Welcome to the show folks....
Patrick Goldstein of the LA Times suspects that Hollywood is heading for a prolonged recession. Here are his reasons, peppered with a few of my own...
1. Major studios like Disney, Universal and Sony are cutting back on developing new movies. Disney because they're only interested in increasingly narrow genres, and Universal and Sony are cutting back because they already spent all their development money.
2. Only Warner Bros. and Fox are maintaining their normal production output, which is still down from their golden age peak. Paramount is still releasing movies, but isn't financing the production for most of them.
3. Revenue is up, but not actual ticket sales. The revenue has gone up because of the spike in prices over 3D movies. When that novelty goes, so goes the market.
4. Wall Street investment isn't around as much as it used to be. Causing a lot of gaps in the money field.
5. There are way less buyers for independently produced films than there used to be. The studio owned faux-indies are mostly dead and gone, and indie distributors like Lionsgate, Summit, and Overture, are all looking to become major studios of their own.
6. The studios are turning more and more to a 'mostly blockbuster' release slate. Cutting out the middle ground that used to fill screens between the Summer mega-hits and the Fall/Winter Oscar baiting orgy.
7. Despite technology supposedly making things cheaper and easier, it is in fact more expensive and harder to make, distribute, and promote films.
8. The value of film companies, and especially their libraries are plummeting, despite wider market opportunities for their product through TV (broadcast/cable), home video, and internet viewership.
9. There's a huge salary crunch where only the absolute top players can command the sort of up front deals that were once so common in Hollywood.
So why is Hollywood slipping into a recession?
If you say it's because of the general economic recession I will slap you with a dead Chilean sea bass.
Remember, Hollywood's golden age, both creatively and financially, was the 1930s, otherwise known as THE GREAT DEPRESSION. Times were a might bit tougher back then, with 25%+ unemployment, 75%-90% upper end tax rates, and a dust bowl choking out the Midwest.
Which brings us to the reason Hollywood is creating its own recession:
All of Hollywood's economic injuries are self-inflicted. Would you invest tens of millions, if not hundreds of millions of your hard stolen dollars, in a major studio film knowing full well that even if it makes a billion dollars at the box office, you will still lose money. Why? Because the accounting practices of the studios make Bernie Madoff look legit in comparison. The latest trick is to take the studio's share of a film's budget out as a 'loan' from the studio's parent company. The interest paid on that loan matching whatever that film should make at the box office and then some, guaranteeing a loss, no matter how much money is made.
Then there's where they spend the money they do have.
Musclebound muscle-head The Situation from MTV's white trash festival Jersey Shore, is looking at making $5 million this years from his show, and related spin-off deals, including an autobiography.
I will bet dollars to donuts that the publisher won't make back that advance. I mean the man's an advertisement for illiteracy. How many of his fans will be able to read, let alone want to read, whatever drivel his ghost-writer, who also has to be paid, puts on the page.
Do you think that inevitable attempts at making movies and TV shows around him will produce anything profitable?
No, he's just another Heidi and Spencer. He'll end up broke, off the air and trying to sell sex tapes of his co-stars within a couple of years, and millions will be wasted on him by Hollywood, and for nothing.
Then there are the films themselves.
Too many of Hollywood films fall into two categories: Slightly dim mega-budget tent-pole films looking for the widest audience, and built around familiar pre-existing brands, like remakes, comic books, and even board games, but are themselves forgettable, sparking little desire to re-viewing. Then there are the Oscar films. The fake sincere melodramas aimed at wowing Academy voters with their importance, while boring or insulting the rest of the audience.
The first kind is becoming too expensive to make, even without the funny book-keeping, and the second kind of film is doing everything it can to repel audiences, equating popularity as some sort of scarlet letter of shame.
Is there a silver lining?
Well, there is, if you have the money and clout.
The middle ground of intelligent, modestly budgeted films, that don't need a billion dollars to break even, is becoming a wide open market. Multiplexes need a variety of product, even more so as the studios continue to contract in their pursuit of a magic bullet for success, be it spending mega-bucks or going 3D.
Someone who uses new technology to produce intelligent, entertaining material with wide appeal, smart budgeting, honest accounting, and shrewd, penny-wise/pound-wiser marketing strategies, could start whittling away at the dominance of the major studios. Then maybe the majors might be forced to evolve or face extinction.