The Big Shift

I do not know about you, but I am finding the world an increasingly confusing place. In the world of exhibition, we are experiencing either a tsunami or a drought. The strikes go on, slowly shaping the amount of product available for theaters. The studios are conducting a balancing act by widening their cash reserves while at the same time limiting their product set.

?Under the camouflage, the major streamers are shifting their focus to a global market and lessening the internal need for North American produced products. Streamers are discovering the large features have only a limited shelf appeal. This is a repeat of the launch of VHS revolution where rental stores saw a solid business with major theatrical release then saw them die a quick death after the 30 day mark. B Movies saw a steady 6 month business. What is past is usually a prologue.

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What is profoundly baffling to me is we also have the example of HBO. When it launched its bill of fare was the best of Hollywood, slowly due to a changing audience base they reverted to series like the Sopranos to guide their growth and their reliance on features was reduced. It is a viewership pattern that we are now seeing repeated within streaming.

?Streamers are seeing diminishing returns by investing in big dollar streaming movies. On Netflix they judge success and failure on the amount of hours a movie is viewed.? The tepid? “Heart of Stone” was viewed globally? 143 million hours in its first 10 days of release.? “Extraction 2” was viewed 175 million hours. and “The Mother,” did similar numbers of hours in that same time period. Now that represents in terms of ticket sales anywhere from 70 million tickets to 88 million tickets sold. That is not really a fair comparison given that it is becoming increasingly hard to get the American public off of their sofas. What is interesting is that Wall Street now realizes that home runs do not build a service but consistent singles and doubles should be the rule of the day.

?What has caused waves in the pond of distribution is the announcement of the Taylor Swift theatrical release. The Taylor Swift AMC announcement gives rise to a simple fact, if a media property has its own synergy like Taylor Swift’s ERAS tour then it can define its own space in the theatrical universe. I am kind of chuckling that while I admit I do not get the Taylor Swift phenomena she is wiping every spot of gravy off her plate. The studios have been producers and distributors but if you can shake off the shackles of a perceived exclusive highway which they own the tolls and remove their ability to act as an exclusive intermediary then things change and change for the better.

?The world of real estate is changing, the idea of communal spaces are being redefined and the world of movies is changing. Market pressures and technology have created a need to really think about the shifting reality facing movies. The studio no longer has the consumer focus and the exhibitors are locked into some kind of Stockholm relationship with the studios. There must be a deep rethinking of the scope of offerings. You have a model that has a litany of reduced market share and with a future that does deeply hint at the need to diversify. Studios should make the admission that by their efforts of attempting to grab the market share globally with a strong focus on China, they have eroded and damaged the idea of American storytelling. They have detached themselves from their greatest marketing tool, a distinct American voice. A voice that the world was highly entertained by. The studios must cry out mea culpa and then seek to regain their tradition.

With the advance of faith-based cinema, beach heads are being made for alternative voices and are becoming part of the mainstream. The studios, who are having a diminishing share of the media universe are facing a deep crisis of relevance. The problem is that they do not realize it.

?The factors leading to this lack of relevance are many. There is also a perception problem. A perception problem is that with the acquisition of the powerhouse agency, CAA by the owner of French luxury goods Kering the focus of CAA could be building brand awareness and no packaging good movies.? Kering controls such brands as Gucci, Saint Laurent and Balenciaga.

“Barbie” has shown that the storytelling behind Hollywood and the talent attachments can move an iconic brand to far greater heights. My guess is that brand affinity with celebrities has driven interest in this acquisition.

Kering is headed by Fran?ois-Henri Pinault, the French billionaire and husband of Selma Hayek. So obviously he has depth and awareness of the potential of Hollywood. CAA was purchased through Mr. Pinault’s family investment firm? Artemis.

Pinault stated when announcing the purchase deal that it gives Artémis “increased diversity, both in terms of geographical footprint and business activities, to our other assets, CAA has insight, relationships and access across key sectors, combined with their widely regarded level of collaboration and innovation, gives the company a formidable role in driving global opportunities.”

?The problem is that audiences are as a collective bunch, a smart bunch, and they will soon realize that paying admission for something that is ostensibly a commercial is a tad off putting. As well as a corporate focus of an agency owned by a luxury goods manufacturer there is further erosion away from the middle and working class of the country. CAA packages a ton of movies and tv….lets make sure we are not consuming very expensive commercials.