Welcome to New Hollywood, where you have to advertise
There are a lot of differences in the Hollywood system as it is now compared to how it was 60 or 70 years ago. There are a lot of new models for production and distribution, all of which are things the studios need to deal with.
But there’s one thing that I hadn’t thought of before. Back when the studios also controlled the theaters, and movie going was just what people did on the weekends, from the matinees to the late shows, studios didn’t have to advertise. Every movie made money because there wasn’t the cost of marketing a movie. Sure there were trailers in the theaters to promote what was coming up next weekend but that was about it.
This system has been imploding for two reasons. First, it depends on mobilizing a mass audience through mass marketing, and that’s a daunting task these days. It’s extremely hard, and extremely costly to reach an audience fragmented by the countless options offered by cable networks, the Web, video games, and home video. That’s particularly true since with each film, the studios “have to create a brand from nothing, and they don’t have a lot of time to do it,” says Nicholas Donatiello of Odyssey, a consultant to media and entertainment companies. (No wonder Hollywood prefers to make sequels, or buy the rights to established brands, such as Harry Potter, or fork over as much as 30% of the gross to stars such as Tom Cruise, who are their own brands.)
Second, nearly every movie loses money on its theatrical run these days. Studios typically pay as much to advertise a movie’s cinematic release as they spent making the movie to begin with. They’re stuck betting that much because a big-screen opening is essentially an expensive form of promotion–not only to the consumers who’ll buy or rent the DVD but also to “the industry.” The opening helps determine how much the studios can get for licensing the movie for pay TV, cable, and overseas. The theatrical release has become a loss leader to promote the studios’ real moneymaker, the DVD, which in turn often serves as a loss leader for Wal-Mart to draw in shoppers.
That one phrase I bolded above is, I think, the money quote of the piece. With each film the studio has to create a brand from nothing. That is why it’s so unattractive for studios to make new, original movies. At least with adaptations, remakes and sequels there’s some sort of starting ground for them.
But the difficulty of mobilzing a mass audience should not be overlooked. Ironically that’s why niche films are doing so well these days. They have a small, concentrated appeal that pays off with loyalty and therefore box office business.
Put those two together and you have quite the conundrum for modern movie studios.
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movie marketing
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