i think this is going to turn into a classic case of free market economics. over-compensation is only one way to look at it. the truth is that the studio gets $100,000,000 from a theatrical release because 10,000,000 people paid ten bucks to see the thing. what they make from each individual ticket sale is very little, and they have to account for the various and expensive flops they produce every year. They still sell hundreds of millions of tickets, and they make their profit. like any other business, they’ll stop when they stop making a profit. and here’s the real rub. many of the films that produce the profit are the ones with the hundred million dollar budgets.
those make money because we pay to go see them. a family of four can easily spend $100 to see a feature film, and they won’t go unless they believe they’re going to get $100 worth of entertainment. of course, the studio pays a small fortune for the effects and production costs for this film, and they want it to succeed. so they may hire actors whose reputations will put asses in seats. they are trying to make a profit.
the model is collapsing now because of the distribution system. they can’t control the paying audience. they’ll stop spending $100,000,000 to make a film when there’s no way for them to get it back.
i think that they will be forced to return to the practices of the radio age. radio shows were mass audience productions, but they had a limited lifetime and everyone knew it. prior to television, feature films were a one shot deal. after a film’s first run, there was no way to make more more money from it. a blockbuster was a very risky proposition. there were no marketing tie ins, no reese’s pieces to pay into the investment. no secondary markets existed to earn revenue from broadcast and recorded media sales.
at the same time, the theatrical experience was much more than it is today. a night at the movies included a newsreel, cartoon, short subject, and then the feature presentation. all of this material was produced on the assumption that after its initial run, it was worthless. yet they still made money, vast fortunes in some cases.
i think we will see a return to something like this. they’ll bring back inexpensive dramas, along with additional features and lower priced tickets to convince the audience to keep going to the movies. low budget independent productions may become a force if someone can figure out a way to control the internet audience. how that could happen is beyond me.
even if a studio spent $1,000,000 on a production (low budget, these days) it needs a way to ensure that it will collect on its investment before bootleg versions of it are all over the web. i’m sure there is a way to do this, i just don’t know what it is.
As you say, distribution is key.
Good analysis - thanks for doing that.