The Future of Cinema
Roughly 1.26 billion movie tickets were purchased in North America between January 1 and December 31 of last year, according to preliminary estimates by The Hollywood Reporter. That sounds like great news, a massive number. It is not.
That’s the lowest attendance since 1995. That’s the year Toy Story came out. It was 11 years before Disney bought Pixar. Val Kilmer was playing Batman. James Bond had just returned after a 6-year hiatus. It was the year of Braveheart. But really, it was the year of Waterworld.
Attendance is never the number Hollywood touts because it’s never very impressive. It goes up slightly some years and some years it goes down a bit. Instead, they focus on “box office” which is a fancy term for revenue. But it’s also bullshit, because never explicity stated when touting “box office records” is that ticket prices increase each year. And more recently, 3D and IMAX have added substantially to the price of a ticket. In other words, they’re always juicing the numbers. This is the steroid era of Hollywood.
Or, it should be. But a funny thing is happening to the box office numbers as well now. They’re also down. Preliminary reports have the numbers down about five percent this year in North America (versus six percent for attendance — the gap, of course, is the ticket price). The biggest year-on-year decline in nine years.
So Hollywood is in a funk. But can it break out? Or was this just another “meh” year? My bet is that we’re in the midst of a trend that will see cinema fully convert into something largely different than what we have known.
First, it’s important to note that while Hollywood is undoubtedly sweating these numbers, they’re not sweating them too much. Whereas the North American numbers aren’t good, the overseas numbers continue to rise — especially in Asia.
If you look at the box office numbers for every large release these days, you’ll see that “worldwide” almost always trumps “domestic”. This didn’t use to happen. Now it’s the norm. Duds in the U.S. are converting into massive moneymakers overseas. It usually doesn’t even matter if the movie is any good or not, they just have to have either star-power or be absolutely epic in scale.
This trend, in turn, is pushing Hollywood to market films more towards overseas audiences. And, higher level, it’s fueling the continued rise of the franchise films.
An abundance of sequels has been the norm in Hollywood for a couple decades. But it’s now getting out of control. Nearly every movie is a sequel or the hopeful launch of a new franchise or a spin-off from another franchise.
This is why Disney is genius. They recognized early on the importance of owning brands and IP. They bought Pixar (which, you could argue, is one of the few studios still doing original content because their name alone can boost films to stardom). They bought Marvel. And now, they’ve acquired Star Wars. If you had to point to the best three buys in Hollywood in the past decade, these would be the top three.
These sequels and franchises are not only epic in scale, they’re epic in cost. The aforementioned Waterworld was considered a colossal failure because as the most expensive movie ever made at the time, it couldn’t possibly earn back its budget.
That budget? $172 million. Today, that would be closer to the average budget of a franchise sequel. Waterworld now stands as the 57th most expensive movie ever made. I don’t have to tell you what the movies are that have since passed it. They’re all sequels or potential franchise launchers.
On the other end of the spectrum, we have films being made with tiny budgets because the studios know that with a small amount of marketing, they can easily make some money on these movies. This is especially true in the horror genre, which doesn’t require high-priced star-power.
This is the bifurcation of Hollywood. It’s happening in front of our eyes and my bet is that it only gets more pronounced in the years to come.
Because of the bloodbath at the box office this year, I believe we’ll see the studios make fewer and fewer bets, concentrating on the two ends of the budget spectrum. There will be a small number of low budget sure-things like horror movies and comedies, maybe some Oscar-bait for street cred, and a few massive budget blockbusters.
And the latter, of course, will all be franchise films.
It simply does not make sense for a big bet to be made on a non-franchise film anymore. What’s the point? All the studios are owned by big conglomerates who only see studios as adding to the bottom line. And the only way to add to that bottom line of these massive companies is to go big. Really big. And ideally, multi-year, multi-picture big. Merchandising. Spin-offs. They want billions, not millions.
It used to be that Hollywood created art which occasionally produced big business. Now they create big business which occasionally produces art.
This all spells bad news for the theaters themselves. Real estate is expensive. In an age where big new releases came out each week, the theater model made sense. In the future, when we get a half dozen big movies driving people into theaters, it gets complicated.
Ticket prices will continue to go up, of course. A few people remarked to me on Twitter that they don’t go to the movies anymore because it doesn’t make sense to pay over $50 for a couple hours with your family. Why not just stay at home and pay $5?
The recent rise of 3D was something both the studios and theaters hoped would save cinema. Aside from a few bright blips (Avatar, some of the 3D animated ones), 3D is a dud. It has a tendency to make films even more unwatchable. It will probably live on for the massive big budget films simply because it can pad the stats by a few million here and there. But, let’s be honest, it’s a business idea wrapped in a marketing gimmick. It does not improve the artform of film.
IMAX is a different story, in my view. IMAX films, created the right way, hearken back to an era of grandiose cinema. It’s an experience you cannot recreate in a living room. Go see Interstellar for an example of this.
The problem is that it’s insanely expensive to make a film in IMAX. And it’s very hard to do. There’s a reason even Christopher Nolan, the current king of IMAX in Hollywood, only shoots a portion of each film in the format.
Also, and to their credit, IMAX is very picky about which films can be distributed in their theaters and with their branding. They only want the best. So naturally, this is leading the theater chains to try to recreate the IMAX experience with larger screens. But that’s stupid because IMAX is really a combination of the creation of the film the right way and the presentation of the film the right way. These theater chains are simply focused on the latter. Again, to juice the numbers.
Even better is that we now have the theater chains attempting to make “4D” cinema a thing. What is 4D? In some cases, it’s literally smell-o-vision. In others, it’s more like a ride. And sometimes, they even spray stuff in your face. What fun! Total disaster.
The more interesting move by theaters is to create a more all-encompassing experience for moviegoers. A real “night out”. By this I mean dinner and, of course, drinks.
While this has been a trend for a while in the UK and other places, it’s finally catching on in the U.S. as well. Because, again, what’s an easy way to pad your bottom line? Alcohol. And as an added bonus, it even makes otherwise shitty films seem halfway decent sometimes!
One chain that does the dinner and drinks element well in the U.S. is Sundance Cinemas, owned by Robert Redford’s group. As an added bonus, they also have nice seats and cut out all advertising before a film. You pay extra for all of this, but it’s worth it.
Probably the best experience I’ve had watching a film in recent years is over here in London. There’s a theater called Electric Cinema in Notting Hill which is fantastic in every way. Massive recliner seats, couches, and even beds and blankets! And lots of good food and drinks.
The one downside is true all over the UK as far as I can tell: a massive, massive number of truly awful ads they make you sit through before the movie. We’re talking 20–30 minutes. It’s atrocious.
With fewer films coming out, I imagine we’ll see the closure of a lot of theaters in the years to come. The ones that do stay open will either be focused more on experience (either faux-IMAX, 4D, or food and drinks) or they’ll figure out ways to milk other money out of the space. Texting and watching movies Pop-Up Video style, anyone?
I always wondered why more theaters don’t open up to show big sporting events, for example. It undoubtedly has to do with contracts with film distributors and the rights to those sporting events. But I think there’s something to that notion if they can work through the business equation.
I also believe we’ll see more and more films go straight to digital distribution, as we just saw with The Interview, in what equated to a forced experiment. I suspect we’ll see big Hollywood and perhaps even the independent guys start to cut deals with players like Amazon, Apple, Google, HBO, and Netflix to get exclusive windows on new releases that aren’t going to theaters.
They’ll have to erase the stigma of “straight-to-video”, but I think that’s already happening. I could see the digital distribution players ponying up big bucks for the rights to certain films, and perhaps even financing some in the future, just like House of Cards and the like on the television side of the equation.
Perhaps these bidding wars will even give the studios another meaningful stream of cash outside traditional distribution. It may not be the replacement for the DVD cash cow the studios are all still looking for, but it may end up being a meaningful supplement to the blockbusters.
Wildcard: imagine if Hollywood figures out how to take advantage of VR. This was never going to be a theater technology, but it’s poised to be perfect for the living room. The content won’t be cheap or easy to produce (Google Ventures has one investment, Jaunt, working on this), but it could be the next true evolution of the medium if someone can nail both production and presentation. I would not bet against this. And this could fill the DVD-sized hole in Hollywood — if Hollywood is the one able to capitalize on this.
All of this is a world — probably ten years away, maybe less — where you go to a theater to see a handful of films each year. The tentpoles. Everything else goes right to your living room. The tadpoles.
And if a tadpole hits it big at home, it could even turn into the next tentpole!
In 2015, you’ll likely hear about a “return to form” for Hollywood as box office records are shattered. But it will be exactly in line with what I’m talking about. The films driving the numbers next year will be the second Avengers movie, the seventh Star Wars movie, the twenty-fourth James Bond movie, and so on. And let’s see what those attendance numbers look like.
