Bubble, Bubble, Toil and Trouble

Posting about Google Book Search has kept me from what I’ve wanted to write about for some time: Steven Soderbergh’s most recent film, Bubble.

This isn’t a movie review. I haven’t seen the movie.

What interests me is how Soderbergh, aided by Mark Cuban, is trying to probe the limits of the standard Hollywood business model.

Within four days of its release, “Bubble” will not only appear in movie theaters but on DVD and television, challenging the long-standing model the business has operated on for decades.

It’s part of Soderbergh’s effort to spark change in the industry, particularly in the way films are financed and talent is compensated.

“All this stuff needs to be redesigned, the whole thing from top to bottom,” said Soderbergh. “The risk-reward ratio, how people are compensated up front, how they’re compensated on the back. In my view, all this needs to be rethought.”

The film — a murder mystery that takes place in a doll factory — is an experiment of sorts that has generated excitement as well as anxiety in the movie industry. If “Bubble” is a success, it could start a trend that has the potential to cripple the already suffering movie theater industry, and to change the way movies are made forever.

Success? Doubtful. Theatrical exhibitors mounted a concerted effort to block access to the film.

It seems that Hollywood watched what happened to the music industry, and learned precisely the wrong lesson. But that’s the industry’s choice. It does seem to me, though, that if IP owners can exert such powerful control over their products via physical exclusion then they really don’t need all those complicated statutory rights. Why have a public performance right for theatrical exhibition when theatre owners have the keys to the auditorium? Why not get rid of it?

8 thoughts on “Bubble, Bubble, Toil and Trouble

  1. Mike, does resistance by exhibitors show that Hollywood as a whole has learned the wrong lesson? Exhibitors don’t benefit from downloads, pay per views, or DVDs. They’re seeking to protect their turf just like car dealers seek to block new ways of selling cars. If movie theater owners could, they would persuade friendly state legislators to pass laws to protect their turf just like car dealers, liquor distributors, funeral homes (casket sales) and other industries have done.

    This kind of resistance points to a bigger problem: In entertainment, the proceeds from the copyright pie are finely divided among creators, performers, publishers, recording companies, performance venues, distributors, etc, and each has their own well-settled revenue stream. It is rare that any one person or entity owns all of the rights. It is thus hard to move to new business models without creating a net (or total) loss for some constituency. Exhibitor’s losses from new forms of movie distribution is one example of this dynamic. Another manifestation would be that music publishers do better in a world where we listen to broadcasted recordings than they do in a world where we download them once, with the reverse being true for recording companies. During any time of change, political and economic resistance of the old guard is great, but the division of rights in copyright seems to complicate the problem: More friction, a larger number of losers.

  2. Are we sure that exhibitor resistance is entirely independent of pressure from larger Hollywood fish? I find it hard to believe that Hollywood studios are otherwise indifferent to what Soderbergh and Cuban are trying to do.
    It seems plausible to me that they would exercise their unhappiness by encouraging exhibitors (if not coercing them) into boycotting the film.

  3. Mike, I’m sure that some large Hollywood fish are quite unhappy with Soderbergh and Cuban. But where you stand on this probably depends on where you sit. For example, if I am an executive with P&L responsibility for the theater distribution business, I’m very unhappy. If I’m in charge of the overall business, however, I may be wary but intrigued. If I have P&L responsibility for the rental, download and/or DVD business, then I probably think it’s a great idea. If I own a theater chain, then I’m furious, without any need for Hollywood to egg me on, and I want to make sure that direct to video remains a synonym for low budget and inferior. But then again, I really sit in an academic’s office, so what the heck do I know?

  4. What do any of us know?

    Three thoughts:

    1 — Historically, people who owned theaters and theater chains had complex power relationships with studios — if they weren’t owned by studios outright.

    2 — Something I don’t know: In motion picture studios, do different P&L responsibilities may fall at different levels of the organization? So do the happy or hurt feelings of different P&L people count essentially equally, or differently?

    3 — A quick hypo: Suppose I’m in charge of P&L for DVDs. Let’s say US DVDs. Do I care whether the film hits theaters for a while before the DVD release, or would I be just as happy with a concurrent release or a no-theater release? I’m sitting in my office, too, but I’m willing to bet that more than a few of these folks rather like theatrical release because it helps pump DVD sales.

  5. With respect to your third thought, I agree that theater release does constitute great advertising and a signal of legitimacy for movies in the *current* marketplace. That fact and tradition seem to be the best explanations for why people still obsess over U.S. domestic box office when most movies make most of their revenue from worldwide box office, DVD, and cable, pay per view, etc. Soderbergh and Cuban are trying to change the signal, breaking the tie between theater release and legitimacy.

    I have noted a similar relationship in the music industry between what many perceive as the “main event” and the real source of most revenue. When looking at Forbes’ list of top grossing music acts last year, you find that U2 grossed $150 million, $139 million of which was concert tickets. When you are making that large of a portion of your revenue from touring as a performer, distribution of the music itself–whether via CDs, illegal filesharing, or paid downloads–merely functions as advertising for your main business. The same is true for many of the others in the top 10. Naturally it likely differs for other musicians. (But maybe not for the likes of Britney Spears and Jessica Simpson, whose music is merely advertising for their careers as movie starlets, spokesmodels, and all around celebrities.)

  6. Actually it is s little known indian company called saimira access technologies ltd that changed the way for home release; it also faild largely due to financing the entry cost to customers in India; but it is very true that the demand for a movie will be created only on a hype created by the theatre release and this hype wil feed the DVD sale. DVD sale simultaneously may work financially but wil also kill the “zing” of the industry.

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