September 6, 2013

Death of movies greatly exaggerated

Every year you read about how the movie business is collapsing, but, then, it just keeps sort of trundling along. This summer was widely reported to be one of catastrophic flops marking tectonic shifts that will soon dump Hollywood to the bottom of the ocean, but, after a terrible start to 2013, domestic box office was up 7% for summer 2013 versus summer 2012, despite the 3D fad continuing to fizzle out. (And the summer season growth would have been 12% except that last year's The Avengers was such a giant hit.)

And that's just measuring the century old business model of getting customers to leave their homes and go to a theater, which is a downright quaint way of doing things. They have lots of other ways to make money.

The Coen Brothers are out promoting their upcoming December movie about a folk-singer in pre-Bob Dylan Greenwich Village:
Q. Steven Spielberg and George Lucas recently talked about the state of the movie business and how frustrated they are with it. ... It’s a recurrent theme — the crisis in film. 
Joel Coen: It’s definitely harder now. On the other hand, I think you can exaggerate that, too, because the movie business in the United States, despite the sort of ups and downs of the economy, is still a very healthy business. And that healthy business is going to support — and it always has — a lot of niche moviemaking. More than you might expect it to, given the mentality. There’s still a lot of interesting stuff being made which is completely outside of the kind of trend that we’re describing, you know? 
Ethan Coen: We’ve always actually been remarkably commercially successful. Not in terms of making huge amounts of money, which we rarely do, but in terms of not losing money and making modest amounts of money. We’re actually strangely consistent in that respect. We’ve been able to keep making movies because of that and also because, strangely, we’ve had studio patrons, starting from Barry Diller. Sometimes they're establishment people who know they’re not going to make huge amounts of money, but they like your movies. They’re moviegoers, too. 
Joel: And mostly they’re making blockbusters, but when you get in a room with them, they go, “Go off and make your movie, and I’ll do it as long as I can’t get hurt too bad.” 

The Coen Brothers are like Woody Allen in this regard -- investors don't demand they maximize ROI as long as they don't Heaven's Gate them -- except that, in contrast to Allen, there are two of them, they are a couple of decades younger, and, on average, they take twice as long to make each movie, so with four times the amount of man-years per movie, their average film's quality/originality is much higher than Allen's last dozen.

A movie executive
The movie and TV industries are among the rare holdouts to having their cost-structures ruthlessly rationalized. Movie executives are generally not lacking in chutzpah, but even they have more dignity and self-awareness than Silicon Valley billionaires, so they don't lobby Congress about how the crippling best boy and key grip shortages mean that movies will be rotting in the soundstages unless Hollywood gets 100,000 more visas to bring in foreign workers to do the gaffering jobs Americans just won't do.

Moreover, the movie business is full of weird cross-subsidizations that any MBA with a spreadsheet would target for elimination. Most notably, teenage fans subsidize grown-up movie-goers. The wealth generated by blockbusters helps pay for Coen Bros.-type movies, both because investors lavish a fraction of their summer profits on fall movies, and because talent charges less to work on prestige pics.

Also, teenagers subsidize grown-up tastes even within summer blockbusters. The summer's biggest hit movie, Iron Man 3, for example, was a lot better than it had to be (e.g., Sir Ben Kingsley's role). 

By the way, to change the subject to sibling rivalry, over the last 29 years I've read dozens of joint interviews with the Coen Brothers (who are not twins), and I still can't tell them apart. Their public affect is not like, say, Ray and Dave Davies of the Kinks. Brothers usually take pains to distinguish themselves from each other (for instance, one identical twin recently informed me that he has 20-22 eyesight while his brother has 20-24 eyesight). In contrast, the Coens, who have gotten an awful lot of work done together, don't. I suspect they have fairly conscious strategies and rules for minimizing and managing sibling rivalry, but I don't know what they are.

My son tells me that a few years ago, the Coen Brothers came to his college to give a speech or receive an award or something, and the students buzzed for a week afterwards about the surprising fact that the Coen Brothers had arrived in separate limousines coming from separate directions. It had never occurred to the college film fans that the Coen Brothers are different individuals with distinct lives who don't live together in one big Coen Brothers House.

50 comments:

Anonymous said...

From watergate to heaven's gate.

Anonymous said...

Movies were supposed to have died in the 60s with rise of TV. They survived.

To be sure, ticket prices have been jacked up way high.

Anonymous said...

"but even they have more dignity and self-awareness than Silicon Valley billionaires, so they don't lobby Congress about how the crippling best boy and key grip shortages mean that movies will be rotting in the soundstages unless Hollywood gets 100,000 more visas to bring in foreign workers to do the gaffering jobs Americans just won't do."

Unions are stronger in Hollywood.

Unions can't be strong in Silicon Valley since it was built considerably later than Hollywood, because computer technology is always changing, people go from company to company, and no kind of job is really secure.

There will be grips and gaffers as long as Hollywood exists, but entire jobs in computing may go under with new technologies.

Hollywood incorporates new technology but lots of people working on movies still do traditional stuff, and such jobs have a long pedigree of union protection.
Silicon Valley is all about innovation, so security is a trickier thing.

Anonymous said...

Movie executives are generally not lacking in chutzpah, but even they have more dignity and self-awareness than Silicon Valley billionaires, so they don't lobby Congress about how the crippling best boy and key grip shortages mean that movies will be rotting in the soundstages unless Hollywood gets 100,000 more visas to bring in foreign workers to do the gaffering jobs Americans just won't do.

I think your general pro-Hollywood bias is clouding your perception here.

Movie set grips aren't analogous to computer programmers.

Hollywood execs use foreign directors and talent and producers all the time. Like Silicon Valley execs, they don't care as long as they're in control.

Olov Olovsson said...

I've been more impressed by Woody Allen's recent work than by the Coen Bros.

Of course, my wife and I were the only two people in the audience at an evening showing (in suburban Minneapolis-St.Paul) of Woody Allen's newest film on its opening weekend.

Allen's "Blue Jasmine" is quite good. It was clearly made by a New Yorker who doesn't think much of San Francisco. That said, it was extremely affective. It made me squirm uncomfortably in ways that I haven't squirmed since reading Tom Wolfe's "I Am Charlotte Simmons."

Anonymous said...

I can't prove it, but I like to think the Coens are like Christopher Nolan and Blomkamp: on the reactionary side, but quiet about it. Intellectually, they can't be progressive. Their best films are essentially an affirmation of original sin (in a secular sense, of course).

Steve Sailer said...

While we were watching their first film, Blood Simple (in which a couple's perfect crime goes completely awry), my wife (who is only slightly more organized than I am) turned to me and said, "I hope _we_ never have to turn to a life of crime."

Anonymous said...

http://www.rollingstone.com/politics/news/everything-is-rigged-the-biggest-financial-scandal-yet-20130425

"Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything."

Robomayor Eric Garcetti said...

Non-sequitur, non-sequitur!

LA mayor warns of 'state of emergency' as production firms ditch Hollywood!

‘It is not in some people’s interest to see California win, they may benefit from this competition being in as many places as possible, because it has been a race to the bottom. And I certainly won’t lead a race to the bottom.’

‘We are going to fight a lot of fights. I know we are not going to win every single one of them. But if we don’t put a lot of strength toward winning a couple of battles in this war, we are just going to continue to be left behind on the battlefield.’

Marlowe said...

Jack Valenti was dignified & self-aware when he lobbied Congress?

Mr. Sailer likes to stick up for his home town's most famous industry, apparently led by patriotic, union-loving and artfully tasteful patrons, whose closest historical rivals would be the Medici.

Whiskey said...

Steve, look at Matt Damon's "Promised Land" ... in 2012 it took in according to Box Office Mojo $7.6 million and about half a million foreign. Against that a production budget of at least, oh around $60 million or so, plus another $40 million for marketing and advertising.

This for a movie with no special effects, no green screens, no action sequences, no explosions, no models, no big name mega stars. And its a total dog. One that makes no money is probably about $92 million in the hole.

Most movies now shoot outside of Hollywood to cut costs, that ought to tell you something. Margins are so tight that instead of easy shooting around LA, producers/directors trek out to the boonies to save a few production bucks in Prague, in Vancouver, or get North Carolina, or Louisiana, or New Mexican tax credit money.

Linda Obst certainly has a different take in Salon.

----------
I recalled his exact words as I sat in bumper-to-bumper traffic. “They have extremely high overheads,” he said to his guest with me listening in. “They have multiple houses, wives, and families to support. They’ve made movies for years, they were on top of the world and had no reason to think it would end. And then suddenly it did. They’ve gone through whatever savings they had. They can’t sell their real estate. Their overhead is as astronomical as their fees used to be. They’ve taken out loans, so they’re highly leveraged. It’s a tragedy.”
...
“The movie business,” Peter said, “the historical studio business, if you put all the studios together, runs at about a ten percent profit margin. For every billion dollars in revenue, they make a hundred million dollars in profits. That’s the business, right?”

I nodded, the good student, excited that someone was finally going to explain this to me.

“The DVD business represented fifty percent of their profits,” he went on. “Fifty percent. The decline of that business means their entire profit could come down between forty and fifty percent for new movies.”

For those of you like me who are not good at math, let me make Peter’s statement even simpler. If a studio’s margin of profit was only 10 percent in the Old Abnormal, now with the collapsing DVD market that profit margin was hovering around 6 percent. The loss of profit on those little silver discs had nearly halved our profit margin.

Anonymous said...

If you want to better understand what's going on in Hollywood production now, Lynda Obst's book, "Sleepless in Hollywood" explains it well and is very up to date.

Anonymous said...

Robomayor Eric Garcetti said...

LA mayor warns of 'state of emergency' as production firms ditch Hollywood!

LOL

"Hollywood askew! Hollywood askew!"

Power Child said...

When I was working as an editor/VFX artist in Hollywood, I knew a lot of guys on the production side who complained about work leaving for other states that are offering incentives (Louisiana probably being the one mentioned most). I don't ever remember hearing anyone complain about 2nd unit or even principal stuff being shot abroad.

I don't know if any of these people were in unions. Of people I heard voice such a concern, the most prominent was probably the dog trainer from I Am Legend. Is there a dog wrangler's union? I dunno.

Anyway, a lot of data wrangling and assistant editing work can be done remotely. The cost of shipping hard drives is pretty stable too, I think. Yet despite the ability and low cost, not much of that work is done remotely.

I get the sense that the Coen Bros. basically put it correctly: things are a bit harder, but at the same time there are always new opportunities opening up. Hollywood will be around for a while.

Anonymous said...

Any business that can get people to pay money and sit through two hours of “Ain’t Them Bodies Saints?” is enjoying a truly extraordinary amount of kindness of strangers, and in a country that is extremely rich. Can you imagine if they tried to market that kind of movie in a real Depression?

Anonymous said...

It is curious that the movie biz has no problem shifting production to odd ball places like New Zealand while the computer biz insists everything has to be done in one place and they have to bring in foreign experts rather than do the work abroad.

Is that because of the difference between copyrights and patents and trade secrets? Do they need to do the work in the US to satisfy the government?

" had studio patrons, starting from Barry Diller." Are you saying the Coens are Guh Guh GUh Gay?

JoetheHun said...

Steve,
Where do I find a wife like yours?

Anonymous said...

Media know exaggeration sells.

Randall Parker said...

Movie making gets a lot of subsidies from local and state governments. It is a prestige industry and it is highly mobile. Every movie is a new business venture. So the makers are in a great position to bargain for lower taxes and other financial advantages.

I would be curious to know how much of the cost of a movie comes from subsidies.

Walk of Fame said...

It'd be a bit obvious to say the guys in charge of the studios, and indie producers to a lesser extent, prefer working with reliable "creatives." But as to the Coens specifically, your excerpt implies the Barry Diller types of the industry sort of like/envy them on a personal sentimental level. e.g. the brothers can be semi-charming but not so charismatic as to be socially threatening (I thought the cameo of the fictional Schecter twins in "The Player" was reminiscent of a similar approach if not modeled after the Coens themselves).

So another way of stating that part of your thesis here is that filmmakers with people skills tend to get more of their movies made. Wow.

Also, the comments above are right: You are such a homer for the film business. Harry Caray or Suzyn Waldman are like German math professors in comparison

Steve Sailer said...

So do the investments in movies. A decade ago, much of the financing of Hollywood movies came from Germany due to some incentive put into German tax codes that then turned out to benefit American productions as well as German ones.

Right now, a lot of movies are being shot in Louisiana and North Carolina. Has anybody ever studied whether states get a long term economic benefit from giving Hollywood tax breaks, or does Hollywood just move on to the next sucker state?

Anonymous said...

The Coen brothers are Jewish guys from Minnesota who really, really like white gentile Midwesterners and Americans in general. Fargo is a love letter to the decency of Marge Gunderson, and their True Grit remake has a real affection for American Protestantism.

Anonymous said...

Edward Jay Epstein did a short review of Obst's book, which from what I understand is mostly a retread of the general themes from his two books but with more personalities/name-dropping

Anonymous said...

"So do the investments in movies. A decade ago, much of the financing of Hollywood movies came from Germany due to some incentive put into German tax codes that then turned out to benefit American productions as well as German ones."

See: pretty much the entire career of Uwe Boll.

JoetheHun said...

a decade ago in Hollywood the saying went " German
Money = Stupid money" resulting in Ueber- turkeys like
Ed Burns' " Sound of Thunder ". after that , wall street took over selling subprime junk to German Landesbanken ...

David Davenport said...

This will interest iSteveniks: From Restate.com: The Obama Administration Gets Pwned By AIPAC?

... What Does It Mean?

In terms of a smoking gun there is nothing. If you wish to connect dots, I would submit there are a lot of them to be connected. Ms. O’Bagy is hardly a heavy hitting intellectual. Her non-profit, SETF, is objectively a non-entity. Yet both she and SETF are punching way above their weight. She is working on a contract that has given her a high profile and some notoriety and the employer is fine with it. Take my word for it, this is not usual.One of the directors of her employing non-profit, one who is not listed on the website, is Bill Kristol.* I don’t know what his ties are to AIPAC but they seem more than passing. The executive director of SETF is affiliated with WINEP, a pro-Israel think tank. And there is the nasty little coincidence of the SETF having the same hosting server and apparently the same web designer as a Jewish school in Boca Raton, FL. But the dots… eh, they’re probably just coincidences.

Were I connecting the dots, I’d say that John McCain and John Kerry and a lot of other rubes have had been hooked, gaffed, and landed by an updated version of the Nayirah scam. ...


*William Kristol Jr. -- prominent, respectable Neoconservative.

Anonymous said...

Vancouver built a big industry doing work for Hollywood on the cheap until the exchange rate reversed from about a 1/3 discount to par. 21 Jump Street, Happy Gilmore, The X Files, Rocky IV, Night at the Museum, MacGyver and First Blood give you an idea of when that was. Also, Toronto was doing A Christmas Story, Monk, Degrassi, American Psycho, Cocktail, etc. Both hit the crapper with the exchange rate reversal but have recovered somewhat since. They both produce local Canadian content as well and have a somewhat integrated industry, mini-Hollywoods if you will with some level of local representation from most of the various trades. I may be wrong, but I don't believe North Carolina or Louisiana have anything like that. The movie sets just follow the tax credits in that case.

I think a place like New Orleans might be able to build a Toronto-level film industry. If they had vision they might link up with Quebec and build some Quebecois-Cajun axis of New France filmmaking, but that might just be the bourbon talking right now.

Anonymous said...

Hollywood going down would make me a happy panda.

Anonymous said...

don't you think internet piracy (especially outside the States) is going to eventually kill the film industry?

Steve Sailer said...

China has long been the world capital of movie piracy, and yet Iron Man 3 enjoyed a $64 million opening weekend last May in China.

People kind of like going to the show.

Anonymous said...

"China has long been the world capital of movie piracy, and yet Iron Man 3 enjoyed a $64 million opening weekend last May in China.

People kind of like going to the show."

there's a reason why hollywood changed the iron man 3 movie for china's audience.

http://www.dailymail.co.uk/news/article-2324077/Iron-Man-3-execs-changed-film-Chinese-audience-adding-4-minutes-Chinese-actors.html

(to encourage them to go see it in chinese theaters instead of downloading it online)

Anonymous said...

"The Coen brothers are Jewish guys from Minnesota who really, really like white gentile Midwesterners and Americans in general."

Rotfl.

Coens were laughing at the dummies.

Socially Extinct said...

Advancing digital technology allows distant production tax havens to proliferate.

"Portable" dailies systems, kick-ass super fast data pipelines, and a vacant but legitimate North Carolina address are all that's required.

Voila, everyone's back gets scratched!

chucho said...

Steve, I'm sure you saw this, but just in case:

http://www.commentarymagazine.com/article/i-dream-of-genius/

harkin said...

Please don't try to equate how long or hard someone works on a film with the film's quality.

Then again, film quality is subjective so just fire away.

Anonymous said...

http://www.theamericanconservative.com/articles/neocons-are-back-but-not-in-the-gop/

Whitehall said...

North Carolina stole all the nuclear power jobs too. The SF Bay Area once had 10,000 high paid white collar jobs but is now down to maybe 300. Everything is going to Charlotte. Of course, California politicians and environmentalists were there to say don't that the door hit you in the ass.

North Carolina did this by offer a several thousand dollar tax bounty per job to companies setting up shop in the state.

And Woody Allen still doesn't "get" California as shown in "Blue Jasmine."

pat said...

In evolution species evolve and species go extinct but the average tendency has been for the total number of species to expand. So it is with movies. Movies are not what they once were but there are more venues and genera and movie like experiences now than ever before. The ecology is getting more rich and varied.

Almost certainly some kinds of movie experiences will disappear in the next few years. But new stuff will emerge.

When I came to San Francisco in the mid sixties I lived near Market Street. There were many more than a dozen movie theaters within a few blocks. Near Market and Powell there was a theater that only showed news reels. They had a TV in a tiny basement theater below the main theater that had a TV. It was a 'big' TV - maybe 24". There were lots of second run theaters which showed double, triple, and quadruple features. Most of the patrons were street bums or shiftless young men.

But there were also upper end theaters that showed first run movies with reserved seating. The theater that played the "Sound of Music" had a three story picture of Julie Andrews painted on the side of the building. As I remember it showed for about two years at that one outlet before it migrated to the suburban theaters.

So are movies dying? Yes and No. The movie industry that I knew then is totally gone. All that is gone - deader than the dinosaurs.

Comparable industries have undergone very little change. There were restaurants in San Francisco in the sixties - still are. There were cars on the streets. They used to be Fords and now they are Toyotas but other than that - not much change.

When I was a starving student I took the bus. Today I consider going to a movie theater something like public transportation - an undesirable alternative to private usage. I transitioned to Home Theater ten years ago and I have expected the great bulk of the public to soon follow me - but they haven't.

One simple reason that HT hasn't yet killed off the few remaining movie theaters is light bulbs. My projector's bulb costs $400 for the whole assembly. They last about two years. It will have taken a month to get a replacement when I get a new one in the mail next week. No normal person (only a hobbyist) would put up with this kind of aggravation. But LED projectors may be here in a few years with lifetime bulbs. When that happens a whole generation of normal folks will opt to watch movies at home rather than go downtown to a theater where their shoes stick to the floor.

But movie theaters won't entirely disappear. They will just become more marginal.

There is another technological danger for movies on the horizon. Conventional movies are passive. Video gamers interact with what's shown on the screen. As CGI gets better and most actors on TV or movies are no longer shot live but are rendered on a motion capture model, watching a movie in a conventional theater will seem frustrating. In a good horror movie the audience cries out "Don't go in there". That's because they can't keep the character from going in. Gamers will just have them avoid that danger only to find that the monster gets them from an unexpected direction. Everybody likes kung-fu but gamers expect to choose whether to punch or kick. Static passive movies won't be able to compete with the next generation of video games.

So movies like those made by Woody Allen will fade from center stage. Center stage will be interactive dramas experienced at home. But passive group experienced entertainments like those of the Coen Brothers will continue just as live opera continues.

Albertosaurus

Anonymous said...

Semi-OT: Hollywood lefties say that Hollywood won't protest Syria because doing so would get them branded racist:

http://www.hollywoodreporter.com/news/syria-why-hollywoods-anti-war-623326

Anonymous said...

look at Matt Damon's "Promised Land" ... in 2012 it took in according to Box Office Mojo $7.6 million and about half a million foreign. Against that a production budget of at least, oh around $60 million or so, plus another $40 million for marketing and advertising.

Yes, well maybe but lets not forget Hollywood's creative accounting practices.

Anonymous said...

Does Hollywood send film overseas or is the whole world digital?

goatweed

Anonymous said...

"The Coen brothers are Jewish guys from Minnesota who really, really like white gentile Midwesterners and Americans in general."

Rotfl.

Coens were laughing at the dummies.

I view their work as affectionate satire a la Mike Judge and King of the Hill.

jody said...

i'd like somebody to explain why the effects in robocop 2014 look worse than the effects in robocop 1987.

maybe that loser who was trying to follow me around isteve will explain this to us.

robocop 1987 budget: 13 million
robocop 2014 budget: 120 million

so for about 10 times as much money, you can have worse effects.

kind of a trick question - i already know why the effects look worse. but maybe anonymous can enlighten the rest of the readers.

Anonymous said...

i'd like somebody to explain why the effects in robocop 2014 look worse than the effects in robocop 1987.

The special effects aren't worse. Go back and watch the bad guy robot in the original Robocop. They used stop motion and it doesn't look very realistic. In some scenes, it's really bad.

They've been making nothing but comic book movies for the past decade. No reasonable person who's watched any of these could say that the special effects today are worse than those of 25 years ago.

BTW, when are you going to actually point out those "head scratcher" Nobel prizes in the sciences?

Anonymous said...

I'll help you out with one "head scratcher", jody. Although it's not from the past decade. It's from 1949:

http://www.nobelprize.org/nobel_prizes/medicine/laureates/1949/

"The Nobel Prize in Physiology or Medicine 1949 was divided equally between Walter Rudolf Hess "for his discovery of the functional organization of the interbrain as a coordinator of the activities of the internal organs" and Antonio Caetano de Abreu Freire Egas Moniz "for his discovery of the therapeutic value of leucotomy in certain psychoses"."

Anonymous said...

"And Woody Allen still doesn't 'get' California as shown in 'Blue Jasmine.'"

You can say that again. The white, working-class San Francisco of Allen's movie (set in the present) is a figment of his imagination.

But there was a San Francisco like that once, and the movie made me wish it still existed.

Socially Extinct said...

Anonymous @ 1209 hours:

Yes, SF hs become one big SWPL/hipster oasis, but you're only seeing what the mainstream media tells you. Take a trip there one of these days...or better yet, stay away from the Predictable Zones. It's a big city. The same thing is happening to Hollywood now. Hollywood is turning into a big flashy ****hole of annoying elites intermingled with large swarms of frightening ghetto folk. And because of the latter, innocent people are dying here all the time now. Point being, it's pointless to damn Allen's film based on ignorant perceptions of San Francisco.

Anonymous said...

@Socially Extinct

Anon 1209 here. I've seen the City up close and personal for about 40 years now. I loved the movie, but the white, rough-around-the-edges San Francisco of Blue Jasmine is nothing like San Francisco. Go see the movie.

Anonymous said...

"The special effects aren't worse. Go back and watch the bad guy robot in the original Robocop. They used stop motion and it doesn't look very realistic. In some scenes, it's really bad."

Maybe he meant it's worse in the imaginative sense.

Anthony said...

Albertosaurus -

Movie theaters will survive because it sounds kind of sketchy (for a teenage guy) to ask a girl to come over to watch a movie at his house for a first date. And you never know when the 'rents might walk in on your makeout session.