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How Ryan Kavanaugh Can Save the Movies

Thompson on Hollywood By Cotty Chubb | Thompson on Hollywood December 23, 2010 at 9:25AM

Indie producer Cotty Chubb has a modest proposal for Relativity chief Ryan Kavanaugh that could save the movies. (Chubb wants the studios to be involved, which may be part of the problem.)The movie business is being strangled. For a professionally produced picture to succeed, it must be released theatrically. But not every movie is fit for 3,000 screens or appropriate only to educated adults, the twin poles of distribution today. And there is almost no middle ground.
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Thompson on Hollywood

Indie producer Cotty Chubb has a modest proposal for Relativity chief Ryan Kavanaugh that could save the movies. (Chubb wants the studios to be involved, which may be part of the problem.)


The movie business is being strangled. For a professionally produced picture to succeed, it must be released theatrically. But not every movie is fit for 3,000 screens or appropriate only to educated adults, the twin poles of distribution today. And there is almost no middle ground.

Everybody knows the independent movie business has been squashed. But the studios aren’t doing so well either, when you look closely at long-term prospects. Their audience is slowly drifting away.

• Movie tickets sold have declined about 3% this year, and have been absolutely flat over the last decade. Hardly the sign of a thriving business in a population that’s grown 10% in that time.

• Tickets prices have risen 40% since 2000. Forty per cent! They went up 5% this year, in the teeth of the worst recession since the 1930s. 3-D! Oh yeah, right.

• Most worryingly, the fastest declining segment of the audience is young adults. If that generation gets out of the habit of going to movies in theaters, uh-oh.

Can you blame them? There are no jobs, tickets cost too much, and all they get, for the most part, is product, usually "branded" (another way of saying "unoriginal"); they don't get what we used to mean by the word "movies." They're not really familiar with the experience of sitting in a crowded, darkened room with their cohorts and seeing something that provides an emotional experience, something that they can take out of the theater and into their lives, whether wrapped in comedy's bright clothes or cloaked in tension and threat.

The studios, for the most part, don't make actual movies for them anymore, movies like Say Anything or Fight Club. For every Superbad there's a hundred enormous branded spectacles, notwithstanding the deliciously nutty Black Swan or the passionate The Fighter (which, like The Social Network, lands a little older). And independents, for the most part, don't know how to reach that audience, or can't afford to.

For a new generation of moviegoers to develop among the 18-25 audience, they need to experience movies that matter to them, are unique to their generation, and speak to them with their voice.

That means risk. Who knows what can work when someone is saying something new? But there’s no business model for risk when the cost of reaching the audience is so high. (Even the delightful Easy A cost about $35 million to take to market, according to friends who should know.)

Here’s what an original movie needs to succeed. It has to be ubiquitous in the culture; readily available however, whenever and wherever its audience wants it; priced right for the experience; and with a community-building capacity built into its presentation.

But movies can't be available however and wherever and whenever so long as the theatrical exhibition chains insist on their window. Day-and-date release on digital platforms is anathema to them.

Everybody knows that this business model is cracked, if not yet outright broken, but nobody knows how to change it.

Here’s where the red-headed buccaneer of movie finance comes in. Since 2004 Ryan Kavanaugh's Relativity Media has provided massive slate financing for studios, particularly Universal and Sony. And recently his company has transitioned into a significant stand-alone producer and distributor. Kavanaugh cannot be ignored by the exhibitors.

There are only three companies that control more than half the screens in America, a remarkable concentration of power over how movies are experienced and therefore what movies are made.

Here’s what Kavanaugh should tell those three CEOs:

"I'm Ryan Kavanaugh and I want to fill your theaters with young people eighteen to twenty-five, people who've slowed or stopped their movie consumption, people who will buy your popcorn and hot dogs and sugary drinks (and they'd buy expensive beer if you'd sell it to them and expensive pot if the government had any sense). I want your theaters to be full of happy people.

Relativity bought Rogue Pictures from Universal to make movies for those audiences, young movies, smart movies, crazy movies, exciting movies, and I want people to see them. They won't be costly big blow-things-up CGI spectaculars. Rogue can't and won't compete in price with those. So I don't want to charge my audience the same as for those big spectaculars.

Here's my deal. If I've got a picture that's going out on three or four hundred screens, I'll let you have the movies almost for free. Give me a buck or two for every ticket you sell. You set the price for the ticket-buyer in your theaters so that you bring in the most people and sell the most stuff to them. That's all your money and you keep it all. Price it the way that makes sense in each theater, in each market for each show. I don't care about that so long as I get my buck or two.

But I get to put the picture out day and date any way I want: VOD, disc, streaming, download to own, whatever the buyer wants.

You get a growing theatrical audience and almost all the revenue from it. I get to concentrate my marketing dollars on opening the movie on all platforms at the same time, and thereby achieving ubiquity at a substantial savings. We both get to price right for the audience and the specific experience. And with right pricing and immediate all-platform access, we can build community and buzz and want-to-see.

Some will want to experience the movie in the theater. Great! Make that experience the most fun possible. Stop the noisy pre-show bullshit. Nobody wants to pay money to see a movie and be subjected to those lame ads. They want to talk to their dates and talk to each other and then see the trailers and then shut up and see the movie on a beautiful big screen with great sound. The more exciting and fun it is for the right price, the more people will come to your theaters.

Some will want to watch it at home, on a computer screen in the privacy of their own room or on the living room screen hanging out with friends. Why should we care where they watch it, so long as we're both making money?

Help me save American movies, because if we don't, we're all going to go out of business doing the same old dumb thing the same old dumb way."

If Ryan Kavanaugh can pull that off, and open the door for the smaller, wilder, independent movies to find a theatrical audience as a part of their release, then more distributors than just Rogue can come back into the business, taking different chances, finding different voices, and maybe even growing the audience for the first time in a decade.

Making exciting new pictures with exciting new film-makers for an audience that is excited to see them sounds good to me. It's been a long time since that has happened.


This article is related to: Box Office, Franchises, Genres, Hollywood, Independents, Studios, Guest Blogger, Media, Marketing, Exhibition, Relativity


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