Time Warner Shouldn't Give Up On Blockbusters Yet

from the oh-it's-different-this-time dept

In an intriguing piece, Business2.0’s Erick Schonfeld offers his prescription for what’s been ailing his employer, Time Warner. One of his suggestions is that the company reduce its dependence on high-cost blockbuster films, and instead focus on, in his term, nichebusters — small, cheaper products that target fans devoted to a certain area. The case for niches has been bandied about for a while, particularly since the term “long tail” has been popularized. But does this strategy make sense for Time Warner? Schonfeld argues that media can no longer depend on megahits, a statement that is probably based on recent weak ticket sales. But due to the nature of the industry (the economics of which are similar to pharmaceuticals and venture capital), profit outcomes are highly variable. Looking at a few years of data and drawing a conclusion is like rolling three sevens in a row in craps and declaring that the dice must be loaded. Even if low-cost, niche content will be big (and the popularity of Youtube, et. al. suggests it will), there’s a fundamental reason Time Warner shouldn’t alter their strategy: they have no competitive advantage in this area. What a company like Time Warner has is its ability to marshal the hundreds of millions it dollars it takes to make blockbusters these days. This is a great barrier to entry, one of the few advantages of mammoth size, and not something they should forfeit too readily. While the big media companies have a lot of adapting to do, if they’re going to thrive in the digital age, quitting production of popular movies wouldn’t be a wise strategy.


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Comments on “Time Warner Shouldn't Give Up On Blockbusters Yet”

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3 Comments
discojohnson says:

Supply Chain

If Time Warner were to make niche movies that appeal to, say, 10% of the viewer population, the consumer still has to be convinced to go to the theater to begin with. This has been discussed in length already here on Techdirt. Now, if they focused soley on blockbusters (I would guess that most people in that business know a blockbuster when they hear the pitch or read the script). Time Warner does not know the marketing over the Internet model, so they should force traditional production companies out of the blockbuster business and leave the web to those that can make more, smaller movies. There will always be a high demand for a theater experience that’s worth the price of admission.

Anonymous Coward says:

Time Warner (and all media giants, for that matter) should not bother with either niche films or blockbusters. Instead, it should commit honorable seppuku as quickly as possible. Not that the accountant-whores who run such organizations are even capable of understanding concepts like “honor” (or “quality,” or “entertainment”).

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