in movies

The state of the film industry is bleak

David Lieberman over at Deadline has a fascinating interview with Doug Creutz about the state of the movie industry. Overall, things are not looking good:

CREUTZ: It’s a classic tragedy of the commons scenario. Everybody’s optimal strategy is to go aggressively after blockbusters. But when everybody’s doing that, it’s bad for their collective outcome. In industries where you have overcapacity or shrinking market, typically companies get merged or they go out of business. That’s competition. That’s capitalism.

DEADLINE: Why isn’t that happening?

CREUTZ: All of the studios are owned by larger companies. So there isn’t this overriding financial pressure: “Oh my God, were going to go bankrupt. We better do something.” Paramount could lose money for 50 years and Viacom would not go out of business. It’s small compared to the overall company. There was an option on the table for them to sell Paramount to a Chinese bidder. There were lots of rumors about that. They opted not to. Why? Well, some of this has to do with it being a family business. The movie business is a sexy business to be in. Very prestigious. People have a hard time letting go of those assets. You wouldn’t see a merger unless two of the larger companies merged.

Disney is the only studio that’s really raking it in. But even for them, the growth trajectory seems uncertain:

CREUTZ: Disney’s doing great but investors expect them to continue doing as well as they are doing —  potentially, if not forever, then for the next several years. And they probably will. But in the event that they stumble, it’s going to be bad news for Disney stock. When you’re at 60% of industry profits, it’s hard to see how you go up much from there.

I was having a discussion with somebody this morning: “Now they’re doing all these live-action remakes of their animated films. Isn’t that better for Disney?” I said, “Look, how much better are things going to get?” They had the top five grossing films in the world last year and six of the top 10. I guess they could have 10 of the top 10. It’s possible. But at a certain point it’s like, “Okay, you are the industry, practically.”

If current trends continue, medium-budgeted films will keep getting squeezed out in favor of ultra-low-budget or massive-tentpole releases. By and large, the movie industry isn’t really a growth industry anymore — it has become a zero sum game, with studios all trying to out-blockbuster each other.

While it’s a great time to be a filmmaker, it’s insanely difficult to get noticed or to get any critical mass of attention these days. That will only get worse as time goes on.