Time moves forward. Movie going will still happen, but is it going to look very different. The smell of blood is in the air and both AMC and Cineworld are being sized up. Is it prudent to break them up, let them fail and then try to deal with desperate landlords, or let them define themselves by selling off large blocks of properties? My hope is that whatever happens, the human impact can be mitigated as much as possible. As much as I regret the path the major circuits have gone down, I have been shocked by their repeated examples of self-interest. There are many men and women who have counted on them for their livelihood.
I am going to quote Buck Kolkmeyer again, “Hollywood is really good at selling bad deals.” Buck is a respected mentor of mine and before I write my article I usually get Buck’s perspective. This statement he made really sums up where we have ended up. The screen count rose rapidly on the backs of cheap money and wheeling-dealing real estate developers. The circuit was egged on by the promise of easy money and the machinations of Lew Wasserman and Sid Sheinberg and their rapid modification of traditional release patterns after the summer of Jaws.
Hollywood began experimenting with vehicles like the Silver Screen Partnerships and West German tax shelters to fund their movies, while still raking in those lucrative distribution fees and even more lucrative expense reporting. The studios have become addicted to cheap money. The studios made movies and the folks who laid fiber optics and cable television cables in the ground, as well as the good people who owned the cable television networks, saw deep value in acquiring studios. Sony erroneously thought, hey we make electronics let’s buy a movie studio who’s movies can play on these electronics. Wrong…they forgot about the guys who owned the pipes which connected their electronics to the movies. A bit of a mistake on Sony’s part.
Studios were acquired and began to march lock step to the vision of owning the pipe that fed the consumer and them owning the product that went down the pipe. All the while making the product with someone else’s money. Let some Australian Hedge Funds take all the risk, while they still received their fees. Hollywood’s financing model has greatly impacted the rise of box office rentals. Essentially the theaters have been expected to pay for this cheap money Hollywood receives as well as making sure they get their lovely distribution feed.
As Buck said, Hollywood is really good at selling bad deals.
Now is the downside with streaming. Hollywood wants to totally control all aspects of the distribution chain, which means they can no longer rely on the theater owners to pay off the Hedge funds of the world. Now, with the pandemic altering all business models, I am really hoping that the media majors will see that the continued alienation and purposeful depletion of the theatrical market is just folly. It denies them needed revenue and it denies them an advertising showcase for their streaming releases. I can tell you what is selling on streaming is different than what sells in the theater,
Here are the top ten movies playing on Netflix this week;
“The Last Thing He Wanted”
“The Foreigner”
“To All the Boys: P.S. I Still Love You”
“Girl on the Third Floor”
“A Bad Moms Christmas”
“Mr. Right”
“A Haunted House”
“The Other Guys”
“A Shaun the Sheep Movie: Farmageddon”
“American Assassin”
Not a comic book movie among them……Number 6, Mr. Right which was released in 2015 and stars Sam Rockwell and the ever perky Anna Kendrick did a whopping $397,000 at the box office. The syndicated TV show Friends does much better than most Marvel movie streaming.
All that being said, it is obvious to most analysts that the business of exhibition is going to change. If I have any contribution to make, it is that I firmly believe in the scheme of things there is hope. The exhibition business has to take a step back and realize that the business model that Hollywood is putting forward is for the most part snake oil.
What has to be put into place is a vehicle that can collectively call the studios on their malarkey (excuse my Celtic slang, I come by it honestly) and negotiate a global deal for the independents. When I bring up this idea, I usually hear the words antitrust. Well I don’t think right now, after all the machinations at the Department of Justice we have seen as of late, this is a concern. Also, there is a way and a legal structure in which to avoid any allegation of antitrust. Frankly, the studios should be worried about other things, like restraint of trade and unfair business practice, yada yada.
Once you have a proper distribution body that can aggregate collective buying power, then a proper free market can be established recognizing for the first time that the theaters do indeed have power in numbers. This is not an effort for the ICA or NATO. A new body should be formed, a new body that recognizes the erasing of territories and the truly global nature of the movie-going experience. This body could expand the content offerings and counter the machinations of the studios by working with independent studios. As an aside, the largest amount of viable commercial movies are not produced by the studio but are produced by independent producers.
And maybe, just maybe, if a deal could be done with independents, the theaters should maybe control their own streaming service.
We should truly begin to see that the studio needs the theaters much more than they think or will let on. As a gentle reminder, remember what a wise man once said “Hollywood is very good at selling bad deals”
Oh and also, maybe consider building a drive-in…..they are coming back and in a big way.
