Jeff Goldblum Needs To Teach Hollywood Honchos About Chaos
from the better-betting dept
As the movie studios continue to struggle, there’s been a lot of discussion about what they can do to assert their relevance in the digital age. However, before they can chart their path, it’s important to appreciate the challenges they face. As we’ve expressed before, a key component of studio economics is randomness. A few down years aren’t enough to mark a trend; in fact this year the studios are doing better than they were last year. Overall ticket sales aren’t up by a whole lot, but there’s been a noticeable absence of major bombs so far. Now, more people are discussing the role of luck and randomness in the film industry and how the studios’ failure to understand this has harmed them strategically. For example, executives with a hot hand are promoted, while those whose films have performed badly are shown the door. This may seem logical in the short run, but if you view them as roulette players on hot or cold streaks, it doesn’t make sense to assume that one is necessarily better than the other.
But just because there’s a large element of chance, it doesn’t follow that the studios can’t do anything to improve their performance. For example, instead of looking for studio heads who put out hot pictures, they should look for executives who — like executives in any other business — push cost cutting. Remember, films don’t need to cost $200 million to produce anymore. New technology allows for films to be produced with a much smaller initial buy-in. Much of the costs are, of course, for actor pay, but randomness applies to them too. You can’t buy a hit just be hiring a hot actor, so the studios should press against their high prices. Importantly, appreciating the consequences of chaos should also help them deal with the changing media landscape. The current system of theatrical releases lends itself to winner-take-all releases. When a film like the Da Vinci Code comes out it dominates the available screens, leaving the other works unlucky enough to be released the same week to fight for the scraps. By embracing the multi-channel approach, something the studios are currently in fear of, they can avoid the consequences of a bad release window. Investing money into a new project will never be a sure thing, but it’s clear that Hollywood can improve its fortunes by pushing back against some of the ways it’s always been done.