George Lucas Announces The Death Of The $200 Million Feature Film

from the good-for-him dept

Back in April, at the Cato Institute conference on copyrights, someone in the audience from NBC Universal challenged both myself and Professor David Levine from UCLA on how the movie industry could keep making $200 million feature films in a world where copyrights were less stringent (or non-existent). The response, of course, is that he's asking the wrong question. Why focus on the cost of making the movie? It's like a mainframe maker asking how they can keep making million-dollar mainframes as PCs become more and more powerful. The answer is that you don't keep making $200 million films, but figure out how to make films for less. That means embracing technology that makes moviemaking, distribution and promotions much cheaper, while also recognizing that the value of star power (which is extremely costly) is greatly overrated. While the folks at NBC Universal may not like that, it does seem like some big moviemakers are recognizing the trend. John points us to an interview in Variety with George Lucas, where he discusses why he won't be making $200 million movies any more, saying that they're just too risky. Instead, he can spend the same amount of money making a lot more video for TV or for online. While he doesn't discuss ways to make quality films for less, he's clearly realized that the market is changing -- and it's changing in a way that will make him produce more content, not less. That's important, since the assumption from the NBC Universals of the world has always been that, if they can't make $200 million movies, the world would have a lot less content. Looks like that assumption isn't holding up either.

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  1. identicon
    Glenn T, 6 Oct 2006 @ 2:14pm

    Just what are monopoly rights worth?

    So just what are monopoly rights worth? My guess is between 0% and 500%, but more generally around the order of 100%. That is, if a product would make $x with no monopoly rights it will make between 0% and 500% more than $x with monopoly rights.
    It is so often implied that monopoly rights produce 100% of returns, and this is patently false. Monopoly rights increase the returns, and I would hypothesize that this increase is often very little. People go to movie theatres for the experience and for a night out. They will continue to do that. So long as honesty is maintained and studio approval is noted people will pay the 10% of the ticket price to see approved movies. With a blockbuster like Lord of the Rings this may involve ensuring that every moviehouse in the country has access to approval to show the movie, so that overflows into non-approved theatres are minimized. It means that the timeframe between theatre release, DVD release and TV release may be shortened. This is simply an adjustment in the business model.
    The key question is why do governments provide a mandated monopoly to distort the market to increase these profits. It is providing a government mandated subsidy of hundreds of billions of dollars to companies in particular industries. It distorts the market, this money would otherwise flow to different industry segments.
    Life would go on and a group of 3 year old girls singing happy birthday in public parks would no longer be subject to arrest or harassment from the RIAA.

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