June 2, 2022
I got an email from a business colleague the other day that mentioned the “potential recession” ahead, and my response was – “there's no potential recession - we are in it, but it hasn’t been formally declared, and not everyone knows it yet.” Apparently, I am joined in this feeling by Jamie Dimon, the head of Chase, who told a conference of investors yesterday that ““It’s a hurricane. Right now, it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this,” However, “That hurricane is right out there, down the road, coming our way. We just don’t know if it’s a minor one or Superstorm Sandy or Andrew or something like that. You better brace yourself.”
I’ve been hanging out in Rockaway Beach lately, and it’s been sunny, (mostly) warm and fun – but the beach is a strange mix of frolicking sun worshippers and heavy cranes, repairing groins and jetties destroyed by Sandy and preparing the beach for the next big one. While I disagree with their chosen methods (see Shored Up), it is good to be preparing for the future during the calm before the storm. If only this were true of the film world, too. Over in film land, most of my friends are drinking nutcrackers and enjoying the good times, with too few making any preparations for the potential storms ahead.
The looming recession is already impacting my day-to-day business – brands and films. Clients who just weeks ago were on the long-term brand building train that is brands making movies, are now being told by their bosses to focus on product marketing, asap. Move product, now. Which are not what films do unless you are Star Wars. And not that this is a good idea - to focus on product marketing now, as you still need to build your brand. But this sense of urgency will deepen, and it will hit other sectors – including advertising, which is being held up as the holy grail for SVOD (specifically, Netflix) at the same time. It’s gonna get interesting, in the best-case scenario.
But the film world has been insulated a bit from this because there’s been a boom in the need for more movies and shows, due to the streaming wars. People are busy. The getting’ is good. Sure, everyone noticed the big correction over at Netflix, but they’re too busy enjoying the schadenfreude to think about the long-term impacts. But read the tea leaves, and you can see signs of a big correction coming.
This week, the Hollywood Reporter noted that Netflix’s new mandate is “Bigger, Fewer and Better.” In my Twitter feed, people were mainly upset that the reporter called The Irishman a “vanity project,” but didn’t note the actual news – that there will be less Sub-$30MM movies being made, and that the “original indies” division was being “wiped out.” That’s not a good sign for the field, even if it takes a while for it to trickle down.
Peter Kafka, over at Recode, noted that maybe we should be more concerned about Netflix’s troubles, and less cheered by the giant’s stumble. I agree, and let’s face it, you don’t usually know how good you had it until something goes away. Netflix has been a blessing both as a consumer and as a producer – lots of great films and shows for people to make and watch. They’ve revolutionized the business, and even with all its issues, Netflix has been a big supporter of quality films, and diversity and equity, too. That will soon change. Kafka noted that one exec told him, ““From a consumer experience [perspective], things are going to get a little worse. They’ve been enjoying a subsidized and unsustainable amount of choice,” he said. “And I think there is going to be a little less choice across the ecosystem.“ Read: things will also get worse for the producers making these films.
Kafka continues: “So the nightmare scenario for Hollywood — or at least the unpleasant dream version — is that Netflix’s problems are everyone’s problems. And that if Netflix is already losing customers to newcomers, that means the market isn’t nearly as big as everyone has been hoping.” Which will mean more big changes – aka a Hurricane – headed towards film productions and shows across the board.
See exhibit B in this argument where over at Discovery/Warners, the scuttlebutt was more about Toby Emmerich leaving, and less about the fact that Zaslav made this decision about five minutes after he left the screening of Elvis at Cannes (Richard Rushfield at The Ankler did note this). That’s not a good sign for what he felt about its creative and business prospects, or for the future of films we might like. Not that Baz Luhrmann makes indie films, but it’s another signal that overspending on “art” doesn’t have much of a shelf-life in the coming economy.
It seems to me that a one-two punch is coming for the biz – a cut to the budgets being spent to make all of this in the first place, as streamers realize they won’t reach the billions they expected, and then a recession, which cuts all budgets, everywhere. And this is after we just somewhat survived Covid’s impact on the business, and so many other problems. Fun times, right!
Well, the bright side is – not yet; and as Dimon said, we don’t know how bad this Hurricane will be. But two types of people will do best at the end of it – those who prepared in advance, and those who are ready to rebuild something new when everyone else is washed out to sea.
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Film
Are the Movies Liberal? No, but in case you didn't know that, A.O. Scott has some pretty good arguments against that notion in the NYT. (BN)
There are NFT's hidden in Netflix's Love, Death + Robots: Who knew? Well, people who looked for the QR codes, and the NFT community, and CreativeBloq who had the news. Pretty swell idea for testing a concept. (BN)
"Streaming is Now the Parsley on the Meal, Not the Meal": My new favorite quote about the business, from Eric Jackson of EMJ Capital, speaking about how stand-alone streamers may be an old model, as you need to be tied to an actual business that makes money, like Apple or Amazon. Just part of a good run-down of what's happening in the streaming business over at CNBC.(BN)
Can we Change the Cost-Plus Streaming Model via Gov. Intervention? Maybe, that's what Jeff Sagansky was arguing for at NATPE, as covered in this piece in Deadline. He argues that the slim profit margins being paid for perpetual streaming licenses is killing the business (true), and that we have precedent to look to - As he explains, this was the case with TV, until “Out of desperation, the producers and studios jointly went to Congress, the Justice Department and the FCC to address this coercive anti-competitive behavior on the part of the networks, and they succeeded big time” Sagansky said. In 1970, the FCC passed the Financial Interest and Syndication (fin-syn) Rule that largely prohibited networks from airing programming that they had a financial interest in. Sagansky goes on to explain how this and other developments led to a flourishing of creativity (and profits to producers/talent/etc.) and the article is worth a read. (BN)
Curzon Cinemas is Lowering Prices due to Changing Consumer Behavior: Curzon, a cinema chain in the UK, is reducing prices pretty dramatically, due to the impact of inflation and changing consumer behavior, which is impacting who goes to cinemas and when. Their CEO noted: "“With the increase in working from home and ongoing cost of living crisis, cinema risks becoming the preserve of blockbuster movies,...But there is a breadth of brilliant films available and we want to ensure regular cinema attendance remains affordable.” Prices are changed through the Summer and maybe longer. Now there's a radical, good idea. Screen reports. (BN)
The long, long, twisty affair between the US military and Hollywood: “Producer Jerry Bruckheimer has said that Top Gun would not have been made without the military’s assistance. This is far from an anomaly”, writes Alissa Wilkinson for Vox Media. Hollywood and the US military go way back (pre WWII). It’s the mutualistic relationship and some shared ideologies “that has made Hollywood an attractive and powerful resource to the American military — and vice versa,” Wilkinson continues. Give the article a read if you’re interested in learning about how these two American powerhouses are tied together, historically and in the present-day. (GSH)
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Miscellany:
Pushing Buttons: Why linking real-world violence to video games is a dangerous distraction: In the wake of last week’s tragic school shooting, conservative outlets like Fox News are blaming violent video games for turning children into killers. The theory has been proven false time and time again. The argument is nothing new — it’s pretty old actually, going back further than video games themselves: “It’s an extension of the panic that flares up whenever a new and supposedly morally abject form of youth culture emerges. In the 1940s, when New York’s mayor ordered 2,000 pinball machines to be seized so that he could performatively smash them up, it was arcades; during the satanic panic of the 1980s and beyond, it was metal music. Since the mid to late 90s, it’s been video games…” The argument recycles itself over the decades. Today, like death metal and pinball machines (apprantely) video games are “an easy scapegoat that ties into older generations’ instinctive wariness of technology, screen time and youth culture, and it greatly benefits institutions like the NRA and pro-gun politicians to have a scapegoat.” The argument does have real consequences, in that it shifts the conversation away from firearms and inspires the wrong kind of action. After the 2019 El Paso shooting, for instance, Walmart removed violent video game displays from their shelves, though they continued to sell guns. In a time with so much technological change, with VR becoming commodified, with concerns about data privacy and children roaming free on the metaverse, of course it’s natural to feel afraid or have questions about the effects of new media/mediums and tech on children. Though let’s please keep the conversations about violent video games and real world access to guns and gun violence separate. Keza MacDonald for The Guardian has the story. (GSH)
The Art Angle Podcast: How Artificial Intelligence Could Completely Transform Art: If anyone’s looking for a new podcast, give this a go: In this week’s episode, Artnet News’ chief art critic and author of Art in the After-Culture: Capitalist Crisis and Cultural Strategy Ben Davis talks about the rise of A.I. art, and what the art world might look like if the machines pick up the paintbrush. One particularly interesting question the episode examines is, are NFT’s here to stay or are they merely a distraction from the technological revolution the art world is undergoing today? Artet News has the news (click the link to give a listen, GSH).
14 Warning Signs That You Are Living in a Society Without a Counterculture: Ted Gioia, who happens to be one of my favorite historians of American Jazz music warns us that we’ve entered an era where there’s no counterculture. Here’s his definition of what this looks like.
- A sense of sameness pervades the creative world
- The dominant themes feel static and repetitive, not dynamic and impactful
- Imitation of the conventional is rewarded
- Movies, music, and other creative pursuits are increasingly evaluated on financial and corporate metrics, with all other considerations having little influence
- Alternative voices exist—in fact, they are everywhere—but are rarely heard, and their cultural impact is negligible
- Every year the same stories are retold, and this sameness is considered a plus
- Creative work is increasingly embedded in genres that feel rigid, not flexible
- Even avant-garde work often feels like a rehash of 50-60 years ago
- Etc. etc. etc.
 Okay, but can he back this up with real world evidence? Yep, and he does so through Twitter. Gioia uses a collection of 14 tweets to illustrate that we indeed do exist in a counterculture-less age. Read his multimedia “essay” here. (GSH and h/t Redef)
GSH = Articles written by Sub-Genre's Gabriel Schillinger-Hyman, not Brian Newman (BN)
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