have lowered the cost of releasing a film. There are no longer film prints to produce, quality control, deliver, track and pickup.
It might happen one day but no time soon.
A similar analogy that works in my favour is Steam as a distribution channel, undercutting physical disk distributors. Games became a lot cheaper, but the AAA titles still ask for and receive quite a high price comparatively.
I can't help but notice that GOG came along and started selling classic games at even lower prices than Steam and ever since, I have seen some excellent Steam sales.
I guess I like a world where a $300 million Lord of the Rings trilogy exists. It's not necessary but I like it.
Probably a bad example, because the studio's investment in Harrison Ford in SW:TFA will surely be repaid many times over, and isn't really threatened by netflix.
Variety claims 10 - 20 million http://variety.com/2015/film/news/harrison-ford-star-wars-pa...
Sydney Morning Herald had an article says that it would be $34 million if it breaks $1 billion gross earnings (which is likely). http://www.smh.com.au/entertainment/movies/star-wars-the-for...
That said, the studio will probably get at least half of each of those $5, and I've known people who think absolutely nothing of renting movies for $5 multiple times per day, literally no cognitive difference between picking some $5 movie on iTunes and choosing another one on Netflix. Multiply that, e.g. 1% * $global, and pretty soon you're talking about real money for everybody.
$10-25million is nothing to pay an actor with a main part in a movie that may make $5 billion dollars for the studio.
At the big-chain theatre that I saw Star Wars, the "standard" price for a non-3D movie is $19.50. However it's very easy to get discounted prices for any movie. I paid $12.50 for my ticket, booked it online a few minutes before I left home.
I'm quite sure that the extra dollars paid for the $43 movie ticket was going to the movie theatre, not Hollywood.
Also: > Profit margins for Hollywood aren't that great.
From what I hear, that's not true, but it's all hidden through magical "Hollywood accounting" (https://en.wikipedia.org/wiki/Hollywood_accounting)
Absolutely, but that's nothing new. We had direct-to-video or direct-to-tv movies for decades. Direct-to-streaming isn't really that disruptive. What we don't have is big budget movies bypassing theaters, because why would they? Why wouldn't they have theatre run, and then a streaming/video/TV run?
If they can keep selling in theatres then they will. But if Netflix can deliver high enough production values (coupled with higher quality home equipment) then it may put theatres out of business. Since I got a $500 projector I've hardly ever gone to the cinema, and regretted it when I did.
I think that's what it comes down to.
>Since I got a $500 projector I've hardly ever gone to the cinema, and regretted it when I did.
But that's been a trend for a long time. There is some evidence that high-quality AV equipment with digital content did impact ticket sales. But I don't know if it's going to kill it. The one thing that cinema has going for it is it's a destination when you want to get out of the house.
And we do have a good thing going. If you want to see a new release RIGHT NOW, you pay $15/person/view. If you don't, you wait a few months to rent it for $5 or wait a little longer and watch it for 'free' on Netflix or TV. That's eco101 price discrimination.
I'd be perfectly fine with additional fees or different payment tiers for more expensive content. I pay $130/mo. for a cable package that provides almost no content that I enjoy and includes a DVR that frequently craps out when recording the few shows that I do watch. I'd rather pay Netflix an extra $30/mo. (or more, depending on what they can offer) for that premium content and ditch my cable package altogether.
> Hollywood continues to wrestle with rising marketing costs, particularly overseas, which can make up 70 percent of a film's gross.
http://www.hollywoodreporter.com/news/200-million-rising-hol...
Sure cable companies make money but most money seems to be going to TV networks and in turn TV actors
Precisely the things I don't watch :P
Let's see what the price is when they are entrenched as a global monopoly with a vast catalog of culturally relevant content that you can't get anywhere else. It may very well act as Hollywood on steroids.
Crunchbase tells us that the only investment was $36m. The rest is regular debt, $1.7bn! It just shows how much banks trust their business model.
Also Netflix gets $10 a month from me. $120 for a year. Double what I spend at the cinema.
And I don't watch big budget movies all the time. I can see them getting customers to keep paying the monthly subscription for the cheaper to make content and then they have enough money left over to film a few huge movies every year. Especially if they use relatively unknown talent that won't get paid tens of millions a film.
Which means you're spending $180 on movies per year. $120 for a legacy catalogue of hundreds of movies, and $60 for six new releases. So why would they give up that extra $60?
As for your next question, maybe making their own movies does not exclude theatrical releases and getting another $60 from me.
I think their bigger concern is not having to deal with expiring streaming rights and regional distribution rights. They want their own library of quality content.
A $200 million film that grosses a billion worldwide.. Those margins aren't bad.
It did happen to me when my daughter was born, I couldn't go to cinema but still wants to see new movies.
Avatar production cost: $237,000,000 USD
Avatar global revenue : $2,787,965,087 USD
91% of Avatar's total revenue was pure profit... practically unheard of in most industries.
Sure, Avatar is a unicorn, and sure studios often produce strike-out movies... but the occasional home-run more than makes up for them.
> How do you justify spending $200 million on Force Awakens and hope to recoup that from Netflix fees?
Perhaps the $200 million production cost is unreasonable. We've all seen how many people and companies are involved in producing a single movie. The actor assistants have assistants that have assistants who have paid interns. One company will do a single character model while another goes a different character.
There's so much waste in the movie industry... it's ripe for the typical "SV" disruption (come in cheaper, and same or similar quality, and make it more easily accessible to the masses).
Imagine - you buy the base Force Awakens for $10, and then they offer you extra movie parts - $1 for one in which Chewbacca does something silly, $2 for one which features an additional 10-minutes-long scene of starships shooting at each other, etc.
I wouldn't want to watch a film with extra fluff that added nothing to the story, just for a cash-grab by the maker of the film.
Extra add-on features are always pointless: look at the Dreamcast and the add-on packs you could put into the controller. As it was entirely optional, none of the games could depend on it being there so had to cater for controllers without it, so this little LCD on your controller just ended up showing Rayman walking or dancing, and contributed nothing to the game.
The same is happening with Macbooks and iPhones, where developers cannot rely on the user having a "force touch" touchpad or iPhone 6nnnn (whatever it is), so cannot rely on that hardware feature being available; because of this, they cannot say "feature X is done by using force touch" because if you have a Macbook without that hardware, you can't use that feature. So it must get ignored to cater to everyone.
In the case of stories and films, the story must still make sense without the extra scenes. This makes the extra scenes pointless.
You obviously can't apply it to every movie, but you could appply it to quite a few. For instance, there's little point in extra content for Inception, because the movie world is defined by the start and the end of that very movie, and as you said, it has to make sense in its basic version. But consider things with already established franchises. I Disney would start publishing DLC sub-stories to the Force Awakens, I'm betting that every hardcore Star Wars fan would feel obliged to see them. The world portrayed in the movie is much bigger than the movie itself, and is has communities formed around it. To participate in the fandom, you need to be up to date with the canon. I'm pretty sure it could work with Marvel Cinematic Universe as well.
Then there are movies for which such a move would be a gamble. LotR and Hunger Games are franchises too, but I don't think they're strong enough to support DLC money-grab.
Anyway, enough suggesting ideas to them :). I absolutely hate DLCs. I just couldn't resist discussing the concept in the abstract.
I think this could totally work for something like Inception too. The film has a backstory suggests at a wider context beyond what's shown in the scenes. Most stories do. That's why fanfiction exists.
It would be interesting to see how this would/could be applied to both rentals and purchases - rent the bonus features for $0.50-2 each, purchase them for $2-5 each or something like that.
For ex: (10 million movie-goers * $10 tkt price =$100 m rev)
(100 million Netflix users * $1(considering that Force Awakens title in Netflix library is being accessed by 1/10th of total library and N'flix is paying Star Wars accordingly) =$100 m)
-- there will be 100-200 m Netflix subscribers who can access all the content anywhere in the world
-- there won't be any physical media drive in existence in which you can slot your DVD.
-- economies of scale for Netflix with dirt cheap internet will force people to consume content cheaply and easily.
-- there will be so much advancement in Televisions and Home theater systems that it would make cinema screen inferior.
Won't these reasons be good enough?
They are trying. Crouching Tiger, Hidden Dragon 2 is being released simultaneously in theaters and on Netflix. Some chains complained and are refusing to show it.
But honestly, I don't see it. Cinema is $10-15/person/visit, and Netflix is $10/mo for an entire library of content. Profit margins for Hollywood aren't that great - so how do you bridge that price gap? How do you justify spending $200 million on Force Awakens and hope to recoup that from Netflix fees? You can't.