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The Hollywood Bloodbath of ’09

axe-14fIt’s been a rough year for most industries, and Hollywood has not been immune. Despite a small increase in box office take, which only accounts for about a quarter of film revenue, most studios have taken a big hit this year and one (MGM) is on the edge of bankruptcy. Consequently, the blood has run thick in the halls of Hollwood offices, with studio execs from Disney, MGM, Paramount and Universal getting the axe in recent months.

The Times Online recently ran an article profiling Donna Langley, the new co-chairman of Universal Pictures. Besides extensively discussing Langley and her daunting new assignment, the article contained some interesting commentary from Edward Jay Epstein, author of The Big Picture: the New Logic of Money and Power in Hollywood.

According to Epstein, there are many more studio bigwigs who should be fingering their necks uncomfortably as they sit in their corner offices:

“The studios are firing the heads and saying everything is going to be all right. But the problems are so enormous they can’t be solved even by making better movies. We are going to see many more studio executives lose their jobs in the coming months.
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Some of the “enormous problems” that Epstein is talking about are the lack of funds, ever-increasing film budgets and drying-up credit that studios are facing. Plummeting DVD sales, are of course mentioned as contributing to the studios’ woes.

“The money that rushed in from 2000 to 2007 in DVD sales papered over cracks in the business, but it was a temporary phenomenon,” said Epstein.

The article cites consumer exhaustion with the format, quality television alternatives and a certain $1 per night kiosk operator as culprits in the downfall of DVDs. Epstein was also bearish on studios’ hopes that digital delivery will help stanch the dollars they are bleeding. Regarding downloads, he said Hollywood may be swapping “analog dollars for digital pennies”.
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When will it all end, Insiders? Can rolling studio heads’ heads, fresh blood and new ideas turn around the fortunes of the once-mighty titans of Hollywood?

[via Times Online]

31 Responses to “The Hollywood Bloodbath of ’09”

  1. Visitor [Join Now]
    Lesa [visitor]

    They are cutting in the wrong place! Cut the actors pay and film budgets! Why should Hollywood continue to get richer and richer while the rest of us, who budget to get a $1 rental, get poorer and poorer. Why isn’t all of Hollywood feeling the economic crunch!?

  2. Visitor [Join Now]
    Lesa [visitor]

    Oh, and if they’d actually put out some movies worth owning people might buy. Most movies are good to see maybe once. AND they need to get with the program on the download option! People want their audio/video easy as digital downloads now. Hell, that’s less overhead for the movie companies, too.

  3. Visitor [Join Now]
    movierazy [visitor]

    As usual, they are scratching and clawing all the way to the bottom instead of embracing the new paradigm and technology.

    Change or die. It’s pretty simple.

    Look at Hulu, they started with nothing and now they have a lot of revenue, good connections in the industry and big advertisers paying for time. All that in a down economy. That’s how you embrace the new paradigm.

    And these high paid studio executives went to business school. What a waste. Why do the boards of these corporations, and the stockholders think these idiots know how to run anything?

    On top of that they have Redbox technology staring them in the face and instead of thinking “what can we do with this to make big bucks?” they fight them and try to put them out of business. Retards!

  4. Visitor [Join Now]
    moviecrazy [visitor]
    I work for VBG. To find out why this is important, click here.

    It sounds to me like redbox has taken it’s toll on the studios.

  5. Visitor [Join Now]
    Joey [visitor]
    I work for VBG. To find out why this is important, click here.

    Once again the reason for this…………………….

    For one, the increase in revenue from disc rentals doesn’t make up for a huge decrease in the higher-margin sales. Indeed, despite the fact that the DVD rental market spiked 6 percent in the first half of this year, the overall home-entertainment market declined 3.9 percent to $9.7 million, according to Digital Entertainment Group.

    The reason? DVD sales, which command the lion’s share of growth, declined 16 percent to $5 billion.

    For their part, studio officials have blamed low-priced rental services — notably kiosk operator Redbox — for undermining the once buoyant DVD sell-through business. Studios including Fox and Universal have argued that not only are their rental prices too low – $1 a unit in the case of Redbox – but they’re flooding the market with used discs, exerting significant downward price pressure on DVD sales.

    • Member [Join Now]

      The studios make the same amount of money on the sale of the dvd if it is sold to redbox or blockbuster. People are just buying less dvds now and renting more because of the economic downturn and a change in buying habits. The movie industry puts out way too many movies in a given year thus watering down the market. People mostly rent because they like movies i.e. want to watch a lot of movies but do not have a bazillon dollars to buy every dvd at 20.00 a pop. If the studios concentrated on making fewer movies, but better ones people would most likely buy their movies instead of just renting them.

      • Member [Join Now]
        Joey [joey-2]
        I work for VBG. To find out why this is important, click here.

        “The studios make the same amount of money on the sale of the dvd if it is sold to redbox or blockbuster.” WRONG,WRONG,WRONG! Not to mention Wrong

        • Member [Join Now]

          Really, and how would you know this? Is Redbox going to the black market and stealing these movies or something I don’t know about? Given the hoopla I doubt the studios are giving redbox a discount on the sale of dvds so if anything they would be paying the same or more for the movies.

  6. Visitor [Join Now]
    joey [visitor]

    I just love Redbox! I don’t see how they could possibly be devaluing dvd media. I think if anything they are helping “value” dvd media!

    • Member [Join Now]
      Joey [joey-2]
      I work for VBG. To find out why this is important, click here.

      Yeah they are making it worth about as much as a tampon out of the machine in the ladies room. Go Redbox. Pretty soon we can be watching Bring it on #26 thanks redbox

      • Member [Join Now]
        moviecrazy [moviecrazy-3]
        I work for VBG. To find out why this is important, click here.

        I’ll be glad to see once redbox stops taking the value out of “dvd media” and starts putting the industry first not just there own pockets.

  7. Visitor [Join Now]
    Jonathan [visitor]

    It’s interesting to me that they are blaming DVD sales and $1 rentals.
    What kept them out of the red back in the older days before DVDs and VHS were an option to buy?

    • Member [Join Now]
      Joey [joey-2]
      I work for VBG. To find out why this is important, click here.

      Back in the day DVD sales didn’t account for over 50% of the profits. And the movies cost $1.50 to make.

      • Visitor [Join Now]
        acdahl [visitor]

        So, what you are saying is that they have a flawed business model and were not able to control spending, so when other income avenues opened, they spent more than the market based on a temporary revenue stream.

        Try this logic. Movies cost a lot less back then ($1.50 according to Joey, but my estimates are a little higher) and they were better, on average than what comes out now. Now, they cost much more and the quality has dropped significantly. This was done well before Redbox came onto the scene. So, who is to blame again for the quality of movies being released?

        This problem existed before Redbox and this point would have come anyway. This is the natural progression of the movie industry based on the decisions of the executives that have led the companies down this path.

        • Visitor [Join Now]
          moviecrazy [visitor]
          I work for VBG. To find out why this is important, click here.

          Your a fool! Are you honestly going to try and act like redbox isn’t having a negative impact on the industry. The only thing they offer is a cheaper price for consumers (destroying value) other then that the rest of what redbox offers is hurting every segment top to bottom, studio to video store, retail to whatever. Sugar coat it all you like. Redbox is driving the movie industry into the ground.

  8. Member [Join Now]

    What I don’t get is that Netflix has streaming movies for free with their dvd rental plans and you can basically watch as many as you can stand to watch. Nobody in the movie industry is crying foul about this. Isn’t this going to devalue movies??? Sure it isn’t all the new releases but a few are put on there a week or two after they come out. And doesn’t it devalue the price of older movies???

    • Member [Join Now]
      moviecrazy [moviecrazy-3]
      I work for VBG. To find out why this is important, click here.

      movie money is made on new releases in the first 30-45 days. The internet and streaming is such a small fraction of the business it’s not even a blip on their radar. However redbox only deals in new movies offering them for a dollar which devalues dvd media.

      • Member [Join Now]

        Redbox often has older movies for rental. I rent a lot of horror movies and know for a fact that they put in old movies but market them as new. You have to watch them for that and make sure you aren’t getting a movie you might have already seen. And the whole point of devaluing dvd media is this you pay $20.00 for a dvd right? So the value should be 20.00, but blockbuster rents it as is has for years for 4.00 doesn’t that devalue the precious dvd media???

        • Member [Join Now]
          moviecrazy [moviecrazy-3]
          I work for VBG. To find out why this is important, click here.

          No renting it for $1 does.

          • Member [Join Now]

            That makes no logical sense at all. $4.00 doesn’t devalue but $1.00 does. In my book both of the following are true 1<20 and 4<20.

          • Member [Join Now]
            Casey4147 [casey4147]

            Somebody help me out here. What’s the difference between RedBox’s $1.00 a day rental and Blockbuster’s $5-something for a 7-day rental (do the math on that one, who is cheaper?) and Family Video’s $1.00 a night (admittedly you pay for half-price rentals but if you rent enough it can be worth it)? Then you get into things like Blockbuster Online where you can trade for free rentals, Netflix… Seems to me there’s not a ton of price difference.

            Renting vs buying? I’ve gone from buying movies I’m interested in to renting first because these days you need to prove the movie is worth the cost. Recent examples: I rented Monsters vs Aliens and Superman/Batman Public Enemies before I bought them because I wanted to make sure they had replay value. If a movie is good enough I have no problem paying asking price – Star Trek will be a no-brainer for me but Transformers will be rented first because although my kids liked the first one, I was underwhelmed, and I gather the sequel is worse. I rented The Proposal – my wife and I like Sandra Bullock, and if we like this one it’ll get bought. How much we like it is the difference between buying new or previously viewed. And that’s the reality of it – for me, Hollywood now needs to prove their wares ae worth the asking price.

          • Visitor [Join Now]
            John Small [visitor]

            How many times do you have to watch a movie at $4.00 a rental before it is a better deal to have bought it?

            5 times.

            How many times do you have to watch a movie at $1.00 a rental before it is a better deal to have bought it?

            20 times.

            You really do not see a difference?

            As for the $/day issue. It is not the cost per day but the initial transaction value that the studios are looking at. With BB, they do revenue sharing so each transaction has more than a $2.00 value plus there is a minimum revshare level for most titles.

            If Redbox wants to go to $4.00 a rental but you get to keep it for a week and they revshare with the studios, all the problems will go away.

  9. Visitor [Join Now]
    whogivesaratsazz [visitor]

    For those of you that are opposed to RB, why are you here? You’re obviously connected somehow to loose money because of this. Otherwise it makes no sense why you’re even here rambling on and on and quite honestly who cares?

    First you had free TV and then commercials came in and saturated the set. you eventually got 5 minutes of programming to every 55 minutes of advertising. (ok maybe I’m stretching the truth on that one… more like 6 minutes)

    We were FORCED from being able to watch free TV… to having to PAY for cable because the Gov shuts down analog. So now essentially we have to PAY someone to SELL us something. (pretty good concept, not sure why we all don’t do this more… the next time you go into a store, hand them 20 bucks and ask them to try and sell you something.. even if your not looking to buy anything)

    Beta came and went
    VHS came and went
    Laser Discs tried to come and went
    Mini discs came and went
    DVD came ?
    Blue Ray came ?

    It’s the nature of the beast!

    It’s been said many times already… Change or die. That’s the world these days. So welcome to the world of technology.

    Besides, who in their right mind would pass up on anything that’s of value to them? You get a good deal, why would you complain? Wa-wa-wa…

  10. Member [Join Now]

    Let’s face it, instead of the studios pointing the finger of blame at Redbox, they should be pointing it at themselves for turning out massive quantities of so-called “Blockbusters” that have such poor quality and overpaying actors and directors(NO ONE is worth $20 Million+ to act in one movie). Hollywood is creating its own waterloo…and I don’t feel sorry for them.

  11. Visitor [Join Now]
    movie4mom [visitor]

    Honestly, I don’t really care if Redbox IS driving Hollywood into the ground. I’m a movie buff as much as the next guy and I buy a lot of movies. For a long time I bought a lot of movies the moment they came out. I don’t get to the theater very often, and they would be discounted to 13.99 the week of DVD release and that was a great deal to get to see the new release as many times as I wanted. In the last couple of years, those first week discounts have gone up to MINIMUM 15.99 and the movies have gotten less and less replay worthy. After spending 16+ on some stinkers that I ended up trading in for a fraction of what I paid, I figured I better not trust that a movie is good just because it looks good, so now I rent them and wait until they’re cheaper. i now have a rule that NO movie is worth more than $15. I have become a very patient person. The studios should be happy that redbox is getting people to rent some of these horrible movies at all. Now I am in love with blu ray, which I totally can not afford at full price, so the studios should really be hating Amazon or ebay where you can find movies at a much more affordable cost if you just wait a bit, used and new. Companies, in general, need to realize that maybe their bottom lines are worse than a few years ago, but their consumers bottom lines are even worse than that, and if we can’t afford their product, of course their numbers are going to go down. Time to stop blaming us, and start thinking of other ways to cut costs and make products more affordable for consumers in this economy. Thank you redbox for giving me an affordable form of entertainment.

    • Member [Join Now]
      AnnieB [annieb]

      I buy my movies on eBay, or at Amazon when they’re on sale. I refuse to spend that much on any movie, no matter how good it is.

      It’s been years since I went to a theater. The quality of movies are not worth the expenditure.

      It really mystifies me that Hollywood doesn’t seem to get the message when their revenues started dropping, and that was long before the current financial environment.

      It seems a little arrogant to me for them to keep pumping out trash and complaining because no one wants to pay to see trash.

  12. Member [Join Now]
    AnnieB [annieb]

    I stopped renting movies at BB and Movie Gallery when they went to more than a one day rental and increased the price exponentially.

    When I rent a movie, I don’t want to keep it a week. I usually watch it that evening. The BB has it set up they’re making tons of money rerenting movies that are turned in early.

    Nope, not going there anymore.

    I don’t have a problem with a company making a profit. But when they do stuff like that, it strikes me as dishonesty. And I won’t swallow it.

    • Member [Join Now]

      well put… I dont want to keep a bad movie more than a minute… example…
      “hulk” the first one with my lovely jennifer C. but it was a weak plot and the only villain worthy of an advasary was his own dad…booo

      Had I known about redbox then I would have been contempt.

      had I bought the movie before seeing it, well draw your own conclusion

  13. Member [Join Now]

    “The money that rushed in from 2000 to 2007 in DVD sales papered over cracks in the business, but it was a temporary phenomenon,” said Epstein.

    This tells me Hollywood was in $$ trouble long before RB came around, yet RB gets the blame??

    I buy less and rent more because I can’t afford $20 movies!