The Shape Of Things To Come

Until they become conscious they will never rebel, and until after they have rebelled they cannot become conscious.”

George Orwell,1984

This week the motion picture exhibition industry feasted on the new life that Black Panther, Jurassic Park and Incredible’s 2 were breathing into a perceived ailing box office, Summer ticket sales are running more than 15 percent ahead of summer 2017 when revenue tumbled to its lowest level in more than a decade, but it’s still been feast or famine for some movies. It is beginning to look like that the summer box office is headed for near-record levels, a solace as Hollywood begins to get consolidation fever. The acquisition of Fox by Disney has been approved and the studio which saw the rise of John Ford and Darryl F. Zanuck begins it slow and for me, a painful fade into the sunset. The tympanic fanfare for Fox movies will now live in only memory.

Revenue for the season is pacing 15 to 16 percent ahead of last summer, when ticket sales fell to their lowest level in more than a decade, according to comScore. At its current pace, summer 2018 could come close to matching the May-August stretch in 2013, when revenue hit a record $4.8 billion at the domestic box office.

While I certainly fee this is welcome news, I personally think in many ways it’s a last hurrah of sorts. Things are about to really change.

In 2017 those very smart people at Walt Disney Company announced it acquired a majority ownership of BAMTech, LLC, BAMTech ,a global leader in direct-to-consumer streaming technology and marketing services, data analytics, and commerce management was originally created by Major League Baseball in order to launch the online streaming of baseball games. It has been acknowledged that BAMTech offers the best in class in all streaming integration. Disney through the facilities of the new acquired BAMTech, launched its ESPN-branded multi-sport video streaming service in spring of this year. The next project the wizards at BAMTech are working on is the new Disney-branded direct-to-consumer streaming service in 2019.

Bob Iger, former weather guy at the ABC affiliate in Ithaca, New York and now Chairman at Disney was quoted as saying “The media landscape is increasingly defined by direct relationships between content creators and consumers, and our control of BAMTech’s full array of innovative technology will give us the power to forge those connections, along with the flexibility to quickly adapt to shifts in the market. This acquisition and the launch of our direct-to-consumer services mark an entirely new growth strategy for the Company, one that takes advantage of the incredible opportunity that changing technology provides us to leverage the strength of our great brands.”

The statement by Iger “ launch of our direct-to-consumer services” is telling of Disney’s intent and focus. To put in bluntly Disney really would like to take theaters out of the equation. Since 1984 their prime directive was to establish a direct relationship with movie fans, a relationship that would be between Disney and the consumer, with the theater and the theater economy considered to be interlopers in that relationship.

The plans in 2019 for the Disney-branded service will become the sole home in the U.S. for subscription-video-on-demand viewing of the newest live action and animated movies from Disney and Pixar, beginning with the 2019 theatrical slate, which includes Toy Story 4, the much anticipated sequel to Frozen, and the live action version of The Lion King., along with other highly anticipated movies. Disney will also make a significant investment in an annual slate of original movies, TV shows, short-form content and other Disney-branded exclusives for the service. Additionally, the service will feature a vast collection of library content, including Disney and Pixar movies, Disney Channel, Disney Junior and Disney XD television programming. And now the libraries of Fox are being thrown into the mix. Disney is preparing to act in a role of juggernaut.

If you scratch just beneath the surface you will see the emergence of the alternative business model, a business model not based on theatrical release but on video on demand placement. I am off the firm opinion that Solo failed primarily because the lack of ability within Disney to truly market to a theatrical marketplace. When George Lucas made Star Wars one of his first action was to engage Charles Lippincott to promote the first Star Wars movies. In the Fall and the Spring, Lippincott went to fan conventions in order to spread the Gospel of Star Wars. By the time Star Wars was to go into mass release there was an audience ready to see it.

Fast forward to 2018, Solo was in many ways a major disappointment for Disney. which was only Lucasfilm’s second A Star Wars Story spinoff, but which received mixed-positive reviews and fell short of box office expectations. The film scored $84.4 million on opening weekend and has grossed $192.8 million domestically and $339.5 million worldwide in four weeks, which is nothing to scoff at but did not meet the benchmark of other Star Wars Movies. Rogue One opened to $155 million and had grossed $424 million domestic by Week 4.

Information passed on to me from inside the studio, says that the difference between success and failure of Solo was due to the share that Disney reluctantly had to provide to the theaters. At least that was the resentment expressed at the Studio water cooler.

In my way of looking at things Solo did more than fine by any imaginable blockbuster standards, but according to the folks at Lucasfilm, it was not the event they were hoping for. I personally think that the marketing effort by Disney was at best tepid and very reminiscent of the failure of marketing that was John Carter of Mars.

John Carter was not just a box office disappointment, but has become an icon in defining a box office disaster rivaling Ishtar and Heavens Gate. John Cater earned $284 million worldwide on a cost of anywhere from $250 to $307 million of production. According to public company records, Walt Disney took a $200 million loss on what I think is not a bad movie. What John Carter did provide was a hint that maybe Disney was making a slow retreat from the business of theatrical distribution. They forgot how to market movies into theaters.

Now this week rumors about the future of Star Wars have begun to fly Studio sources have told the website, Collider that Lucasfilm has decided to put plans for more Star Wars movies on an indefinite hold. They claim they are going to focus on Star Wars: Episode IX. Supposedly the long rumored Obi Wan Kenobi movie is off the books as in a movie focused on the exploits of everybody’s favorite bounty hunter, Boba Fett.

In May Lucasfilm excitedly announced that that producer, director, writer and actor Jon Favreau has signed on to executive produce and write a live-action Star Wars series for Disney’s new direct-to-consumer platform. Favreau is no stranger to the Star Wars galaxy having played roles in both the Star Wars: The Clone Wars animated series and was in Solo: A Star Wars Story.

The reality is that Disney is retreating from theatrical distribution. They are raising box office rentals, restricting prints based on VPF participation and just being rather difficult to deal with. The writing is slowly being displayed on the wall. Their prime focus as Bob Iger said, is a direct to consumer relationship. They want to be in home, they want to be paid directly by you, and they do not want to cut the theaters in for a piece. They have forgotten how to market to and how to strengthen the theatrical market. They see theaters as anachronistic and a relic of a non-digital past.

What I think is that they are short term thinkers who have forgotten their audience base and serve solely the whims of Wall Street and the perceived gold at the end of a VOD rainbow.

I write these essays because I love movies. I love movie history, I love the movie business and I really love movie theaters. A great public speaker and sales coach, Zig Ziglar once said “The first step in solving a problem is to recognize that it does exist “. I do think there are problems and those problems have to be addressed and solutions sought. The independent theaters must find a proactive voice amidst the ever changing world of theatrical exhibition. At present there is no viable voice, there are efforts that while well intended, do not either possess the energy nor the leadership skills in order to address the challenges faced by independent theaters.

And by the way who you you think is really going to pay 71 billion for Fox……look in the mirror.