It is 2:00 AM in Beverly Hills. The air is quiet…the odd dog barks, private security firms patrol the streets. In master bedrooms studio executives face the knowledge that their world is coming and are not sleeping well. The Fox acquisition by Disney is just an band-aid solution. The studios as a whole have woken up to the realization that they in many ways have missed the boat and are now trying to place catch-up against the reality of Amazon and Netflix. In the words of a studio executive , “ “Every single day in my company, and I know in other companies, there’s a question of: ‘Did we do something … to build a monster that will come back to kill us?’”
The answer is simple….yes.
Netflix based in The Los Gatos, Calif.,close to Silicon Valley has moved from its foundation as a video rental business to become an entertainment juggernaut generating award-winning content for both its digital streaming service. Many of Hollywood’s most talented writers and producers take their proposals to Netflix first and try to avoid the studio. A Wall Street favorite, Netflix is currently valued at nearly $45 billion, giving Netflix financial firepower to go with its impressive subscriber base of 70 million across 200 countries.
Be assured of one thing, the impetus of the Fox acquisition began with with the board of the illustrious and recently predatory (thank your Star Wars booking commitments) received a revised profit expectations for its cable channels including ESPN, This news triggered a sell-off of media stocks, erasing nearly $50 billion for the uber-Mouse in market value in two days. Something had to be done.
Hollywood long has had a more than interesting relationship with Netflix. It can easily be deemed love/hate. When Netflix began was a small time vendor that had the wacky idea of sending dvd across the world in little red envelopes. I am sure that during the progress of many cocktail parties, arrogant studio executives chuckled about this business idea…and that it would never really go anywise In 2007, Netflix added a streaming option and provided studios with even more money for the rights to their old movies and TV reruns. Studio executives probably in their wisdom chuckled even more.
Ten years later this little upstart Red Envelope touting company is eating their lunch and they do not like it one little bit. I am 100% convinced that during this season of holiday cheer Netflix executives are sipping their egg nog and smiling. When Disney pulled it’s titles from Netflix, it was obvious that something was afoot and we were about to enter into a serious period of re-structuring and adjustment. The next logical phase is for Netflix and Amazon to begin looking at acquiring studios themselves.
We are about to witness a turf war of dynamic proportions. Where the battle for the streaming dollar will be fierce and bloody. The aftermath will re-define the placement of the entertainment dollar. It will be hard fought and it will be hard won. Like all senseless conflicts there will be massive collateral damage. Right now is something is not done the movie theatre will find itself it so damage it probably not be able to keep on existing.
Moviepass is attempting to re-shape the theatre model in the mold of Netflix, Cinemark is challenging the model and AMC is blocking Moviepass. Let’s face it the model of theatrical motion exhibition in a total ball of confusion. Knowing how to react to this state of affairs will be crucial. All of these strategies are symptomatic of a economy in deep crisis.
“In the midst of chaos, there is also opportunity”
Sun Tzu, The Art Of War
The confusion and lack of direction has trickled down and has impacted theatrical exhibitors. It is indeed time to get off the Merry-ground and avoid begin annihilated by the crossfire of the battle that is about to emerge. It is time to abandon the Hollywood studio, just as producers are doing on mass.
Last year 7000 feature films were made in North America. Frankly most of them are gawdawful…but often you can find them in the dark recesses of Amazon. I would say out of that 7000 maybe 700 are worthy of theatrical distribution but majority of them will not even gain any form distribution. I have stated it before that in regional exhibition economies that have facilitated regional and smaller movie exhibition box office has increased on average of 20% People love variety and then love seeing stories they can have an affinity with.
When the dark shroud of the VPF is lifted, there will be massive opportunity for a re-invention, but plans have to be made know to re-invent this most vial of industries. With the creation of the Global Cinema Federation, the role of NATO was diminished. Primarily driven the the cross country economies of large theatre chains, this organization creates a lobbying force that erodes the interests of the independent theatre. This decreases the influence of NATO and frankly given the increasingly odd behavior of AMC further heightens the air of confusion that surrounds this industry. It is time to get of the Merry Go Round and define yourself.
One of things I am wishing for this Christmas is that the independents and the drive-ins to firmly realize that the current state of affairs that Hollywood is serving up is less than satisfactory and start to take steps to start establishing their own ground rules. Communities need you and your theatres. In your auditoriums lives a communities history, aspirations and dreams, you are necessary to the local economy and the local community conception of itself.
It is time for the independents to issue a their own Declaration of Independents and start building your own economy. What we had perceived Hollywood to be…no longer exists. The model they have offered is being blown apart and it is imperative that you as independents avoid being suck into the vortex that is starting to form.
Merry Christmas to you all, and here is hoping for a vital and re-energized new exhibition economy in the New Year.
