Hey guys,
Long time listener, first time poster. I always enjoy hearing your opinions on films, especially the LA tidbits that you don't tend to get while working overseas.
I often discuss the topic subject with friends of mine who work in various facets of production, but since none of them are specifically on the money side of feature films we never seem to be able to get a clear answer. I was hoping that the combined experience at DIF could shed some light on it.
This is a very broad topic so I'll try to keep this as organised as possible. Here are some general assumptions I'm working from (feel free to dispute):
1) Individual studio films don't technically turn a profit, the studios operate on a 'fee' system and extract money in that way. "There is no net" etc.
2) The studios, while no longer owning theatres, still benefit from 'internalising costs' by owning their own distribution arms. Buena Vista with Disney etc.
3) The studios themselves have been absorbed into massive conglomerates.
4) The majority of studio revenues now come from non-theatrical sources. Domestic/worldwide TV, DVD, merchandise etc. Hence the increasing focus on proven brand names and garnering broad international appeal.
5) Most films (studio or otherwise) on an individual basis, lose money.
6) Independent films are financed by ordinary (wealthy) people, who don't enjoy the risk-hedging abilities of the studios (who produce slates of films), or the benefits of owning their own distribution chain.
I'll apologise halfway through for the long post but hopefully it takes the conversation somewhere interesting - here are my questions:
a) Do the film studios actually make any significant positive financial impact on their conglomerated owners? Or are they kept around just so those companies can maintain a foothold in the media/PR sphere?** I've been told that the actual end-of-the-day profits of the big studios are nothing to write home about.
b) If the vast majority of films lose money, why are there still so many privately invested independent films? Is it really just wealthy people splashing money for the glamour of the business and bragging rights?
c) When DVD/BluRay collapse, where do you see the future of film financing/distribution revenue? Netflix/iTunes?
While I imagine that Netflix/iTunes may be a nice bonus cheque for films which already exist, it seems too meagre to sustain even modest production budgets with it as the only revenue stream.
I also understand that creative works like music and books (which are relatively inexpensive to produce, financially speaking), may thrive on the Kindlestore/iTunes, unfortunately movies are orders of magnitude more expensive to make. And no, Canon 5Ds don't change that. It also appears that torrent piracy is becoming increasingly prevalent and (more disappointingly) socially acceptable.
It seems like a shame, because I feel like with the technology advancements in post-production especially, we could be seeing a bunch more smart and well produced films that sit under a million dollar budget. I don't know, however, that they'd be able to be marketed in a way that actually encouraged savvy viewers to pay for them.
In other words, are films ultimately now just aimed at those too stupid to know how to steal?
I hope some of you managed to get all the way through that post, and look forward to hearing what you guys have to say!
** I'm reminded of an interesting interview with the director of Hitch on the subject of product placement. He mentions that his "boss" (GE) doesn't really care about film or the film industry, they make fighter jets and power plants.