Film Industry Shifting From Institutions to Entrepreneur Mentality

The Film Industry is morphing so drastically day-by-day.  I believe that the major institutions of society – corporations, state governments, etc.,  – are far less responsive to immediate market conditions.  Market conditions can be stimuli on technology, customer base (whether citizens dealing with bureaucrats in government or bureaucrats at the local Time Warner cable company).  An article on urban planning suggests that the Nation-State is so antiquated that power both financial and political will devolve to the more practical and responsive City entity.

What does this have to do with the film industry?  The paradigm shift is palpable on many levels.  Over the last decade, the US military saw that their units required a response to the Taliban/ISIS small cell SOP.   Major corporations don’t seem to innovate quickly unless they have a fearless figurehead leader like Jeff Bezos, Steve Jobs, Bill Gates or Mark Zuckberg.  These are personality driven companies.    So the startup has an edge responding to market conditions and seeking opportunities.

Since major technical innovations (Netflix to cameras) create the market conditions, the digital entrepreneur-filmmaker hyphenate seeks the quick opening for opportunity.

Paramount Is No Longer Paramount

Paramount Pictures was once a behemoth on the film industry front.  No longer.  It’s been last among studios for five years.  The top jobs recently opened up.  One candidate, Michael De Luca, appears to have turned down the job and will stay with Universal Studios.   He has his own deal at Universal and, more importantly, running the daily operations grind at a studio has a focus on feature films.  Features are, in many ways, declining.  He said in an earlier interview that the producer no longer (and hasn’t for a while) had that divide between features and TV.  But nowadays, a producer with flexibility can pursue “mini-series, features, TV, streaming” and other options.  Some producers also work on plays and Broadway shows.

You don’t get that flexibility at the studio focus-only-on-features level.  No surprise that De Luca – who worked his way up from pizza delivery guy to the top production guy at New Line Cinema and then worked at Sony – would rather opt for flexibility.  His family also lives in Houston where he commutes to on the weekends.  Better to have flexibility on the weekends for family (not an option for the Paramount job) for a balanced life.  Again, a collision between the Old Paradigm (insitutionts) and the New Paradigm (startups).

Other examples are the Rhythm and Hues bankruptcy highglighted in this article by  “Low margins, the use of digital moviemaking and cheap labor in foreign countries were all factored in to the downfall of Rhythm & Hues, which sold itself for $17.8 million at auction as creditors continued to circle the bankrupt estate.”  The article also discusses that the company was mishandled.  And there’s a documentary called “Life After Pi” which can watch on YouTube.

Paramount Has No Yuan To Count On

Literally, Paramount can’t count the Yuan from its Chinese partners in its coffers.  Chinese investments either seem to come from very close relationships or its become the butt of a lot of Hollywood jokes.  The deal dynamics can be different.  I’ve heard numerous people tell me that “in America, the deal is signed and done while in Asia (China), once you sign the deal, then you start negotiating.”

It was a $1 billion, three-year deal from two China companies that was supposed to pump money in the Paramount Pictures coffers. The pair at the center of that deal are Huahua Media and Shanghai Film Group, which has been in business with not only Paramount but producers around Hollywood. As reports fly about the lack of money coming into Paramount so far from the deal, the question is what is actually going on?

The sweeping riches from a Chinese connection for filmmaking seems more illusory in many ways.  The big players like Paramount in Hollywood are dealing with recent Chinese communist government currency controls.   Chinese officials are amongst the biggest exporters of wealth, fleeing turmoil in the Chinese economy on many levels.

Paradigm Shift Happening Right Now

The nimble production model in New Media is the key.  Flexibility with crew, payments and the lower threshold for profitability – to make another season and to create more jobs.  The digital entrpreneur-filmmaker will navigate these areas well.  Filmmakers are usually survivalists, working hard non-stop, keeping the house nut (cost of operations) low and figuring out the guerilla methods (there’s that Army analogy again) to fight the difficulties of production.  They are ready for the changes that are inevitable.