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Why the Movie Business Is in Big Trouble – Variety. Anyone in the movie business who tells you they’re not scared stiff about the future is probably lying. There’s ample reason to be fearful. It’s been 1. 28 years since Thomas Edison first helped usher in theatrical exhibition with the creation of the Kinetoscope, an early motion picture viewing device.

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In the ensuing century, cinema has given audiences Garbo and Rin Tin Tin, introduced “May the force be with you” into the cultural lexicon, and dazzled crowds with man- eating sharks and dinosaurs so massive and menacing they could barely be contained on even the most cavernous of screens. Despite that history, there is mounting anxiety among theater owners, studio executives, filmmakers, and cinephiles that the lights may be starting to flicker. As consumer tastes and demands change, Hollywood is scrambling to adapt. Instead of surrendering to existential dread, studio chiefs and exhibitors are showing a greater willingness to experiment, particularly when it comes to releasing movies in the home within weeks of their theatrical debut for between $3.

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If that comes to pass, it would represent the biggest distribution and exhibition shakeup since the introduction of the DVD created a home- entertainment windfall in the late 1. Some industry veterans are unconvinced that the business can pull it off.

Structurally, these studios and the agencies and exhibitors that orbit them are too sprawling, too slow- moving, and too entangled in a dizzying web of antiquated business practices and associations to respond effectively to the digital era.“The major studios have not been choreographed or run to be entrepreneurial,” says Amir Malin, managing principal and co- founder of Qualia Capital, and former CEO of Artisan Entertainment. It’s a system that’s been intoxicated with a ‘cover my ass’ mentality.

Simply put, it’s a defective system, and when a business paradigm is defective, very good people start doing things that are counterproductive.”There are two major problems gripping the industry. Younger audiences are becoming more interested in streamable content that is accessible on their i.

Phones or tablets. They’ll still turn up at the multiplexes to see the Avengers save the world or watch Han Solo slide behind the wheel of the Millennium Falcon, but despite a few massive blockbusters, the zeitgeist continues to shift from the big to the small screen.“I think the proof is right in front of us with what’s happening in cable and streaming services,” said Lorenzo di Bonaventura, producer of the Transformers films. Directors want to go there, because they’re able to tell interesting stories…. That’s where the chances are being taken. That’s where the action is now.”The other problem is that the financial underpinnings of the business are showing signs of strain. Nowhere is this clearer than the barriers that are springing up between Hollywood and its most reliable sources of capital. The smart money left the business years ago, partly because of Silicon Valley’s promise of fortune, but also because investors were put off by creative studio accounting that turned hits into financial losers.

Now new money — particularly that which has been pouring in from China — appears to be drying up. Chinese authorities are putting tight restrictions on foreign investment, limiting the flow of capital into the entertainment industry.

That resulted in a failed $1 billion sale of Dick Clark Productions to Dalian Wanda, and the potential collapse of another $1 billion slate- financing pact between Paramount and two Chinese players, Huahua Media and Shanghai Film Group.“They think Chinese companies are overpaying for Hollywood and they’re slowing it down,” says entertainment attorney Schuyler Moore, a partner at Stroock who has been involved in arranging slate- financing deals for the likes of Dream. Works and Warner Bros. Moore thinks that Chinese investment may be gone for good, and that other forms of venture capital will transition away from film to emerging forms of popular entertainment such as virtual reality.

The interest is not in the traditional film model,” says Moore. All investors see there is trouble.”Optimists maintain that revenues are still growing.

The domestic box office hit a record $1. Three months in, 2. Beauty and the Beast” and “Logan.” But that growth is being driven by higher ticket prices and inflation. Simply put, fewer people are going to the movies. U. S. and Canadian attendance has failed to match the 1. You’re spending more money to reach less people and to less effect,” said Adam Goodman, former Paramount president and founder of Dicotomy.

You’re opening movies only to see them burn out at the box office.”Just- released figures by the Motion Picture Assn. America reveal that attendance in 2. Gone are the days when studio chiefs were true moguls, ruling over the lots like sultans. Today, studios are a small piece of sprawling media and technology empires.

Most of the movies are made far away from Los Angeles, in cities like Atlanta or New Orleans where tax credits are the most generous. All of the studio executives who make greenlighting decisions have bosses higher up the corporate ladder, and the films they produce are becoming less and less integral to the bottom line. The Comcasts and Disneys of the world make more money from their cable or consumer product lines than from movie ticket sales. Perhaps it’s the mounting fear that an iceberg is approaching, but studios and exhibitors do seem closer to signing that grand bargain which would enable films to get early home entertainment releases for a higher price. As an enticement, distributors are willing to cut theaters in on a percentage of their digital sales.

Six of the seven biggest studios — a group that includes Fox, Paramount, Lionsgate, Sony, Warner Bros., and Universal — are having unilateral discussions with major theater chains like Regal and AMC. Currently, big theatrical releases are supposed to wait roughly 9. But studios argue that’s too long, and they want to shrink the window in which theaters have exclusive access to their films. With the DVD market fading fast, they need to find a way to prop up home- entertainment revenue. There is a belief, accepted as dogma in some studio boardrooms, that streaming services like Netflix have conditioned consumers to access content whenever and wherever they would like it.“It’s just such an obvious thing that has to happen,” says Jessica Reif Cohen, an entertainment and media analyst with Bank of America, adding that she thinks offering films earlier in the home may be attractive for people with young children.“It may be an impulse buy, or they don’t have a babysitter, or have other reasons for why somebody doesn’t go,” she says. Watch Patrik, Age 1.5 Download.

At the very least the two sides are talking. In the past, exhibitors have been hostile when studios have tinkered with release windows. They’ve long believed that if movies are made available to rent or buy within weeks of their release, then customers might steer clear of multiplexes.

Not wishing to become handmaidens to their own destruction, theater operators have warned of cannibalistic consequences, ready to man the barricades at any incursion. A plan by Universal to release 2. Tower Heist” two weeks after it premiered in theaters, for instance, was kiboshed after theater owners threatened to boycott the comedy.

Paramount waded into the issue again in 2. AMC and others to allow them to release “Paranormal Activity: The Ghost Dimension” and “Scout’s Guide to the Zombie Apocalypse” as soon as they stopped being shown on a certain number of screens. Chains like Regal refused to show the film.“A lot of the problem has to do with the unknown factor of consumer behavior,” says Eric Wold, an analyst at B. Riley & Co. “Will the consumer want to see a movie opening weekend regardless of knowing it’s only coming out on- demand a few weeks later?

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