Business Musings: Entertainment in the 21st Century (Part One)
One of my routes on my morning runs each week takes me past a small independent high-end movie theater, privately owned. It has a full restaurant, a beautiful bar, a space that can be rented for civic events, and six small theaters with extremely comfortable chairs.
In the Before times, as one reporter likes to call everything pre-Covid, the theater had a wait-staff that would take your orders while you sank into those seats to watch your favorite blockbuster. Every Democratic Presidential candidate held an event in that theater in the run-up to February’s caucus. Not a week went by when I didn’t see or get an invitation to a special event held there.
In March, when quarantine set in, the theater’s owners put up huge sheets of plywood over the display windows on all three stories of the building and made the lovely balcony inaccessible should someone get the bright idea to climb up there.
No one has painted the plywood, unlike so many other plywood coverings in the Arts District here. So the high-end theater now looks like an abandoned building. A group of homeless men slept against the plywood until someone moved them out. Occasionally, one of the totally stoned people from the high-end marijuana dispensary across the street will sit on a bench near the plywood, swaying to music only they can hear.
This morning, as I ran by, an extremely buff tattooed white man wearing shorts and thick specialty gloves practiced his handball moves against the plywood. For two blocks, all I could hear was the thud-bounce of a handball slapping up against the wall and rebounding back to him. He had quite a rhythm going as he moved all along the street and sidewalk, controlling that ball.
The scene reminded me of the days early in pandemic lockdown when we could see the empty Justice Center Parking lot from our condo. Every Sunday, like clockwork, some guy drove in from the suburbs with his golf clubs in tow. He practiced his chipping in the empty lot for hours, before returning to whatever cookie-cutter neighborhood he had come from.
Only back then, six months and three-hundred thousand years ago, the golf courses were closed, as were the gyms. Workouts could only happen outside.
Now, both businesses are open, albeit with new rules and at new capacities. But many movie theaters aren’t. In fact, the world’s second largest theater chain, Cineworld, announced this month that it was closing all of its U.K. and U.S. movie theaters. That’s 663 cinemas or, in real world terms, 45,000 jobs.
This wasn’t some arbitrary decision. It was based on financial realities. Cineworld’s revenues fell 67% through June. The company had a stock “tumble” (to use Bloomberg’s word) that erased 2.7 billion pounds in market value. (That’s nearly 3.5 billion dollars, just gone.)
Cineworld reopened its theaters in late summer, in anticipation of some blockbuster releases, like Christopher Nolan’s Tenet, which was supposed to rescue the theater industry by luring us all out of our homes to watch this film in masked comfort, socially distanced from our other movie-going comrades.
That didn’t happen. A film that cost $400 million barely brought in one-tenth that after a month of release. Disney gave up, and released the live-action Mulan to its streaming service (at the price of an additional $30 over and above the service). Entertainment Weekly says that Disney would need at least 10 million viewers to buy the film to recoup the cost of making that movie, which is “roughly the same number of new subscribers Netflix has added over the entire course of the pandemic so far.”
The implication is that Disney won’t achieve that…at least not right away.
That’s the thing about event movies. For the past 45 years, ever since Jaws hit the big screen in June of 1975, Hollywood has relied on the summer blockbuster season. As ticket prices went up and screen numbers went down, summer blockbuster season stretched backwards, into the spring, and then into the fall, except for a tiny hiatus in August and September.
In the last few years, even those two months started seeing Event Movie Creep. With the advent of streaming, event movies were pretty much the only reason for most people to go to the movie theater. The smaller films played well on large TV screens, and were perfectly suited to home viewing, where you could pause the film when you needed to pee, have a meal of your own choosing while watching, and wrap up comfortably in your favorite blanket if you wanted.
The problem with event movies is that they were a high wire act. Yes, they paid off well—and quickly—if they were something the audience felt they needed to see, but the risk was great. Flops weren’t minor. A series of them could cost a big studio exec’s job or, in a few instances, the entire studio itself.
If this sounds familiar to regular readers of this blog, that’s because traditional publishing mirrored the event movie model in all its ugliness. Traditional publishing had its series—and they were/are aging: John Grisham, Stephen King, Lee Child—most of the “guaranteed” bestsellers belong to writers who first hit the list more than a decade ago. In many cases, these writers first hit the list in the late 20th century. King’s first bestseller predates Jaws. Grisham first hit the list in 1991, as did Diana Gabaldon. Lee Child is a relative baby, with his first bestseller arriving around 20 years ago. Suzanne Collins’ Hunger Games series is 12 years old as well.
There are very few new bestsellers, and those who received “bestseller money” are as risky as a stand-alone summer tentpole film. The highest grossing movies of 2019 (we can’t count 2020) were Avengers: Endgame, The Lion King, Frozen II, Spider-Man: Far From Home, Captain Marvel, Joker, Star Wars: The Rise of Skywalker, Toy Story 4, and Aladdin. Not a single one of those films was a new break-out series. Not a one.
And now, that model is broken, maybe permanently. According to Entertainment Weekly in “Will Covid Kill The Event Movie?” not a single studio has greenlit a movie with a budget of $200 million or more. Benjamin Svetkey writes “that’s partly because the studios have had their hands full figuring out what to do with all the finished or half-finished $200 million-plus tentpoles already in the pipeline….”
After all, it was this month’s announcement that Metro Goldwyn Mayer will delay the new James Bond film for at least two months that sparked Cineworld to shutter its cinemas. Cineworld was already losing $60 million a month with its theaters partly open. It only had $285 million on hand at the end of June. To wait until the Bond film showed up, Cineworld would have needed bridge loans of $500 million or more, and since the company was already having trouble meeting its obligations, that really wasn’t an option.
For companies like Cineworld, these facts are public record because the companies are publicly traded. We have no idea if traditional publishers are having the same problems because most of their records aren’t public.
We do know that they juggled blockbuster schedules and can’t seem to meet other deadlines. Yes, print sales are up, but ebook sales aren’t doing what they should be because of terrible decisions a decade ago. John Sargent, Macmillan’s chief executive, is leaving the company in January, clearly forced out, partly because of his terrible decisions regarding ebooks over the past decade. (And his conservative bent and the lack of diversity in the company and the work atmosphere and, and, and…).
I expect to see more such departures, combined with restructuring and several imprints and/or major companies shutting down over the next year or two.
I don’t know what will happen with the bestselling novels, because I don’t know what’s going to happen to bookstores. We’re waiting with bated breath to know what’s going on at Barnes & Noble. Powell’s Bookstore, one of the big independents which, until this year, was seen as financially stable, remained closed until mid-August, when it reopened some of its stores. Now, its CEO, Emily Powell, is stepping down. Getting rid of the CEO of any company is a sign that the company is going in the wrong direction.
Closed bookstores, closed movie theaters. What does it all mean?
It means that the blockbuster mentality—earning millions (or billions) in the space of a few weeks is nearly impossible.
But as far as new Event Movies are concerned, the only players placing those kinds of bets have been cash-rich streamers like Apple (which greenlit Martin Scorsese’s $200 million Killers of the Flower Moon in May) and Netflix (Ryan Gosling’s $200 million thriller The Gray Man in July). The rest of the town has all but left the game.
Streaming services don’t need to recoup in a few weeks before the film gets replaced with something else. The film can stay on the service indefinitely or for several months or years, while word of mouth takes over.
That’s an ancient model, but one that is best suited to storytellers.
All of these constructs—movie theaters, bookstores—became a thing in the 20th century. Movie theaters were designed, not for the communal experience, but because when they started that was the only way to deliver content to the viewer. The movie reels were actual bits of film on camera reels. It took specific equipment to get the movie onto the screen.
TV took a big bite out of movie-going, but the theaters enhanced the experience with technology that wouldn’t work on the small screen. Yes, viewership in the theater went down, but prices went up. Then video cassettes came about and DVDs and finally streaming, and the quality of the TV itself improved, and suddenly, going to the theater was quaint.
Which is why the movie theater opened in my neighborhood. That theater was an all-around experience. Dinner and a movie, maybe drinks ahead or after the show. But the venue was (somewhat) realistic by renting out space for big corporate and political events for extra revenue.
Will that theater ever reopen? I have no idea, because I don’t know how much cash they have on-hand. I talked to one of their investors in September, and he didn’t think they would be able to rebound.
I’m not sure any theater will.
What does all of this mean for storytelling, for earning money in the 21st century, and for the entertainment industry in general?
Actually, where others are seeing loss, I’m seeing opportunity. I have believed for a long time that we need to get rid of the 20th century model, which was built on scarcity. In books, the 20th century model was built on shelf space which was limited by its very nature.
With the arrival of ebooks, though, shelf space is more or less infinite. We can get product that we’ve wanted whenever we see it and we get irritated when we can’t—because it’s not available in our country, for example, or it was never released in ebook (yeah, there are still companies that do that).
But here’s the problem for big publishing companies and big studios: their business model is based on huge outlays of cash, followed but quick but large earnings. That’s why some of these companies take out large loans. The loans cover the needed cash outlay until the money flows in.
That model doesn’t work with streaming. Nor does it work in modern publishing.
As most writers with an indie (self) publishing career know, the money comes in every month, not once or twice a year, not just after release. There is no big money. There’s consistent money, and sometimes the consistent money grows into more consistent money. But millions upon release? It happens only rarely. Now, it’s hundreds of thousands on release for big ebooks, and tens of thousands or thousands or maybe even tens for smaller releases.
It calls for a completely different business model, one indies of all strips—movie-makers as well as indie publishing writers—are well situated to take advantage of.
It will also have an impact on storytelling. A good one.
For a decade now, the smaller film got crowded out of the market by the blockbuster. Before streaming became ubiquitous about five years ago, the smaller films rarely got viewed outside of the big markets like New York and Los Angeles. Maybe a handful of small independent theaters could risk showing the award-winning small films, but most theaters couldn’t afford it.
The same with small novels. Books that appealed to a niche audience were getting (are getting?) harder and harder to find through traditional publishers. And what traditional publishers defined as niche was often wrong. Look at the sales of genre books from diverse perspectives—particularly romances featuring protagonists of color or LGBTQ+ protagonists. Theose sales in indie are through the roof, but even now, traditional publishers who champion books by non-white or non-straight or non-male perspectives are seen as “risk takers.” Which is ridiculous in the 21st century.
The thing that has to change are expectations. Not just those of the writer/business person or publisher/filmmaker, but also those of the entertainment consumer.
I’m not sure how many of us will actually lament the loss of a movie theater. I do miss going to tentpole films, but I stopped going to a weekly movie about twenty years ago. There was rarely anything I needed to see immediately, which was my criteria for seeing a film in the theater (no matter how comfortable that theater was).
I also no longer see the reason to read a book upon its release. I can wait until I’m in the mood. I’ve always been like that about books, but when shelf space was limited, I had to buy the book at release or risk never seeing it again. That part of the equation has changed.
So, in the next few posts, I’ll discuss expectations from both a storytelling perspective (craft for writers) and from a business perspective (how we earn money). I’m hoping to do a larger analysis, maybe toward December, on the ways that the 20th century entertainment model is being blown up and replaced. I might have to wait on that, though, given the way that events keep spiraling by. I might not have enough information by then.
I did think that handball player was prophetic, though. That boarded up theater, with its plywood and sense of abandonment, seemed like something from the distant past.
Maybe it is.
The present is still handball played in an empty street, but the future is just around the corner. And as we move ahead in the 2020s, it is becoming clearer to me that the opportunities to rebuild into something more suited for today are all around us.
We just have to figure out what we want to build and how. We need to let go of the models we grew up with, and figure out how to step into the future.
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“Business Musings: Entertainment in the 21st Century,” copyright © 2020 by Kristine Kathryn Rusch. Image at the top of the blog copyright © 2020 by Kristine K. Rusch