October 15, 2010

Role Reversal: Why TV is replacing movies as elite entertainment


The following post by Edward Jay Epstein, author of The Hollywood Economist: The Hidden Financial Reality Behind the Movies (available from Melville House, and reviewed in the Wall Street Journal here), is the 12th in a series of posts celebrating the publication of the book. You can also see Epstein in Oliver Stone’s just released Wall Street 2: Money Never Sleeps wherein Epstein plays the head of the Fed. Click here to read all posts in the series.

Once upon a time, over a generation ago, The television set was commonly called the “boob tube” and looked down on by elites as a purveyors of mind-numbing entertainment. Movie theaters, on the other hand, were considered a venue for, if not art, more sophisticated dramas and comedies. Not any more. The multiplexes are now primarily a venue for dumbed down comic-book inspired action and fantasy movies, whereas television, especially the pay and cable channels, is increasingly becoming a venue for character-driven adult programs, such as The Wire, Mad Men, and Boardwalk Empire. This role reversal, rather than a momentary fluke, proceeds directly from the new economic realities of the entertainment business.

Consider what happened to Pay-TV. When HBO , now a subsidiary of Time Warner, initially signing up monthly subscribers in the 1960s, it provided the only way home viewers could see movies uninterrupted by commercials, and it (and Cinemax unit) eventually signed up through their local cable systems 40 million subscribers. HBO gets a fixed a fee — about $4.5 per month — for each subscriber, no matter how little or often they watch HBO. To continue to harvest this immense bounty, HBO has to perform a single feat: stop subscribers from ending their service. But since nowadays its subscribers can get movies cheaper and fast from other sources, such as Netflix, retail stores and the Internet, HBO needs a more exclusive inducement to keep them. And so, beginning in the 1990s, it began putting more and more resources into creating its own original programing that would appeal to the head of the house. Not restricted by the need to maximize the audience (it has no advertising), ratings boards (it has no censorship), or non-English speaking markets, it was able to create edgy character-driven edgy series such as Sex and the City, not only succeeded in retaining their subscribers but achieved surprising acclaim in the media. Other pay-channels followed suit. So did other networks so as not lose market share. The result is the elevation of television, or at least some tiers of it, to a medium of entertainment for the elite.

Meanwhile, Hollywood, conforming to its new economic landscape, has had a gradual downgrade. Unlike in the era of the studio system in which studios opened their movies in select first-run theaters (most of which they owned), the big six Hollywood studios nowadays open their major movies nationally on 3,500 or more screens owned by a handful of multiplex chains. These multiplexes are in the people-moving business, as on multiplex owner put it, “moving people past the concession stands.” So, in return for providing their screens, these chains not only expect the studios to provide a lavishly-produced movie but, more importantly, the type of marketing campaign that will drive into their multiplexes a sufficient number of consumers on the opening weekend. Since such campaigns cost tens of millions of dollars the marketing arm has now to sign off on projects before they are greenlit for production. The deal-breaking issue for these strategists is not the intrinsic merits of the film but whether it contains the necessary elements to attract a target audience in seven-days of intensive 30-second ads on TV programs leading up to its opening weekend. Even with a $30 million budget — the average in 2010 — studios cannot afford to reach the entire prime time audience, so they must concentrate their blitz on the cable programs that are demographic groups with a proven disposition to go to movies on weekends cluster around. And, no surprise, this turns out to be tweens and teens who also are the group most likely to consume popcorn, candy, and soda. With this targeted audience in its sights, the marketing executives tend to only approve movies that contain elements that, when encapsulated in the ads, will activate these young people to go to the movies, such as visually-stunning action, and that can be encapsulated in 30 second spots. Even so, since anything original is chancy, marketing executives lean towards formulas that gave been successfully used before; hence, the profusion of action movie sequels.

In addition, studios need to consider another part of their new economic landscape: the growing importance of non-English speaking markets. Nowadays major Hollywood releases earn most of their revenue abroad, and, large scale action films, such as Avatar, Spider-Man 3, and Mission Impossible 3 earn more than 70 percent of its revenue in overseas markets. Since many of these foreign territories depend on dubbing, especially in Asia and Latin America, studios have found that the formula for successful bookings is, as a top Fox executive put it, “Short on dialogue, long on action.” Happily for the studios, this formula fits in with the requisites for marketing to its target audience in America. Add to this equation, the multi-plexes appetite for supersized 3D movies (which lets them jack up ticket prices), and it hardly surprising that Hollywood is moving more and more towards comic-book sequels and other action-bumped fantasy fare. Meanwhile television, which must to adopt to a new Internet world in which its audience can cherry-pick what it want to see, anytime and anywhere, via ubiquitous DVRs, tablets, and computers, is now providing the sophisticated niche entertainment that movies once provided. Its after all show business.

Edward Jay Epstein studied government at Cornell and Harvard, and received his Ph.D from Harvard in 1973. His master’s thesis on the search for political truth (Inquest: The Warren Commission and the Establishment of Truth) and his doctoral dissertation (News From Nowhere) were both published as books. He is also the author of The Big Picture: Money and Power in Hollywood.

Edward Jay Epstein's book The Annals of Unsolved Crime is available now from Melville House.