Hollywood 101-volkow

1
Stuart W. Volkow, Copyright 2011, www.stuartvolkow.com

Hollywood 101

1

Hollywood 101

Stuart W. Volkow
Xtropia Partners
Strategy and Technology Consulting
www.stuartvolkow.com
svolkow@ucla.edu

1

My Clients:

Copyright 2011 Stuart W. Volkow, www.stuartvolkow.com

A Brief History of
Hollywood

Copyright 2009 Stuart Wayne Volkow. Xtropia Partners

“To me, the vapor of human existence is best
captured in ﬁlm; it’s a molding of all the primary
creative arts.
Mel Brooks
The Movie Business Book pg. 65


IN THE BEGINNING, THE SEVEN MAJOR STUDIOS HAD DIRECTLY FINANCED,
PRODUCED AND DISTRIBUTED THEIR OWN PRODUCT, ADDITIONALLY,
THEY CONTROLLED TALENT, DIRECTORS AND PRODUCERS.


Daryl Zanuck
Samuel Z. Arkoff
Louis B Meyer

Irving Thalberg

William Fox

Now they control the $$$


The MPAA Studios
major studios ﬁnance, produce and distribute

84.7% of total gross B.O.


The First Indie?

1919
2006

“Mini Majors”
or
“Independents”

11% B.O. Gross

Specialty, Art House, Indie


1927 1928
The Jazz First talk movie
Singer, ﬁrst The Lights of
sound movie New York


May 16, 1929
Roosevelt Hotel Hollywood CA

Attendance releases screens

1929 4.9 bln 700 4,000

2010 1.3 bln 534 35,000

In 1929 80% of the U.S. attended a movie weekly, in 2008 it was
under 6%

• 1940 Failed Consent Decree
Paramount was on trial. The studios settled
with antitrust to limit block booking

• 1948
Antitrust forced the major studios, who had
>70% of theater revenue, to divest
exhibition and end block booking.

“If a writer is talented, his talent can open the
door to directing. The director, in the end, is the
real author of the movie.
Mel Brooks
The Movie Business Book pg. 65


Script Digital Distribution DVD
Consumer Sales
Talent Agency
Consumer
Consumer
Actor Director
Re- Re- Distribution
(Theatre
Hollywood 1.0
writes writes
(Develo (Develo Release)
pment) pment)
Re-
Producer writes
(Production Re-
Company)
writes Production Consumer
Re- (Develo Engagement
writes pment) (Test Film)
Re-
(Develo Creative Marketi
writes
pment) Department Green ng
Light
Production
Production Film Complete
Studio
Division
© THE INSTITUTE FOR THE DEVELOPMENT OF ENHANCED PERCEPTUAL AWARENESS

Deconstruction:

© THE INSTITUTE

Construction:

© THE INSTITUTE

IDEA CONSUMER DIGITAL DISTRIBUTION

Hollywood 3.0
BRANDS MARKETING (COMMUNITY) FILMMAKERS

© THE INSTITUTE FOR THE DEVELOPMENT OF ENHANCED PERCEPTUAL AWARENESS

NATO
Stats

www.natoonline.org


100 million admissions per week in 1946

Movie Econ 101
Millions

Box ofﬁce 100
• 50% Exhibitor

• 30% of Producers Gross to Exhibitor 50
Distributor

• - Print and Ad Expenses Distributor 15
• - Net Points to Participants (Stars, P &A 40
Directors)
Production Budg 75

Deﬁcit $80


Trends


1. Who are the Gatekeepers?
Crowdsourcing?


Crowdsourcing?
2. Globalization is Changing Everything


Crowdsourcing?
3. The “Hollywood” and Media Power
Structure is Changing


Crowdsourcing?
4. The Internet is Becoming The Primary
Medium For Media and Entertainment
Distribution


Crowdsourcing?
Distribution
5. Digital Distribution and 3D Will Increase

Crowdsourcing?
Distribution
5. Digital Distribution and 3D Will Increase
6. “Windows” are changing with Day and

6. Multi-Platform Production and Distribution is
the economic key. 5 Screen World.



7. Now, Everyone wants Everything On-Demand




8. Advertising and Brand Tie-Ins Are Becoming
More Important to Film Marketing




8. Advertising and Brand Tie-Ins Are Becoming
More Important to Film Marketing

9. Piracy is an increasing global threat


G a t e ke e p e r s


Ta l e n t A g e n c i e s


Management Companies

Asif Satchu, Mordicai Wicyk
Media Rights Capital

Going Direct


Crowd Financing?


GLOBALIZATION


Media and Entertainment
>$1 Trillion Worldwide

• $613 Billion for USA (2005, iSuppli) total
for all Media, Entertainment and
Communications Content and Services
• $188 Billion of that is in Ad Spending
(2005)


Two thirds of the Worlds Pop. live in 15 Countries


Globalization of the Entertainment
Marketplace and Digital Distribution

11/13/2006 Copyright 2006 Stuart Wayne Volkow 36
34


• More than 60% of Hollywood B.O. Gross is
International

34


International
• The entertainment industry is growing fastest in
the Asia-Paciﬁc region, which will see a 6.8%
annual growth rate

34


International
• The entertainment industry is growing fastest in
the Asia-Paciﬁc region, which will see a 6.8%
annual growth rate
• Asia Pacific has been the second TV market after
North America for more than a decade.

34


Universal joins the $1 billion club.

Third studio to reach international
milestone in '08

Paramount International Pictures hit the mark on
June 17, and 20th Century Fox International and
Warner Bros. Pictures International joined on July
9 and July 19, respectively.
THR, 14 August 08

34

Content and Hits Still Rule Hollywood Economics

(in million $ US) Rec. Est. Rec. Gross Est. Gross Captured Release % Share
Admissions Admissions Count

United States: 769 769 $5,701 $5,701 100% 306 38.40%

International: 891 1216 $5,814 $9,154 63.50% 2910 61.6%
Total: 1661 1986 $11,516 $14,855 3216

34

In 2006, six films accounted for
nearly 30% of all the major
studios’ international grosses

11/13/2006 Copyright 2006 Stuart Wayne Volkow

Blockbusters


1. Stars are less important and less certain.



2. Talent Agencies have lost some of their power.




3. Animation has become the most profitable type
of movie.




of movie.

4. Family films are more profitable than R rated
films




of movie.

4. Family films are more profitable than R rated
films

5. The market is saturated with over 5,000 films
made / year.

“Tentpole” Hits Are Still Hollywood’s Engine

Domestic:-----$144,130,063---23.6%
+ Foreign:------$465,711,574---76.4%
2008

Domestic:
Domestic:---$102,491,776---25.6%
$533,345,358-----53.2%
+ Foreign:----$298,636,863------74.4%
+ Foreign:
= Worldwide: $401,128,639
$468,576,467-----46.8%
2008
2009

34

Domestic:--- $760,507,625----27.3%
+ Foreign:-----$2,021,767,547---- 72.7%
=========================
Worldwide: $2,782,275,172

Domestic Summary
Opening Weekend:
$77,025,481
(#1 rank, 3,452 theaters, $22,313 average)
% of Total Gross: 10.3%
> View All 34 Weekends
Widest Release: 3,461 theaters
Close Date: August 12, 2010
In Release: 238 days / 34 weeks
Total Lifetime Grosses
Domestic: $415,004,880-----39.0%
+ Foreign:-------$648,167,031------61.0%
==========================
Worldwide:------$1,063,171,911

Domestic Summary
Opening Weekend:
$110,307,189
(#1 rank, 4,028 theaters, $27,385 average)
Close Date: December 2, 2010
In Release: 168 days / 24 weeks

Domestic: $238,433,768---23.1%
+ Foreign: $794,600,000-------76.9%
=========================
Worldwide: $1,033,033,768

Opening Weekend:
$90,151,958
(#1 rank, 4,155 theaters, $21,697 average)% of Total Gross:
37.8%
In Release: 73 days / 10.4 weeks

Total Lifetime Grosses
Domestic:--$338,838,869-----34.1%
+ Foreign:---$655,876,900--------65.9%
========================
= Worldwide: ----$994,715,769

Domestic Summary
Opening Weekend:
$97,852,865 (#1 rank, 4,088 theaters, $23,937 average)
> View All 5 Weekends
In Release: 34 days / 4.9 weeks

Male Female

Younger

4 Quadrant Movies

Older

Digital Cinema

Rick McCallum produced the last three Star Wars movies.
"I traveled to 60 cities across America,"
McCallum says. "I went to small towns, I went
to big towns. I went to where ever the ﬁlms
were playing. And I was so dismayed, I was so
appalled. I couldn't believe how truly bad it
was."
March 21, 2007, NPR

Stuart W. Volkow

Text

Christie Digital
2048x1080

•SONY CRX

SONY SXRD 4 K Projector- Fantastic!!

Digital Cinema Server with a Digital Cinema
Distribution Master. 180 GB for “CASANOVA”

Cinema Servers

JUST HIT PLAY

Christie 2K Digital Projection System
At The Entertainment Technology Center, Hollywood CA.

Virtual Print Fee Financing

Phase 2 deployment plan for up to
10,000 Digital Cinema Systems
backed by major studios.


3D Digital Cinema

 CHICKEN LITTLE
 MEET THE ROBINSONS
 BEOWULF
 JOURNEY TO THE CENTER OF
THE EARTH
 U2
 HANNAH MONTANA & MILEY
CYRUS
Concerts and
Sports Events  FLY ME TO THE MOON
 AVATAR
 MONSTERS VS ALIENS
 9 3D movies planned from Pixar/
Stuart W. Volkow

New Uses for Theaters

Stuart W. Volkow

The Media Conglomerates


From Fortune Magazines 25 most Powerful People
In Business:
Steve Jobs, Apple
Rupert Murdoch, News Corp
Bob Iger, Disney
Jeff Imelt, GE
Schmidt, Page, Brin; Google


$13.4B

NASDAQ:CMSCA
$30.9 B / 24 mm subs

Viacom
(NYSE:VIA)
Disney ABC
General Electric
$14B
NYSE:GE

CBS Corp.
Time Warner (NYSE:CBS)
(TWX) $28.6 B

News Corp
(NYSE:NWS)

Comcast (NASDAQ:CMSCA) $30.9 B

•CATV •Other Interests:
•24 million subs •MGM (with Sony)
•13 million Internet subs •iN Demand
•4.6 million Phone subs •FEARnet
•250 Digital Channels •Music Choice
•10,000 VOD programs
•Content
•VERSUS
•Bull Riding!?
•G4
•E!
•Golf Channel
•Style

Stuart W. Volkow

Comcast NBC-Uni

•Universal Studio Facility: production,
distribution, facilities, finance
•Universal Studios
•NBC Television Network
•USA Network
•CNBC
•Sci Fi Channel With NewsCorp and $100
•MSNBC million for 10% from $21
• Bravo billion sized Providence
Equity Partners

Stuart W. Volkow

Time Warner (TWX)
•Adelphia •Classic Film and
• HBO Animation Library
Commuinication
• Cinemax •Warner Music Group
•Cartoon Network
• TBS
•Court TV •Warner-Elektra-Atlantic
• CNN •Turner Classic (record distributors/
• WB - The CW Movies marketers)
• New Line •Boomerang •Warner/Chappel
•American Online (publishing and music
• CNN
rights holders)
•Time Inc. – 64 magazine
titles
•Time-Warner Trade
Publishing Inc.
Stuart W. Volkow
•Warner Books

Time Warner
Interactive Units
• AOL.com (announced it is spinning
it out)
• AOL Moviefone Turner
• Netscape
• Bebo.com
• $850 million for 3rd largest social
net
• allow AOL to offer advertisers even greater reach

Stuart W. Volkow

Disney ABC
Disney Studio Facility: production,
distribution, facilities, finance
Walt Disney World
Disney Studios Resort
Walt Disney Television Magic Kingdom
Touchstone Epcot
ABC Family Channel Disney’s Animal
Fox Kids Europe, Latin America
ABC TV Network Kingdom
ABC Radio Network Disneyland Anaheim
Buena Vista Television Tokyo Disneyland
Miramax Film Corp. Resort
Hearst Communications
Disneyland Paris
ESPN
ESPN Classic Disney Cruise Line
ESPNEWS Disney Stores
Disney Channel
E! Entertainment Television (part
owned)
A&E Television Networks (part owned)
Toon Disney
SoapNet

Stuart W. Volkow

News Corp (NYSE:NWS) $28.6 B
•Fox Filmed Ent.
•34 pics in 07, 711 Home Ent. Titles
•Searchlight, Fox Atomic, Animation
•Twentieth Century Fox TV (TCFTV)
•Fox TV: 35 Stations, 9 DMAs have 2, 25 FOX affiliates
•FOX, 213 Affiliates
•FX, FUEL, SPEED, Fox College Sports, Fox Movie
Channel
•STAR: International production in 53 Asian countrie, 10
languages.
•DBS, SKY
•Publishing
•145 daily newspapers
•Dow Jones
Stuart W. Volkow

News Corp: Fox Interactive
•2005 acquisitions:
•$580 mln for Intermix Media, aka MYSPACE.
•Sold MySpace for $30 mln
•$650 million for IGN Entertainment, Inc, a
leading community based Internet media and
services company for video games and other
forms of digital entertainment.
•Scout Media, Inc., the parent company of
Scout.com, the country’s number one
independent online sports network, and Scout
Publishing, producer of 47 of the most widely
read local sports magazines in the U
( www.scout.com )

WebMD/The Health Network

Stuart W. Volkow

Chris DeWolfe
Tom Anderson
Rupert Murdoch

Copyright 2007 Stuart Wayne Volkow. Xtropia Partners 72

Viacom (NYSE:VIA) $13.4B
Sumner Redstone, Exec Chairman of the Board

 Film Studios SPIKE
Paramount TV Land
MTV Films Noggin
Dreamworks Nickelodeon
Nickelodeon TMC
Films LOGO
 The CW The N
 UPN FLIX
 MTV Networks Sundance
MTV 2 Comedy
VH1 Central
Stuart W. Volkow

Viacom
Interactive Units
Rhapsody
JV between MTV and REAL Networks
SPIKE.com (Atom Films)
Virtual Worlds
Xfire.com (7 million HHs)
Shockwave.com

Stuart W. Volkow

$14B CBS Corp.(NYSE:CBS)
Sumner Redstone, Founder, CEO

Paramount Showtime
Dreamworks TV Land
CBS Television Noggin
Stations (29) Nickelodeon
CBS TV Distribution TMC
FLIX
CBS Paramount TV
Sundance
The CW (with TWX) Comedy Central
CBS Outdoor Spike
CBS Radio (140
stations)
Stuart W. Volkow

CBS Interactive Units

• CBS Interactive
• last.fm

 NEW YORK (AP)--Television stations owned by CBS Corp.
(CBS) are launching an online advertising initiative with local
bloggers and social media sites, the company announced
Monday.
 March 12 (Bloomberg) -- CBS Corp.'s Webcast of the U.S.
national college basketball tournament will produce as much
as $25 million in ad sales, more than double last year's tally.
Stuart W. Volkow

Sony

• Sony-BMG Music (with Bertelman)
• Sony Pictures Entertainment • Sony Electronics
• Columbia Pictures • Sony Broadcast Media Co. Son
• Sony Pictures Classic Pictures Home Entertainment
• Screen Gems • Sony Pictures Television
• TriStar Pictures • Sony Pictures Television
• Sony Pictures Releasing International
• Part owner of MGM Studios (along with
Comcast), which is part owner of United
Artists (Tom Cruise and Paula Wagner).

• American Movie Channel - part owned
• Bravo - part owned
• Independent Film Channel - part owned
• WE: Women’s Entertainment - part owned
Stuart W. Volkow

DIGITAL PRODUCTION


AD V ANTAG E S DISA D V A NTAGES/ Vs Fi l m
Equipment may be initially Obscolescence, longevity of
less expensive for lower equipment not as good as
form a t s 35mm/16mm
Lower cost of shootin g Formats and software
glitches may create time
consuming and therefore
expensive problem s
Variety of formats for every Incompatibility of formats Vs
need universality of 35m m
Easier editorial work flow, no May have problems with
telecine needed, just digitize, digital transcoding and time
or transco d e code if not careful
No Telecine needed, Massive storage n e e d e d
therefore eliminates a large
expense and time proble m
Small, lighter cam e r a s May not be as sensitive or as
reliable as smaller 16mm
cameras such as Bolex, and
Arrifle x
Digital formats offer flexibility Newer emulsions cancel this
under variety of lighting advantage
conditions
What you see is what you get You never know exactly what
monitoring you get until film is
processed. New laptop tools
get previews clos e r .
Shoot longer, cheaper Mass storage devices needed
No changing of reels after a and they can crash
few min u t e s
No optical work flow, saves
time and mo n e y
Color correction all digital Smaller colorsp a c e
saves time and money
Copyright 2009 No re-mastering for HD, SD,
Stuart Wayne Volkow. Xtropia Partners Digital Master Format still not
DVD, 35 standard

Digital Cinema : Acquisition

RED

34

HD Videography
ENG, EFP, Movies, Games, VLOGs....

Panasonic P2
Sony HD CAM SR
Sony XD Cam

DSLRs!

Shane Hurlbut, ASC, Act of Valor

Digital Post Production, Digital Intermediate,
Automated Television Studios

34

Digital Intermediate Equipment
and Workﬂow

Digital Post Production, Digital Intermediate,
Automated Television Studios

34

Changing Distribution


Collapsing Release Windows

“If this thing happens you know the
majority of your theaters are closing,
its going to crush you guys.”


Collapsing Release Windows

“If this thing happens you know the
majority of your theaters are closing,
its going to crush you guys.”

“When I sit down next to you at in a
movie theater we become part of a
collective soul, that’s the magic in the
movies.”


M. Night Shyamalan
at NATO East, 2005

 Mark Cuban has pioneered this idea
www.bubblethefilm.com/about.html


Release “Windows”


Home entertainment is (was?) over 50% of
the studios bottom line


5 Screen Multi-Platform World

92


VOD


C o m c a s t VOD:

368 million
total views on its VOD platform in July,
up 11% from last year.

Comcast spokeswoman Jennifer Khoury


Long Tail Economics Overturns
Pareto’s Law Commonly Known As
The 80/20 Rule

Copyright 2006 Stuart Wayne Volkow 97 11/13/2006

The 80/20 Rule
• “Hits” to the left of the curve are fewer
as…


The 80/20 Rule
as…
• …the aggregate of all sales down the tail
rises as the tail gets longer and more
efficiently distributed.


The 80/20 Rule
as…
• …the aggregate of all sales down the tail
rises as the tail gets longer and more
efficiently distributed.
• As the tail gets longer, filtering, browsing,
searching and discovery become
progressively more important.


The Long Tail
On-Demand Business Models


The Long Tail


TODAY DIGITAL DISTRIBUTION HAS TAKEN A
COMPLETELY DIFFERENT COURSE WITH THE
POPULARITY OF INTERNET SITES AND VIDEO ON
DEMAND


Content with Distribution


VOD over the Internet


DVD Falling
• Wal-Mart Scales Back DVD Displays
– Wal-Mart no longer sees DVDs and Blu-ray discs as trafﬁc drivers," J.P. Morgan
analyst Imran Khan said.

• The Digital Entertainment Group estimates that overall
U.S. DVD retail sales fell 13.5% to $5.4 billion
during the ﬁrst half of 2009. At the same time, DVD
rentals rose by 8.3% to $3.4 billion. Digital sales and
rentals from services like Amazon.com Inc. and Apple
Inc.'s iTunes rose 21% to $968 million.


Redbox easy $1 a night DVD rentals.

22,000 redboxes
in 15,000
locations

NO TO RED BOX:

FOX, UNIVERSAL, WB


HDNET
“Quality counts more
than unlimited content.”
• “Consumers will love HD
and demand it once they get their sets.”
– 29/29 Productions
– Magnolia Home Entertainment
– Landmark Theaters
• Sony 4k Digital

7/15/06 106
Copyright Stuart W. Volkow 2006

New Release Windows:
Combat Piracy
Exploit Advertising

Mark Cuban has pioneered this idea
www.bubblethefilm.com/about.html

03/30/2007
Copyright Stuart W. Volkow 2006

C o l l ap s i n g DV D W i n d ow

Text

Copyright 2009 Stuart Wayne Volkow. Xtropia Partners 108

Digital Direct Distro
As of 2007 iTunes sold > 50 TV eps at $1.99
1.3 Mln Features $9.99-$14.99


Br and Integr ation and
Tie-Ins

T r a n s M e d i a Wo r l d s


Movies=Traditional Product Placement

111

M&Ms Spot

M & Ms Game

Decepticon LG

BK Spot

115

Piracy
In August 2008, the U.S. Department of
Justice ﬁled charges against 11 individuals
who allegedly obtained identity information
over wireless networks from nine major U.S.
retailers, resulting in the theft and sale of
more than 40 million credit and debit card
numbers.

The Costs of Piracy (MPAA)
• In 2005, the worldwide motion picture industry,
including foreign producers, distributors, theaters,
video stores, and pay-per-view operators, lost
$18.2 billion as a result of piracy
– $11.1 billion loss due to hard goods piracy
– $7.1 billion due to Internet piracy
– The major US motion picture studios lost $6.1 billion

• Losses to US Economy
– 141,030 lost jobs
– $5.5 million in lost earning to US workers
– $837 million in lost tax revenues
*SOURCES: L.E.K., Stephen E. Siwek (“The True Cost of Motion Picture
Piracy to the U.S. Economy” - Sept. 2006)

Pirates are resourceful at satisfying
consumer demand
5 Antonio 5 Leonardo DiCaprio 6 Wesley Snipes
Banderas movies movies movies

Hollywood 101-volkow

Recommended

Recommended

More Related Content

Similar to Hollywood 101-volkow

Similar to Hollywood 101-volkow (20)

More from UCSD Cntr For Astrophysics & Space Science; The Clarke Cntr For Human Imagination

More from UCSD Cntr For Astrophysics & Space Science; The Clarke Cntr For Human Imagination (9)

Recently uploaded

Recently uploaded (20)

Hollywood 101-volkow

Editor's Notes