More product, more competition, higher cost, lower engagement. No one in their right mind thinks that making a movie and launching it commercially is easy, but the rate and speed at which that difficulty is growing is terrifying.
The internet is wreaking havoc with Hollywood’s business models: a recent report by the European Union Intellectual Property Office (EUIPO) identified that 27% of 15-24 year olds accessed content from illegal sources intentionally. Blockbusters are becoming increasingly risky propositions as the spate of summer flops this year (*Cough* King Arthur *Cough*) can attest. Cinema audiences in western Europe and North America are tailing off and banking on the growth of Chinese audiences looks like an unlikely strategy to save the day.
The independent sector is the worst hit section of the business so far, yet such an important part of the industry, as it provides a creative counterpoint to a structured, largely business-focused studio setup. With piracy and the amount of films being made, it is becoming increasingly more difficult to secure a stable revenue stream.
According to the Economist, in 2016 around two-thirds of the 675 films that reported US box office results earned less than $1m. In 2002 just half of the total released failed to reach that figure. Sales and rentals of films in physical formats in America dropped from $25bn in 2005 to $12bn in 2016, according to box office data website the Numbers. If we lose the viability of filmmaking and the cinema experience we risk relegating movies to the same standing as opera or ballet – something afforded by the few. Yes extreme, but possible.
Innovation across the business of film distribution is desperately needed but few major players are willing to make drastic changes while they can still squeeze the last drops of cash out of tired and rehashed franchises. The questions of cost, convenience, and access have to be answered. A few independent distributors (such as the US company A24 and Madman in Australia) have seen their holistic approach – caring and investing in every stage of the filmmaking process – work wonders but we need more. We require radical transformations to the way the business operates at all levels.
Yes, the streaming giants of Netflix, Amazon, and Hulu are leading a charge for change. And their ranks are growing, as Apple recently made its first move in this space and so did Facebook. They are set to dominate all aspects of the industry – from the way movies are made to how they are consumed – but that in itself is not necessarily 100% healthy. Netflix’s push to cut theatrical releases of its movies piles pressure on the already buckling cinema chains and a growing number of filmmakers are echoing the sentiments of 'Embrace Of The Serpent' director Ciro Guerra that streaming sites are “graveyards for films”, making it nearly impossible to stand out in such a crowded marketplace.
As a filmmaker/distributor/production company, how do you stand out in the maelstrom? From a marketing perspective, focusing on awareness without factoring in conversion and audience building is what has current business models on a path towards certain failure. As an industry, we have to be smarter. Harnessing audience data to shape campaigns, building a community around projects, intelligent digital advertising that keeps up with audience habits, and rapid licensing across platforms are just the start.
What we are seeing today are merely the early signals of what the next five years have in store for the entertainment industry.
With the rise of VOD, the changing dynamics of film making and financing, and the growing threat of rampant piracy. One of the potential answers lies in developments and applications of new types of technologies such as Blockchain, which has the power to streamline bulky industry processes and add a wave of efficiency to licensing, payments, distribution, marketing, and IP protection. Unless a conversation on these topics and a chance of direction are started soon, the industry is heading for disaster.
Ben Johnson is the co-founder of Gruvi, a technology based media agency, which has recently published the e-book Winning Your Audiences: Marketing Movies in the Connected World