At Faultline we have not paid a blind bit of notice to the continuing dispute between the Screen Actors Guild and the Alliance of Motion Picture and Television Producers (AMPTP), which is about to come to a head.
Partly this is predictable because it’s tough to get riled up about a privileged group of overpaid individuals fighting against a fat, and over protected Hollywood industry, which has done its best to keep the video industry in the dark ages.
But given that there is a vote this week for an all out actors strike we thought that it was worth at least repeating the obvious truths about changes coming to our digital media industries.
We are negative about these two groupings because it is the dominance of the members of the AMPTP over the distribution process for films and TV series which has created this California centered excess wealth, and the actors enjoy it. Europe, China, India and the rest of Asia Pacific and Latin America are held in thrall by the oceans of TV output from the US, while their cinema and DVD distribution is also built around it. But not for too much longer we feel.
China is making more and more of its own movies, and has the hinterland of its own cinema distribution chains, and its own DVD production beginning to get under way. You could get rich in China, just making a film or TV series, even if it never reached outside of China. Much the same has already happened in India with its own so called Bollywood, though revenue streams from this are more fraught, given the low income of many Indian families and the need to reach out to expatriate Indians living all over the world, which creates a distribution challenge.
These two countries alone would be enough of a challenge for Hollywood, and their output is gradually absorbing some of the capacity for filmed content in neighboring countries.
But it is the same all over the world. More and more content is being consumed, across new video formats ‘ mobile phones, iPods, games consoles, the internet ‘ but running counter to that are two themes, deliberate promotion of local content and new internet based distribution models.
No-one has any doubt that this will change the shape of the video and broadcast industry, it’s just a matter of exactly how rapidly that change will come about, and the exact future shape of content and content distribution.
There are hybrids here. China has had many of its films sanitized and produced in conjunction with US interests. Some have also submitted, outside of China, to US distribution channels. That’s only natural to gain access to the super-rich US market. But eventually these large film producing nations will see the benefit of guaranteeing their own success by taking control of their own distribution internationally.
It is this distribution control that has led the major Hollywood Studios ‘ Sony (including MGM), Disney, Universal, Warner, Fox and Paramount ‘ to exert an unnaturally strong influence over global visual entertainment. There may be 2,000 tiny companies making independent films in the US, but without a relationship with one of the big six they can expect little in the way of a global airing of their goods.
It is this which creates the common misconception that the US makes the best TV and films in the world, but this is no longer necessarily true if it ever was and in the future there will be a war for control of the route to market for quality content.
In that war the US studios currently stand strong because they fill the global cinema chains, and insist that they each take the bad films to pad out the good ones; they have the largest DVD runs, bringing them economies of scale in DVD manufacture which few other companies can match; and they have the vast promotional budgets which can see even the worst film get its money back or close.
This is why the US studios whine so much about piracy, because their pricing models and global control of distribution have turned their industry into an exceptionally rich one. It is usually those with the biggest piles of money who complain the most about theft.
But there is more than piracy which is putting this US centric view at risk. Emerging countries, new internet business models with entirely new exploitation chains ‘ the period between theatrical release has fallen, made for internet videos are more common, advertising free to web experiments are proving popular. This also puts the future of institutions like the actors guild at risk.
There is no doubt that well known actors, with faces which are recognized on the advertising and promotional efforts of the major studios, are instrumental in filling cinemas and in driving choices on DVD purchases and rentals. But the internet is a powerful tool which can make more actors, many from countries which are not the US, just as well known as the heavily promoted blockbusters films from the US. Increasingly, through the recession we would expect big budget movies to be cut down and for each studio to authorize more, cheaper projects ‘ which in turn will dilute the impact and the promotional spend on each.
Looking at the issue at hand, fundamentally we can entirely see the Screen Actors Guild union’s point. The studios are making more and more money from the internet. Throughout the last 20 years the studios told writers and actors ‘ ‘you can’t have any of the income from the new experimental DVD format’ ‘ a stance which lasted well into the stage where DVDs had become the largest revenue format for film. The studios are now saying much the same about online and mobile versions of content.
This is why actors need to have unions, because the studios will push their hand as far are they can in brinkmanship negotiations in order to keep as much cake for themselves as possible. There are so many famous actors who went on to become producers and directors, and who made so much more money in their second career than their first, that the community has a pretty shrewd idea of just how much wealth there is in the system.
What the world actually needs, and what is likely to come not out of Hollywood, but out of other countries which build up their own visual entertainment industry, are contracts which relate equally to ALL forms of exploitation of the finished product, from video to franchising to TV re-runs. Ideally it would be a partnership between actors and studios, not a war.
But Hollywood thinks it can replace well known actors with new ones, and that new bright eyed innocents will be happy to sign flat fee, low level deals, further inflating the potential for studio profit, and creating a new group of stars which are non-unionized and tame. What they are likely to stimulate instead is a bevy of talent creating its own content for the online world, bypassing old studios and creating new rivals. Actors can go and work around the world, and get creative contracts from Bollywood, China and a new European order of TV producers, potentially wresting interest away from US studios and at the same time stimulating new internet business models which undermine them.
On the one hand Hollywood can cave in and give away a small part of the ‘new digital world’ revenues, or it can unleash a torrent of talent that it has paid to make famous, onto alternative video formats.
Which side has the best chance of surviving a strike, if it happens? The top 6 studios are likely to start running out of canned content (for TV) inside three months, whereas the top US actors who can find audiences in other mediums, on stage, in independent productions or in many cases for the more famous can just afford to take a year off making one of their own pet projects (although making them while their co-workers are on strike will prove tricky).
All of this is about what the actors should get for content appearing on Hulu or on YouTube (legally), and right now if that was done as a % of revenues it would have little immediate impact on the studios at all. It is when it becomes a huge portion of their revenues that they want to have a sweet deal.
Under the AMPTP’s current offer virtually nothing would be paid, probably for the next ten years for online or mobile content, and who can say that in that period that these will not be the most profitable areas of filmed entertainment.
Our suggestion would be that international actors write their own contracts collectively ‘ where they take more and more or the risk associated with projects ‘ including online and those with new exploitation formulas, and then go around looking for companies which are happy to work within these contracts, possibly in other countries. Those companies which take them up on their offer will likely then be the major global studios of tomorrow.