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Film Industry is definitely not heading for implosion

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The film industry is doing the exact opposite

Steven Spielberg and George Lucas have predicted an ‘implosion’ in the film industry but the reality is, this is not what they said, nor are we are heading for such a disaster. Instead, the film industry today is heading toward a revolution and it’s going to be an incredible moment that we will cherish and celebrate for generations.

Going to see a film at the cinema is as old-school as heading to a store to buy a DVD yet we still do it, albeit in fewer numbers every year. Audiences love going to the theatre, but they are more selective as diversity increases, and prices also rise. In the past few years 3D was supposed to step in, by bringing back the quality and re-inventing the experience of viewing a film, but it hasn’t worked. Even DreamWorks CEO Jeffrey Katzenberg back in 2011 made a point about how mediocre releases had undermined the format. 3D isn’t going to replace falling demand at the theatres either (even with better films), and with high individual ticket prices for 3D screenings, the future of Hollywood blockbusters will certainly not be saved by the format.

Spielberg and Lucas predict that theatre tickets could reach $25 and that movies will run for more than a year, moving us toward a “Broadway play model” as high budget movies fail. That reality is entirely plausible, but not one that should deter or lead us to depression or produce the argument that the film industry is heading for a breakdown, or collapse. These ideas are completely false, and Lucas along with Spielberg never suggested that the film industry was in a mess. I am shocked that some of the world’s biggest newspapers are running the headline that it is. It would be absurd to attend the opening of the USC’s School of Cinematic Arts to then tell the next generation of filmmakers that they had no future whatsoever.

In retrospect, filmed content is thriving, and the demand for it is exploding (not imploding), and I will get to this point further down with undeniable proof.

So what’s this revolution we’re on about? Domestic ticket demand at U.S theatres is at its lowest point since 1996, and continues to fall year-on-year. Fewer blockbusters are being made, but the ones that do shine, have enormous marketing budgets to push them out for wider releases. It’s getting more and more risky for these mega-movies to exist, because in order for them to succeed they have to reach such a huge demographic of potential viewers, who are more divided than ever by the disruption of choice.

Last year alone more than 600 movies were released theatrically in the U.S market alone. We’ve never had so many options, and the competition is getting fierce at the top, but also in the middle. Hollywood blockbusters make up most of the box office takings, but that wont always be the case, and this is where our revolution begins. The technology that we interact with will change how we go to see the movies, and that’s where Hollywood has to make a change, and embrace it, instead of trying to survive on the old distribution model. (I welcome any debate on this to move us forward.)

Just this past week, the “untouchable box office master” Will Smith earned what critics called a measly $27 million disaster with the opening of ‘After Earth’. That’s a whopping figure, yet a catastrophe for Sony, who put so much effort in marketing that incredibly expensive movie, so much so that they are set to lose $20 million on it.

Their losses on that movie could produce almost 7 movies. Just look at ‘The Purge’, a $3 million movie that is conquering the box office in its opening week..

Whereas before going to the cinema was an experience we had much pleasure in sharing with others, we are now so bombarded by digital, ie the web, tablets, gadgets, that our desire to see big, loud movies at the theatre is declining and our desire for a more personalised experience is increasing. Cinema systems are becoming affordable, and the technology to enjoy ‘epic’ at home is approaching, and this is also going to play a major role away from the theatre. DVD sales, and physical sales will also eventually collapse. There will be insufficient market demand for these films on physical mediums for producers to turn a profit in the next decade as we switch to content on demand via the web and cable. The Netflix and Amazon Instant business model will ultimately prevail, although studios might not want this to happen, they know it’s inevitable. That’s why the very concept of a $200 million blockbuster cannot survive, nor can actors demand $10 million to act for 30 days. Getting a financial return from the box office in addition to profit margins from declining physical unit sales will end this type of filmmaking. However, on the bright side, the cost of film production is falling, and the scope of what we can do is increasing. We are at a point where creativity and content is booming. Just look at crowd-sourcing as an example of how people are pooling resources together to create incredible content. Have we ever had so much opportunity to work together to make the films we love? Definitely not.

In retrospect studio films will survive, but they will be produced differently. Budgets will fall, but demand for viewing them will increase, just not in the same places (ie not only at the theatre, but also through digital distribution). Back in 2009 Cisco predicted that 90% of consumer IP web traffic by this year would be driven by videos, and we are definitely consuming more filmed content moving forward.

Content is without a doubt thriving. Youtube is getting a billion views + a day. Short videos are becoming our way of communication and we are watching more videos now than at any other time in history. We are plugged into the web through our phones, tablets and computers round the clock, and the world’s industrialised nations are investing billions in the digital economy of the future and we will practically breathe it. We will watch and consume content on Smart TVs and tablets, and this is the future that has to be embraced now.

So in conclusion, feature length content and Hollywood blockbusters just have to make that transition, and along with it, a viable business model to support the filmmaking behind it. We are in no way at a disaster point. Steven Spielberg and George Lucas are iconic filmmakers, but they have certainly not predicted the demise of the industry, as many have stated. We are at the point of a revolution, and a massive change, and I would urge you guys not to give up on your dreams, but to live them. The film industry is here to stay but it will be different tomorrow.

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