The Big Shrink

When cinema became a topic of study, in the early sixties there were four universities that really taught the subject, University of Southern California, University of California, New York University and oddly enough the University of Bozeman, Montana (long story). Today 102 colleges in the United States offer cinema as a full program.? In 2022 a grand total of 3,264 students graduated from one of these universities. Now how many of these earnest bright people are gainfully employed in the field of their choosing. Cricket, Cricket, Cricket. Let's just say that the highest unemployment rate for all university graduates is for cinema majors.?

This kind of long-winded allegory is to introduce you to the idea that the business of motion pictures is about to endure a very rapid contraction. In simple terms, we have gotten too big, too fast and now a price has to be paid.? The real estate and cheap money boom of the 1980’s caused a rapid expansion in the number of theaters,? and COVID saw a rush to expand streaming, which really did not work out and agents created a rapid expansion of the cost of production. This has all led to where we are today. We are attempting to feed an ongoing cinema economy that is just too damned big.? Be prepared for the industry as a whole to undergo major changes.?

One of the majors, Warner Bros. Discovery stock recovered slightly when a damning? report from those wacky analysts at Bank of America Global Research put forward some alternatives for the ailing Warners? that could help increase the company’s shareholders . The suggestions? include an asset sale (fire sale) , a merger with a broadcast network, and splitting into several spinoffs.?

Analysts at B of A, stated,? in pretty blatant fashion “it is becoming increasingly clear that the company, as it is currently constructed, is not working as a publicly traded entity, and transformative changes are likely required to unlock the considerable value embedded within these assets.” Basically nothing really is working in time to get seriously about re-inventing yourselves.?

Warner’s? stock has sunk? 70% since the? 2022 merger. Additionally, the company started a new round of firings this week. Wall Street does not expect things to improve anytime soon. It shuttered its New Zealand streaming service, losing 300 employees. It is projected by the time the blood letting finishes Warners will have laid off over a 1000 employees.??

Corus, the Canadian Media giant began a series of layoffs equating to 25% of its workforce. CNN laid off 100 employees, Netflix cut 15 people from its film department, Amazon cut employees and industry watchers are expecting the shoe to fall at Paramount after the merger with Skydance. In the media industry they are anticipating up to 10,000 jobs to be lost.?

At the end of the day? as Wall Street begins to turn an increasingly skeptical eye towards the entertainment business, it is beginning to realize that its self induced folly is becoming increasingly more apparent and they are looking at the folks that they funded for quick and easy answers. The problem is that there really is not one answer, but the need is for an honest assessment and a direct plan of action to be put forward.??

Netflix did some soul searching and internally decided that spending $32 million on “Spenser: Confidential” starring Mark Wahlberg was not a terribly sound investment. Heads were scratched and the solution was to invest in smaller movies, much smaller movies and ones that were in specific genres. Now Netflix has some pretty darned intelligent people attached to it and in attempting to right the content boat have really come to the crux of the matter.??

Things have to become smaller.??

In the heady days of movie going in the early 80’s there were about 17,590 screens. In 2007 that number had increased disproportionately to 39,000.? Drive-ins had 730 screens in 1980, coming down from a high of 4,000. Today there are around 400 left. The days of waiting excitedly in line for a movie was squelched by the increase of screens and the wider amount of prints being released. When VHS first came on the scene, movies in theaters enjoyed six-month windows. A strategy that greatly enhanced both industries.??

From 1995 to 2009, the six major Hollywood studios Walt Disney, Warner Brothers,? Universal, Paramount, Twentieth Century Fox, and Sony together released nearly 112 theatrical films per year on average. That number began to become smaller. In 2023 that number shrank to 88. It became harder and harder for smaller pictures to break through because of the blockbuster mentality imposed by the majors, and because the majors and the major circuit the blockbuster became the drug that fed Wall Street. There are not enough movies and too many theaters,??

The studio, seduced by technology, got sucked into streaming by Wall Street’s and their own greed.? Streaming stumbled. They had ignored theatrical and they created a content cycle that began to strangle the movie going experience. The audience remains and as? “Twisters” has shown, are just waiting for the studios to deliver in order to show up to the theater.? Now with the merger of Skydance? and Paramount, David Ellison son of Oracle's Larry Ellison will descend onto Hollywood with a magic bag of tech including a deeper involvement of AI in the moviemaking process. There is a deep danger for studios to get seduced by technology again and they should really re-learn the fundamentals of storytelling first.?

Things are going to change. I believe that the cycle of mergers and kinky relationships with technology are coming to an end. I think we are going to see the splitting of the studios away from the current bloated giants. We need studios to emerge who are going to re-imagine proper windowing. Reducing the amount of prints being released, a movement to build and rebuild smaller markets and a wariness of the reliance on blockbusters to sustain an industry.?

The Russian Roulette of exhibition has to come to an end and it is time to think small....

Domenico Del Priore Rob Arthur John Sullivan Laura Peralta-Jones Steve Winn Tony Franks Kevin Mitchell