What is the Future of Hollywood? How Will Tech Participate? Predictions Abound at TheGrill 2018

The annual gathering of TheGrill, produced by TheWrap, provided attendees with myriad up close and personal observations about the state of the business. As in years past, the producers assembled an impressive lineup of speakers across the media and tech landscape.

For easy consumption, here is a collection of observations I collected over the two day gathering.

As to the future of theatrical, long the cornerstone of Hollywood’s revenue machine, a two tier system was predicted, where any of the “Star Wars” films are presented in luxurious theaters and everything else is bleak or gone. Also predicted was tiered pricing, although this has long been predicted. I recall circa 1994 Jeffrey Katzenberg wondering when his Touchstone / Disney film “Cabin Boy” was sinking at the box office why tickets to that film cost the same as a blockbuster like “Forrest Gump.”

As to the future competition of theatrical, pundits at TheGrill predicted Netflix will have competitors, meaning there will be more trillion dollar verticals (beyond today’s Amazon and Apple).

The importance of subscription video on demand (SVOD) continues to trigger contraction in the windows of exploitation, which puts further pressure on the existing channels of distribution. The increasing importance of SVOD continues to accelerate, which is fascinating for those who were there at the birth (I worked at Starz when we negotiated the industry’s first SVOD deal, with Disney).

Showtime CEO David Nevins admits they need to ramp up the frequency of new show launches, a clear acknowledgement of the influence of Netflix.

Apparently “cost plus 20% and take your name off it” is the current model Netflix uses to buy busted theatricals.

There was lots of chatter about what to do with all the excess executive talent becoming redundant from the Disney purchase of Fox.

As to new content producers of a major scale, Apple could jump in without hardly a dent in its balance sheet and become a major player. But don’t leave out Samsung; both hardware companies could immediately push content to a billion users each. As long as the carriers agree, was the unstated reality. Verizon, AT&T and Sprint would need to be in the foodchain for mobile delivery.

As to the declining age of digital consumers, perhaps the best line of the two days is that kids today have been “swiping before they were wiping.”

Speaking of mobile and Katzenberg, WndrCo is not looking to own the rights, which is surprisingly wonderful when creators come in to meet with Katzenberg.

Several speakers at TheGrill predicted major bankruptcies in the next two years, with theatrical distribution bound for failure. A contrary and optimistic view about the health of the theatrical market was presented by executives from IMAX, Paramount, Fox and Atom Tickets.

Looping back to the huge pending merger, two interesting points were made:

  • the Fox and Disney libraries will create the industry’s biggest content library, and hence the logic of Disney deciding not to license to third party distributors (Netflix won’t have Disney product after next year).
  • AvatarWorld seems to be a logical addition to the Disney Parks, maybe not so much “Alien vs Predator.”

Will Packer being interviewed by TheWrap’s CEO and Editor-in-Chief Sharon Waxman

Will Packer provided a great chat about his path of becoming the only black producer who has ten #1 box office openings, including last weekend’s “Night School.” He likened the proliferation of billboard film advertising in LA to political signs in your neighborhood as a sign your candidacy is doing well. “Not so! You gotta have great social media,” Packer declared.

Hollywood has always searched for the magic algorithm to create a guaranteed hit, and one of the latest chapters in that book has been MoviePass. Ted Farnsworth (CEO of the firm that owns MoviePass) pointed out that his company’s strategy was to harness all the data generated by the subscription ticket service to better decide what films to pursue. He also said bankruptcy has never been considered an option, despite seeing MoviePass share prices plunge nearly 100% to a few pennies. He’d also like to drive the price of movie attendance down to zero. Without divulging any details, Farnsworth must be viewing an advertising-based model. Of which, several observers separately noted the increasing rise of advertising on demand. I recall a panel from the mid 1990s where it was predicted that once the technology arrived, folks would happily watch a Ford commercial in exchange for watching a desired episode of The Simpsons. (I then suggested the commercial should have some level of interactivity, to provide Ford some level of assurance that their ad buy was worth it).

The explosion of eSports was further explored at TheGrill in a fascinating panel. A convincing datapoint is that the median age of an eSport viewer is 28, with the next median age in the 40s for MLS. The ages get older for baseball, football and golf. From a broadcaster perspective, eSports represents a logical target. Colleges are giving scholarships in eSports, and post-professional careers in eSports are readily available. Non-endemic advertisers abound in eSports; when State Farm is advertising you know the insurance company is reaching beyond hard core gamers.

Having just heard Elon Musk’s 2+ hour conversation with Joe Rogan, I came away thinking the former is crazy brilliant. Subsequent regulatory settlements seem to confirm most of that assessment. Even more impressive and reassuring was hearing Patrick Soon-Shiong, MD at TheGrill discussing his amazing background growing up in South Africa (also where Musk was born, intriguingly) as a springboard for Soon-Shiong’s eclectic forays into cancer research, engineering patents and ownership of the LA Times.

When asked at TheGrill about the half billion dollar price paid, he said “it wasn’t about the price, it was about do we want this paper to survive,” which elicited a hearty and grateful round of applause.

But he emphasized that the newspaper must become profitable.

 


Brad Auerbach has been covering the media, entertainment, travel and technology scene for many years. He has written for Forbes, Time Out London, Village Voice, LA Weekly and early in his career won a New York State College Journalism Award.

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