Lighting The Fuse

As I look over the beleaguered terrain, I see a vital business being subjected to a death by a thousand cuts. I do not think exhibition is in some death throes, but instead being subject to a series of calamities which in the end will brutally force its re-invention. Exhibition is changing rapidly. COVID accelerated the re-shaping but it has been a long time coming.

A paradigm shift is taking place right now, a change in the base economy of exhibition and also a shift in the players making an impact. In our society since the 1980’s we have been in a headlong rush to be the biggest and the baddest. Now we have three monolithic circuits, one seems to be guided by mature hands and the other two are a mess. If any of these three circuits sneezes the industry as a whole gets a cold. We have other players in this business who are saddled with vast amounts of debt. Encumbered by the past where money was cheap and expansion was made easy, now these companies will either overdose on their debt load or be forced to dry out painfully in some sort of rehabilitation. Meanwhile, the pushers of cheap money are on to their next dance and will entrap other industries in their packaging and commission exploits.

Where we are today is a result of events in the 1980’s. First of all the emergence of the cheap real estate market, which saw mall after mall being built. They all wanted a movie theater as an anchor tenant. The glow of the rise of the blockbuster hung in the air. Theaters were built without much long term thought as to the dilutive aspect their building would have on the core of the industry.? The amount of screens quickly doubled, in order to service the suburban screens and the last of the great downtown theaters began to be shuttered. This forever altered the idea of the movie as a spectacle and started the screws turning and imposed the sense of commodity on the 20th Century’s greatest artform. Circuits rose, stumbled, realigned, and moved to having a focus on tenant allowances and inexpensive money. For a while it worked.

Some pretty smart guy saw an opportunity in having the post office deliver books, DVD’s, and music to your home.? His idea took off and quickly started forcing the closure of bookstores. It became apparent that if this idea expanded it would spell a downturn in the American Mall economy. This year NIKE and other major retailers are looking to shift their entire business away from any form of retail platform to an entirely online marketing effort. This decision will most likely put 8% more on the bottom-line, but really signals the collapse of the mall culture in America. This has a deep impact on the business of exhibition and impacts a fairly high percentage of theater locations.

In 1985, 20th Century Fox (I just got a wave of nostalgia) commissioned a study, the subject was “ if the next Star Wars movie was to just be released into the home, how much money would it make the first night of release”. Now this was based on a $4 revenue. When completed, the study had concluded that if the technology existed to deliver this movie into the homes of Americans it would make $114 million in one night. $114 million that did not have to split with the theaters, that did not require cumbersome 35mm prints and would create a one to one relationship with the consumer with no intermediary. The results made the studio execs giddy.?

Ever since then they have been itching to move towards the scenario and have headed to it with a blind abandon. The problem is that the study was flawed and while the survey produced results that really appealed to the studio heads, the factors which made up that study did not take a lot into account. They transposed the theatrical experience to the home when it was not at all applicable. The various missteps which have taken place in streaming all are red headed stepchildren of that poorly executed survey. The family room and the theater are two distinct and different cinematic economies.

One day in the mid 1990’s, a studio executive woke up. He tossed aside his silk sheets which were made from material produced just outside of Beijing. He walked slowly to the nearest bathroom, looking into the mirror which was made by the Fuyao Glass Factory in Fuqing China, grabbed his Waterpik which was assembled in Shenzhen China and began his day. He blissfully readied himself as he thought of what he wanted to accomplish today. He had a bagel and some fig jam for breakfast, alongside a steaming cup of Oolong tea harvested from the slopes of the Wuyi Mountains in the Fujian Province. He got into his car, a Range Rover, looked out his windshield again produced by the Fuyao Glass Factory, and then checked his IPHONE, made at a FOXCONN plant in Zhengzhou. He started his car and began to make his way to his office, located on Melrose Avenue. On his way he started thinking about how to widen the revenue base for the movies he was responsible for and could achieve much more revenue. As he drove past a P.F.Chang’s it came to him….CHINA.

“Yeh China has a lot of people….people like movies….Chinese people will give us their money…this is a great idea.” When he arrived he started advancing his plan, gaining a lot of traction at his studio and others. This studio head organized a junket to Beijing to meet the heads of the various government branches that controlled the Chinese motion picture business. He was amazed at how flexible and accommodating the Chinese were and on top of that there were hordes of newly minted Chinese industrialists who were anxious to invest in movies.

A trap was being set, Hollywood entered the mouth of the dragon and they had no idea.

After a decade of dancing with the Chinese bureaucracy, American movies started appearing on Chinese screens. The Chinese government came to him and suggested that maybe it would be a good idea to make the movies less American, that maybe there should be a China angle…after all if they wanted access to Chinese money and Chinese markets they should be a bit more gracious. The studios all agreed. When AVATAR made $200 million in the Chinese market the die was cast.

A plan had been put in place, a plan to dilute American cultural supremacy. The Chinese were intent on imposing a positive view of China to the world and they were intent on having Hollywood do the dirty work for them. Their intent was to make China the world’s source of entertainment, not America. It became clear that the Chinese market would only really accept American diluted blockbusters. These were spectacles. The American motion picture tradition had long built the foundation of the rise and triumph of the underdog, where the small guy can transcend? and emerge victorious. This kind of storytelling was more than contrary to the Chinese government who aspired for conformity and not individual attainment.

Movies started to present diluted storytelling and had diminished appeal to American audiences. Hollywood soon began to play into the Chinese machinations as a way to seek funding for movies. Do it the Chinese way or no market and no money. Hollywood became a battleground in a culture war that is being fought today. The problem is that many in Hollywood have taken their 30 pieces of silver. China has taken the avenue given to them by Hollywood and in places like Africa and South America the Chinese are beginning to use movies to shape perceptions and attitudes. It is not good.

When the remake of RED DAWN took place the studio involved was told that in no uncertain terms if you made the Chinese the villains there would be trouble. So the movie’s villains were made North Koreans. Wolf Warrior 2 was a 2017 Chinese produced movies which had a Chinese commando squad protecting African from an evil American led band of mercenaries. The tagline for the movie was "Anyone who offends China, no matter how remote, must be exterminated.” To this day Hollywood accepts Chinese money and fall in line when Beijing demands changes. Nice eh.

The government in ignoring this turn of events and the manipulation by the Chinese, really have done America as a whole a deep disservice. They have diluted the story telling, shift focus and sold America down the river.

I wanted to lay out the three industry changes, which have started the decline of the business of exhibition. The pattern of rising to the opportunity of short term greed has forever altered moviegoing and should start to be countered. Further change occurred like stadium seating, the regime of virtual print fees and the consuming of Fox by Disney would further negatively alter the landscape.

The damage done is profound and I don't really know if we fully grasp the impact.