Interesting persepctive on movie industry & downloads

[nightflier]

I thought this might be of interest considering some of the discussion that's been had about the topic:

Is 99 Cents the New Free For Movie Downloads?
By: Andrew Robinson
October 6, 2009
http://hometheaterreview.com
http://hometheaterreview.com/is-99-c...vie-downloads/

It's no secret the film industry is hurting these days. While the month-to-month theatrical earnings seem to fluctuate compared to previous years, overall earnings are down. Home video is no different as DVD continues its downward spiral aided by the confusion caused by the introduction of Blu-ray and a shaky economy. Film downloads are on the rise, but they have failed to ignite a firestorm in the manner of their musical counterparts. In response to the growing crisis, small studios or mini-majors have closed their doors and the larger studios and distributors have ceased production and development on future projects for up to two full years, as well as laid off scores of loyal employees.

As a filmmaker, the rapid decline of Hollywood is a bit unnerving, but not wholeheartedly unexpected. Beyond the current economic climate we find ourselves in, which has had a profound effect on seemingly everyone from Hollywood to Joe the Plumber, I can't help but think all of this, or at least most of it, could've been avoided. Hollywood is banking heavily on 3D to pull theatrical sales out of the toilet and, on paper, it appears to be a good strategy. However, this still doesn't solve Hollywood's problems with home video and the rise of Internet-based video services such as YouTube and Hulu. For decades, home video has been the bread and butter of just about everything Hollywood has to offer. Home video has been the life's blood of the film industry since VHS and what home video couldn't provide, international sales could. With both home video and international sales sinking faster than the Titanic, the studios have begun taking a hard look at the Internet and subscription-based rental services and they don't like either of them one bit.

Well, allow me to clarify a bit. I'm not certain Hollywood hates the Internet or rental giants like Netflix, I just don't think they understand them. Or at the very least, they don't understand why consumers love them so much, because if there is one concept Hollywood can't wrap their collective brains around, it's "affordable" or, better yet, "cheap." The idea of "cheap" scares Hollywood, because for eons, they've solved problems by throwing money at them. Bad test screening results? Spend more money on flashy advertising. Poor international sales? Spend more money to get four bankable stars in the sequel, rather than the two who were in the first film, and so on and so forth. The problem with cheap isn't that Hollywood can't make money on anything, the problem with cheap is that they can't make back all of the money they've spent.

Case in point: the Tribeca Film Festival ended not to long ago and played host to a number of independent and studio films, many of which were still for sale in some capacity or another. Because of the bad economics plaguing the film industry right now only a handful of films sold at the festival. Magnolia proved to be most eager to acquire content this year, though no film, not even ones with a bit of star power and press behind them, sold for more than low six figures.

While it may seem like Magnolia and a few other mini-majors got the deal of the century, they still have to spend upwards of a million dollars or more, on top of the acquisition cost, to market the film to the consumer. With independent film revenues down both domestically and internationally, it could be years before Magnolia sees a profit, despite the low cost of acquisition compared to that of costlier big-budget films. Never mind the fact that the filmmaker may still be upside down their investors even with a sale to a reputable company such as Magnolia. This is why so many in Hollywood are sleeping with a loaded gun under their pillows at night thinking to themselves, "If it gets any worse ..."

Now, I'm not going to necessarily shed a tear for the Hollywood power brokers, for they've had it good for a very long time, but like I said earlier, a lot of what they're going through could've been partially if not entirely avoided, which brings us to the Internet and subscription-based rental services, such as Netflix. These services are nothing, new yet if you read the trades, many Hollywood insiders talk about them as if they woke up this morning to discover there were consumers out there downloading content via their computers and getting movies delivered to them in the mail. To quote Keanu Reeves, "Whoa."

However, the Internet isn't just another thing Hollywood can take over with money, though I'm sure it sometimes looks that way. The Internet is still the Wild West in many regards. As in the real Wild West, the rules can and do change. The other thing about the Internet, and the inherent problem Hollywood has with it, is the fact that it's somewhat the embodiment of "free," or at the very least "cheap." It started earlier in the days of DVD, with dotcoms like Amazon undercutting retail disc prices by significant margins, and has evolved into the 99-cent download and free play through services like Hulu. In a world where content is priced below a dollar or for free, how is Hollywood supposed to make any money? Compound the Internet problem with the growing threat from kiosk services like Redbox, which charges a dollar to rent a DVD, whether it's a new release or a library title, and the perceived trouble only gets worse for Hollywood. Hollywood's first real attempt at utilizing and monetizing the Internet through their partnerships with iTunes, YouTube, Hulu and the like isn't going completely to plan, because they wanted to have their cake and eat it, too.

Hollywood opened up their vast libraries to the Internet, but priced the titles at such a premium that it is actually confusing to consumers. iTunes currently sells major studio films for anywhere between $9.99 and $19.99, depending on the resolution and relative newness of the release. For your money, you get convenience wrapped in some of the dumbest copy-protection known to man, as well as lower-quality audio and video, compared to standard DVDs. With the release of iTunes 9, many new films now come standard with bonus features like deleted scenes, outtakes and more, making the value proposition a little stronger for downloads. However, there's no denying that many consumers like to own something physical if they're spending any sort of money and, in this economy, you better believe that $10-$20 is real money. However, even with all the bonus features, the downloads still cost more, in most cases, than a new release of the same film on DVD, which can be ripped easily and shared across a wider range of portable devices and products without having to do the stupid DRM dance. Don't even get me started on Blu-ray. Furthermore, many consumers don't want to buy anything right now and have flocked to rental services like Netflix, which offers monthly plans that start at around five dollars. Five dollars and the movies come straight to your door? iTunes who?

On top of all of this, sites like Hulu offer full-length films for free. With many of today's consumer electronics hardwired to stream content from the likes of Hulu or YouTube (which also offer feature-length studio films), the idea of spending money on a movie in the future may go out the window altogether. Even so, there is a silver lining in all of this, a sign that customers are still willing to pay something for their entertainment: music downloads. Hollywood is currently experiencing what the music industry went through a few years ago when they went toe to toe with the Internet, and the lesson they learned was simple: fewer artists, lower budgets and 99 cents. Also, they took a cue from their own artists and began taking ancillary goods and services seriously as well. Hollywood isn't experiencing a new phenomenon, though they'll say they are; they're simply going through the growing pains and the learning curve the music industry has already endured.

It's not impossible for Hollywood to rebound and rise above their financial woes; it's just going to take a slight adjustment in thinking. The idea of cheap equaling bad is no longer the case. Cheap equals a sale right now, and with regard to the Internet, that will always be the case. The Internet is the people's playground and, while there are those who seek to patrol and police the Net, they're not on the scene yet, so for the time being, consumers will have it their way. Downloaded movies have to be priced below physical media, 99 cents for rentals and $4.99 for purchase, if they're going to have any real chance at becoming the medium of choice in the future. Along with lower-priced downloads, Hollywood needs to open up more of their libraries, especially their new releases, to services like Hulu and YouTube, because not only will it generate them more money, but it will grow their fan base and, when it comes to the Internet, you can never have too many fans.

While Hollywood can make their goods available to consumers at far more advantageous prices, they'll also have to lower the amount they spend to make said content. At the very least, Hollywood will have to make fewer films that are of higher quality, turning the theater/viewing experience into more of an event, as opposed to treating the theaters or your living room like a parking lot to sit your butt in for two hours on a weekend. And no, 3D isn't the solution, and no I don't need to see 20-year-old John Hughes movies in 3D because you say so. 3D is great, but it is not Moses come down from on high, for the root of the problem isn't relegated simply to theaters or finding new ways to skin the same bald cat.

I'm often asked why I choose to remain in the film business and Hollywood, given all the reports telling me to get out now while I still can. Simple, people will always need and crave entertainment and I don't believe movies will ever die. The format might change, as will the venue, but the basic premise of visually telling a story to another will remain and that's what gets me out of bed in the morning. The rest of this stuff, while sometimes unnerving, comes with the territory and, if I'm honest, is all rather exciting.

[Mr Peabody]

That's an interesting article as I just read yesterday that Blu-ray is further along in their 5th year than DVD was in theirs. I find that a bit hard to believe as DVD was vastly an improvement over VHS. But VHS had quite a root and folks in some instances don't like change. So it very well may be that the bad economy fueled the flame for Blu-ray as people are looking for more home based entertainment. The article has some validity though as more players come out with features that embrace streaming. Should their be a distinction between streaming and downloading? I think when it comes to watching internet based content it's streaming. When I think of downloading I think of bringing something onto my computer.

There have been some recent big movie titles selling very well. It would be bad if movies like Transformers couldn't make back their money. Maybe they'll have to find actors who will work for less.

NF, not to hijack but you haven't posted how the system sounds since getting the Oppo, nor have I seen Oppo feedback from you.

[poppachubby]

Great write up flier! I don't consider myself a "movie guy". I love asian action and kung fu, I buy all my movies unless it's really hard to find, then I may go to the networks for a download.

I don't pretend to know the politics or finances of Hollywood or any large studio based system. It would seem to me that everything is a little inflated in terms of what actors and crew expect to make. I think movies will probably always be profitable, whether by traditional methods or downloading. The only question now is, how profitable?

It's hard to feel sorry for an industry that makes "squillions" of dollars and considers a failure to be anything that doesn't bring in vast sums of money. I realize in most cases they are just trying to make back their production capital but that's exactly my point.

Maybe its time for Brad and Angelina to take a pay cut, oh I don't know, say 1 million per film? I'm sure life would be really tough for them at this small payrate but hey, somethings gotta give...

[nightflier]

Poppa, you like "asian action and kung fu"? I never would have guessed, LOL.

I posted this, because a few months back I had a big debate on this site and I mentioned that the cost of movies was too high and I got blasted for saying it. I also said that big-budget movies would be made a lot less often, and yes, more booing and hawing. Well, apparently I wasn't the only one who was thinking that way.

Anyhow, the one point I still think is paramount: downloaded movies are a flop today because they cost too much. Why should I pay $20 for something I can own on disk for a few dollars more? Makes no sense. I know the music industry is selling lower-quality music downloads for more than it costs on CD, but even that I think is starting to piss people off.

Many people believed that CDs should have dropped in price a long time ago but they never really did. Yes, I know that relatively speaking, the dollar is now worth less, but that means little when movies cost about the same, today. So why not just buy a movie for 2 hours of both aural and visual entertainment? This cost issue is what is hurting movie downloads because with music one can download just the songs one likes. But it's not like people are going to be allowed to just download the chapters of a movie they like, or at least, a movie without all the extras and sound options fluff.

Hollywood banks on bundling junk that most people don't care for or need and they want to keep prices high for this reason. This turns consumers away. Add to that the DRM nonsense and you've got people staying away in droves. I've never understood why the media companies couldn't let people download lower-quality / lower bit-rate content for free and then ask them to pay for higher quality content. Napster and all the other sites would have gone along with that and could have easily filtered out high-quality content. Now the movie industry is trying to gouge the consumers again. I'm guessing that in this economy, that doesn't fly anymore.

Mr.P. I received the Oppo, didn't install it right away because I was so busy, and when I did, it didn't work (at all - no lights and no signs of life). I have not asked for an RMA yet, but I'm sure that will be granted and I'll return it. The shipping box was not in the best shape, so that may have had something to do with it. Been really busy - we're doing performance reviews at work, it's Halloween season and the kids are at that age.... But with only 3 BR movies on the end table, right next to a stack of 20-30 standard DVDs, a crate full of newly acquired records, and at least a dozen CDs, I just haven't been that excited about it. Maybe that's odd, I don't know.

So little time and so much to do....

[Mr Peabody]

Boy that sucks about the Oppo.

I'm not defending the movie company but why single them out when it's seems to be normal across the board for all companies to gouge the public for as much money as the market will allow for their product.

I also don't think it would be fair to allow free downloads unless maybe for older movies or shows, but for new movies why punish consumers who care what the movie looks and sounds like. If you want to watch a crap picture it's your business but you shouldn't get a new release for free while the rest pays. I can see maybe a higher price for better quality. Which of you want to work for free?

[Sir Terrence the Terrible]

This article has been making the rounds around Hollywood studio exec's and managers since it hit the internet There are some things in this article that are indeed very true, and some that are completely off base. I thought since I have worked in the film industry (and audio overall) my entire life, risen through the ranks, and now in upper management while still mixing and engineering, I have a pretty good perspective of the industry I work in

Things are tough for the Hollywood studios, some doing worse, others holding the line, and a few not doing bad at all. Everyone is not suffering equally. I know of only one studio in danger of closing down, and that would be The Weinstein Group which is a very small studio that was already in trouble before this economic crises. Others are cutting back big time in terms of personel, and other cutting back their yearly releases and keeping their valuable employees. Others are combining operations, sharing talent, and in the case of Warner bringing their subs (New Line Cinema) back closer to the fold. The studio I work for has seen a very modest growth, but not enough to write to mom about.

It's no secret the film industry is hurting these days. While the month-to-month theatrical earnings seem to fluctuate compared to previous years, overall earnings are down. Home video is no different as DVD continues its downward spiral aided by the confusion caused by the introduction of Blu-ray and a shaky economy. Film downloads are on the rise, but they have failed to ignite a firestorm in the manner of their musical counterparts

He is lumping the studio together into a great big ball here. Some studios have seen their DVD sales drop 30%, while the studio I work for has seen it drop 5%. There has not been any confusion with Bluray as he states as sales of Bluray disc have been quite healthy for everyone. Catalog titles released on Bluray have not done well for some studios, but where I work, it has been quite good. Out theatrical films have also done quite well, as we are making more than we did last year by about 8%. Film downloads have not taken off because the studios are still trying to figure out a business model that actually makes them money. They are also totally fearful of piracy, hence the protective measures they have on downloads.

Hollywood is banking heavily on 3D to pull theatrical sales out of the toilet and, on paper, it appears to be a good strategy. However, this still doesn't solve Hollywood's problems with home video and the rise of Internet-based video services such as YouTube and Hulu. For decades, home video has been the bread and butter of just about everything Hollywood has to offer. Home video has been the life's blood of the film industry since VHS and what home video couldn't provide, international sales could. With both home video and international sales sinking faster than the Titanic, the studios have begun taking a hard look at the Internet and subscription-based rental services and they don't like either of them one bit.

Hollywood is not banking on 3D to pull theatrical sales out of the toilet. They realize that not every movie can be done that way. They are banking on 3D to differentiate the theatrical product from the Home Video product. The consumer can purchase a turn key hometheater that can compete directly with the professional theater in every way. What the theater can do right now is 3D, and you cannot find it in the home. Next year that is going to change, and the studios think it will actually boost Bluray disc sales are those movies that are 3D will be presented in the same way as folks saw in the theater. As more Bluray players are purchase, naturally disc sales will follow. Player prices have now dropped down to a level that sales are doing quite well. The reason that the studios have not look kindly at Amazon box, Netflix or any other downloading service is that the are going to take a loss on their current business models, where Netflix, Amazon and other take the lion share of the profit, and they get what is left - which is basically not much.

Well, allow me to clarify a bit. I'm not certain Hollywood hates the Internet or rental giants like Netflix, I just don't think they understand them. Or at the very least, they don't understand why consumers love them so much, because if there is one concept Hollywood can't wrap their collective brains around, it's "affordable" or, better yet, "cheap." The idea of "cheap" scares Hollywood, because for eons, they've solved problems by throwing money at them.

The studio exec's understand the internet and the rental market alright. They understand that they cannot make money from the current business model, and they also understand if the consumer can get their products for free (piracy) then they can no longer make movies. Also, not one of the studios want to butcher their bread and butter, and that would be the DVD and Bluray formats. They also understand clearly that the internet infrastructure is not ready for downloading large files, not robust enough for everyone to stream, and not secure enough to protect intellectual property. They also understand with the trend towards larger viewing displays, downloads and streaming does not look all that good. You cannot transmit true 1080p, you cannot transmit uncompressed or lossless audio so there is a large swath of individuals (the profitable videophile) that will not be interested. The way the studio think is to create a videophile product 1080p/24fps with lossless or compressed audio, and let the product fall where it may for lesser delivery systems. The videophiles are happy (DVD and Blurays bread and butter costumer), and everyone else is happy as they can buy the quality they are willing to pay for. The internet is going to have to increase its bandwidth, stability, and speed - and the end user is going to have to purchase the necessary storage devices and home infrastructure.

Because of the bad economics plaguing the film industry right now only a handful of films sold at the festival. Magnolia proved to be most eager to acquire content this year, though no film, not even ones with a bit of star power and press behind them, sold for more than low six figures.

This has happen through every recession I have been through while working in this industry. Its is nothing new, and it will happen every time the studios revenue is down. Independent filmakers take a big chance with their movies, and there is no guarantee a movie will sell. The studios are in no mood to take chances when revenue is tight.

However, the Internet isn't just another thing Hollywood can take over with money, though I'm sure it sometimes looks that way. The Internet is still the Wild West in many regards. As in the real Wild West, the rules can and do change. The other thing about the Internet, and the inherent problem Hollywood has with it, is the fact that it's somewhat the embodiment of "free," or at the very least "cheap."

This is somewhat ironic from a guy who supposidly works in the industry. The studios do not like instability as they have too much on the line financially. They like stable rules, and they cannot afford to give away their product for free. Let's face it, theatrical patrons like big blockbusters. They are what drives the business, and makes it possible to finance and purchase independent and more specialized films(chick flicks). Without the blockbuster, these other films would not see the light of day. Blockbusters are not cheap to produce. Even if you take away the outrageous salaries the actors get (and they are over paid like most professional athletes), the cost of special effects, live effects (car crashes explosions etc), soundtrack creation, marketing and distribution still costs a bundle. The old adage you have to spend money to make money is especially true in this industry, and many others as well. If you start giving your product away, or short selling it, you go bankrupt, and that is the bottom line. This gentlemen calls himself an independent filmaker. I would say that he does not understand the economics of the business he works in, or some of the comments he made he wouldn't. I have been, and still am on both the creative side(re-recording mixer and sound designer) and on the economic side as well (I manage the sound side of the post production facility where I work) I understand both sides well. If the consumer is willing to do without the Dark Knights, The Ups, The Star Wars, The War of the Worlds types of movies (those have made big dollars) then perhaps what he speaks about is possible. Without a unified delivery system (there are at least 5-6 incompatible systems out there) there is no way to make money on streaming and downloading.

Hollywood's first real attempt at utilizing and monetizing the Internet through their partnerships with iTunes, YouTube, Hulu and the like isn't going completely to plan, because they wanted to have their cake and eat it, too.

Not so. It is because the studios cannot make a profit from this venture. If you cannot make a profit, you cannot make movies. Itunes, YouTube, and Hulu take such a large cut of the pie, there is not much left - and the studios are the ones that create the product that drives their business.

While Hollywood can make their goods available to consumers at far more advantageous prices, they'll also have to lower the amount they spend to make said content. At the very least, Hollywood will have to make fewer films that are of higher quality, turning the theater/viewing experience into more of an event, as opposed to treating the theaters or your living room like a parking lot to sit your butt in for two hours on a weekend.

He is correct here. There are far too many bad movies produced and released - I cannot argue with that. Here is the rub. I consider the Evil Dead movies bad movies. When theatrically released, they performed terribly. However, when released to home video, they made a great deal of money. Many in this industry look at the theatrical release of movies as a giant preview that opens the door to home video release. How do you predict how well a movie will do in a theater, and how well a movie will do at home? It is impossible. If you ditch the theatrical release and go straight to video, it does not do as well. A rock and a hard place situation.

Now I am not going to pretend that all is well in Hollywood. It is not. Too much money is directed upwards(studio exec and actors pay and compensation) and not enough devoted to the product itself. There are too many movies made that are not of high quality, and don't do well. There are quite frankly too many film studios and post houses as well. I look at what is happening in Hollywood to what happened with the car industry. Over capacity that needs to be corrected. There is too much reliance on special effects and sound effects, and not enough on quality scripts and good performances by actors. The actors today are not half as good as the ones from yesteryear - they are blue screen characters IMO. However this guys dire analysis is to doom based, and he presents the Hollywood studios as headed for the toilet when they are not. Things are bad, but its bad for everyone all over this world. The Hollywood studios produce a product that is distributed all over the world. That makes them as vulerable to the financial ebb and flow as any other industry. Look at what is happening to the Newspaper, and the entities that produce them.

[Sir Terrence the Terrible]

Many people believed that CDs should have dropped in price a long time ago but they never really did. Yes, I know that relatively speaking, the dollar is now worth less, but that means little when movies cost about the same, today. So why not just buy a movie for 2 hours of both aural and visual entertainment? This cost issue is what is hurting movie downloads because with music one can download just the songs one likes. But it's not like people are going to be allowed to just download the chapters of a movie they like, or at least, a movie without all the extras and sound options fluff.

Like I told you in our previous discussions on this issue. What works for the music industry is not going to work for the film industry.

Hollywood banks on bundling junk that most people don't care for or need and they want to keep prices high for this reason.

Just what junk would that be? Did it ever occur to you that what you consider as junk, another could consider treasure? Hollywood does not decide what gets put on Itunes, XBOX, Amazon, or any other streaming or downloading entity. They decide that themselves. Hollywood only decides what goes on DVD's and Blurays, and what you call junk on that, is not junk to other people.

This turns consumers away.

They are not turning away from Bluray.

Add to that the DRM nonsense and you've got people staying away in droves. I've never understood why the media companies couldn't let people download lower-quality / lower bit-rate content for free and then ask them to pay for higher quality content.

Because it cost to host the movies on servers. The electricity costs a bundle to run the servers. The people who keep the servers running have to be paid. The people who supply the content have to be paid. The support staff that supports the people that run the companies that house the servers and create the business plan need to be paid. DRM is necessary as long as people believe that they can steal and propagate intellectual property without paying for it. In a perfect world, DRM would not be necessary.

Napster and all the other sites would have gone along with that and could have easily filtered out high-quality content. Now the movie industry is trying to gouge the consumers again. I'm guessing that in this economy, that doesn't fly anymore.

How can you say they are gouging. Do you know what it cost to store a single movie on a server for a month. There is a whole infrastructure of people that have to be paid. Do you work for free?

We have discussed this before. Because of you lack of knowledge of the whole industry from production to distribution, you make claims and assumption that are so far from the truth, they might as well be in pluto.

Not trying to pick a fight with you, but from my perspective....here we go again.

[nightflier]

Mr.P., I was referring to very low quality content being free, sort of like a preview. With music I would put the limit at 64kbs MP3s, so that you can hear the whole song/piece, but not the way it would sound when playing the actual disk. Right now, the "preview" samples on amazon and similar sites, don't give a good idea of what the whole song is like. This is especially a problem for longer pieces such as classical where the composition changes considerably over the length of it. For movies, I would find an equally low-quality format that would look pretty bad on a regular 26"+ TV screen, but would be viewable in its entirety. Alternately, it could be released with commercials or a watermark across the screen.

This would serve the preview purpose factor, that currently the movie theaters provide, and would curb piracy, IMO. If you want it for free, that's allowed, but then it's not going to be good/pleasant enough for home viewing or listening (and equally unpleasant on a portable player, of course). The they can stop criminalizing and suing grandmas and pre-teens for millions and a lifetime of misery - which does so much to array the public against them. Another advantage is that lower quality files are much smaller, so they can more easily be distributed over the internet.

I'm not saying this is guaranteed to be the solution to all of Hollywood's hangups, but why not try it on a few movies and albums, and see if it works? Considering how bad their finances are right now, it's time for some out-of-the-box thinking and for the media companies to offer the olive branch and stop wasting so much resources (and money) on piracy. It will always be there, the effort should be on minimizing its impact, rather than stamping it out completely. It's like trying to fight technological progress, it's an unrealistic goal and it's extremely expensive to even attempt it.

Piracy is much more prevalent outside the US, but that's also where the largest market growth could be. Imagine if 1B Chinese and 1B Indian citizens were able to easily preview Warner's whole catalog for free and then purchase the higher quality files at more affordable rates straight from their own website here in the US? My guess would be that Warner would make such a profit that they could lower prices for everyone and still have enough profit to ignore the then marginal piracy that would still exist from their movies & music.

By the way, I agree with the original article - Hollywood doesn't get the internet, they really don't. Their ridiculous and hated obsession with trying to stamp out piracy is a perfect example of that.

[nightflier]

Like I told you in our previous discussions on this issue. What works for the music industry is not going to work for the film industry.

Look, the article above is comparing the two and you didn't point out that you had an issue with that. Why don't you pick a fight with Andrew Robinson instead of me?

Just what junk would that be?

Extras, different languages, previews, DVD-ROM stuff, other sound formats, etc. I realize not everyone considers them junk, but then let's give people the option of buying movies at a lower price w/o them. I bet they would sell at 10x the volume, especially in this market. If anything, it will reduce file sizes.

They are not turning away from Bluray.

Hair-splitting. Let's move on.

Because it cost to host the movies on servers.

There are technological advances in this area that will bring costs down - not as much or as fast as many people want, but it's a start.

DRM is necessary as long as people believe that they can steal and propagate intellectual property without paying for it. In a perfect world, DRM would not be necessary.

Look, I didn't create the problem, Napster did. But now that the toothpaste is out of the tube, there's no easy way to get it back in. People have had a taste of free content, now they won't pay for it at the same rates as before anymore. That's a simple fact. Kind of like giving a people their freedom from oppression and bondage - 'kind of hard to put them back in chains afterwards.

How can you say they are gouging. Do you know what it cost to store a single movie on a server for a month.?

Yup. that's part of my job. I oversee several server farms with NASes that store video content.

We have discussed this before. Because of you lack of knowledge of the whole industry from production to distribution, you make claims and assumption that are so far from the truth, they might as well be in pluto.

Stop with the direct attacks & insults - it doesn't help your case and doesn't endear you to anyone here. I'm only agreeing with the article. You didn't like it when before I made pretty much the same case that Andrew Robinson is making. If you don't want to argue against me, then argue against him. Kind of ironic how he points out so many things I said before and you attacked me up & down for them. This isn't about me, it's about the article, so stick to the OT.

Not trying to pick a fight with you, but from my perspective....here we go again.

I'm trying really hard to take the higher road here. I respect what you had to say elsewhere on this forum (almost gave you a greenie, too), but you're really getting personal here. For the sake of keeping things civil, stick to the OT.

[Mr Peabody]

My question is what did the movie companies do to make money before home rental and the internet? It would seem those things to be gravy on top of what ever they were doing before.

My concern about 3D it's too soon after Blu-ray hit. I think it's too soon for something new. If all you need is a pair of glasses and it works on your existing equipment it might get some play but it's not going to be mainstream. Can you see ma and pa sitting around with the 3D glasses on? It might be a nitch amongst gamers or the younger folks. A few years back we visited Disney in FL and went into a theater showing a Mickey and Donald 3D, it must have been excellent 3D because my daughter kept about jumping out of her chair.

[Sir Terrence the Terrible]

Look, the article above is comparing the two and you didn't point out that you had an issue with that. Why don't you pick a fight with Andrew Robinson instead of me?

Because Andrew didn't write the article so you could use it to back up your talking points, both in the past and now. Andrew is just one person - albeit on the fringe of the business, and you use his words like they are word. It is just his opinion, not fact. As such, it cannot be used to support your assumptions. He works OUTSIDE the studio culture. As such, his opinions on the INNER workings of a film studio are at best naive, and at the worst misinformation. As you stated in your topic title, its an interesting (if naive) perspective not facts.

Extras, different languages, previews, DVD-ROM stuff, other sound formats, etc. I realize not everyone considers them junk, but then let's give people the option of buying movies at a lower price w/o them. I bet they would sell at 10x the volume, especially in this market. If anything, it will reduce file sizes.

Sorry NF, but the different languages allow the studio to create one disc that can be marketed in many different counties, in many different languages. It is too costly to create separate disc or download to market in each country. It is too expensive to store 50 different languages of the same movie on a server. If we have the technology to save the cost, it should be used. Previews are a marketing tool. You don't jettison your marketing tools when you are trying to sell discs.

The studios do not decide anything on downloads except what goes into the contract with the companies that stream or allow downloading . They don't decide extra value content, or what languages are on the download. That is the job of the companies that deliver the streaming and downloading product. This is THEIR issue, not the studios. Reduced file sizes do not guarantee a sales. All of the film streaming and downloading done now is reduced file sizes from the original, and it is not selling.

Hair-splitting. Let's move on.

Let's not, because Bluray is part of the picture. I know you would like to dismiss it because it does not jive with your point. Video people seem to want the best, and you computer guys seem to want the lowest quality video. This is the typical divide between the computer internet guys, and the videophiles. You guys don't buy disc, you download and watch on computer screens, hardly the best place to watch a film. The videophiles don't download, they buy disc they can watch on their 1080p LCD's or plasmas with their 5.1 sound system. I can get more profit from selling a disc, so who do you think I am going to market to? Use your bean old bean, everyone is out to make money because it cost money to make movies.

There are technological advances in this area that will bring costs down - not as much or as fast as many people want, but it's a start.

Well, it is not here now, and people are looking for solutions NOW. How do you offer cheaper downloads now when the technology is not there to allow it? This is a wagon before horse thought process. I would not give my intellectual property away for free when it took time and money to create it. I also would not knowingly take a loss on my intellectual property unless it was a way to make a profit in the long run.

Look, I didn't create the problem, Napster did. But now that the toothpaste is out of the tube, there's no easy way to get it back in. People have had a taste of free content, now they won't pay for it at the same rates as before anymore. That's a simple fact. Kind of like giving a people their freedom from oppression and bondage - 'kind of hard to put them back in chains afterwards.

Napster didn't do 1080p movies, it did music. So there was no toothpaste that was spilled. You continually mix these two together like they are one issue. While you can download movies for free, they are not of the quality that would appeal to anyone but the computer nerd on a 22" monitor that outputs the wrong colorspace for HD, and is at a resolution not supported by the source. People who are interested in watching movies have time and time again chosen technology that elevated the experience, not reduce it to pixelation, improper color values, smearing, edge enhancement, poor contrast and elevated black levels. We can adjust to degradation in the audio because we want it on the fly, and we do not listen to it in an optimized environment. We don't want that kind of degradation in our living rooms on our $2000+ LCD,DLP, or plasma panels.

Yup. that's part of my job. I oversee several server farms with NASes that store video content.

Yes, but you don't produce, market, or distribute movies. And the video content on your servers didn't cost $100 million plus to produce, and is not being marketed to millions of people. If you said you worked for Google, Amazon, Apple or Microsoft, the folks that actually have to store movies based out of the Hollywood studios, then that would be different. It is not cheap to store a 2 hour plus movie. We have heard this from Steve Jobs over and over again.

Stop with the direct attacks & insults - it doesn't help your case and doesn't endear you to anyone here. I'm only agreeing with the article. You didn't like it when before I made pretty much the same case that Andrew Robinson is making. If you don't want to argue against me, then argue against him. Kind of ironic how he points out so many things I said before and you attacked me up & down for them. This isn't about me, it's about the article, so stick to the OT.

I am very puzzled why you think it is an attack to state the obvious and factual information. A) You don't know anything about the film industry. That is an attack or fact? B) You don't know anything about marketing and distributing films. Is that an attack or a fact? I think you don't like me pointing this out, as it does not allow you to leave a perception that you are knowledgeable on this issue. Andrew works on the fringe of the business, and you don't work in the business at all. That makes both of your opinions a looking in the house window, instead of living in the house. I would rather listen to the person who lives in the house instead of a peeper when I want to know what is going on INSIDE the house. Both of your perspectives are naive, and lack the depth and knowledge to really understand the problems the studios are facing at this point. I suppose this fact is an attack too?

I'm trying really hard to take the higher road here. I respect what you had to say elsewhere on this forum (almost gave you a greenie, too), but you're really getting personal here. For the sake of keeping things civil, stick to the OT.

How can you even attempt to take the high road when you don't know anything about the road? If pointing out facts is not civil, then why are we discussing this? It is clear to me that you want to appear like you are knowledgeable enough to discuss the complexities of the film industry when you are not. I am not a faker, I cannot discuss this issue with you as an equal, just like I could not discuss managing server farms with you as an equal. Neither Andrew or yourself has enough knowledge of the industry. You manage server farms not film studios (I suppose that is an attack too). Andrew is a independent film maker, which means he makes film OUTSIDE the studio culture. He does not know how to run a studio either. This is not an attack, its a fact. I know you hate this, but it is a fact.

[Sir Terrence the Terrible]

My question is what did the movie companies do to make money before home rental and the internet? It would seem those things to be gravy on top of what ever they were doing before.

Good question. They controlled everything in the process from the actors salaries (they signed them to exclusive multi-year contracts) to production (they did everything in house) to distribution (the owned the theaters their movies were presented in). This way they could control the overall cost of a particular film. When congress mandated that they sell the theaters they owned (they controlled the distribution too much), they lost that revenue. When actors refused to lock themselves into exclusive multi-year contracts, they lost control of the salaries, which increased the cost of making a movie. The business suffered greatly for years behind this. Even though they foolishly fought again both LD and VHS, it ended making up for the loss of revenue of the theaters, and for the spiraling cost of paying actors. They both also fueled the making of the big blockbuster that so many now enjoy.

My concern about 3D it's too soon after Blu-ray hit. I think it's too soon for something new. If all you need is a pair of glasses and it works on your existing equipment it might get some play but it's not going to be mainstream. Can you see ma and pa sitting around with the 3D glasses on? It might be a nitch amongst gamers or the younger folks. A few years back we visited Disney in FL and went into a theater showing a Mickey and Donald 3D, it must have been excellent 3D because my daughter kept about jumping out of her chair.[/QUOTE]

Actually the 3D proposals before the BDA do not require a new format, but a backward compatibility with the current format. If you want 3D, you buy the Blu ray player and the right television to support it. If you don't want to, don't buy either. All 3D proposal require backward compatibility with the current format. It will not be for everyone, but neither is a high end hometheater. No one can predict whether it will be mainstream or not. According to our studios theatrical polls, the young folks like it MUCH better than the older folks. Those younger folks are the consumers of tomorrow, so this could be a mainstream product in the future. Not every movie will use it, or benefit from it, so it is up to the studios to be wise in their choice of the appropriateness it is used, and on which films.

If you think what you saw at Disney was good, wait till you see what 3D looks like now.

[nightflier]

How can you even attempt to take the high road when you don't know anything about the road? If pointing out facts is not civil, then why are we discussing this? It is clear to me that you want to appear like you are knowledgeable enough to discuss the complexities of the film industry when you are not. I am not a faker, I cannot discuss this issue with you as an equal, just like I could not discuss managing server farms with you as an equal. Neither Andrew or yourself has enough knowledge of the industry. You manage server farms not film studios (I suppose that is an attack too). Andrew is a independent film maker, which means he makes film OUTSIDE the studio culture. He does not know how to run a studio either. This is not an attack, its a fact. I know you hate this, but it is a fact.

You presume I don't know about this industry. You can continue to say it, even laced with vicious attacks in every paragraph, but it still doesn't make it true. You may know about many things, but there is absolutely no need to dismiss everything I'm saying and calling me ignorant of the facts. I'm not, and you can't stand that either. Ironically, I've got two PMs in my inox right now pointing out how irritating your attacks have been. You turn people off with them and it isn't doing anything for this thread or the whole site. Now let's dispense with the personal attacks and just discuss the topic.

You obviously didn't read my response to Mr. P. I'm not talking about giving $100M movies away for free, I'm talking about getting consumers interested again in them. While you might despise Napster, Filesharing, and BitTorrent sites as a threat to your bottom line, the hopeless attempts to shut them down is a never-ending whack-a-mole game. They will always be there. A wiser policy would be to learn from them and try and make them, for the most part, at least, fair to both producers and consumers of entertainment.

One way to do that is in the steps I described in my response to Mr. P. But the dogmatic and punitive approach that the studios have latched onto and that you consider appropriate, have not worked and have done significant to damage to the reputation of Hollywood. The RIAA, although it is feared everywhere is also a despised and hated arm of Hollywood's game plan. DRM is just as much despised. And the message that they scream over the rooftops is that Hollywood is entirely clueless about the Internet, the future, and their own content.

And this isn't just a trend that followed the economy down in March and last October. The fact is Hollywood was already struggling with this well before the economy tanked. Blockbuster has been on the skids for some time, movie ticket sales were not growing, and movie sales were counted in units sold and not dollars, because the price kept going down. No - Hollywood does not have a clue. It's not that they haven't yet figured out how to make money in this new economy, but rather that they aren't able to see beyond their aging bundling model. People want choices, and the studios arent giving it to them - plain and simple. The studios think they can continue without changing, and that just isn't true when there are so many alternatives.

Sooner or later someone, maybe a small independent outfit, is going to get the formula of price & content right for downloads. When they do, they will be the new Wall Street wunderkind and all the big studios will be chasing their tails. Likely, they'll try to stiffle it and kill it, and they may even succeed, but then someone else will give it a shot. Eventually someone's going to succeed, and we'll all be better for it (well we will be, I don't know about those lumbering big sudios who get left behind, but I doubt many people will be shedding any tears for them.).

[poppachubby]

Man, you guys are pretty passionate about this topic. No one really addressed what I said. In layman's terms, is it possible at this juncture to reduce inflated wages of actors, crew, etc? Have the unions and agents become too powerful a force? The writer's strike was greatly effective and as a trade unionist I can tell you, a great case study.

It just seems that when in the red, most companies address labour as one of the first areas to cut back in. My impression is that Hollywood is excluded from this process. Fill me in guys...

[Mr Peabody]

Unless I missed it, the auto industry wasn't able to get far with the UAW. Before things got real bad they were able to get some consessions to end or avoid strikes but they didn't get enough to save the business apparently. One of the more criticized points was getting paid full wages while being laid off. I never heard anything about that being changed. There are other examples of employees being willing to cut back like the airline pilots. Hollywood I'd say is more like the auto industry looking at the writers strike. People aren't going to pay to see Joe Blow unknown at the box office where they will pay to see Brad Pitt or who ever the cash cow of the month is. Just like sports, people aren't going to pay to see inferior no name players when they are used to Michael Jordan. Once you've gone there and a standard is set it's hard to go back. It also depends on who has the most leverage. Actors do make a lot of money but many times it takes months to make a movie and they don't know when the next one will come around for them. And, as I stated, we can't just single them out while CEO's make mega-millions for what ever they do and apparently given the state of the economy, not much. When faced with something opposed to nothing people might compromise but actors know the movie industry is greedy and they aren't about to take less so the studios can have more. That's my outsider opinion on it for what it's worth The public is fickle but many times for me good casting can make or break a movie. I've seen a lot of movies I've enjoyed and not known who the actors were. I look to pick movies by the story rather than whose acting in it. I have to admit also there have been border line decisions on whether to pick a movie up and a good actor has helped to push it in my hand.

You had to bring up Blockbuster I am not happy with them. They are the only game in town unless I want to rent DVD from Redbox or drive way out of the way. BB is not bringing in the local stores all the new movies on Blu-ray and small numbers which means I have to camp out there or wait my turn. i want to watch it when I want to watch it. It's like they want to force you to use online. I got news for them if I go that route it won't be from them. And, if Blu isn't an option, hmmmm $1 at Redbox or pay $5 to BB. BB had better wake up.

Not meaning anything by this to you NF or Sir T just merely pointing out a fact, if there are PM's going around saying Sir T is not acting in an orderly manor his rep points don't reflect that. So either Sir T has some special way of getting those points or one has to question the sincerity or conviction of the PM'ers.

[Sir Terrence the Terrible]

You presume I don't know about this industry. You can continue to say it, even laced with vicious attacks in every paragraph, but it still doesn't make it true. You may know about many things, but there is absolutely no need to dismiss everything I'm saying and calling me ignorant of the facts. I'm not, and you can't stand that either. Ironically, I've got two PMs in my inox right now pointing out how irritating your attacks have been. You turn people off with them and it isn't doing anything for this thread or the whole site. Now let's dispense with the personal attacks and just discuss the topic.

I get you now. The truth is now an attack, and a lie and false assumption is now the truth. That is the way you work. Sorry, that is not the way it works. A fact is not an attack, no matter how many times you say it is. The internet is not the country club you are trying to make it. Andrew stated correctly that the internet is the wild west. If you can't play in the land without your feelings getting hurt, then get off the internet, it is not for you.

I presume you don't know anything about this industry? I KNOW that you don't have a clue about the film industry. Your track recording based on your past post demonstrates that better than I can. You predicted that HD-DVD would win because it was cheaper. It didn't. You stated that downloads were going to make big in roads against HD media on disc, it is not happening. Ten pages of a previous discussion we had was full of your predictions - one after another did not happen. So you see it is hard to take you seriously, as the only thing you are really trying to do is leave a perception that you know what you are talking about when you don't. That is called "faking", and I don't do faking.

As far as your PM box, don't care. Those two people could be you and your alternate personality, since you do have a habit of flourishing or completely avoiding the truth.

You obviously didn't read my response to Mr. P. I'm not talking about giving $100M movies away for free, I'm talking about getting consumers interested again in them. While you might despise Napster, Filesharing, and BitTorrent sites as a threat to your bottom line, the hopeless attempts to shut them down is a never-ending whack-a-mole game. They will always be there. A wiser policy would be to learn from them and try and make them, for the most part, at least, fair to both producers and consumers of entertainment.

NF, what the hell are previews and trailers for, brushing your teeth? They are for getting people interested in a specific film. They are free and you can find them on a disc and online. There is nothing the film industry can learn from a entities that steal and distributes intellectual property for free. This is against the law and you know it. Teaching people to expect something for nothing is not a noble cause, no matter how you slice and dice it.

One way to do that is in the steps I described in my response to Mr. P. But the dogmatic and punitive approach that the studios have latched onto and that you consider appropriate, have not worked and have done significant to damage to the reputation of Hollywood.

NF, If you are so smart, and have the knowledge to run a studio, why aren't you? You idea is stupid, and it would cost the studios a bundle to implement, not to mention the people that actually distribute the downloads. When you have to pay for the content, and the overhead and manpower to store it, giving it away for free is a loss leader that nobody wants to absorb. Your studio would be in bankruptcy in less than ten minutes.

The RIAA, although it is feared everywhere is also a despised and hated arm of Hollywood's game plan. DRM is just as much despised. And the message that they scream over the rooftops is that Hollywood is entirely clueless about the Internet, the future, and their own content.

The RIAA is not the MPAA. and music is not film. DRM is despised because it slows down thieves, and prevent people for getting something for nothing. If there were no thieves then there would be no DRM. If Hollywood was so clueless, then why does DRM exist? It exists because folks like stealing films and distributing them for free. The only folks complaining about DRM are computer geeks, the very people who enjoy stealing off the internet. Andrew correctly stated that the internet is the Wild West. As such, it is not the model of stability to support a legit business model for the film industry, and the industry knows this. Unfortunately you computer geeks who like free stuff just don't get it. It cost to make a movie, and the people who invest in films want to make as much as they can from their investment. It is call the free market, which is the way the world turns.

And this isn't just a trend that followed the economy down in March and last October. The fact is Hollywood was already struggling with this well before the economy tanked.

Wrong wrong wrong. Before the economy tanked ALL of the Hollywood studios where quite financially healthy. They were turning out more product per year than they ever have. Not all of it good, but they had all the financing they needed to complete their entire slate of theatrical and video releases. Just like with all businesses that depend on credit, the credit crunch is putting pressure on their operations.

Blockbuster has been on the skids for some time

Blockbuster is not the Hollywood film industry, so I don't know how they relate to this discussion.

movie ticket sales were not growing, and movie sales were counted in units sold and not dollars, because the price kept going down. No - Hollywood does not have a clue.

Your opinion. And based on the accuracy of your opinion this is a throw away statement. You are not an accountant that works in the industry, so you don't know the health of the balance sheets of all studios.

It's not that they haven't yet figured out how to make money in this new economy, but rather that they aren't able to see beyond their aging bundling model. People want choices, and the studios arent giving it to them - plain and simple. The studios think they can continue without changing, and that just isn't true when there are so many alternatives.

More uneducated opinion. Just because the studios have not moved their entire film catalogs online does not make them them clueless. I want you to use your brain instead of your mouth on this one. I can sell a movie on a disc and make a nice profit to finance my film operations. I make next to no profit selling film online, and the overhead for storing them exceeds what I would make for offering them. Where do I sell my product, on the disc or online? What you computer geeks don't understand is something called a business model. If one business model says I will lose money, and the other says I will make money, which is wisest to choose? The answer ought to be really easy unless you are a lousy business manager. You fall where in this?

Sooner or later someone, maybe a small independent outfit, is going to get the formula of price & content right for downloads. When they do, they will be the new Wall Street wunderkind and all the big studios will be chasing their tails. Likely, they'll try to stiffle it and kill it, and they may even succeed, but then someone else will give it a shot. Eventually someone's going to succeed, and we'll all be better for it (well we will be, I don't know about those lumbering big sudios who get left behind, but I doubt many people will be shedding any tears for them.).

NF this is why I call you names like stupid and ignorant - you just do not listen, and you keep repeating the same wrong assumptions. I am going to say this one more time with the hope that it finally penetrates your thick scull. For emphasis: THE STUDIOS DO NOT SET THE PRICING STRUCTURE OF ONLINE DISTRIBUTION. THAT IS UP TO THE INDIVIDUAL BUSINESS THAT SUPPORTS THE STREAMING AND DOWNLOADING OF THE CONTENT. THE STUDIO JUST PROVIDE THE CONTENT, AND THAT IS ALL THE SAY THEY HAVE. THEY SIGN THE CONTRACT TO PROVIDE THE PRODUCT, AND THE OTHER SIDE SET THE PRICE OF THE DOWNLOAD SO THEY CAN PAY THEIR EXPENSES AND MAKE A PROFIT.

Got that? Your beef is not with the studios, it is with Amazon, Netflix, Blockbuster, and the other online distributors of video content. The studio are focused on producing content for disc media. When the online distributors (or perhaps the studios themselves) come up with a profitable business model for online distribution, then the studio will migrate their product in that direction. Now as far as choice, you are way off base in your observations. The consumer has more choices than ever to view films. You have Blu-ray disc, DVD, and online. This is more choice than the consumer has ever had. Even television programming can be found on all three. So your observation is once again wrong.

I am going to make this as clear as I can. The studio can not, and do not make a profit off online distribution. Until they do, they are not going to embrace internet distribution. While folks are downloading television content left and right, they are not downloading films. Itunes, XBOX, Amazon, BB, and all of the other online distributors are not making any money on their film downloads. They are making money off of the music and television content, and that is it. The online infrastructure is not ready for mass downloading, and certainly not the file sizes of 1080p and lossless audio offered on disc. Folks apparently are not intested in down-rezzed stuff, as it does not look very good on their 40-50" 1080p panels. The problem is not the studios, it is the internet. The internet has to work for the studios and not the other way around. So what you computer geeks need to do is get to work on improving the bandwidth, stability, and capacity of the internet instead of asking the studio and distributors to dummy down the product to fit the least common denominator.

[Sir Terrence the Terrible]

Man, you guys are pretty passionate about this topic. No one really addressed what I said. In layman's terms, is it possible at this juncture to reduce inflated wages of actors, crew, etc? Have the unions and agents become too powerful a force? The writer's strike was greatly effective and as a trade unionist I can tell you, a great case study.

It just seems that when in the red, most companies address labour as one of the first areas to cut back in. My impression is that Hollywood is excluded from this process. Fill me in guys...

poppa, I will address this in a two prong fashion. Actors salaries have already taken a hit. Several actors that commanded $20 million per picture none negotiable have already began negotiating at lower salaries. Will Smith is really the only $20 million man standing, and he does not always get that kind of pay. It's a per movie basis depending on the size of the budget. All of the others have made films at substantially lower salaries. As pictures that feature major players flunk out, their salaries are negotiated downward. There are very few actors that sit in a none negotiable position. We have even seen a few studio heads take pay cuts when their contracts are negotiated. The Hollywood studios are moving away from the guaranteed salary and bonuses, to performance based models. It is still big bucks in comparison to you and I, but you can clearly see the downward pressure being put on it.

Below the exec level, studio have been laying off people left and right. We have even seen some studios drop their PR agencies to cut costs. Some subsidiary independent studios like New Line Cinema, MGM, Genius and other small operations have either been brought back under their major companies (New Line back under Warner). Disney has not seen any major layoffs (thank God!), but cutback in yearly releases, and an emphasis on in house projects where costs can be controlled. Sony has seen some layoffs as well, but Warner has taken the largest hit. Warner has taken control of all operation of New Line, and they are no longer an independent subsidiary of Warner. The operations of the two have been pretty much combined, and any overlap eliminated. About 200 people have lost their jobs. 20th Century Fox has had very few layoff, but a cutback in releases. Weinstein is on life support, and only releasing six films in all of 2010. Paramount is also going through combining of operations, and layoffs. Universal is going to be spun off from GE, but they are not doing quite as bad as the others. MGM is on life support, and has been for a while. It is rumored that Warner is looking to buy them, Sony will take over the Bond series, Warner will control the production of the Hobbit, and the rest will be sold as scraps if things don't improve by December. The folks that took a huge it this year are the independent filmakers. Sales of their projects from the film festivals this years has been extremely poor

The movie industry is just like any other business. When times get rough, they cutback. Unlike some people who believe this industry has been in trouble a while - it is not true at all. This industry is under the same stress as any business that depends on credit for its operations.

[Mr Peabody]

Keep in mind that "streaming" is probably the fastest growing form of download if you want to call it downloading. The Blu-ray players that include the streaming feature via the internet seems to be quasi popular, at least enough that it looks like more companies will jump on the bandwagon.

[poppachubby]

poppa, I will address this in a two prong fashion. Actors salaries have already taken a hit. Several actors that commanded $20 million per picture none negotiable have already began negotiating at lower salaries. Will Smith is really the only $20 million man standing, and he does not always get that kind of pay. It's a per movie basis depending on the size of the budget. All of the others have made films at substantially lower salaries. As pictures that feature major players flunk out, their salaries are negotiated downward. There are very few actors that sit in a none negotiable position. We have even seen a few studio heads take pay cuts when their contracts are negotiated. The Hollywood studios are moving away from the guaranteed salary and bonuses, to performance based models. It is still big bucks in comparison to you and I, but you can clearly see the downward pressure being put on it.

Below the exec level, studio have been laying off people left and right. We have even seen some studios drop their PR agencies to cut costs. Some subsidiary independent studios like New Line Cinema, MGM, Genius and other small operations have either been brought back under their major companies (New Line back under Warner). Disney has not seen any major layoffs (thank God!), but cutback in yearly releases, and an emphasis on in house projects where costs can be controlled. Sony has seen some layoffs as well, but Warner has taken the largest hit. Warner has taken control of all operation of New Line, and they are no longer an independent subsidiary of Warner. The operations of the two have been pretty much combined, and any overlap eliminated. About 200 people have lost their jobs. 20th Century Fox has had very few layoff, but a cutback in releases. Weinstein is on life support, and only releasing six films in all of 2010. Paramount is also going through combining of operations, and layoffs. Universal is going to be spun off from GE, but they are not doing quite as bad as the others. MGM is on life support, and has been for a while. It is rumored that Warner is looking to buy them, Sony will take over the Bond series, Warner will control the production of the Hobbit, and the rest will be sold as scraps if things don't improve by December. The folks that took a huge it this year are the independent filmakers. Sales of their projects from the film festivals this years has been extremely poor

The movie industry is just like any other business. When times get rough, they cutback. Unlike some people who believe this industry has been in trouble a while - it is not true at all. This industry is under the same stress as any business that depends on credit for its operations.

Interesting, I really don't follow anything related to Hollywood. Whether its Brangelina or a studio in decline, I know nothing. I suppose I should look in on my own favorite genre's stability in Hong Kong. Can't imagine they're doing any better.

It all seems like gloom and doom for movies. I must admit, I'm guilty of the odd download. However, I bet 50% of what I've downloaded has been crap. I realise this is in my own opinion, however I think most people would agree that Hollywood has a knack for churning out re-fried, brain dead flicks. There's no feeling worse than watching an "exciting" trailer, only to find out at the cinema, that it's actually boring. I think "dirty" and "raped" come to mind. Luckily for me, Hollywood product doesn't interest me for the most part.

Anyhow Terrence, thanks for sharing that info, I think I'll try and keep my eyes peeled for this subject...

[pixelthis]

Man, you guys are pretty passionate about this topic. No one really addressed what I said. In layman's terms, is it possible at this juncture to reduce inflated wages of actors, crew, etc? Have the unions and agents become too powerful a force? The writer's strike was greatly effective and as a trade unionist I can tell you, a great case study.

It just seems that when in the red, most companies address labour as one of the first areas to cut back in. My impression is that Hollywood is excluded from this process. Fill me in guys...

Wages and such are inflated because of the huge flow of dollars into the economy,
since that flow is soon to decrease, wages and such will follow, its called the free market.
And in not so obvious ways, like moving production to low cost states, etc.
People seem to think that what they want affects the market.
For instance sir talky said that the price of Blu players were going to be "kept at a certain
price point", that the blowout in prices that occurred in DVD players wasnt going to happen,
well, I saw a sharp BLU player for 129 bucks today.
The movie industry is going to have to economize, which will be harder than the music
biz, costs a lot more to make a movie than a song.
The future of movies and video is a small show on the "syfy channel",
called Sanctuary.
The entire show is computer generated, everything except the actors, and not all of them are real, whole thing is "blue screened"(or green rather).
THATS the future, hardware from China, entertainment from the brain of a computer.
Already taking place, most of what you see these days is not real.
Which is kinda ironic, what used to be an expensive option sparingly used is probably going to be the salvation of the industry.
Charlton HESTON said that movies like ben hur wouldn't be made anymore, too expensive
for teh crowd scenes, etc.
Now they do such things as destroy entire cities for TV shows.
Wave of the future.

[Sir Terrence the Terrible]

For instance sir talky said that the price of Blu players were going to be "kept at a certain
price point", that the blowout in prices that occurred in DVD players wasnt going to happen,

You are a damn liar, I never said any such thing. This is the second time @sshole that you have repeated this lie (and out of context at that), and I am getting sick of it.

I was referring to a period of time in 2008 and not anytime after that. I said VERY CLEARLY I might add, that in early 2008 the BDA did not want a premature dumping of Chinese manufactured low cost players that drives the cost of ALL players down like it did with DVD. I also said that it was going to be 2009 that prices will naturally drop as more manufacturers (including the Chinese) enter the market. I also said there will be players at every price point, and there currently is.

Pix, stop your lies. I am getting sick of them, and you too.

[GMichael]

And we're off like a prom dress........

[poppachubby]

And we're off like a prom dress........

hahaha, much like international affairs, I am the Canadian squashed in the middle of the conflict, peacefully minding my own....

[nightflier]

The internet is not the country club you are trying to make it. Andrew stated correctly that the internet is the wild west.

Spoken like someone who both fears it and doesn't understand it. The internet is, as some commentators have stated, "the purest form of democracy there is." Yes larger corporations have a commanding position, but everyone has a place, everyone. It is not the wild west, and it is not without rules. It's just that the rules are made by the people who exist in it, and that is something the Hollywood execs just can't accept. Sad really.

You predicted that HD-DVD would win because it was cheaper. It didn't.

Yes I did. I was wrong about that, I've owned up to it. But it's not like HD-DVD's demise was obvious when you started shouting it from the rooftops. You were fanning the flames of battle well before there was a winner, hoping you could influence the outcome. Pretty inappropriate for someone who claimed to be fair to both sides.

You stated that downloads were going to make big in roads against HD media on disc, it is not happening.

Not yet, but I didn't put a time-limit on this one. It will happen, sooner than you will feel comfortable with, no doubt.

I guess what you are so upset about here, is that I found an article on a major news-site that actually supports many of the things I predicted and you just can't bear that you may be wrong with your attacks on them. Kind of entertaining to watch this happen, really.

As far as your PM box, don't care. Those two people could be you and your alternate personality

Wishful thinking, but more incorrect hyperbole.

There is nothing the film industry can learn from a entities that steal and distributes intellectual property for free. This is against the law and you know it. Teaching people to expect something for nothing is not a noble cause, no matter how you slice and dice it.

You didn't read what I wrote. I was talking about lower-quality, but legal, full-length content as the preview - not misleading bits. I don't expect it to be what people end up with in their homes, but it will curb piracy, which is what everyone wants. This is true simply because it will offer real competition to pirated content, without the risks and, in most cases, at the same quality-level. Did you even read what I wrote?

NF, If you are so smart, and have the knowledge to run a studio, why aren't you?

Considering their failures, I think I've been plenty smart not doing so, wouldn't you say? Never even invested in them either - how's that for smarts. I bet you're loosing your shirt on that gamble too.

You idea is stupid, and it would cost the studios a bundle to implement, not to mention the people that actually distribute the downloads.

Coming from someone who fears the internet and computers, that's kind of a comical statement, don't you think? Kind of like a religious zealot who dismisses everything he doesn't understand as stupid. I happen to know just a little bit about what it takes and costs to implement, and I'm fairly certain that the studios could manage it. But if that's not the case, then why is it so stupid? Enlighten us with your infinite wisdom.

When you have to pay for the content, and the overhead and manpower to store it, giving it away for free is a loss leader that nobody wants to absorb. Your studio would be in bankruptcy in less than ten minutes.

Well we won't know until it's tried, now will we? Someone will, and it won't be a bankrupt model. That's another prediction for you, so run with it. By the way, we wouldn't be giving it away for free, we would be giving a lower-quality version away for free, as a preview. Have you read nothing that I so painstakingly described?

The RIAA is not the MPAA. and music is not film.

Small-minded people always have this desperate propensity to put everything into little black & white categories and bite-sized chunks to get their little minds around them. The idea that one industry can learn from another is so anathema to their very existence that they will stop at nothing to destroy the thought. This is why they can't see the bigger picture. The RIAA and the MPAA have the same goals and the same draconian methods. Surely you can agree that there are more parallels than disparities? Just deal with the reality of that thought for a minute, while the rest of us go on.

DRM is despised because it slows down thieves, and prevent people for getting something for nothing. If there were no thieves then there would be no DRM.

DRM is no deterrent. If it was, then there would be no piracy. It is despised because it irritates consumers of legitimate products. I don't think I've ever read that thieves are bothered much by DRM, but I've read countless ways that law-abiding consumers are frustrated by it. Maybe you should review what you just said, because the backwards logic just doesn't work. Go ahead, but excuse us for proceeding, there's lots to cover, in your backwards illogical inconsistencies, LOL.

If Hollywood was so clueless, then why does DRM exist? It exists because folks like stealing films and distributing them for free.

If I search enough, I can find every single new song or movie, cracked. Obviously Hollywood is clueless. DRM is not working and it is being fazed out because it is more an irritant to law-abiding consumers than a deterrent to thieves.

The only folks complaining about DRM are computer geeks, the very people who enjoy stealing off the internet.

Completely false. The only people complaining are law-abiding consumers (go ahead, do a search). While it's obvious you despise computer geeks so much, you should be thankful they exist - they expose more bugs to the industry than the industry could ever do on its own. You really need to read a bit more about the people who make up the Internet you so misunderstand.

As such, it is not the model of stability to support a legit business model for the film industry, and the industry knows this.

As a democratic and fairer distribution medium that stands in contrast to the corporate-dominated top-down model, the internet is not so forgiving of indiscriminate bundling and price gouging that Hollywood execs so depend on for their profiteering. What you profess as a "legit business model for the film industry" is simply not one that benefits the consumers because it denies them choice. Again, as I said before, if it was so fair, then why not allow people to buy movies w/o the fluff? Let's put that to the test and see how much better those movies would sell. Hollywood doesn't even want to try it, because they will loose their reason for charging more. I'm guessing you wouldn't either?

Unfortunately you computer geeks who like free stuff just don't get it.

My what a loaded statement. So computer geeks want everything for free? Maybe they're all thieves, too? Where do you get off?

[QUOTE=Sir Terrence the Terrible]It cost to make a movie, and the people who invest in films want to make as much as they can from their investment.[QUOTE]

Then pray answer this question for us: why should a consumer pay the same amount for, oh I don't know, The Bridges of Madison County and T3, to name a couple of oldies? Did these cost the same to make? Is that a free market? Oh, but wait, there's a solution: load them both up with lots of fluff, add another disk with more fluff, re-release them as new editions, and lo and behold: $19.99 for each film - isn't that clever! Not a good example? Then how about Seven Pounds and Hancock, to stick with one of your favorite actors for a minute? Why should consumers pay $15 bucks a ticket to see each of these movies? Certainly they did not cost the same to make. So what are consumers really paying for?

It is call the free market, which is the way the world turns.

Interesting you should be so enthusiastic about the free-market, when you are equally enthusiastic, some would say exceedingly zealous, about regulation, controls, and limits on the free market. If it was a free-market model, then people would pay different prices for different movies. They would also pay less (not more) for re-releases, and box-sets, and not have to pay extra for fluff. Likewise, they would not have to pay a full $0.99 for downloading a song that they already own on CD, LP, or Cassette. No this is very much a cost-controlled market, one not unlike the diamond industry.

Wrong wrong wrong. Before the economy tanked ALL of the Hollywood studios where quite financially healthy. They were turning out more product per year than they ever have. Not all of it good, but they had all the financing they needed to complete their entire slate of theatrical and video releases. Just like with all businesses that depend on credit, the credit crunch is putting pressure on their operations.

Signs of trouble were there well before October 2008. We discussed some of them on this very site, if you recall.

Blockbuster is not the Hollywood film industry, so I don't know how they relate to this discussion.

It's a symbiotic relationship, and you know that as well as I do. Quit splitting hairs and making mole-hills out of mountains.

Your opinion....You are not an accountant that works in the industry, so you don't know the health of the balance sheets of all studios.

One shared by the article I posted. Isn't it convenient how you choose to ignore that little detail?

Just because the studios have not moved their entire film catalogs online does not make them them clueless.

Boy talk about twisting words. I said they were clueless about the Internet.

I can sell a movie on a disc and make a nice profit to finance my film operations.

Unless you're an independent or smaller outfit, right? So this system really only benefits the big guys.

I make next to no profit selling film online, and the overhead for storing them exceeds what I would make for offering them. Where do I sell my product, on the disc or online? What you computer geeks don't understand is something called a business model.

More generalizations about computer geeks - and what overt hatred! Did they steal your lunch money?

The only reason that the big studios can't make any money this way is because the over-priced bundled movies + fluff (read: old business-model) are of no interest to online consumers, so they don't sell. If they would just stop and learn a little from the how the music industry has changed - oh, but wait, that's not allowed in your world-view, right? Well that ought to be a big clue as to why the studios won't sell online and why your argument is so hollow. OK, we'll wait a few seconds for that sentence to sink in, for ya....

The answer ought to be really easy unless you are a lousy business manager. You fall where in this?

I'm sure I don't command the kind of salary that you do, but I've certainly managed to successfully minimize my exposure to this sliding economy and I've done OK. So I guess you could say, I "fell" on a soft pillow.

NF this is why I call you names like stupid and ignorant

No you do it because you are belligerent and will not tolerate a different point of view. It frustrates you and you become defensive. It's really quite enervating...

THE STUDIOS DO NOT SET THE PRICING STRUCTURE OF ONLINE DISTRIBUTION. THAT IS UP TO THE INDIVIDUAL BUSINESS THAT SUPPORTS THE STREAMING AND DOWNLOADING OF THE CONTENT. THE STUDIO JUST PROVIDE THE CONTENT, AND THAT IS ALL THE SAY THEY HAVE. THEY SIGN THE CONTRACT TO PROVIDE THE PRODUCT, AND THE OTHER SIDE SET THE PRICE OF THE DOWNLOAD SO THEY CAN PAY THEIR EXPENSES AND MAKE A PROFIT.

...and now you feel that yelling is justified. Quite enervating, especially since you are so excited that you cannot even understand a simple explanation anymore. I'm saying quite simply that the studios should get online already, and sell directly. That this isn't the case now, is another indication of how they just don't have a clue. And apparently, neither do you.

Your beef is not with the studios, it is with Amazon, Netflix, Blockbuster, and the other online distributors of video content. The studio are focused on producing content for disc media.

Again, trying desperately and in vain to categorize everything into little boxes you can wrap your head around. You want to think of Amazon et al is completely separate from the studios and this is not only false, but a sure-fire recipe for future failure. They already have very close ties to each other and influence each other. As much as you'd like to think of Netflix as doing their own thing (very typical of someone who needs everything to be black & white and who fears or loathes two categories mingling), but they would be nothing without the content. It's not just a contract-signing and then everybody goes on their merry way. It's a symbiotic relationship (I know, big word, already used above - you might want to look it up before we, heven forbid, use it again).

Furthermore, that relationship needs to grow and expand so that both entities can benefit from them. Yes, that means more blurring of your precious compartmentalization of the world. Get used to it, the world is not black & white, it is almost entirely gray.

When the online distributors (or perhaps the studios themselves) come up with a profitable business model for online distribution, then the studio will migrate their product in that direction.

You're putting the cart before the horse. The model already exists, it's called iTunes. It's the studios who are lagging behind. The online model is not going to accept their old bundling-gouging practices, so either they get on board or they will continue to flounder.

Now as far as choice, you are way off base in your observations. The consumer has more choices than ever to view films. You have Blu-ray disc, DVD, and online. This is more choice than the consumer has ever had. Even television programming can be found on all three. So your observation is once again wrong.

Again, twisting the meaning of everything I said. The choice I'm talking about is about the individual product - let consumers choose what quality and how much fluff they want. That is the way the music industry has progressed, and that is the way the movie industry must progress too, or they can just continue to struggle with an aging model that stagnates and festers.

I am going to make this as clear as I can. The studio can not, and do not make a profit off online distribution. Until they do, they are not going to embrace internet distribution.

Well, it's at their own peril. In case you haven't noticed, Hollywood is one industry that is not recovering with the rest of the economy. Ironically, it's computers and high-tech that's driving the new economy. Isn't that funny?

While folks are downloading television content left and right, they are not downloading films.

You're proving my case, wouldn't you say? TV is free (Hulu), that's why. And the advertisers are laughing all the way to the bank.

Itunes, XBOX, Amazon, BB, and all of the other online distributors are not making any money on their film downloads.

Because Hollywood just won't play ball. How much more does it have to hurt before they will finally pay attention? Well, from reading your posts, perhaps a whole lot more - enjoy the punishment - it's not like we didn't warn you.

They are making money off of the music and television content, and that is it.

Yes. You'd think Hollywood would notice.

The online infrastructure is not ready for mass downloading, and certainly not the file sizes of 1080p and lossless audio offered on disc.

That's why there ought to be choice in what people download. If a consumer has a 32" CRT TV and 2.0 sound, then he should not have to wait 4 hours to download the 1080p DTS 6.1 version in three languages, nor should he have to pay for the premium.

Folks apparently are not intested in down-rezzed stuff, as it does not look very good on their 40-50" 1080p panels.

Pure speculation. You don't know that. They certainly aren't going to pay full price for it, that we can all agree on. And not everyone has a 50" 1080p plasma, either. Some folks just want to download it to their iPod or PSP.

The problem is not the studios, it is the internet. The internet has to work for the studios and not the other way around.

Well, we'll see if "the Internet" bows down to your wishes. I seriously doubt it. In a few years we'll see who blinked first, and I'm putting my money on Hollywood eating crow.

So what you computer geeks need to do is get to work on improving the bandwidth, stability, and capacity of the internet instead of asking the studio and distributors to dummy down the product to fit the least common denominator.

We are, but not because Hollywood is making us. Boy, you Hollywood insiders sure are full of yourselves.

Look at it another way, sooner or later your employer is going to turn his greedy eyes on you too. He will say: you know, I need to cut costs, and this guy is making way too much. Maybe I can offer him a pay-cut, which he'll take for fear of being fired. Or maybe I'll raise his insurance premiums so that I have to pay a smaller share of them. Maybe I'll stop matching his 401k contributions. After all, I've got to stay afloat, now. Nothing else I've tried seems to be working. I just can't figure out why the consumers are no longer buying my overpriced bundled disks anymore. And why is our stock price in the dump when everyone else on Wall Street is riding high? What is happening to my precious business model? ...Wait a minute, is that a pink slip in MY inbox?

[Mr Peabody]

Keep in mind consumers have a choice to buy or not. As long as some idiot pays a crazy price for a re-packaged or re-release they'll keep selling them. Look at the recent re-release of Wizard Of Oz, this isn't all the movie companies, several retailers like Amazon and Wal-Mart have special and unique to them packages. Actually, I think WM has a single disc version with no special additions. I haven't checked the price. The Amazon prices are expensive. Pricing is a roll of the dice. There were some John Wayne Blu-ray discs that came out and the price dropped and dropped. The person who gave the go ahead for The Searchers is probably unemployed right now. You can buy that on BD for $7.99. I personally would like to see the prices of BD movies more in line with DVD.