One-and-Done (Part 3): Future GazeDecember 23, 2014
For Hollywood to weather the "one-and-done" storm, it has to adapt. When television threatened movies during the 1950s, the industry moved toward color and widescreen to provide an experience one couldn't get at home. Given a choice between watching b&w moving images on a 12" box or being overwhelmed by full-color grandeur on a huge screen, which would you choose? When the VCR became a popular home appliance in the 1980s, the studios (following a period of reluctance and copyright wrangling) used it as a means to provide films with a second life. As amazing at it may be to consider today, most films released in the 1970s vanished after their box office stint, perhaps never to be seen again. Only those considered important enough to warrant a pay TV run and/or network TV "movie of the week" designation avoided obscurity. Bond films never died because ABC showed them regularly on Sunday nights.
Common sense (not necessarily a trait one often associates with Hollywood executives) would dictate that the most obvious way to cope with the declining revenue associated with "one-and-done" is to reduce costs. There's a tremendous amount of inefficiency in the movie-making process and the marketing/advertising budgets have become obscenely expensive. A film with a $180M production budget might require another $50M in (domestic) advertising. So the baseline cost is $230M. Assuming the studio gets back about 2/3 of the gross, that movie would have to make $350M to break-even. Of course, it's not that simple - foreign revenue factors in as do home video and ancillary markets (Netflix, pay TV, etc.). But hitting the break-even point isn't the goal. In order to keep stock prices high, dividends must be issued and healthy dividends require solid profits. The bottom line: a film costing $180M needs a domestic gross of at least double that to be deemed successful. In 2014, no movie made $360M. That spells trouble. It creates an immediate, unsustainable situation.
Most of the summer's high-profile movies grossed between $200M and $250M. Keeping that in mind and using at as a future baseline, studios need to target their budgets with that level of expected revenue. A movie with a production cost of $100M will be successful if it makes $220M. A movie with a production cost of $150M won't be. That's not to say there can't be a few huge movies (The Avengers 2 should be able to easily support a $250M budget) but costs have to come down for "average" high profile motion pictures. Special effects budgets need to be brought in line. Bloat needs to be trimmed. $100M is a large parcel of money and a smart, efficient director should be able to create something amazing with it. Few things engender laziness more than open checkbooks. Anyone can make something visually impressive without financial constraints. A test of a director's aptitude might be how much she/he can do with a controlled and capped budget.
The next thing to look at is the ridiculously crowded summer calendar. Between May 1, 2014 (the current official beginning of the summer season) and mid-August, there were eight major releases and four or five "mini-majors". (Think Neighbors and Edge of Tomorrow.) Looking back to the '80s, there were typically three or four major releases and a similar number of "mini-majors." That's close to a doubling of output. It used to be that the spacing between summer titles provided ample opportunity for each to succeed on its own merits, not because it was being shunted aside in favor of The Next Big Film. In today's market, Hollywood would be well-advised to remember those days of yesteryear. Unfortunately, a machine has been created and it must be fed. Megaplexes with 24 screens don't want to wait two or three weeks in between major releases. For corporations that make their money selling overpriced snack foods, packed houses are needed every weekend. Plus, reducing the number of big films would require cooperation among the studios - something that's a rarity. Would Paramount (for example) agree to move a mid-June movie to October to ease the summer crunch and help the industry as a whole? Hell, no! Let some other studio make that sacrifice. It's the motion picture equivalent of NIMBY (Not In My Back Yard).
Of those two suggestions, there will likely be some movement on the first (reducing production costs), although not nearly as much as there should be, and little or none on the second. This all-but-guarantees that "one-and-done" will persist as an issue. Consequently, Hollywood will become increasingly dependent upon the fickle stream of overseas revenue. The problem with an overreliance on this is that it could dry up without warning at any time. A global recession could constrict the foreign box office as could governmental restrictions or other vagaries of geo-politics. It's also possible that as the newness of blockbuster movies wears off in countries just now getting access to them, the desire to see them will fade. Some things lose potency with age and familiarity and 3-D is no Viagra.
Another concern: home video sales are evaporating, victim of changing tastes and a growing appetite for everything to be a stream of 1's and 0's. Every year, fewer DVDs are sold than the previous year. The Netflix model is the king. People can watch streaming content on a tablet, a phone, or a TV. It's easy, convenient, and (usually) reliable. The monthly costs are reasonable. The one downside is that the menu of content is limited. Nine out of ten titles you can think of probably aren't available. But there's an opportunity here for the studios - an opportunity presented as a result of "one-and-done." The average gap between the theatrical release and the home video release is about four months - a little more for some films but rarely less. However, in a "one-and-done" environment, a title has mostly exhausted its theatrical life after about three weeks. In partnership with Netflix (or some other company), Hollywood could offer a special "near-theatrical release" subscription that would (for a fee) allow viewers to stream films that opened as recently as a month earlier. This would fill a need for all the 40-somethings, 50-somethings, etc. who don't want to go to multiplexes but are less-than-enamored with the environment.
This isn't as far-fetched as it sounds. Most studios have plans to float pilot programs providing "early" VOD access to select premium theatrical films (not just the indies and direct-to-video titles currently populating Comcast's roster). In the past, there has been considerable pushback from theater owners but under "one-and-done", their losses would be minimal. The idea isn't to make home viewing of films available in parallel with their theatrical showings but to make them available immediately after. And, instead of having to order each one separately, they would all be available under a subscription umbrella. There's a lot of money to be made here. It just remains for someone to take advantage of it.
In my view, "one-and-done" is here to stay and Hollywood will have to adapt to it. The studios can't ignore it or run away from it. Anyone hoping 2015 will be different isn't taking a close look at the root causes. We have become a society of instant gratification and this applies to our movie-going habits as much as to anything else. The faster Hollywood changes, the better for everyone: the studios, the multiplexes, and (most importantly) the movie-going consumers.
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