Distribution : The Hollywood Reshuffle - VOD Is In Flux by Christopher Cooksey

Hey Christopher, this is Karen from the Stage 32 team. I just wanted to let you know I moved your post from Anything Goes to Distribution (since you're talking about VOD), as it fits much better there. Let me know if you have any questions, and all the best to you!

Christopher Cooksey I read your blog and have the following comments on your four well-presented points.

(1) Profitability on the Hollywood model - actually as a result of monopolistic consolidation in the industry (there are at the top, only 4 players left who among them own literally all streaming services outside of small independent and emerging platforms), it is more profitable than ever; Studio budgets have gone sky-high across the board. I mean sky high and major studios simply do not make content they are not already certain of a profit on. As far as the "Hollywood" model I am not sure what you mean. If you are referring to theatrical, that has been in decline for 30+ years and Hollywood would love to dump it if it could, but can't yet. If you are referring to streaming and subscription paradigms, those are very new, not the Hollywood model, and are unsustainable in even the medium run. Which is why the major studios are all developing their own platforms on which they charge for premium content.

(2) Audience size - in truth, the market is expanding and at an exponential rate. There is, IMO, an audience for literally every piece of work out there, the only issue being to reach the specific audience. There is not enough content on the planet and not enough producers on the planet to satisfy demand. The profitability issue, where it exists, is a temporary issue for mainstream as it rationalizes away from subscriptions, which have only been around long enough to prove uneconomical.

(3) Studios are too scared to do what is needed - au contraire, they now own everything and are confidently changing paradigms to consolidate the economic strength of the MPA cartel (of which all six members are actually owned by Disney, Comcast, Paramount and of course the unwanted ginger Netflix which is a public company but owned in large part by AT&T and Comcast). They are international mega-corporations and act as such, meaning among other things that they don't compete for accolades over their content, but for control over market share. That implies a host of more or less abusive business practices, which they increasingly engage in since the 1949 antitrust consent order was set aside only a year or so ago.

(4) There is an opportunity to build something outside of Hollywood. - I absolutely agree with pretty much everything you say on this point. It is one of the two primary mandates of the International Independent Producers Guild - https://independentproducersguild.org with what we call a "Direct To Audience" model. The tools exist to go around major studios and controlled distribution pipelines, and literally rip the market out from under them. There is nothing they can do, really. However, as you point out, independent film makers are in a fantasy world. Those who don't break out of it will stay there permanently. The IIPG seeks to professionalize those in the independent industry who have the guts to actually commit to creating their own path, and the brains to realize that those who do are already the industry. If you agree, you should join the dialog at the IIPG as a general member of full member if you qualify, and help change it to the advantage of independent producers.

Shadow Dragu-Mihai, Esq., Ipg Interesting thoughts, although I can't say I agree entirely. Yes, mega-corporations ultimately compete for market share but the people they have in charge at the studio level are generally setting up a house of cards that will diminish the value of the market. Mainly, I believe this because yes, they are very new, and they've already incurred massive amounts of debt that they have to keep producing content to stay ahead of. Disney went on a spending spree, overpaying for movie catalogs and franchises that don't have the value they once did, and most of their new content is created at a loss, with the smaller number of hits making up the difference. I'm not saying that Hollywood will collapse from this but they've lost their place as the central hub of entertainment in the world and they're not going to get it back. The quality and value of their new content is for the most part pretty weak and will not retain the cultural significance that has made past franchises retain their value. I could be wrong, as I said in my post, but this is my prediction. The audience is unsatisfied, which leaves a vacuum that could siphon away the bread and butter from those who, right now, have the most holdings in the market. Not only that but a strong newcomer could revitalize it in ways that haven't yet been thought of. As far as your Indie Producer's Guild goes, I'll check into it but I'm going to be honest, I've had enough experiences with unions as roadblocks to what I wanted to accomplish to have convinced me that they're more harm than help to smaller productions. That's another conversation which I spent some time at length addressing, here: https://youtu.be/1-DudKk7mqA However, I'm always open to new information.

IIPG is not a union, it's a true guild. A union is a collective bargaining organization for labor (regardless that it may, like SAG-Aftra and the PGA, use the term "guild"). A true guild is a professional organization devoted to improving business conditions for its members and the industry it works in. The WGA and SAG-Aftra are actually unions. The DGA is both a union and a guild, depending on where you are involved (a guild for directors, a union for everyone else), the PGA is a nothing, having intended on incorporation to become a collective bargaining organization for producers, but failed when the courts observed that producers are management, and done nothing of use to producers since. IIPG is here to change the landscape of markets and to raise the level of professionalism and skills among independent film community. To be blunt, you spoke of fantasy in the indie space - it's fantasy to think it's going to change without the development & direction of professionals such as the IIPG is fostering.

As far as the economics - Netflix will certainly fail at some point, but likely end up being bailed out by AT&T, who has eyes on the catalog of rights. Yes, major studios are spending unbelievable amounts of money - I am on a Disney show or an NBCUni show literally every week and you don't know the half of it. But no, they are not going to go down, they literally have more money and more tax advantages than anyone cares to try to remember. Audiences are not only not going away, the overall numbers are going up and the "alternative" venues are owned by the majors one way or another. "Monopolistic competition" is the old label.

(and in addition - major studios have started to inch backwards to the old "exclusive talent" model - to sequester and keep talent in their own stable. So, as an independent, you may suddenly find you need Fox on you production as a partner if you want to use one of "their" talent - another way of controlling access to competition.

Shadow Dragu-Mihai, Esq., Ipg Okay, so a guild is still going to require me to work within their parameters, which means I have to check with them if I want to make a move, which in turn means that I'm not free to work outside of them. That's exactly what I'm trying to get away from. If the concern is safety or quality of work environment, I'm perfectly capable of determining those things and coming to agreements with my own crew and talent, regarding them. It doesn't sound like it's really working in the interests of independence, just being made to conform to a conglomerate that wants to eventually form into a competing clone of Hollywood.

As far as needing other studios' talents, with all due respect, I'm not sure why I'm supposed to care about that. I'm firmly working in a grassroots environment, making small productions to sell directly to audiences who are slowly breaking away from seeking their entertainment from a single source. I'll build my own IP that if done well accrue value over time, just like anyone else can.

AT&T may or may not be interested in Netflix IP in the future when it becomes available or they may figure out that most of the properties are not worth as much as thought, just like Disney did with its Fox purchase. A lot of franchises that were once gold turned to dust in their hands. Let that happen enough times and they'll eventually learn or go bankrupt. Right now, the reshuffle suggests they know they're in trouble. The money you're seeing thrown around is another indicator but inflation is a big part of those big numbers and if they don't see the returns eventually the house of cards will collapse.

I'm not trying to be rude, I've just seen enough in my years to be skeptical. I grew up in Hollywood, dealt with their kind of thinking, lived through the recession, and don't think they learned anything. You can only kick the can so far down the road before you hit a dead end.

Christopher Cooksey Well truly, anyone who is not trying to be rude would expend the few seconds it might take to word their response so that it doesn't come off as rude.

But honestly you don't sound rude; you sound just a bit misinformed and more than a bit presumptuous, neither of which helps the discussion. And I am not being rude, I am being descriptive. Moving on...

AT&T gave Netflix over $2B - back when Netflix was only $8B in debt. It wasn't actually a gift, of course, so you can guess what AT&T (and/or Comcast) wants. It came at the time NetFlix became the 6th member of the MPA cartel, which also coincided with NetFlix cutting off all indie content.. resulting in the the bankruptcy of one-trick pony aggregators Distribber, Tag and others.

You should care about talent being locked into studios, because as you move into projects where budgets are reasonable, you're going to want access to talent that actually has some market appeal. $10k budgets, for instance, aren't risking much, and are unlikely to make much back. But like it or not, as a producer you are an employer at law and you probably can't afford to pay minimum wage at that level. It's not trivial to get caught in a situation where talent or crew realize that if they haven't been paid minimum wage for any reason that they have legal and inexpensive recourse. That usually doesn't happen until they see your film somewhere they think it is making money.

For the same reason, you're going to have to access SAG-Aftra talent at some point whether you like it or not, though you can usually avoid the other unions until you get to the Tier 1 range. So you're going to have to suck it up and toe the line with one or more of the unions at some point. Trying to get around their rules on a union show is really not recommended. And they have a very long memory.

The "democratization of the film industry" is a propaganda phrase. Film making, whether it is independent or major, is big, complicated, tough, hard nosed business. Amateurs are not equipped to be successful. Amateurs simply-won't-make-it. They aren't supposed to make it. They are supposed to fuel the dream machine so that professionals at any level can make their living, and so that markets keep anticipating the next thing that professionals are doing.

So every film maker has to decide, if she wants to be an amateur or a professional. A lot follows from defining yourself as a professional. The default, if one doesn't define themselves as a professional, is amateur, and amateurs will simply not make it in the industry, as I said.

Whatever other guilds may or may not be about, whether you are a disgruntled former union member or someone who just feels oppressed at very the idea unions exist - your presumption about what the IIPG is about (if you were referring to that in your comment) is just that - presumption. The IIPG exists not to control it's members, but to empower those independent film makers who insist on making their living in the industry - in other words, those who already are or who aspire to be professional film makers. It does not exist to help amateurs or even encourage them. If people just want to be left alone to make shorts with their friends and whine about mainstream... that's all they will ever do and who cares?

The IIPG board and the growing membership believe in the importance of freedom of speech, in diverse and original expression, and in ethical and sound business practices. Those all are required for a strong industry, and they are hard to come by in the independent space. We select and mentor those we judge to be bright and talented and capable enough to make it. We're not about telling people what to do or building an alternative to the mega-corporation studio system. But if we need to do that, and if we need to force standards on unethical, unprofessional and abusive players in the industry, we will do that. We intend to make the industry better and more predictable for independent creators. Period. We have already begun and we are already getting respect, support and heat for it. Which means, of course, that what we are doing is relevant.

Inflation isn't driving bigger budgets. They're just spending more money. 3-4-5-6 camera crews on sets which used to be single camera; shooting ratios of 50:1 is not unheard of and actually becoming common. Especially on shoots where less experienced studio producing teams, in their combined narcissism and inexperience, insist on having their way on set. Production design budgets on otherwise simple sit-coms could fund several indie features. Background cast of a hundred or more on a regular non-premium television episode. And since September 2021, the additional cost of Wuhan Virus procedures which easily go to tens of thousands of dollars per week on even small productions. Now that "mandates" are mostly gone... major studio/union production is maintaining those procedures with no end in sight. Do you doubt that's to ensure independent producers can't access union cast and crew until majors have locked everything down tight?

One of my recent budgets was just under $5m and the covid procedures alone were near $200k. Problem is, if you use even one union actor, even your $250k budget is likely going to include at least $20K just for covid. Indies can't afford that.

Streaming numbers are private numbers. Do you really, really buy into the idea that corporations with decades of experience in production and controlling an industry are losing money? Have you never heard the term "Hollywood accounting?" Have you ever tried to familiarize yourself with different corporate structures, or for that matter, tax codes relevant to production? The majors are better at that stuff than Bruce Lee was at Kung Fu. Admittedly, Netflix is losing money, and is expected to go under sooner or later, and Hulu has always been in the red. But then Netflix and Hulu are Hollywood the same way McDonalds is cuisine. There are other players involved in those two who will take over the structures when they go down. Do you imagine that's not already planned for?

Do you really, really accept the idea that Disney buys Fox without knowing the true value of Fox's assets, including catalog? Think about that one.

If you think the major studios are inept, incapable and simple minded, as you seem to think, then it should be very easy for you (and independent producers in general) to overtake them. They're not, though. They are smart, rich, powerful, ruthless and more than willing to play dirty all around. They are systematically shutting off every avenue of income you might have as an independent producer (yes you), and they are being helped by minor wannabe players who just can't wait to be let in.

That has to be stopped. I think at least, we can agree on that.