Strategy decay in the film industry

At the Library House Mediatech conference yesterday there was a presentation from a company called Slingshot Studios which could be described as a ‘Film2.0 business’.

They described how Hollywood has chased up film budgets to an average of $70m on production and a further $50m for distribution by focusing on the very limited strategy of having big stars and getting great reviews.  I’m sure these are drivers of film success, but to what extent I’m not sure – other harder to control variables like quality of plot and dialogue might turn out to be more important. 

It is a common strategic error to focus on the levers of a business that are easy to control and ignore the ones that are more difficult, even if they would have more impact.

The Slingshot guys also made the point that Gen Y’ers care less about stars and reviews than the rest of us, so the market is moving against the Hollywood strategy.

I buy all of this, and see the periodic huge success of low budget movies like My Big Fat Greek Wedding as evidence.

Slingshot describes itself as ‘an all-digital, British film company that is dedicated to making good films, differently’.  They have released six films, with seven more in the works.  I’m not sure what the budgets are, but given they are VC rather than hedge fund backed I’d be surprised if they were more than a small fraction of the Hollywood averages.

This trend towards bigger budgets based on more of the same across a couple of key dimensions has parallels in the game industry where console manufacturers have chased up budgets to similar levels by focusing on better and better graphics and ever more intricate and involved game play.  This created a large opening for casual games which had much simpler game play, less sophisticated graphics and were much cheaper.  Maybe something similar will happen in the film industry.

From LibraryHouse Mediatech presentation by startup Slingshot.

Average Hollywood film costs $70m to produce and a further $50m

Recognise themselves in the films not caring about stars or reviews

Film industry has been chasing its budgets up in pursuit of always doing better with an established formula – stars, often special effects etc.  Just like hardcore games – opportunity is for equivalent casual games

Slingshot movies are cheap and focus on what research shows works