Charles Kenny

It’s been on the horizon for quite a while and yet is rarely discussed even though it has the potential to wreck the entire industry. It’s been discussed here of course, but in the grand scheme of things, the good times will seemingly never end for movie studios. Yessiree, the blockbuster has become the king of all movies over the last few years and shows no signs of slowing down. That’s a problem though, because the question now isn’t so much whether the industry will crash, but how far it will fall.

The Current Blockbuster Bubble

The New York Times had an article last week that looks at the current situation:

Steven Soderbergh, the much-admired filmmaker, delivered a blistering critique of the phenomenon at the San Francisco International Film Festival a few weeks ago, bemoaning studio executives’ lack of imagination and their fixation on big-budget franchise films. “Cinema as I define it, and as something that inspired me, is under assault by the studios,” he said. He likened the big studios to “Detroit before the bailout” and worried that the hegemony of the blockbuster is “a trajectory that I think is pretty difficult to reverse.”

But his warning may have come too late for this summer, when the studios seem to be headed over a blockbuster cliff.

….

With its acquisitions of Pixar, Marvel and, last year, Lucasfilm, Disney has spent billions to acquire others’ intellectual property, and what Disney hopes will be the foundation of generations of future blockbusters. Whether this bold bet ultimately pays off remains to be seen, but Marvel under Disney has gotten off to a strong start. “Disney is basically 100 percent blockbusters,” Mr. Creutz said, not counting films it distributes for others, like DreamWorks Studios. “There are a few exceptions, but when they’ve invested in the big event movies, they’ve come out pretty well.”

Essentially, Hollywood studios see blockbusters as being more expensive but embodying less risk than if they made many films for the same price. The logic is sound, but only if you’re the only one doing it.

What’s Causing Things to Crack

Blockbusters are everywhere now, there’s practically one every week. Sure there are losers just as there are winners (John Carter being the recent example), but even those can come close to breaking even thanks to both foreign receipts and home media sales.

The concern is that with such large budgets at stake, studios will narrow their range in an attempt to maximise both the size of the potential audience as well as how much money they can hope to extract from them. Hence, the recent rash of comic book-based films and a heavy reliance on franchises such as Pirates of the Caribbean and Harry Potter.

Inevitably, we start to see the same kinds of films popping up week after week; Thor last week, The Avengers this week, Iron Man 3 next week. Notice a pattern? Animated films aren’t immune either. Large budget efforts from pretty much all the major players mean that parents (the prime targets for animated films) are getting close to being over-stretched.

The Consequences of the Fall

So there’s no doubt that the crash is coming. What we’re seeing is an increasing number of hands dipping into the same pot. That can only last so long, and since gold rushes always result in people being empty-handed, the only question is how many, and how badly?

First of all, cinema attendance will drop. If you discount all the fanboys who’d show up regardless, that leaves single people and families. The former will undoubtedly continue to visit the cinema; they’ll just look for alternative films. The latter will just flat out look for cheaper alternatives. That isn’t a snide at cinema’s or ticket prices, just economic realities. Kids don’t particularly care whether the content they view is brand new or not. Parents make that decision and something on DVD is a lot easier on the wallet than a trip to the omniplex, especially if you’re tired at shelling out for the same kind of movie with the same kind of jokes week after week.

So if consumers start to look for alternatives, what’s the impact? Well, films aren’t made in a day, and large blockbusters can be in production for a year or more. Imagine if you’re a studio with a full slate of films in production that suddenly no-one wants to see; you’re pretty much up the creek for about a year or so, aren’t you?

Large studios are therefore the one’s most likely to get tripped up. They’ll be a few tough quarters that Wall St will undoubtedly penalise them for. Smaller studios may be OK, but they will find it difficult to both infiltrate large cinema chains and pay the necessary marketing budgets to attain a profitable release.

Rock Bottom

For the purposes of this post, rock bottom is going to hit animation harder than anything else. Animated films take longer to plan, longer to produce, and carry budgets that dwarf most live-action films. That puts them in the crosshairs for cuts, especially if they don’t bring in the moolah.

Animated films are not immune at their traditional homes either. They only survived the 80s at Disney because Walt continued to cast a very long shadow over the studio. It’s hard to see anyone in that place batting an eyelid at shutting an unprofitable division now though.

So what’s the worst-case scenario that we’re facing? Well, expect severe cutbacks at all major houses. Expect Disney to yank on the rope around Pixar’s neck harder than it’s ever done before should that studio’s films start to lose traction. DreamWorks is a target for FOX and the smaller players (all subsidiaries) will most likely get shuttered.

What’s important to take from all this is that the major animation studios bar DWA are all subsidiaries of parent corporations. Animation is not a prime driver of their business and employment within those divisions is a function of profitability (both local and corporate).

This isn’t to scaremonger either, it’s a fact of capitalistic life. If people stop buying a product, there are consequences up and down the supply chain.

Will animated films survive? There’s no doubt about it, but budgets will be much, much smaller. More will be done with less (in all respects) and we will likely see fewer releases from fewer players. (Who those will be, I leave up to you.)

Rebuilding Advice

The simplest way to approach a crash like the one we are facing is to do more than simply look at where we went wrong. An over-reliance on a narrow range of content? Sure. A false belief that throwing enough money at a production will make it profitable? Absolutely. But what else can we analyse?

Are we making films in the right way? Are we making money from them in the best manner? Huge box office grosses make for great opportunities to crow on the Monday morning news but they’re a on-shot deal. A hit is great, but a miss is disasterous.

What will need to be done isn’t hard or complex, but will have to be done in earnest:

• Make more for less. Instead of one $300 million picture, why not six $50 million ones?
• A greater variety of stories: Instead of attracting the largest possible audience, attract a varied one instead.
• Don’t bore consumers with franchises. The risk of failure is less, but the risk of burnout is higher; and the latter will never become apparent until it is too late.
• Vary the style! CGI is a singular style and has been done to death for the last 10 years.

Lastly, all the above pertains to studios. What about the animators on the ground? The bottom line, vary your skills and be prepared financially as best you can. There is still time to prepare. News of layoffs has only just begun, not peaked. Get those personal projects going and practice your hustling skills. We’re in for a tough couple of years.