Internet Hating Sony Pictures CEO Insists Piracy Is Killing Movie Business; But Facts Show Otherwise

from the whoops dept

Ah, remember Michael Lynton? The Sony Pictures CEO who earlier this year insisted that nothing good had come from the internet at all. When everyone started mocking him for this statement, rather than back off, he doubled down and insisted it was true, using examples that were easily debunked. Apparently, he hasn't learned his lesson. He's back at it, pushing for the UK (and others) to pass laws kicking people off the internet (so-called "three strikes" laws) while insisting that due to piracy there's less money to make movies and fewer movies being made. Of course, those are things that can be fact checked, and the folks over at TorrentFreak did exactly that, pointing out that more movies are coming out each year and more money is being made. Oops.

The way Lynton tries to get around this is by not actually talking about how many movies are coming out, but just counting the number of movies that came out of "the leading studios." I find this quite amusing, because in the podcast we discussed last week involving Paramount's Scott Martin, part of his argument was that while the big studios were fine, the independents were all suffering and fewer movies were coming out because of it -- and, as a "fan" of independent movies, he found that sad. I didn't bother to check the numbers, but it appears that Martin was simply wrong. More movies are being made, and it looks like an increasing percentage of them are coming from smaller independent shops.

The problem, again, seems to be that the folks at the movie studios (just like those at the record labels) only like to count the big hits as successes -- rather than the smaller projects that actually make money and make up the majority of the actual market. It's the same sort of thinking that makes movie studio people insist that we need to explain to them how they can keep making $200 million movies. That's the wrong question. The question is how do you make profitable movies. The technology has advanced such that it's cheaper and cheaper to make movies (which is why we have more of them). But notice that the studios never focus on ways to make movies in a more economical way, but how can they keep spending. Perhaps that's a bigger problem than "online piracy."


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Anonymous Coward, Oct 28th, 2009 @ 8:48am

    Facts have a known internet bias!

     

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  2.  
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    Anonymous Coward, Oct 28th, 2009 @ 9:39am

    the problem is that with a more level playing field the rich and the powerful are losing their monopoly rents that they have spent so much effort into lobbying for and now their only response is to once again lobby the government for an unethically unlevel playing field.

    The only reason they used to make so much is because of their lobbying efforts (ie: the FCC et al) for an unlevel playing field and the Internet has broken it. So of course they're not happy and being that they have no regards for morality and never have their only response is to once again lobby the government for an unlevel playing field.

     

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  3.  
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    Anonymous Coward, Oct 28th, 2009 @ 9:49am

    Why do I get the impression that Michael Linton might be the type of person that picks his boogers and then eats them?

     

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  4.  
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    PRMan, Oct 28th, 2009 @ 10:05am

    Well, it has to be piracy...

    It can't possibly be bad decisions by the CEO...

     

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  5.  
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    Anonymous Coward, Oct 28th, 2009 @ 10:06am

    Fawk Sony. DEAD to me!

    Thanks for Securom, ASSHATS!

     

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  6.  
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    Anonymous Coward, Oct 28th, 2009 @ 10:15am

    I blame Hank Stringer

    Mark Linton is just mad that BluRay hasn't seen widescale adoption, which is causing Hank Stringer, err Sir Hank Stringer to breathe down his neck.

    Internally, this is once again casting doubt on British's capability to Rule over a well-known innovator and Japanese manufacturing conglomerate which it seems, products now almost exclusively come from China. There have been discussions that occur inside the company, run by marketing, that the next series of movies will be from the newly-minted "SinoSony" Production House. "Sino" which is short for "Sony In Name Only" It's kinda catchy if you say it fast four times.

    There are some similarities downfall of British downfall. In business, East India Company's dissolution in 1874 comes to mind. I'm told that Brittan also lost a few wars, but make up for it by putting cameras all over town in an effort to increase crime. Just like what works in Japan.

     

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  7.  
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    framemonkee, Oct 28th, 2009 @ 10:15am

    A little sincerity goes a long way

    If only studio executives would level with everyone and say that piracy is interfering with their supply of hookers and blow, we'd all have a lot more sympathy for them.

     

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  8.  
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    Anonymous Coward, Oct 28th, 2009 @ 10:29am

    Re: A little sincerity goes a long way

    Music interferes with my supply of hookers and blow. I spend too much on entertainment to keep the steady supply I need to survive.

     

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  9.  
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    Anonymous Coward, Oct 28th, 2009 @ 10:33am

    Suggestion for Sony

    Sony should start printing the words "High Quality" in all it's marketing materials and on product packaging because people are starting to wonder about the final product's quality.

    You may recall that there was a problem with laptop batteries made by Sony affected many manufacturers- Dell, Apple, HP to name a few. There's the possibility that people think that Sony Pictures DVDs will explode in their DVD players, and that's why people aren't buying Sony Pictures DVDs or PS3s, or PSPs, or Vaios... Oh hell, by listing all product lines, we're digressing now.

    By printing the words "High Quality" on the DVD packaging will definitely remove all doubt, and let everyone know that the product is of high quality prior to purchase.

    It's been proven to work on Chinese products. Sure they have lead on toys, but they are "High Quality".

     

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  10.  
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    Anonymous Coward, Oct 28th, 2009 @ 10:49am

    Re: Suggestion for Sony

    "Sure they have lead on toys," but it's "High quality" lead.

     

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  11.  
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    fogbugzd (profile), Oct 28th, 2009 @ 11:35am

    Big Movies feed Big Egos

    Hollywood is about egos. The reason we have $200Meg flops is because big egos require big budgets.

     

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  12.  
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    Jerry Cronin, Oct 28th, 2009 @ 11:39am

    Ever Considered This?

    Mike, have you ever considered the fact that maybe these guys all know piracy is good for them? That perhaps it is them leaking Wolverine or whatever a month in advance, on purpose? And that they are SO gready, that after knowingly using piracy to help their bottom lines (because, as you've pointed out before, pirates tend to spend the most on media, according to studies), they then double-dip by suing, setting new licensing fees for emerging technologies (or raising the fees on existing technologies), and leveraging legal threats to acquire equity in innovative businesses? That all this noise about piracy and property rights is just an act to facilitate further cash grabs?

    Maybe you're preaching to the choir. Maybe they KNOW everything you're telling them, and take advantage of it as sneakily as they can, while also raking in whatever they can by playing Devil's Advocate in the public eye.

     

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  13.  
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    Jerms, Oct 28th, 2009 @ 11:43am

    Re: Suggestion for Sony

    While this sounds like a good idea on the surface, Sony might have a harder time implimenting this than you'd think. I went to a mainstream movie a few months ago (yes, in the public theatres too - a rarer and rarer activity for me these days), where the quality was shocking. It was almost as bad as a cam job, and my partner and I /almost/ walked out to demand a refund.

    That was apparently the "legitimate" version, and I wouldn't have wanted to see a "High Quality" label on the ticket. Not sure how the studio would have felt about it either, since I'm guessing the theatre was ripping them off.

     

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  14.  
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    Anonymous Coward, Oct 28th, 2009 @ 11:51am

    Sorry, but there is a number problem here:

    2004 Total Movies Released: 567 Total Combined Gross: $9,327,315,935
    2005 Total Movies Released: 594 Total Combined Gross: $8,825,324,278
    2006 Total Movies Released: 808 Total Combined Gross: $9,225,689,414
    2007 Total Movies Released: 1022 Total Combined Gross: $9,665,661,126
    2008 Total Movies Released: 1037 Total Combined Gross: $9,705,677,862
    2009 Total Movies Released: 1177 Total Combined Gross: $7,596,626,766


    Here's the problem: The inflation rate from 2004 to 2009 (september) stands at slightly higher than 16%. So the adjusted for inflation only take for movies should be almost 11 billion. Costs have more than likely gone up at the rate of inflation, but the take has not. Further, there are more movies entering distribution, which means that the average take per movie is down. Double squeeze, rising expenses, and dropping revenues.

    Further, the numbers don't break down the releases. While there are more movies currently released, but there are not more screens to put them on, which says that each movie is getting less screen time (and therefore would be more dependent on the DVD and PPV options to make income). There is also no indication how many of these movies are "one week wonders", cheaply made movies that are used just to fill time, looking for a potential hit, rather than a widespread release.

    So based on this, the movie industry has in fact shrunk at about the rate of inflation, or about 16%. That has to hurt.

     

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  15.  
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    Anonymous Coward, Oct 28th, 2009 @ 12:02pm

    Re:

    Amen, brother. Sony hasn't gotten one penny of my money since then.

     

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  16.  
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    Anonymous Coward, Oct 28th, 2009 @ 1:22pm

    Re:

    Except that after you find the babysitter, and buy popcorn, the fully loaded costs to procure an entertainment product can typically cost around $50-$60 for two people.

    So many people are opting out of your generalized definition of "entertainment" in favor for lower cost entertainment products.

    Think of it this way: Your customers pay roughly $15-$20 an hour to procure a 2 hour movie, and roughly 25¢ an hour to procure two hours of internet service, which can in turn be used on free and interactive services such as Facebook, Flickr, Youtube, or the like.

    Another option is to buy a game like Crysis for $30 and get at least 100 hours of entertainment out of it. Net cost 30¢ an hour, 55¢ an hour if you play online. Still extremely inexpensive in comparison to legacy entertainment products.

    You state that the problem is that inflation hasn't kept up and revenues should be at least $11 billion. However, as an ex-customer of entertainment products, I can categorically say that there hasn't been substantial innovation within the industry to necessarily warrant what amounts to a product that may cost 6000% more per-hour to consume.

    This is probably why I've only been to a theater four times in the past four years. And, I don't need to jump on the piracy bandwagon, so don't get any ideas.

     

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  17.  
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    Anonymous Coward, Oct 28th, 2009 @ 2:49pm

    Re: Re:

    Good argument, except that you can rent those movies 6 months later for a couple of bucks, saving you 95% of the cost. Your $1 redbox rental, 4 people in the room just cost you each 12.5 cents per hour.

    Sorry, but the argument is weak.

     

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  18.  
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    Nuuon, Oct 28th, 2009 @ 3:07pm

    The Internet & The Film Industry

    The comments of Michael Lynton proves that it's the massive know-it-all egos of Hollywood bigwigs that is killing the industry, not the Internet

     

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  19.  
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    DocMenach (profile), Oct 28th, 2009 @ 3:13pm

    Re: Re: Re:

    Good argument, except that you can rent those movies 6 months later for a couple of bucks, saving you 95% of the cost. Your $1 redbox rental, 4 people in the room just cost you each 12.5 cents per hour.

    Sorry, but the argument is weak.


    Except that six months later I have completely forgotten about that movie that I may have originally been interested in, so they get nothing from me.

     

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  20.  
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    John Fenderson (profile), Oct 28th, 2009 @ 3:51pm

    Re:

    "That has to hurt."

    I'm sure that it does. It sucks to be part of the market changing.

    And that's what's happening. Movies are overpriced and their quality is generally very poor, particularly the big-budget ones. In the past, there were few alternatives so people sortof put up with it.

    That situation is no more.

     

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  21.  
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    Anonymous Coward, Oct 28th, 2009 @ 4:53pm

    Re: Re:

    Not to mention it's entertaining for me to watch Hollywood trying to unethically take back their unearned monopoly on entertainment through government intervention (ie: by forcing people off the Internet, techdirt being on the Internet and reading and commenting on techdirt being a source of entertainment) and it's entertaining for me to mock their unethical behavior on techdirt and to mock the joke that our corrupt government has become and to watch everyone else doing the same thing in hopes that we will one day vote for representatives (hint, hint; Ron paul, rand Paul) that represent the people and not just big corporations.

     

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  22.  
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    Anonymous Coward, Oct 28th, 2009 @ 4:57pm

    Re: Re: Re:

    Perhaps if the movie industry et al stopped acting like selfish retards they would not provide me so much entertainment in reading about their selfish foolishness and I might actually find it more entertaining to buy their products instead.

     

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  23.  
    identicon
    Anonymous Coward, Oct 28th, 2009 @ 5:52pm

    Re: Re: Re:

    I agree with DocMenach. The amount of "buzz" will eventually be drowned out in the issue of the day, and I find many press releases about movies, actors, and musicians along with the entertainment industry quite self serving anyway.

    Take Colbert as an example. He typically has an audience of 2-3 Share, peaking at maybe 6 share, which isn't much in the whole ratings war where double digits mean you're a player. But yet, Colbert has won a few Emmys®, a Peabody®, and is highly respected because he has fun with the news, and people trust his insight.

    It's just too bad David Shuster, who actually personifies a good portion of the whole news industry, (Read: Sad to see him on MSNBC payroll) have a stick up their ass and can't have fun with the news.

    Christ, if Keith Olberman was an "Emergency Anchor" he would have had a lot of fun with it and gone with the flow of the Denver Affliate.

    Just watch the on-the-spot Balloon Boy reporting a few weeks ago where he fights with the NBC affliate in Denver.

    I've watched it a few times.

    What an asshole.


    FTC Disclosure:
    I do not work for NBC or any affliates or companies that do business with NBC, MSNBC or it's affliates.

    Next, I am really pissed at Keith Olbermann because he said he was going to "Prime The Pump" for free healthcare clinics, to which he contributed $50,000, but off-air.

    Kieith donateed $10,000 to troops because Famous Radio Personality "ManCow" couldn't be water-boarded for 30 seconds. Sean Hannity volunteered to be waterboarded for 30 seconds. Keith also sent $3,200 to the Alaska chapter of the Special Olympics ($100 for every lie) Palin said while on the Campaign Trail.

    Next time David Schuster is filling in on "Countdown", I expect him to donate something he believes in.

     

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  24.  
    identicon
    Anonymous Coward, Oct 28th, 2009 @ 6:06pm

    Re: Re: Re: Re:

    "FTC Disclosure: "

    Every time someone wants to put an FTC disclosure they should put the phrase "retard FTC disclosure" or "disclosure required by retard FTC." If everyone does that it will eventually encourage the FTC to mind its own business being that they do not want to continuously be called retards by everyone who has to disclose.

     

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  25.  
    identicon
    Anonymous Coward, Oct 28th, 2009 @ 6:07pm

    Re: Re: Re: Re: Re:

    Not to mention I'd like to see the FTC put a regulation against our freedom of expression to call them retards. That's a first amendment issue and will bring them all sorts of public relation nightmares.

     

    reply to this | link to this | view in thread ]

  26.  
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    harbingerofdoom (profile), Oct 28th, 2009 @ 6:41pm

    lol i get a kick out of people who try to run annual comparison numbers between a closed out year (say... five years ago?) and right now. you do realize that there are still a couple months left in the year, there are still some movies that will come out and the counting will still be taking place come march of 2010? you can sit there and say "oh my god its down its down!!!" but uh.. the year aint quite over with yet.

     

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  27.  
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    herodotus (profile), Oct 28th, 2009 @ 8:31pm

    "The problem, again, seems to be that the folks at the movie studios (just like those at the record labels) only like to count the big hits as successes -- rather than the smaller projects that actually make money and make up the majority of the actual market. It's the same sort of thinking that makes movie studio people insist that we need to explain to them how they can keep making $200 million movies. That's the wrong question. The question is how do you make profitable movies. The technology has advanced such that it's cheaper and cheaper to make movies (which is why we have more of them). But notice that the studios never focus on ways to make movies in a more economical way, but how can they keep spending."

    This has been a huge problem in the music industry as well.

    A skilled person can make really good recordings for dirt cheap. You can set yourself up with a netbook based studio that the Beatles would have envied for about 600 dollars. A few hundred more could get you some decent monitors, and another couple hundred more would allow you to do a perfectly acceptable DIY room treatment. You can start with Naiant microphones, which are insanely good and only cost between 40 and 80 dollars apiece, add a couple of Chinese condenser microphones and a couple of sm57s and you're in business.

    So for about 3000 to 4000 dollars, we're talking about a recording studio that has infinite tracks, hundreds of automatable effects, samplers beyond the dreams of the people who payed 20,000 dollars for a Fairlight in the early eighties, virtual instruments like the famous Crystal...the possibilities are quite overwhelming.

    But instead of using such humble but powerful studios, instead of experimenting, testing and analyzing the recording process to see if it's costs could be pared down, the industry spends assloads of money in Hollywood and NY studios that charge thousands of dollars a day for studio rental, with thousands more for the personnel, and 300 dollars for every 15 minutes worth of that 2 inch analog tape that you just have to use. And then there are the drum techs and rented drums, the rented vintage amps and guitars...

    Seriously, anyone who is unfamiliar with this stuff should google the Mixerman diaries. The waste that takes place in the music industry is staggering. The 'spare no expense, just deliver a huge hit' mentality was born in a world where the resources necessary to make recordings were scarce, expensive, complex to operate, and difficult to maintain. It came from the way the Beatles made records: fuck around all day until you find something that sounds cool. It never really made sense as a strategy, but you sure couldn't complain about the results from a business standpoint: the Beatles made lots and lots of money.

    But the fact of the matter is that the Beatles would have gone apeshit over the freeware tools that 15 year old kids bitch about these days. The possibilities opened up by these tools are endless. Things like:

    multiple automation lanes (essentially, a bunch of invisible hands you can set to change the levels and settings on virtual instruments and effects in real time),

    audio with absolutely no surface noise and over 100 db of dynamic range,

    having as many tracks as you could ever imagine using,

    non destructive, click and drag audio editing and manipulation, on an intuitive graphic interface that has the color scheme of your choice.

    One could go on and on. But this kind of thinking is antithetical to the ethos of the industry. Paring down costs, an absolutely essential business practice that is a matter of course in most businesses, makes no sense to them. 'Big Records are recorded in Big Studios for Big Money! Any idiot knows that!' is the common wisdom.

    But the absolute triumph of the mp3 on the popular market proves that most people really just are not obsessed with sound quality the way audio professionals are. They care about the song and the performance and they demand that the recording conveys the song and the performance. The number of people who will know or care whether the drums in a song were processed with a free compressor plugin on the one hand, or a 40 year old Fairchild limiter on the other, are vanishingly small. And yet, those 40 year old limiters can fetch over 10,000 dollars on the open market, because, that's right, that's the limiter that the Beatles used, and there are people in the industry who believe that it has some kind of magic pixie dust that will help them sell records.

    But all the listening public cares about is that the drum part, however recorded, makes them shake their collective ass spontaneously when they hear it. And that has absolutely nothing to do with the technology used to record the drums.

     

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  28.  
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    Anonymous Coward, Oct 28th, 2009 @ 8:32pm

    they hate because they lose money on internet piracy, thats it, you cant understand this

     

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  29.  
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    Anonymous Coward, Oct 28th, 2009 @ 9:06pm

    Re:

    If you repeat it ten times and close your eyes and tap your shoes together and spin around in circles perhaps it will magically make this true.

     

    reply to this | link to this | view in thread ]

  30.  
    identicon
    Steve, Oct 29th, 2009 @ 12:35pm

    Well, somebody had to man up and be the resident nutjob after Jack Vallenti passed. Remember when "the VCR was to movies what the Boston strangler is to Women?" Where do these find these guys?

     

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  31.  
    identicon
    Anonymous Coward, Oct 29th, 2009 @ 10:45pm

    If the "200 million dollar" question is the "wrong question" (lol) I would like to know at what figure does the question become acceptable?

    100 million?

    50?

    10?

    700k?

    5 bucks in silly putty and a bit of string?


    Mike, it's only the "wrong question" because it brings to light the inadequacies of your economic theories. Similarly, I would like to know exactly how you, (pursuant to your vast experience in filmmaking, of course) would be able to produce, say, "Iron Man" for significantly less than it was made for?

     

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  32.  
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    Mike Masnick (profile), Oct 30th, 2009 @ 2:01am

    Re:

    If the "200 million dollar" question is the "wrong question" (lol) I would like to know at what figure does the question become acceptable?

    Heh. It's not the figure that's the problem. It's basing the question on any number.

    The correct question is "how do we make profitable movies that people want to watch." Sticking a specific number in there makes no sense.

    Mike, it's only the "wrong question" because it brings to light the inadequacies of your economic theories.

    Hmm. How so? Any business model is based on the premise "I need to spend $x, tell me how to make money" is a dumb question.

    Similarly, I would like to know exactly how you, (pursuant to your vast experience in filmmaking, of course) would be able to produce, say, "Iron Man" for significantly less than it was made for?

    That's not really my job is it? But we've actually pointed to lots of examples of people making incredible special effects on the cheap.

    But, again, you seem to be focused on the cost side of the equation. So let me ask you this: under the current system, how do you make the $50 Billion movie? What, you can't tell me? Then clearly your "old way" of making movies is a failure. Because I want to make a $50 billion movie.

    See how dumb that is?

     

    reply to this | link to this | view in thread ]


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