Matthew Ball has written an interesting analysis of NetFlix’s venture into producing original content. The quick summary is that as long as NetFlix depends upon licensing the company is on a treadmill: as soon as the company shows a profit the big content-producing companies can just increase their licensing fees. The more properties that NetFlix owns outright the more of its earnings the company will be able to retain.
Imagine that NetFlix is able to produce a The Walking Dead or Game of Thrones. Not only will the company hold on to existing customers and add new ones but it will be able to retain its earnings from the hottest properties in television.
On the other hand, imagine that they’re only able to produce limited interest niche products that don’t incentivize present customers to stay or new ones to sign up. Essentially, the move is a gamble.
I think there’s another scenario that needs to be considered. Do the big content-producers have indefinite leeway in raising their license fees? They are, after all, the creatures of government which could turn on them as much as continue to subsidize them. The real question may be just how quickly Warners, Sony, etc. will be able to produce their own attractive and effective streaming services. And whether consumers will put up with that kind of divided market in which you’ve got to know who produces what to know what you should be buying.
Apropos:
Broadcasters Circle Wagons Against a TV Streaming Upstart
Gatekeepers of Cable TV Try to Stop Intel
Interesting times if you’re a cable/network exec.
Dave, my comment’s caught in the spam filter. Could you spring it?
Thanks.
Another angle to consider is Steven Spielberg’s recent prediction that the movie cinema business is about to implode:
http://www.guardian.co.uk/film/2013/jun/13/steven-spielberg-george-lucas-film-industry
There may be more opportunities for at-home delivery models to source the non-blockbuster movies.
I’m not sure “implode” is the right word. I remembe when an unknown named George Lucas put together a science fiction picture using a bunch of struggling, not particularly well known character actors called THX 1138 for about $750,000. Today he could make a much better-looking picture for a fraction of the cost. In dollars.
Robert Rodriguez has been editing most or all of his pictures in his garage using off-the-shelf equipment and software for most of the last decade. The cost of all of that has plummeted over that period.
Distribution continues to be the bottleneck. Streaming may bypass that. I think it’s more likely that makers will shop to streamers, bypassing the distributors, than a real implosion.
Again, go back to The Walking Dead. That is one cheap show to make and something that captures the imagination just as effectively could be streamed first.
Do I need to add how badly Michael Bay’s pictures suck? They’re just loud and confused, even discounting the objectification of women (speaking of Steven Soderburgh) that’s so central to his basic approach. Talk about financial disasters in the making!
You know, there’s probably a business in that. Providing a solid portal where people can put their own movies. A for-pay service that provides something a notch above YouTube. Maybe add some promotion. Apps for various streaming devices.
I think Lucas has fallen victim to the cost disease, he couldn’t make an inexpensive movie anymore. Soderbergh has said he needed $5 million to make the Liberace movie, but the studios said the movie would need to gross over $70 million to accept it. So, he went to HBO.
I’m part of the problem, I’ve no interest in seeing a Liberace movie (he’s no James Whale); I didn’t even see the Lincoln movie. I go to a movie no more than once a year, and its a spectacle movie. I figure I can see easily enjoy more intimate movies in an intimate space.
I also blame foreigners. With most movie profits coming from overseas these days, I think that is the only way to explain Michael Bay. Does he play in Bahrain?
Anyway, I think many of these movies are going to migrate outside of the traditional theatre system, which is no big deal to me.
I’ve had a big transition on movies. In college I lived with the school paper movie critic and I went to screenings probably 3 times a week. Now I’m like PD Shaw. I only see a couple movies a year in the theater. A lot of that is thanks to my kids.
And my kids are a lot different than when I was a kid. I loved the movies as a kid. I even begged my Mom to take me to see Jaws when I was 7 years old. She finally took me, probably to teach me a lesson. I was scared shitless about 1/2 through and left the theater, but watch the rest through the crack in the double-doors at back of the theater.
My kids, by contrast, would rather watch something at home. Theaters are too big, too loud and too inconvenient for them. With satellite TV, a DVR, Amazon Prime and an average (for today) 46″ flatscreen they are more than happy.
Things will probably change once they become teens. I think PD has a point about the foreign (very sexist) audience, but there is also a huge audience of movie-going young men.
Finally, I read a recent interesting post on OTB about movie licensing and I learned that the reason there are is a Spider Man remake every couple of years is because that’s how the Studio keeps the license.
If we go at all, it is usually to Imax now.
Steve
I think comic-book based movies (including the Walking Dead) are experiencing a peak, but the bubble has to be bursting sometime in the next few years. Right now, we have Iron Man 3 in theaters, and coming up shortly:
Jun 14 Man of Steel
Jul 19 Red 2
Jul 19 R.I.P.D.
Jul 26 The Wolverine
Jul 31 The Smurfs 2
Aug 2 2 Guns
Aug 16 Kick-Ass 2 (sequel to a Reynold’s fav)
Oct 4 Sin City: A Dame to Kill For (Robert Rodriguez)
Oct 25 OldBoy (Spike Lee)
Nov 8 Thor: The Dark World
For 2014:
I, Frankenstein (2014)
300: Rise of an Empire (2014)
Captain America: The Winter Soldier (2014)
The Amazing Spider-Man 2 (2014)
Teenage Mutant Ninja Turtles (2014)
X-Men: Days of Future Past (2014)
Hercules: The Thracian Wars (2014)
Guardians of the Galaxy (2014)
Moomins on the Riviera (2014)
Abattoir (2014)
The Secret Service (2014)
Annie (2014)
Why original content, when you can leverage existing licensed material?