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

  • With a dramtic increase in the quality of the video and effects that can be produced in a homebrew way, plus massive online distribution it stands to reason that the movie industry will be impacted by people choosing to do their own thing, find their own heroes, hear good stories not formulaic hollywood hand cranking.
    Having said that I like hollywood blockbusters and the star culture to some extent.
    What is really exciting is the truly distributed story, the ongoing narrative that crosses platforms, games, tv, film, ARG. Its by no means easy to create, but having heard Tim Kring talk about the various Heroes story arcs, the intertwining of individual small properties, like cereal packets with the “mothership” of the tv show. Each experience designed to work both on its own, but still add to the narrative.
    Its exciting and forward thinking entertainment and art for the world we live in now 🙂

  • With a dramtic increase in the quality of the video and effects that can be produced in a homebrew way, plus massive online distribution it stands to reason that the movie industry will be impacted by people choosing to do their own thing, find their own heroes, hear good stories not formulaic hollywood hand cranking.
    Having said that I like hollywood blockbusters and the star culture to some extent.
    What is really exciting is the truly distributed story, the ongoing narrative that crosses platforms, games, tv, film, ARG. Its by no means easy to create, but having heard Tim Kring talk about the various Heroes story arcs, the intertwining of individual small properties, like cereal packets with the “mothership” of the tv show. Each experience designed to work both on its own, but still add to the narrative.
    Its exciting and forward thinking entertainment and art for the world we live in now 🙂

  • Nicolas

    “There is no statistical correlation between stars and success,” said S. Abraham Ravid, a professor of economics and finance at Rutgers
    University, who, in a 1999 study of almost 200 films released between 1991 and 1993, found that once one considered other factors influencing
    the success of a film, a star had no impact on its rate of return.

    http://www.nytimes.com/2006/08/28/business/media/28cast.html?adxnnl=1&adxnnlx=1226509268-pcPVeqBDw64e/8tqz9r8fQ

  • Nicolas

    “There is no statistical correlation between stars and success,” said S. Abraham Ravid, a professor of economics and finance at Rutgers
    University, who, in a 1999 study of almost 200 films released between 1991 and 1993, found that once one considered other factors influencing
    the success of a film, a star had no impact on its rate of return.

    http://www.nytimes.com/2006/08/28/business/media/28cast.html?adxnnl=1&adxnnlx=1226509268-pcPVeqBDw64e/8tqz9r8fQ

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  • For me, to have a low budget doesn't mean to have a low film result. It depends upon how the whole team materialize the film and its importance to the viewing public. We have so many low budgeted films that won awards though.

  • I agree

  • I agree

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