The Evolving Film Industry

Started by wilder, April 28, 2020, 09:57:53 AM

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wilberfan

Hollywood relies on China to stay afloat. What does that mean for movies?
February 21, 20229:00 AM ET
Fresh Air with Terry Gross - WHYY

Today's Hollywood blockbusters are specifically being crafted to appeal to Chinese audiences — and pass muster with the Chinese government — according to Wall Street Journal reporter Erich Schwartzel.

He highlights a few notable situations of product placement: In the 2014 film Transformers: Age of Extinction, Mark Wahlberg's character withdraws money from a China Construction Bank ATM — while in Texas. In another scene from the same film, a character buys Chinese protein powder at a Chicago convenience store.

And just 10 days after its release, Age of Extinction became the highest grossing film of all time in China. The movie has since been overtaken at the box office by a string of other blockbusters, but Schwartzel says its influence lingers.

Schwartzel has trained his eye to spot what he calls "Chinese elements" in movies: "You'll start to see it everywhere," he says. "I go to the movies now and I can see the Chinese cell phone — even if it's blurred in the frame."

In his new book, Red Carpet: Hollywood, China and the Global Battle for Cultural Supremacy, Schwartzel writes about China's growing influence on Hollywood. He contends that China has watched as Hollywood films helped sell America to the world — and it wants to do the same.

"As China has broadened its ambitions on the world stage and tried to become a bigger and bigger player in global politics, it has seen how culture can play a huge role in helping that effort," Schwartzel says.

China is already a powerhouse at the box office: In 2020, it overtook North America as the world's largest film market, and Schwartzel says that movie studios are increasingly reliant upon Chinese audiences to break even.

Marvel's 1st Asian Superhero Gets The Full Blockbuster Treatment In 'Shang-Chi'
"It comes to the point where even on some of the biggest films that make tons of money around the world, like a Fast & Furious film or a Marvel superheroes movie, getting into China and making money there ... can mean the difference between profit and loss," he says.

But before a film can be shown in China, it must first get past Chinese government censors. And Schwartzel notes that the Chinese government has been quick to punish studios that take on topics it doesn't want the Chinese public to see or that it feels will make China look bad.

"No studio in Hollywood today would touch a movie that concerns a storyline involving the Uyghurs or Xinjiang or issues involving Taiwanese independence or demonstrations in Hong Kong," Schwartzel says. "Because of the economic muzzle that China has on the studios today, those things are just complete non-starters."

It started in 1994, and a couple of things were happening at the time. China's economy was modernizing and opening up to the world. This is a time when companies like Boeing were moving into China. ... After the Cultural Revolution, Chinese movie theaters reopened, but they really struggled because really, the only thing that the government had to offer were these very medicinal propagandistic films, and they were really the only show in town until things like television or even karaoke lounges gave people something a little bit more fun to do. And if movies were popular, it often was because they were pirated and available for sale on the city corner.

So the theaters were really struggling, and in 1994, an executive who was stationed in the region for Warner Bros. suggested to a very prominent theater owner that Western movies might help the theaters recover. And so Warner Bros. sent the first American movie over, which was Harrison Ford's The Fugitive, to screen in a theater, and a contract was drawn up that only sent 13% of ticket sales back to Warner Bros., so this was a really paltry amount. And despite having this massive population, the Chinese box office was still really small. I think The Fugitive made around $3 million [in China], which is nothing to a studio as big as Warner Bros., but was an absolute blockbuster in Chinese terms. And the Chinese audiences, who had essentially been shut off to Hollywood's influence in the 20th century, started to do what audiences around the world had done decades prior — they flocked to the theater to see American films. And by the late '90s, only a handful of American movies were flowing into China. But nonetheless, they were causing these surges in box office sales.

On how the 1997 films Kundun and Seven Years in Tibet angered the Chinese authorities and impacted Hollywood studios

These two films, Kundun and Seven Years in Tibet, come out only three years after American movies are getting into China at all. And neither movie is put into production with China in mind, because no one at this point is making movies thinking they will make any money in China. And so Disney, which was releasing Kundun, had inherited the project. It was a Martin Scorsese film, and both films were about a young Dalai Lama and also China's invasion of Tibet. So both films feature not just a valorization of this Chinese state enemy, but also portray on screen in really unvarnished terms the Chinese invasion of Tibet and the persecution of Tibetans. Mao Zedong is featured in a scene in Kundun looking like an absolute buffoon next to this wise lama. It was obvious that China wouldn't like the films, but it didn't seem like it was going to be that much of an issue because no one expected the movies to play in China at all.

Nonetheless, China made it clear that not only did it not like the production of these films, but it was going to punish the studios behind them for making them at all. So Kundun was being released by Disney, which at the time had already invested more than a billion dollars in the market, and had already had aspirations to build a theme park on the mainland and start hooking Chinese children on Disney toys and movies and all sorts of other revenue streams, even back in the mid '90s, despite China's middle class still really coming into focus. Disney knew that it was going to be a source of revenue in the years to come. Sony was releasing Seven Years in Tibet, and again, Sony was releasing movies in China at the time, but the bigger economic concern was the supply chain that its parent company had when it came to Sony Electronics. And what made both of these films such cautionary tales for all of Hollywood was that after they were released, both companies were banned in China, despite the fact that the movies had not been released onto Chinese screens. And Chinese authorities made it clear by doing so that if a studio made a film that angered officials, it was not going to be about punishing that studio, but it would be about punishing its parent company. And so suddenly it seemed like a lot more was at stake than just angering officials over the release of one film.

Is China a threat or an opportunity? Depends which Americans you ask
On how Disney executives reacted to China's ban of Kundun

The executives at Disney ... knew if they canceled the production as the Chinese authorities had requested, they would have been tarred in the Hollywood community for squelching free expression, for muzzling Martin Scorsese. They knew that they would have a lot of domestic blowback if they did that, too. So they had to really thread the needle. And what they ultimately decided to do was release Kundun into theaters, but bury it. And so Kundun was released on Christmas Day on four screens, and then when it didn't perform well, the Disney executives used that lousy performance to justify not expanding it much further. And actually, despite all their efforts, they still were banned in China, and the then CEO Michael Eisner, had to fly over to Beijing a year later and meet with officials and apologize. There's a fascinating transcript that exists of his meeting with a Chinese official in which he says, "The bad news is that the movie was released. The good news is that nobody saw it."

China influences the movies Hollywood makes. But it may not need the U.S. anymore
On the deal between Hollywood and the Chinese government

The primary deal was struck in 1994 and that started to allow 10 films a year onto Chinese screens, and that hummed along for a while, until 2012, when there was a significant expansion of that deal negotiated between then Vice President Joe Biden and his counterpart, Xi Jinping, who was not yet president of China, but was the heir apparent. Biden and Xi met on one of Xi's trips to the U.S. and negotiated an expansion that would allow 34 foreign films onto Chinese screens a year, and that previous 13% of ticket sales that had gone back to the studios grew to 25%. And this is a deal that really cements China's influence in Hollywood because it means that almost every studio in town can guarantee that their biggest releases will get into the country, and not only that, that they will make significant money.

On the rules film studios must follow to get their movie shown in China

China influences the movies Hollywood makes. But it may not need the U.S. anymore
There's a literal list of rules that the censors in Beijing use as something of a checklist. So when a movie has finished filming and it is ready for release, a copy of it is sent to Beijing to the Ministry of Propaganda, where a collection of censors who tend to be a collection of state bureaucrats and even some film studies professors watch the movie. And obviously anything that might concern Tibet or Chinese history or Mao is going to be off the table. But those movies, as I said, aren't getting made anyway.

But even a superhero movie might be watched for certain scenes that contain images or themes they don't want the Chinese people to see. And it ranges from the cosmetic to the thematic.

In 2006, Mission: Impossible III filmed some scenes in Shanghai that feature Tom Cruise running through the streets, and in the background there is laundry drying on clotheslines from apartment buildings, and the Chinese authorities requested that that laundry be edited out of the frame because they thought it presented an image of China that was more backwards than they wanted the world to see. And then there are just deeper issues with some of the core tenets of Hollywood moviemaking.

So for example, there was a film that came out more than a decade and a half ago called In Good Company, and it's a pretty innocuous romantic comedy starring Topher Grace as this young guy who gets a job and displaces the older boss. And it seems like a pretty run of the mill PG-13 family friendly film. It nonetheless did not get into China. And at the time, the head of the Motion Picture Association started asking around in Beijing why that was the case. He couldn't understand why a movie that obviously was not nearly as politically charged as something like Kundun would not get into China. And the authorities said, "It's a movie about the younger generation challenging the system and taking on the powers that be, and that's a theme that we cannot abide here in China." So you realize that not only do studio chiefs today have to watch a movie and think about how every frame of China is scrutinized, but also think quite a bit about how core elements of American storytelling will be interpreted by censors in Beijing.

On how Hollywood studios rationalize the censorship

The economics have made it something of a no-brainer, because China's box office has grown as America's box office has flatlined. ... Pre-COVID, around 2008 or 2009, when studios started to wake up to how much money could be made at the Chinese box office, something else very important happened, which is that the DVD market collapsed. And it can be hard to remember this in an era where we're all streaming, but for many years, DVD sales, because they were so cheap to make and profitable to sell, really kept the lights on at a lot of studios. And so when the DVD market collapsed, studios were scrambling to find a way to make up for that lost revenue when China entered the picture.

I think a lot of studio executives, if they were on the line, would say that they censor movies for all kinds of markets. They censor movies for airplanes. It's a market reality they have to respond to. But what we've seen with China over the past decade is a scale of censorship that is unlike anything Hollywood has had to reckon with, and also a playbook of censorship that goes far beyond cutting a scene for a movie before it goes into a certain country. China has made it clear that it wants to censor films that are being made in America and released around the world, not just movies that are being released into their home market.

wilder

Netflix Officially Signs Updated Windowing Agreement In France
February 22, 2022
Deadline

Netflix has become the first global streamer to ink a deal with the French film industry that will see the window between theatrical and SVOD release significantly reduced.

It is now official that Netflix will be able to show movies 15 months after their theatrical releases in the country, slashing the previously long-held 36-month mandatory window by more than half.

"This agreement is a new step towards our virtuous integration in the unique French cinema ecosystem. It reflects both our constructive contribution to the AVMS negotiation process and our commitment to be part of the French cultural exception," said a Netflix spokesperson on Tuesday.

"Netflix is now able to offer movies 15 months after their release in theaters. This is a significant improvement for our members who had to wait for 36 months until now. Netflix will however continue to promote an earlier window to better reflect consumers' actual viewing habits."

Netflix will still be able to circumvent a theatrical release entirely by premiering titles directly online on a case-by-case basis.

As part of the deal, the streamer will need to invest at least $45M (€40M) in a minimum of 10 local films that will be released in French cinemas per year. There are further terms, such as a diversity clause that will see Netflix need to commit a minimum of 17% of the $45M pot to movies with a budget at less than €4.5M (€4M).

The move could move Netflix one step closer to be being present again in Cannes Film Festival's official selection. As Deadline reported earlier this month, director Andrew Dominik has suggested that his upcoming Marilyn Monroe biopic Blonde could be set for the Riviera in an out of competition berth, something the streamer hasn't occupied since 2017.

The legislation stems from the EU's Audiovisual and Media Services (AVMS), which has been updating windowing rules all over the continent, as well as addressing further questions across the broadcasting and streaming ecosystems.

wilder

20th Century Studios Will Primarily Release Streaming Films In The Future
The Playlist

The Hollywood Reporter spoke to Steve Asbell of 20th Century Studios, as the studio president paints a grim future for their theatrical release lineup for the next couple of years. When asked about the number of theatrical releases the audience can look forward to in 2023 and 2024, Asbell had a rather depressing answer.

"It goes like the other divisions, two or three theatrical movies a year. We're navigating the marketplace like everyone else."

He also highlighted upcoming installments from established franchises like "Avatar," "Free Guy," and "Planet of The Apes" will continue to be released in theaters.

For some context, the studio released 10-plus films theatrically in 2019 and Asbell goes on to suggest the bulk of their work could be funneled to Disney's various streaming services as part of a new "streaming mandate."

"We have this explosive new streaming mandate to pursue, yet we also have titles that we can make ...In order to meet the volume that we are looking at — which is, by 2023, 10-plus movies just for streaming — it's going to be a combination of originals in those genres," Asbell said of the studio's new push to make movies for streaming.

Yes


wilberfan

We Aren't Just Watching the Decline of the Oscars. We're Watching the End of the Movies.
Opinion by Ross Douthat

Everyone has a theory about the decline of the Academy Awards, the sinking ratings that have led to endless Oscar reinventions. The show is too long; no, the show is too desperate to pander to short attention spans. The movies are too woke; no, the academy voters aren't diverse enough. Hollywood makes too many superhero movies; no, the academy doesn't nominate enough superhero movies. (A querulous voice from the back row: Why can't they just bring back Billy Crystal?)

My favored theory is that the Oscars are declining because the movies they were made to showcase have been slowly disappearing. The ideal Oscar nominee is a high-middlebrow movie, aspiring to real artistry and sometimes achieving it, that's made to be watched on the big screen, with famous stars, vivid cinematography and a memorable score. It's neither a difficult film for the art-house crowd nor a comic-book blockbuster but a film for the largest possible audience of serious adults — the kind of movie that was commonplace in the not-so-distant days when Oscar races regularly threw up conflicts in which every moviegoer had a stake: "Titanic" against "L.A. Confidential," "Saving Private Ryan" against "Shakespeare in Love," "Braveheart" against "Sense and Sensibility" against "Apollo 13."

That analysis explains why this year's Academy Awards — reworked yet again, with various technical awards taped in advance and a trio of hosts added — have a particular sense of an ending about them. There are 10 best picture nominees, and many of them look like the kind of Oscar movies that the show so desperately needs. "West Side Story": Steven Spielberg directing an update of a classic musical! "King Richard": a stirring sports movie lifted by a bravura Will Smith performance! "Dune": an epic adaptation of a science-fiction classic! "Don't Look Up": a big-issue movie starring Leonardo DiCaprio and Jennifer Lawrence! "Drive My Car": a three-hour Japanese film about the complex relationship between a widowed thespian and his young female chauffeur!

OK, maybe that last one appeals to a slightly more niche audience. But the point is that this year's nominees offer their share of famous actors, major directors and classic Hollywood genres. And yet, for all of that, almost nobody went to see them in the theaters. When the nominees were announced in February, nine of the 10 had made less than $40 million in domestic box office. The only exception, "Dune," barely exceeded $100 million domestically, making it the 13th-highest-grossing movie of 2021. All told, the 10 nominees together have earned barely one-fourth as much at the domestic box office as "Spider-Man: No Way Home."

Even when Hollywood tries to conjure the old magic, in other words, the public isn't there for it anymore.

True, this was a Covid-shadowed year, which especially hurt the kinds of films that older moviegoers frequent. Remove the Delta and Omicron waves from the equation, and probably "West Side Story" and "King Richard" would have done a little better. And many of the best picture nominees were released on streaming and in theaters simultaneously, while "Don't Look Up" was a big streaming hit for Netflix after a brief, pro forma theatrical release.

But an unusual crisis accelerating a technological transformation is a good moment to clarify where we stand right now. Sure, non-superhero-movie box office totals will bounce back in 2022, and next year's best picture nominees will probably earn a little more in theaters.

Within the larger arc of Hollywood history, though, this is the time to call it: We aren't just watching the decline of the Oscars; we're watching the End of the Movies.

A long time coming ...
That ending doesn't mean that motion pictures are about to disappear. Just as historical events have continued after Francis Fukuyama's announcement of the End of History, so, too, will self-contained, roughly two-hour stories — many of them fun, some of them brilliant — continue to play on screens for people's entertainment, as one product among many in a vast and profitable content industry.

No, what looks finished is The Movies — big-screen entertainment as the central American popular art form, the key engine of American celebrity, the main aspirational space of American actors and storytellers, a pop-culture church with its own icons and scriptures and rites of adult initiation.

This end has been a long time coming — foreshadowed in the spread of television, the invention of the VCR, the rise of cable TV and Hollywood's constant "It's the pictures that got small" mythologization of its own disappearing past.

But for decades these flights of nostalgia coexisted with continued power, and the influence of the smaller screen grew without dislodging the big screen from its commanding cultural position. TV in the 1960s and '70s was incredibly successful but also incredibly disposable, its endless episodes standing in relation to the movies as newspaper opinion pieces stand to best-selling books. The VHS tape created a different way to bond with a successful movie, a new life for films neglected in their initial run, a new source of revenue — but the main point of all that revenue was to fund the next Tom Cruise or Julia Roberts vehicle, with direct-to-video entertainment as the minor leagues rather than The Show.

There have been television stars since Milton Berle, and the '80s and '90s saw the slow emergence of what we now think of as prestige TV. But if you wanted true glory, real celebrity or everlasting artistic acclaim, you still had to put your work up in movie theaters, creating self-contained works of art on a larger-than-life scale and see how critics and audiences reacted.

If you succeeded, you were Robert Altman (who directed small-screen episodes of shows like "Bonanza" and "U.S. Marshal" for years before his big-screen breakthrough) or Bruce Willis (who went from "Moonlighting" to "Die Hard"). If you tried to make the leap and failed — like Shelley Long after "Cheers" or David Caruso leaving "NYPD Blue" — you were forever a cautionary tale and proof that the movies still stood alone, a mountain not just anyone could climb.

The late 1990s were this cultural order's years of twilight glow. Computer-generated effects were just maturing, creating intimations of a new age of cinematic wonder. Indie cinema nurtured a new generation of auteurs. Nineteen ninety-nine is a candidate for the best year in movies ever — the year of "Fight Club," "The Sixth Sense," "The Talented Mr. Ripley," "Election," "Three Kings" and "The Insider," so on down a roster that justifies not just a Top 10 but a Top 50 list in hindsight.

Tellingly, Oscar viewership actually rose from the late 1980s onward, peaking in 1998, when "Titanic" won best picture, which (despite its snobbish detractors) was also a victory for The Movies as a whole — classic Hollywood meeting the special-effects era, bringing the whole country to the multiplex for an experience that simply wouldn't have been the same in a living room.

To be a teenager in that era was to experience the movies, still, as a key place of initiation. I remember my impotent teenage fury at being turned away from an R-rated action movie (I can't recall if it was "Con Air" or "Executive Decision") and the frisson of being "adult" enough to see "Eyes Wide Shut" (another one of those 1999 greats — overhyped then, underrated now) on its opening weekend. And the initiation wasn't just into a general adulthood but into a specific lingua franca: There were certain movies you simply had to watch, from "Austin Powers" to "The Matrix" (1999 again!), to function socially as a college student, to understand the jokes and references that stitched together an entire social world.

Just another form of content?
What happened next was complicated in that many different forces were at work but simple in that they all had the same effect — which was to finally knock the movies off their pedestal, transform them into just another form of content.

The happiest of these changes was a creative breakthrough on television, beginning in earnest with "Sopranos"-era HBO, which enabled small-screen entertainment to vie with the movies as a stage for high-level acting, writing and directing.

The other changes were — well, let's call them ambiguous at best. Globalization widened the market for Hollywood productions, but the global audience pushed the business toward a simpler style of storytelling that translated more easily across languages and cultures, with less complexity and idiosyncrasy and fewer cultural specifics.

The internet, the laptop and the iPhone personalized entertainment and delivered it more immediately, in a way that also widened Hollywood's potential audience — but habituated people to small screens, isolated viewing and intermittent watching, the opposite of the cinema's communalism.

Special effects opened spectacular (if sometimes antiseptic-seeming) vistas and enabled long-unfilmable stories to reach big screens. But the effects-driven blockbuster, more than its 1980s antecedents, empowered a fandom culture that offered built-in audiences to studios, but at the price of subordinating traditional aspects of cinema to the demands of the Jedi religion or the Marvel cult. And all these shifts encouraged and were encouraged by a more general teenage-ification of Western culture, the extension of adolescent tastes and entertainment habits deeper into whatever adulthood means today.

Over time, this combination of forces pushed Hollywood in two directions. On the one hand, toward a reliance on superhero movies and other "presold" properties, largely pitched to teenage tastes and sensibilities, to sustain the theatrical side of the business. (The landscape of the past year, in which the new "Spider-Man" and "Batman" movies between them have made over a billion dollars domestically while Oscar hopefuls have made a pittance, is just an exaggerated version of the pre-Covid dominance of effects-driven sequels and reboots over original storytelling.) On the other hand, toward a churn of content generation to feed home entertainment and streaming platforms, in which there's little to distinguish the typical movie — in terms of casting, direction or promotion — from the TV serials with which it competes for space across a range of personal devices.

Under these pressures, much of what the movies did in American culture, even 20 years ago, is essentially unimaginable today. The internet has replaced the multiplex as a zone of adult initiation. There's no way for a few hit movies to supply a cultural lingua franca, given the sheer range of entertainment options and the repetitive and derivative nature of the movies that draw the largest audiences.

The possibility of a movie star as a transcendent or iconic figure, too, seems increasingly dated. Superhero franchises can make an actor famous, but often only as a disposable servant of the brand. The genres that used to establish a strong identification between actor and audience — the non-superhero action movie, the historical epic, the broad comedy, the meet-cute romance — have all rapidly declined.

The televised serial can establish a bond between the audience and a specific character, but the bond doesn't translate into that actor's other stories as easily as the larger-than-life aspect of movie stardom did. The great male actors of TV's antihero epoch are forever their characters — always Tony Soprano, Walter White, Don Draper, Al Swearengen — and recent female star turns in serial entertainment, like Jodie Comer in "Killing Eve" or Anya Taylor-Joy in "The Queen's Gambit," haven't carried their audiences with them into their motion-picture follow-ups.

It is important not to be ungrateful for what this era has given us instead — Comer and Taylor-Joy's TV work included. The surfeit of content is extraordinary, and the serial television drama has narrative capacities that even the most sprawling movies lack. In our most recent week of TV viewing, my wife and I have toggled between the ripely entertaining basketball drama "Winning Time" and a terrific Amanda Seyfried turn as Elizabeth Holmes in "The Dropout"; next week we'll turn to the long-delayed third season of Donald Glover's magical-realist serial "Atlanta." Not every stretch of new content is like this, but the caliber of instantly available TV entertainment exceeds anything on cable 20 years ago.

But these productions are still a different kind of thing from The Movies as they were — because of their reduced cultural influence, the relative smallness of their stars, their lost communal power, but above all because stories told for smaller screens cede certain artistic powers in advance.

First, they cede the expansive powers inherent in the scale of the moviegoing experience. Not just larger-than-life acting but also the immersive elements of the cinematic arts, from cinematography to music and sound editing, which inherently matter less when experienced on smaller screens and may get less attention when those smaller screens are understood to be their primary destination.

Just to choose examples among this year's best picture nominees: Movies like "Dune," "West Side Story" and "Nightmare Alley" are all profoundly different experiences in a theater than they are at home. In this sense, it's fitting that the awards marginalized in this year's rejiggered Oscars include those for score, sound and film editing — because a world where more and more movies are made primarily for streaming platforms will be a world that cares less about audiovisual immersion.

Second, the serial television that dominates our era also cedes the power achieved in condensation. This is the alchemy that you get when you're forced to tell an entire story in one go, when the artistic exertions of an entire team are distilled into under three hours of cinema, when there's no promise of a second season or multiepisode arc to develop your ideas and you have to say whatever you want to say right here and now.

This power is why the greatest movies feel more complete than almost any long-form television. Even the best serial will tend to have an unnecessary season, a mediocre run of episodes or a limp guest-star run, and many potentially great shows, from "Lost" to "Game of Thrones," have been utterly wrecked by not having some sense of their destination in advance. Whereas a great movie is more likely to be a world unto itself, a self-enclosed experience to which the viewers can give themselves completely.

This takes nothing away from the potential artistic advantages of length. There are things "The Sopranos" did across its running time, with character development and psychology, that no movie could achieve.

But "The Godfather" is still the more perfect work of art.

Restoration and preservation
So what should fans of that perfection be looking for in a world where multiplatform content is king, the small screen is more powerful than the big one and the superhero blockbuster and the TV serial together rule the culture?

Two things: restoration and preservation.

Restoration doesn't mean bringing back the lost landscape of 1998. But it means hoping for a world where big-screen entertainment in the older style — mass-market movies that aren't just comic-book blockbusters — becomes somewhat more viable, more lucrative and more attractive to audiences than it seems to be today.

One hope lies in the changing landscape of geopolitics, the current age of partial deglobalization. With China becoming less hospitable to Western releases in the past few years and Russia headed for cultural autarky, it's possible to imagine a modest renaissance for movies that trade some potential global reach for a more specifically American appeal — movies that aspire to earn $100 million on a $50 million budget or $50 million on a $15 million budget, instead of spending hundreds of millions on production and promotion in the hopes of earning a billion worldwide.

The more important potential shift, though, might be in the theatrical experience, which is currently designed to cram as many trailers and ads as possible in front of those billion-dollar movies and squeeze out as many ticket and popcorn dollars — all of which makes moviegoing much less attractive to grown-ups looking for a manageable night out.

One response to this problem is the differential pricing that some theater chains have experimented with, which could be part of a broader differentiation in the experience that different kinds of movies promise. If the latest Marvel spectacle is packing theaters while the potential "West Side Story" audience waits to see it on TV at home, why not make the "West Side Story" experience more accessible — with a low-cost ticket, fewer previews, a simpler in-and-out trip that's more compatible with, say, going out to dinner? Today's struggling multiplexes are full of unsold seats. Why not see if a streamlined experience for non-Marvel movies could sell more of them?

But because these hopes have their limits, because "West Side Story" making $80 million domestically instead of $40 million won't fundamentally change the business of Hollywood, lovers of The Movies have to think about preservation as well.

That means understanding their position as somewhat akin to lovers of theater or opera or ballet, who have understood for generations that certain forms of aesthetic experience won't be sustained and handed down automatically. They need encouragement and patronage, to educate people into loves that earlier eras took for granted — and in our current cultural climate, to inculcate adult tastes over and above adolescent ones.

In the case of movies, that support should take two overlapping forms. First, an emphasis on making it easier for theaters to play older movies, which are likely to be invisible to casual viewers amid the ruthless presentism of the streaming industry, even as corporate overlords are tempted to guard classic titles in their vaults.

Second, an emphasis on making the encounter with great cinema a part of a liberal arts education. Since the liberal arts are themselves in crisis, this may sound a bit like suggesting that we add a wing to a burning house. But at this point, 20th-century cinema is a potential bridge backward for 21st-century young people, a connection point to the older art forms that shaped The Movies as they were. And for institutions, old or new, that care about excellence and greatness, emphasizing the best of cinema is an alternative to a frantic rush for relevance that characterizes a lot of academic pop-cultural engagement at the moment.

One of my formative experiences as a moviegoer came in college, sitting in a darkened lecture hall, watching "Blade Runner" and "When We Were Kings" as a cinematic supplement to a course on heroism in ancient Greece. At that moment, in 1998, I was still encountering American culture's dominant popular art form; today a student having the same experience would be encountering an art form whose dominance belongs somewhat to the past.

But that's true as well of so much else we would want that student to encounter, from the "Iliad" and Aeschylus to Shakespeare and the 19th-century novel and beyond. Even if the End of the Movies cannot be commercially or technologically reversed, there is cultural life after this kind of death. It's just up to us, now, to decide how abundant it will be.

Yes

Bad article. It's not taking into account the fact we lived during a pandemic that shattered many theatrical windows and limited productions. It's unfortunate major studios no longer make adult entertainment, but the streamers do now. It's the current reality of the marketplace. Yeah, Oscars lost luster and mainstream relevance but the same was said when Beautiful Mind won BP..and then Crash... and then Green Book. It's been this cycle.

wilberfan

I think his greater point--that The Movies are done, ie no longer the cultural center-of-gravity--is valid, tho.


wilberfan

As David Zaslav Reshapes Warner Bros., Are His New Film Execs on the Same Page?
Michael De Luca and Pam Abdy built their reputations with a relationship-driven, filmmaker-friendly approach — but that style might be at odds with the imperative to save money.

QuoteMichael De Luca and Pam Abdy, on the other hand, are likely to be welcomed in the film community with wide-open arms. Between them they have decades of industry experience, and De Luca's relationships with talent in particular were a selling point with Zaslav. (He has surely observed what Hollywood does to outsiders who start making pronouncements without a goodwill ambassador to guide and protect them.) De Luca's affability helped him compete for talent and material when he was situated at MGM, a studio that wouldn't have been top of the list for anyone with something good to sell. But the more potent lure is always money, and De Luca is known for spending it. That would appear to be very much at odds with Zaslav's natural inclinations and, given the debt, imperative to keep a tight rein on costs.

Even some of De Luca's friends worry how this will go. "He's talent-friendly, he's a passionate advocate for certain kinds of projects," says an executive who knows him well. "Is that going to cut it in a big corporate environment?"

A veteran high-level player actually chortles when asked to prognosticate. "I love Mike. But Mike has been totally consistent in making movies that are flashy and lose a lot of money," he says (with some hyperbole). "Zas says, 'We're going to make hits for less money' and then you hire a guy who does the exact opposite." Says another longtime insider: "The idea of fiscal responsibility and creative freedom? Someone's head's going to pop off."

Certainly De Luca and Abdy spent money at MGM, though a source says they stayed within the development and production budgets they were given. Their mandate as chairman and president, respectively, was to make the drifting studio look like it was in the game to help drum up a sale. (The logic of this is unclear as the Bond franchise and the library were the real assets on the block.)

Insiders saw De Luca's hire there then — and at Warners now — as evidence of the great persuasive powers of CAA's Bryan Lourd. And certainly many CAA clients benefited from the deals that followed. Paul Thomas Anderson made Licorice Pizza, Lady Gaga starred in House of Gucci, Joe Wright and Peter Dinklage made Cyrano, and so on.

MGM was in the awards conversation and Licorice Pizza was the studio's first best picture contender since Rain Man in 1988. But sources say leaders at Amazon, which acquired MGM for a rich $8.5 billion in March, were astonished at the tens of millions of losses on the slate. In fairness, the movies were released theatrically during the pandemic. But Licorice Pizza cost about $50 million and grossed a paltry $32 million. Cyrano was dead on arrival. And Amazon has a few more left in the pipeline that are expected to fare poorly.

Looking at that history, there is plenty of reason to see De Luca and Zaslav as a very odd match. "People admire Mike's taste and they love being in business with him," says one De Luca associate. "But people, I know, had urged them to give him something smaller, not as big a thing. This is a big thing."

A few more paragraphs discussing De Luca's career round-out the article--which I found rather interesting.


wilder

The End of Ownership: Why the Battle Over Paying TV Creatives Is Only Getting Crazier
by Cynthia Littleton
Variety

There's a storm brewing in Hollywood's creative community, just as the largest unions and employers are preparing to wrestle anew at the contract bargaining table.

The industry is bracing for the prospect of bitter labor strife in the 2023 round of negotiations with the Writers Guild of America, the Directors Guild of America and SAG-AFTRA. The discussions are sure to be more charged than usual because of the tectonic shifts across TV and film that were accelerated by pandemic conditions in 2020 and '21.

Hollywood's famously Byzantine formulas for compensating creative talent have become outmoded in the process, and that has many industry insiders feeling as though they're working a lot harder just to keep pace with pre-pandemic paychecks. The growing income gap between richly rewarded A-listers and everyone else on the set is fueling indignation among rank-and-file union members — as evidenced last year by IATSE's near miss with a strike.

But the looming labor talks aren't the only explosive issue on the horizon. In recent months, the sentiment has spread in the creative community like a California wildfire that the deal-making structures implemented over the past decade by the streaming giants are costing them the chance to build precious ownership stakes in the TV shows and movies they make.

Like everything about Hollywood deal-making, the reasons why are extremely complicated — more on that below — but the emotion that this heavy mood is provoking in the grassroots is not hard to interpret. It's raw, unfiltered resentment that is a source of generational friction among established actors, writers, producers and directors. Meanwhile, the town's top talent representatives are trying to impose a reality check for why the era of massive windfalls from "Friends"-, "Big Bang Theory"- and "ER"-level syndication sales is never coming back.

For starters, the highly fragmented TV ecosystem of today simply isn't built to support long-running series that rack up 200-plus episodes — which is another reason the guild contracts for TV series need a major overhaul.

At a time when everything is under scrutiny by cost-conscious conglomerates, veteran deal-makers say the marketplace for streaming-content licensing deals is actually starting to open up in interesting ways. But getting to the next evolution of the digital economic paradigm over the next 12 months — amid economic uncertainty, belt-tightening, M&A and significant new developments such as Disney and Netflix expanding with ad-supported options — won't be easy.

"The explosion in production and now the tumult in distribution economics has led to a much more dynamic business environment than a year ago, where ownership, licensing terms and the overall financial risks and rewards are open for discussion between studios/producers and many streamers and networks," says Craig Hunegs, operating partner at private equity firm ZMC and a former senior business executive for Warner Bros. TV and Disney TV.

In short, the town is in a prickly mood that will only be inflamed by the inevitable saber rattling of labor negotiations.The WGA's most recent three-year contract covering most high-level TV and film work expires May 1. The DGA and SAG-AFTRA pacts run through June 30. The DGA will undoubtedly be the first to engage in talks with the Alliance of Motion Picture andTelevision, possibly before year's end.

"We need to move to a world where clients and talent representatives have access to the data around how projects are performing on the various platforms so that we have insight into what's working and what's not," says Dan Limerick, WME's chief operating officer and head of business affairs. "We need to get adequate value for shows that are performing. That's the next frontier."

The younger end of the spectrum feels "ripped off," in the exaggerated-for-effect words of a 40-something showrunner. Part of the lure of working in the showbiz big leagues has been the promise that big commercial success would be followed by beaucoup bucks. Not just a one- or two-time fat paycheck but, in a home-run scenario, profit participation points — a 1% to 5% (or more) share of profits delivered by the property for the rest of time. Achieving backend signaled a level of status and financial security in the form of an annuity that could someday benefit your grandchildren's grandchildren, so long as the title was still making money somewhere in the world.

working a lot harder just to keep pace with pre-pandemic paychecks. The growing income gap between richly rewarded A-listers and everyone else on the set is fueling indignation among rank-and-file union members — as evidenced last year by IATSE's near miss with a strike.

But the looming labor talks aren't the only explosive issue on the horizon. In recent months, the sentiment has spread in the creative community like a California wildfire that the deal-making structures implemented over the past decade by the streaming giants are costing them the chance to build precious ownership stakes in the TV shows and movies they make.

Like everything about Hollywood deal-making, the reasons why are extremely complicated — more on that below — but the emotion that this heavy mood is provoking in the grassroots is not hard to interpret. It's raw, unfiltered resentment that is a source of generational friction among established actors, writers, producers and directors. Meanwhile, the town's top talent representatives are trying to impose a reality check for why the era of massive windfalls from "Friends"-, "Big Bang Theory"- and "ER"-level syndication sales is never coming back.

For starters, the highly fragmented TV ecosystem of today simply isn't built to support long-running series that rack up 200-plus episodes — which is another reason the guild contracts for TV series need a major overhaul.

At a time when everything is under scrutiny by cost-conscious conglomerates, veteran deal-makers say the marketplace for streaming-content licensing deals is actually starting to open up in interesting ways. But getting to the next evolution of the digital economic paradigm over the next 12 months — amid economic uncertainty, belt-tightening, M&A and significant new developments such as Disney and Netflix expanding with ad-supported options — won't be easy.

"The explosion in production and now the tumult in distribution economics has led to a much more dynamic business environment than a year ago, where ownership, licensing terms and the overall financial risks and rewards are open for discussion between studios/producers and many streamers and networks," says Craig Hunegs, operating partner at private equity firm ZMC and a former senior business executive for Warner Bros. TV and Disney TV.

In short, the town is in a prickly mood that will only be inflamed by the inevitable saber rattling of labor negotiations.The WGA's most recent three-year contract covering most high-level TV and film work expires May 1. The DGA and SAG-AFTRA pacts run through June 30. The DGA will undoubtedly be the first to engage in talks with the Alliance of Motion Picture andTelevision, possibly before year's end.

"We need to move to a world where clients and talent representatives have access to the data around how projects are performing on the various platforms so that we have insight into what's working and what's not," says Dan Limerick, WME's chief operating officer and head of business affairs. "We need to get adequate value for shows that are performing. That's the next frontier."

The younger end of the spectrum feels "ripped off," in the exaggerated-for-effect words of a 40-something showrunner. Part of the lure of working in the showbiz big leagues has been the promise that big commercial success would be followed by beaucoup bucks. Not just a one- or two-time fat paycheck but, in a home-run scenario, profit participation points — a 1% to 5% (or more) share of profits delivered by the property for the rest of time. Achieving backend signaled a level of status and financial security in the form of an annuity that could someday benefit your grandchildren's grandchildren, so long as the title was still making money somewhere in the world.

Generous profit participation definitions are the closest thing that even the most successful showrunners — Dick Wolf, Shonda Rhimes, Chuck Lorre, Ryan Murphy — have when it comes to owning the content they produce for studios and platforms. Also known as "backend," the agreements are notoriously contentious and the stuff of a thousand lawsuits accusing studios of self-dealing and breach of fiduciary duty. Nonetheless, size matters, and the size of a megastar's share of a project's all-important Modified Adjusted Gross Receipts revenue line has long been a measure of accomplishment and a source of bragging rights.

The A-list of today is now a full generation (or more) removed from the 1970s-'80s heyday of successful writer-producer entrepreneurs such as Norman Lear, Aaron Spelling and Stephen J. Cannell. Those legendary multi-hyphenates flourished during the golden age of independent production that was ushered in by regulatory changes at the Federal Communications Commission in 1970. The winds shifted toward consolidation and vertical integration of networks and studios in 1993 after a federal judge struck down the rules that limited how much content ABC, CBS and NBC could actually own.

Fast-forward to 2022, and the younger cohort that has hustled to establish itself in the frenetic Peak TV era can often feel like the rules and the prizes have been changed in the middle of the game. The level of frustration has also spiked as producers say there has been a swift pull-back of spending in recent months. Netflix, after jolting Wall Street with its forecast of subscriber losses to come this year, unleashed a slew of cancellations, and HBO and HBO Max jettisoned some pricey and risky projects.

The sense of urgency that some feel to respond to the behind-the-scenes changes in entertainment were voiced bluntly and publicly last month by Jeff Sagansky, the former CBS Entertainment and Sony Pictures Entertainment president, who is an investor in media and related businesses.

"The TV industry is at an inflection point with this new delivery paradigm," Sagansky tells Variety. "There has never been so much work, and for brand-name talent, their compensation has never been as good. But for everyone else — the guilds, talent agencies and creative talent are going to have to decide if the new way of compensating talent is a problem or not."

Discussion of the alarm sounded by Sagansky in his June 1 appearance at the NATPE Hollywood conference has been in the ether for creatives just as the guilds are starting to focus with members on key issues of importance for the 2023 contracts. He questioned why creatives don't press harder for streamers to reveal data on how their shows perform. "We are in a golden age of content production and the dark age of creative profit sharing," Sagansky said at the time.

The fight over the future of seven- and eight-figure contracts with profit participation terms won't be settled by collective bargaining. But anger over the perception that rights are being lost will be channeled into clenched fists for the guilds to achieve big gains in union-covered residuals and royalty rates.

A veteran network executive-turned-producer says the harsh business reality is there is no going back to the way things were. In reality, pay scales for above-the-line creatives in the U.S. are coming down to "middle-class levels" because the changing economic structure of streaming won't support the old jackpot-hit model. It's no accident that Netflix, Disney+, HBO Max and other streamers are talking up the appeal of local-language series such as "Squid Game" and "Money Heist," produced at a fraction of the cost and usually outside Hollywood union jurisdiction. The advent of U.S.- based platforms with global reach is challenging every baked-in convention of the content business.

"We all got used to streamers paying out fat money," says a top industry dealmaker. "Now that they're maturing as businesses, we have to adjust. But they're still paying people a lot of money to make great shows that would not get made anywhere else."

During his time at Disney TV, Hunegs led the charge to implement a massive overhaul of Disney's dealmaking protocols with creative talent. As the company shifted its focus to supplying TV series to Disney+ and Hulu, the company needed to address the challenges of valuing content and monitoring profit participation pools when there were no plans for after-market sales of the shows. The Disney TV plan, which put the emphasis on performance-based bonuses rather than formal backend points, was hammered out with representatives from major talent agencies and law firms.

Hunegs, who exited Disney in 2021, declined to elaborate on that process. A prominent entertainment attorney who was involved in those discussions gave Disney credit for transparency and willingness to listen to the concerns on the other side of the table. The source said there is broad acceptance that things need to change for a new era of television. But getting there won't be easy or fast. "Disney's definition makes it tough ... but Disney has always been tough," the veteran rep said. "Where we are now is an interim step."

***

For decades, studios and producers made most of their money not on the initial primetime run of a series, but through later opportunities to sell the show in syndication and through international licensing. The sweet spot for studios and producers was a scripted series that ran for 22 or 24 episodes per season for at least five seasons. The WGA's two-inch-thick Minimum Basic Agreement contract is built around formulas that pay writers per episode on a season-long basis. For profit participants, syndication and international sales were the welcome events that created a pool of profits to share.

But streaming has upended that decades-old continuum. Streaming platforms, like HBO and Showtime before them, generally prefer scripted series that run from six to 12 episodes per season. The production cycle on streaming series typically occupies a longer period, and there is more downtime between seasons before renewal decisions are made. Moreover, streamers rely on having a voluminous library of shows on demand to keep their paying subscribers engaged. Netflix, Amazon, HBO Max and others require initial license terms of 15 years or more on high-end shows, without the windows that would allow producers to sell rerun packages to outside outlets.With no outside sales opportunities, it's much harder to put a hard dollar value on a show.

To account for that lost profit-making opportunity, Netflix and others developed the "cost-plus" template of buying TV series. Streamers agreed to a license fee that covered a show's production costs and had a premium of profit built in for the studio. In the early days, when Netflix had to incentivize major studios to produce for the platform, the streamer paid premiums of 30% to 40% of a series production budget. Lionsgate Television made an estimated $3 million per episode in its premium for the early Netflix hit "Orange Is the New Black," which ran for seven seasons and 91 episodes from 2013 to 2019.

But over time, terms have tightened all over town, not just at Netflix. The producers' premium nowadays is more likely a negotiated flat fee — a shift that came amid suspicion that production budgets had begun to rise across the board in order to boost premiums. Now, some producers are complaining that Netflix is taking a harder line on costs such as COVID-related precautions and production overages, eating into producers' profit margin. With predetermined premiums, the downside of having a show that flops is protected, but the upside of fielding a runaway hit is limited.

For junior- and mid-level writers, the new series math is tough no matter how you tally it. Even at higher per-episode rates, writers earn less for an eight-episode series produced within an 18-month cycle than they would have a decade ago for 22 episodes produced within a 12-month cycle.

Yet top talent representatives are not uniformly up in arms to preserve the profit participation paradigm of old. Some argue the old system had plenty of pitfalls and benefited only the top tier of talent. "There are about 14,000 members of the Writers Guild, and maybe 150 of them have ever seen any real backend," says a veteran industry deal-maker. Reps also argue that the "present value" of guaranteed cash upfront is worth more than the potential of a piece of future profit streams.

This reflects the realpolitik that profit participation deals have been fraught with problems for creatives. Most of the nuances in Hollywood accounting come into play when calculating these profit stakes. Negotiations over the MAGR (or Modified Adjusted Gross Receipts), in industry jargon, refer to the contractual profit definition, meaning that it is baked into the deal that the production entity takes overhead, distribution and other fees off the top before the final pool of profit distributions is calculated. The definition (and definitions within that definition) have been the subject of business-affairs brawls in setting movie and TV contracts with high-level creators for decades.

Profit participation disputes have also been the spark for countless self-dealing lawsuits between platforms/studios and profit participants. AMC Networks last year reached a $200 million settlement with the executive producer of "The Walking Dead" in a lawsuit that ran for seven years; AMC is still in litigation over a separate suit with other "Walking Dead" participants that was filed in 2017.

The litigation boils down to creatives accusing the studio of taking undue steps to dampen the value of their participations. In early 1997, the creators of ABC comedy "Home Improvement" filed a milestone suit against Disney, accusing the Mouse and ABC of conspiring to a pay a below-market license fee for the sitcom, produced by Walt Disney Television.

The "Home Improvement" lawsuit also led to a blizzard of paperwork at vulnerable companies in their effort to document deal decisions undertaken on an arm's-length basis. Talent and agents scoff at the idea that employees of the same large firm would not wink at each other on price and other financial terms. But industry veterans say that deal-making between sibling networks and studio divisions has often been some of the toughest, as both sides have every motivation to dig in on terms to keep their respective profit and loss statements as strong as possible.

In a nutshell, TV shows produced for Disney or Netflix are no longer treated as individual businesses with their own income statements and profit and loss reports. The paperwork designed to ward off profit participation lawsuits doesn't happen because the shows are accounted for in a central content-spending budget. There are no syndication sales or international deals to track, so there's no pool of discrete profits created to fight over in the life of a show, at least not for some time.

These dynamics help explain the sky-high production pacts in recent years for megastar showrunners. Top players à la Rhimes and Murphy are savvy enough to command money upfront through high fees and generous overhead and development funds. That's because the days of waiting on a big check after the studio completes a round of aftermarket sales are fast disappearing.

The solution for the end of the backend era is a newly imagined model of deal-making. The greatest hurdle in the coming years is access to data, so that talent representatives can assess the performance and value of a property. The cutting edge of making new deals includes a series of elaborately constructed performance bonuses that kick in over a period of years, plus longevity and award bonuses. Industry sources note that in this system, cancellation of a show after two or three seasons is the cruelest cut because bonus payments typically become significant from Season 4 on.

The twists and turns of the marketplace may also work in talent's favor in bringing more gradations to monetize opportunities for streaming series. Industry insiders, from union officials to talent agents, managers and lawyers, are watching closely as Netflix adds an advertising tier to its service. In a previous era, such a move would be seen as creating discrete rights for existing Netflix series and movies that will be featured on the ad-supported platform.

But the harder fight will be the war at home as the creative community gets used to a new normal. Privately, industry insiders recognize that Hollywood's traditionally lofty pay scales and legacy of perks is fading for all but the 1%.

"People grew up reading about Aaron Spelling's big house," says a longtime executive-turned-producer. "They see an older generation of writers that have Malibu beach houses. But there aren't going to be as many writers with Malibu beach houses in the future."

wilder

Neon Exploring Sale As It Taps Merchant Bank Raine
Deadline



Neon, the independent film distributor founded by Tom Quinn and Tim League and which broke through at the 2020 Oscars with Parasite, the first foreign-language title to win Best Picture, is looking to be sold, Deadline has confirmed from sources.

The company is hoping to branch out more into television and streaming, and bulk up its production pipeline. The fact that A24 notched a $225 million equity investment in March provides hope that some or all of Neon's businesses could be sold. Reports are that A24 at that time was valued at $2.5 billion. It's unclear at this time what Neon would be worth.

The distributor has had a recent streak of distributing those movies winning the Palme d'Or at the Cannes Film Festival, starting with 2019's Parasite from Bong Joon Ho. It continued with Julia Ducournau's Titane and this year's comedic crowdpleaser Triangle of Sadness from Ruben Ostlund.

Neon turned Parasite into one of the top-grossing foreign films in the U.S./Canada, grossing $53.3 million; the pic altogether made $263.1M worldwide. The movie won four Oscars including Best Picture, Best Director, Original Screenplay and International Film. The pic was nominated for six Oscars.

Neon also had at Cannes this year the David Bowie documentary Moonage Daydream and David Cronenberg's Crimes of the Future starring Kristen Stewart, Lea Seydoux and Viggo Mortensen. The distributor's other top-grossing movies include the Oscar-winning I, Tonya, which made $30M, and the breakout documentary hit Three Identical Strangers which made $12M at the domestic B.O.

The New York Times was the first to report the news about Neon.

Neon declined to comment for the story.

wilder

HBO Max Has an Inventory Problem
Variety

A decade into the streaming revolution, seams are showing and stitches are starting to pop.

The recent uproar about HBO Max removing a significant number of series episodes and movies from its platform amounts to Unintended Consequence No. 9,789 for an industry that has been turned inside out by digital disruption.

The situation that Warner Bros. Discovery is scrambling to address by lightening the content load should be crystal clear to anyone who has ever worked in retail sales management. Simply put, HBO Max has an inventory problem. The long-tail theory of content that has fueled the streaming business conflicts with the focus on tentpole hits that has traditionally fueled the entertainment economy.

With the major exception of Netflix, no network or platform in the 75-year history of commercial television has amassed such a broad and deep library of content that is made available for on-demand public viewing as HBO Max has in its 27 months of existence. And that means no network has had to deal with the real-world problem of managing the long-term cost of maintaining such a voluminous inventory.

In the retail world, if a product doesn't sell, at some point it comes off the shelf to make room for something new. That has long been the case in linear television too; if a show doesn't find an audience, the cancellation ax falls. In the past, however, if CBS or NBC yanked a show, the network didn't have to keep shelling out coin to make it available on demand. But that has been the norm in the streaming arena.

The bill adds up quickly when the costs of residual fees for actors, writers and directors are included — costs that are triggered no matter how many or how few people cue up a particular episode of a vintage series. There are also producer fees, music licensing fees and myriad other royalties that come into play. Industry sources say the cost varies widely on a title-by-title basis, depending on the underlying deal terms, but there is no version of keeping a show available for viewing on a platform that doesn't incur at least tens of thousands of dollars in fees per series per year. For the lowest-performing 30% of HBO Max's active library, that adds up to tens of millions of dollars a year.

At a time when Warner Bros. Discovery is facing serious post-merger financial pressure, there's no question that lightening the load on HBO Max is a natural place to squeeze out some savings. This move was also made easier by the harsh reality that the shows being removed have virtually no viewership. In some cases, recently yanked shows had episodes that racked up zero views in a 12-month period. There is no spin on the long-tail theory — the sentiment that niche content that drives passion and engagement can be as valuable or more so than mass-appeal hits — that can support an economic argument to keep spending to drive zero views.

Netflix is surely grappling with this same pressure as the streamer adjusts to an environment of slowing subscriber growth around the world. This dynamic spurred Warner Bros. Discovery to act faster to remove content that wasn't getting any traction. Much was made of HBO Max removing about 200 episodes of "Sesame Street" from the platform. But a week later, there are still hundreds of episodes of "Sesame Street" available for viewing, including the past 12 seasons and selection of vintage seasons.

If tens of millions of new customers are signing on every year, it might make sense to keep that quirky drama or offbeat comedy in the lineup because you never know what will play well in Peoria, or Istanbul or Rio de Janeiro. The high-flying promise of vast archives of content available to consumers with just a click (or voice command) has crashed into the hard reality of Warner Bros. Discovery's debt-strained balance sheet. Nobody can afford to maintain that big an all-you-can-eat buffet for $15 a month.

But media consumers young and old now have been trained to expect anything and everything is available somewhere, for a price. The jolt of the content inventory reduction push post Q2 earnings could spur renewed affection for brick-and-mortar media like books and DVD sets among younger consumers as they absorb the jolt of these real-world issues of inventory management versus the infinite promise of cloud storage.

One industry veteran likened the gyrations in streaming over the past few months to the wave of clear-eyed analyses of player stats and ROI for star baseball players' salaries in the early 2000s: "This business is becoming 'Moneyball.'"

Jeremy Blackman

Nothing in that article seems wrong, but I don't like the tone of it: "these are the economic realities of streaming, so get used to it."

WB Discovery is hardly an exemplar of business wisdom here. The merger has put them in such a bad position that they can't afford to release more than 2 more movies this year. I thought Netflix had an infamously obscene amount of debt, but their $15 billion is dwarfed by WBD's $55 billion. And now they're brashly mistreating artists, I guess trying to alienate whoever wasn't already pushed away by their recent years of mismanagement. Maybe they can get Chris Nolan back. I'm sure he'd love to be featured next to the "90 Day Fiance Universe" tile.

WorldForgot



which in turn references: