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A new article by Jake Ures offering a historical narrative of evolving business risk management in the cinema industry.
It’s interesting, though at least in some respects, it looks miles behind James McMahon’s work on the subject… How is it that a leading left magazine like Jacobin has nil publications (to my knowledge) originating from the CasP framework and its researchers?
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I only briefly perused the article, and right off the bat, their understanding of entertainment risk seems to be inconsistent with corporate and financial risk.
They seem to be conflating the notion of stories that might not viewed, with the risk that CasP explicitly describes as the risk of not beating the average.
While there is probably some slight overlap, the 2 are not the same.
They also, in a single article, state that movie content is becoming universalized, and that streaming content is becoming ever more niche and diversified in order to appeal to specific demographics.
So both strategies, according to Jacobin, are risk averse, suggesting that no matter what trend would be taken by content creators, it would be considered the result of risk aversion.
This indicates that their understanding of Risk needs a lot more clarification
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I only briefly perused the article, and right off the bat, their understanding of entertainment risk seems to be inconsistent with corporate and financial risk. They seem to be conflating the notion of stories that might not viewed, with the risk that CasP explicitly describes as the risk of not beating the average. While there is probably some slight overlap, the 2 are not the same. They also, in a single article, state that movie content is becoming universalized, and that streaming content is becoming ever more niche and diversified in order to appeal to specific demographics. So both strategies, according to Jacobin, are risk averse, suggesting that no matter what trend would be taken by content creators, it would be considered the result of risk aversion. This indicates that their understanding of Risk needs a lot more clarification
I don’t agree.
First, the author uses the term “risk” as everyone in finance does, i.e., to refer to the possibility of losing invested capital.
Second, what the author describes are two different markets for content, each with its own risk profile and its own propensity to homogenization due what the end product is.
A movie made for theatrical release is the end product.
A movie made for release on a streaming platform is not the end product, the underlying subscription service is.
Movies made for theatrical release are tailored to appeal to the broadest possible audience. The individual movie-goers are the end customers.
Movies made for release on a streaming platform are tailored to the specific needs of the streaming platform to retain and grow its subscriber base. The streaming platform, not its subscribers, is the end customer.
The success of a movie made for theatrical release is determined by the raw number of movie-goers that pay to see it. If enough people pay to see the movie, the investors will break even or, hopefully, make a profit.
The individual success of a movie made for release on streaming platform is secondary to the success of the streaming platform itself. Yes, streaming platforms want to deliver content that is critically acclaimed and popularly successful, but no single franchise is likely to result in a capital loss for the streaming platform.
Both content markets are subject to content homogenization. Movies made for theatrical release are homogenized based on the interests and tastes of the population as a whole. Movies made fore release on a streaming platform are homogenized based on the interests and tastes of the platform’s subscriber base.
Thus, at the end of the day, the twin goals of minimizing risk of capital loss while maximizing the annualized total rate of return constrains creativity in the same basic way despite the fundamental differences between the two markets.
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Hi Scot,
I’m going to try to make my case, using limited data, and a relatively simplistic argument.
The argument being made in general in the Jacobin article might make use of the term “risk” appropriately, but the underlying suggestion is that creative control is the risk factor that is hedged against.
I wont argue that Hollywood finance isn’t risk averse. That would be silly. Instead I would say that a plethora of research on the subject has indicated that in order to minimize risk, the predominant factor in the finance equation is a very simple “low budget – high projected return” production. Risk is not in the creativity, or the controversial nature of the projects. And so homogeneity of content has very little to do with the decision being made by executives.
Jacobin does make a good point in that part of the risk aversion exhibited by Hollywood studios, is the tendency to put out larger volumes of movies with lower returns, than to bet everything on very few blockbusters with the potential for high returns.
Here we can see an overall increase in total volume of theatrical releases from 2007 – 2019
Then if we look at the same period and start inspecting the finances, the average cost per production far outweighs the average revenue per production.
Finally if we compare each year’s top earner to the baseline average gross per movie, we can see that the vast majority of the movies being produced are not big revenue earners at all
This seems to suggest that the vast majority of the 700-800 movies released annually, are not being produced with any thought to limiting creative control to conform with homogenized audience demands, but purely to minimizing budgets. With the odd Big Earner to make up any potential shortfall.
And on the streamer side of content, it is all about churn. They don’t care if a movie or series is creative or not. What they care about is having a broad base of diverse IP that appeals to every niche they can find through their algorithms.
Is Hollywood risk-averse? Yes
Does Hollywood’s risk aversion result in bad movies? I would answer by saying tastes vary, even within targeted demographics, but for the most part, no. -
I just had a lengthy response eaten by website, but here is a condensed version.
I am not arguing that you are wrong in what you say, as far as it goes, I just cannot agree that your narrative offers a complete explanation of the interaction between the movie industry (the creators) and the movie business (those who sabotage the creators in search of profits).
The homogenization of media content of all types is undeniable and has been noted by many people over the last decade or two. Homogenous does not have to mean “bad,” but it always means “the same or similar.”
The fact is that five companies are responsible for more than 80% of annual revenue for theatrically released films, but they are only responsible for releasing 15-20% of all films. Whether these five companies refuse to fund ground-breaking movies with unfamiliar or unproven themes, or just crowd such movies out by buying up all the theater space, creativity is being hindered.
If capitalism ultimately succeeds, there truly will be nothing new under the sun because capitalists seek pareto efficiency, which requires sticking with what reliably works, i.e., the familiar.
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I just cannot agree that your narrative offers a complete explanation of the interaction between the movie industry (the creators) and the movie business (those who sabotage the creators in search of profits).
I would not claim that Hollywood Business doesn’t Strategically Sabotage Hollywood Industry. It definitely does, My contention here is that the depiction by Jacobin isn’t accurate. What is being sabotaged is not the creativity. I come from an Arts background, with several years in theatre and film. I was on stage, and in front of the camera, and behind the curtain and the camera.
It’s difficult to argue that creativity isn’t stifled by budget constraints, but having worked with both big budgets and highly restricted budgets, I can confidently say that in situations where budgets were limited, we got more creative with the story-telling, and the technical techniques, in order to make the money we did have available, work better for us. There is also a measure of push-back that emerges when you constrain budgets, and the creatives then tend to encode anti-power subtext throughout their works.
The homogenization of media content of all types is undeniable and has been noted by many people over the last decade or two.
This is where I disagree, and to be honest, the only thing that will change my mind is a detailed analysis of content, which none of the opinion pieces over the last 2 decades have provided. Instead, what they provide, are very cherry picked instances of Executive interference in the creative process, and subjective critiques of the movies that just happen to confirm their “movies are becoming the same” line.
Close to 12 thousand movies released in the last 14 years, means we cannot use a sample size of 20 movies, and use that to extrapolate any kind of meaningful conclusion.
Homogenous does not have to mean “bad,” but it always means “the same or similar.”
Debate exists within the arts community about the variety of stories it is possible to tell. Meta-narrative pundits have been saying since the time of the ancient greeks that there are only 3, or 6, or 7, or 12, or 36 stories that can be told. Regardless of the number there is indeed a very low upper limit to the variety that can be used in basic plot lines. Creativity is not in the basic plot, but in how we tell the stories. So homogenous plots are definitely an observable phenomena, but the creativity with which they are told, is a very different concept. It is this creativity that I highly doubt is being sabotaged, or indeed can be sabotaged. The Audience simply would not tolerate it.
Whether these five companies refuse to fund ground-breaking movies with unfamiliar or unproven themes, or just crowd such movies out by buying up all the theater space, creativity is being hindered.
Crowding Indy Studios out of theatres was certainly the case from the 80’s to the early 2000’s,
but since Netflix’s rise to prominence there has been a massive shift in the power dynamics of the industry, and every VOD and SVOD service is clamoring for content, which provides a fair bit of leverage for independent studios in negotiations. But again, this doesn’t affect the creative process, it merely affects the budgets that the studios have available.If capitalism ultimately succeeds, there truly will be nothing new under the sun because capitalists seek pareto efficiency, which requires sticking with what reliably works, i.e., the familiar.
In this context, Pareto Efficiency would mean that a major studio would gain differentially over its competitors by providing more creative control to creators, since this would reduce the benefit the other studio is getting from witholding creative control. Or maybe i’m misunderstanding your usage of Pareto Efficiency here
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Max: your reference to my work is very nice, thank you. To let people compare my work to the Jacobin article, I would recommend:
Is Hollywood a Risky Business? A Political Economic Analysis of Risk and Creativity
Risk and Capitalist Power: Conceptual Tools for Studying the Political Economy of Hollywood
From Power over Creation to the Power of Creation: Cornelius Castoriadis on Democratic Cultural Creation and the Case of HollywoodMy book is being published in 2022. I believe that it will be my most thorough presentation of the links between risk, power and creativity.
My research had led me to believe that Hollywood does in fact sabotage creativity for the purposes of risk reduction. However, I also understand why Pieter is right to be skeptical. There is certainly no smoking gun, and any film requires some creativity. My go-to description is this: Hollywood needs to control creativity but it certainly does not want to suffocate it completely.
There are a few things Scot and Pieter are debating. Give me a few days and I can jump in, if you don’t mind. For now, I want to comment on what I think is actually common to both sides of this debate: claims about the function of films in Hollywood economics. In my research I learned (sometimes painfully) that neoclassical assumptions hide in the cracks and crevices when it comes to talking about the business of Hollywood. Not every assumption is problematic per se, but the breaking of politics-economics dualism has effects on how we think of efficiency, consumer demand and the value of creativity.
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For now I am hitting SUBMIT so I don’t lose this.
LOL.
By the way, I’ve “lost” posts before, but I was previously able to recover them with the “back” button of my browser.
One of my metrics for identifying the sabotage of creativity is the number and pace of remakes/reboots these days. We’ve had three different versions of Spider-Man in less than 20 years (all with sequels!), four versions if you include the animated “Into the Spiderverse.”
But it isn’t just rebooting/remaking familiar franchises (e.g., Ghostbusters, the “third” Star Wars trilogy which just retold the “second”), it is story forms, as well. Since Disney acquired LucasFilm, almost all their movies (regardless of the Disney studio brand used) rely on the Joseph Campbell’s Hero’s Journey story form, which George Lucas really pioneered in Star Wars.
FYI – in preparing my last response to Pieter, I spent some time reviewing the annual reports of Disney, Comcast, ViacomCBS and AT&T, and the content industry has become increasingly verticalized. Disney, for example, owns the Disney, ESPN+ and Hulu streaming platforms as well as numerous studios. In other words, they own the content makers and major players in the distribution channel, which allows them to manage risk from birth to grave, e.g., by switching at the last minute a movie slated for theatrical release to go direct to streaming. In many ways, the movie industry has reconstituted itself into an image of what it was in the early 1930s, when the FDR administration studied it.
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