Monday, 7 June 2010

Hollywood Babble On & On #529: Should Hollywood Go Vertical?

Welcome to the show folks...

Like a broken clock that's right twice a day, every once in a while billionaire gadfly Mark Cuban says something that makes you think. He took time from his busy schedule of rolling around piles of money and arguing with basketball referees to say that movie studios should buy movie theaters. He says his ownership of Landmark Theaters has helped his Magnolia Pictures do well, despite the high number of jokers that nobody's seen in the company's deck.

Now that's actually something to seriously consider.

Why can't movies be a fully 'vertically integrated business' handling production, distribution, and exhibition?

Well, the answer is that they used to be and could be again.

First, a little history.

Once upon a time the major studios all owned their own chains of movies theaters. Many of these theater chains operated in certain kinds of communities and the studios would often tailor their movies for those audiences. Each studio released a new film every week all year round, which would then play in the theaters they owned first, then the prints would then go to the independent "second run" cinemas, then third run "grindhouse" theaters in the more low-rent neighborhoods.

After World War 2 someone in the American government decided that having a bunch of production-distribution-exhibition companies competing with each other was dangerously close to a dreaded monopoly. S0 the government came down on those companies and ordered them to sell off their theaters and rely only on production and distribution or face criminal prosecution through something called a Consent Decree.

Now, recent developments in law and commerce show that the consent decree might actually be a wee bit unconstitutional with restraint of trade and all that.

Which brings me to consider the PROS, CONS, and HOWEVERS for this idea.

PRO: Creates a leaner, hopefully more efficient means of distribution.

HOWEVER: This is Hollywood we're talking about here. There is no such a thing as a leaner, more efficient means of doing anything in Hollywood, and they like it that way.

CON: Studios may use their theaters to block rivals from entire regions of the country.

HOWEVER: Imagine that you're Universal, you own all the theaters in the American Southwest. Are you going to block let's say the next
Batman movie from Warner Bros. and leave your audience stuck with Land of Lost 2: Even Loster, starring Rob Schneider and Lindsay Lohan? No, because you need money to survive, and can make a lot more dosh from the tickets and popcorn sales with full theaters rather than empty ones.

That's not to say that a studio might try that. They can be a tad thick sometimes.

PRO: We might actually get market forces at work with ticket prices. With only one business as middleman between production and exhibition the old excuses for jacking up prices might go away as these new vertically integrated chains compete for putting bums in seats with special sale prices. That's because in theaters it's not the ticket price that mean profit or loss, it's the salty popcorn and 95% ice cube sodas.

HOWEVER: Hollywood has often shown itself, if not totally immune from the normally immutable forces of the market, at least bulky enough to ignore them. So there is the very serious risk of them going even more bug-shit with ticket prices than they are now.

CON: Independent movies may get shut out of movie theaters by the big studios.

HOWEVER: That's already happening without studios owning theaters. The big multiplex chains would rather have the over-sized, over-expensive, over-hyped star vehicle than the sincere independent film about a boy and his love for a terminally ill badger that taught inner city kids to love learning advanced math through interpretive folk dancing.

The thing to remember, is that there are a hell of a lot of screens in America, and fewer major film studios producing fewer films every year. There's a huge middle ground in cinema being quickly abandoned in the gold rush for the sort of instant gazillions raked in by 3D action-fantasy epics. They are going to need content for these screens when 3D fizzles out, and they have to clear out the dead-weight big bombs to make room for something that might actually sell tickets. The key is for independent producers/distributors to figure out a way to make their films sell without the big marketing budgets of the majors.

Then again, a consortium of indie distributors could pool their resources and purchase either their own chains, or slots in the studio owned chains. Though it would take a serious study of the economics to see if these ideas are viable, or if they would collapse in the sort of petty bickering the movie biz is famous for.

This is where I turn things over to you, all three of my readers, and ask you to give me your opinion on the idea. Should movie studios buy or build their own theater chains?


  1. Well sonny, back in the late fifties,when I was a kid, there were four separate movie houses in my town of 40 thousand . One theater showed first run feature films,eg; Monroe flicks or musicals, or epics like The Big Country,it was plush and a SINGLE screen. Then there was a theater showing also on a single screen , more quality films,plus a newsreel,cartoons, previews, and a short subject got a lot for your fifty cents.The other two theaters showed B grade films, horror,monster movies,science fiction like the Creeping Unknown,Abbott and Costello,etc; Those kind of movies are now at my 13 screen cineplex competing with the higher quality stuff. Everything is on the same plain of reference these days. I think the studios should own some theaters. Certainly their interest in how the film is shown is important. Back when,movie theaters gave me a feeling of a special event,not a,big movie box giant concession stand generic,assembly line feeling ,like I get now.

  2. Furious D....The 3-d experience is going to fizzle out.Just when I know not but entropy will prevail. Diversification is the answer. Diversifying your investments is a good way to go and this holds true for movie making as well.Studio films,large, medium and small. Some indie films,please spare me the stories of quirky,selfish people who do reprehensible things to one another in a deconstructed storyline,with languid pacing and purty cinematography!!!!More Russell Crowe would be nice, also stories that stick to your ribs,but by all means think outside the box,Hollywood.

  3. I was thinking the same thing lately, which should probably worry you.

    Yes, the movie companies should own the movie theaters. For one thing, it couldn't get worse than it is now. Also, if there were real competition, then perhaps the adverts and super high popcorn prices would be fixed.

    Finally, if the movie companies were making a larger percentage of their profits in Norte America, then perhaps they'd cater to that audience a bit more.

  4. If studios ran their own theatres, this will mean one thing. They will have to make a profit that is make films that people will want to see. That is no more self indulgent ego-inflating, political peices that no one want to see.

    Sean Penn will probably about cry censorship and stifling his "creativity" for the sake of capitalism between giving Hugo Chavez blow jobs.

  5. Judy I studied film and filn history in college, those movie houses made every ticket paying customer feel like a star. Now the multiplex cinema is just a glorified food court staffed by some teenager who is under trained ,overworked, underpaid and treated like crap by the manager. Thus they pass that bad mojo on to you.

    Like missing the first 5 minutes of your film because there is only one person running the snack stand on a busy Sunday because the boss thought they could make more cash by under-staffing on a busy day.

    This is one of the reasons ticket sales are down. Going to a film these days are a HASSLE.