Welcome to SiliWood

The founders of Google (following in the footsteps of eBay co-founder Jeff Skoll) are dipping a toe into the movie business.

Here's the San Francisco Chronicle piece from yesterday, `Google team sets sights on big screen.'

The movie is called `Broken Arrows,' and it is being directed by Reid Gershbein, who knows Google's founders from their Stanford grad school days. Gershbein's post-Stanford gigs have been at Pixar and DreamWorks Animation.

The budget is under $1 million; another financier of the film is Martin Roscheisen, who runs the Silicon Valley firm NanoSolar, and earlier sold his start-up eGroups to Yahoo for $450 million.

(Thanks to The Movie Blog for the link.)

A report from multiplex-land

'Twas a banner day at the Showcase Cinemas in Berlin, Connecticut today...due no doubt to holiday cabin fever and drenching rain.

The main thing I noticed: where are all the G-rated films this time of year?

We had my 3-year old nephew and 7-year old niece with us. The most appropriate flick seemed to be 'Narnia.' (Even that PG film seemed like it'd probably be too intense for the three-year old.)

That was sold out. So we wound up buying tickets for `Cheaper by the Dozen 2.' (Don't look for any Oscar noms there.) The theater was 95 percent full.

I snuck into `King Kong' for a few minutes, and saw a Mom dragging her two young sons (about 9 or 10 years old) out of the theatre, complaining that it was `too gross.' This was after the Kong/dino battle, and the sequence with Adrian Brody and the sea cucumbers.

So, studio chiefs, is there really no market for G-rated films during the holiday break?

Hollywood woes...the future of windows...digital cinema in China

- Looking back at 2005, John Horn of the LA Times says that 'Hollywood should rewrite own script'. Horn writes:

Scarcely self-critical by nature, studio executives, producers and agents understandably turned a lot more reflective as the year wore on. The questions were not trivial. Is the film business in trouble? Or was 2005 simply an anomalous, cyclical year? Will the same formulas work in the future? Or does Hollywood need to reboot its creative and business hard drives?



As Nietzsche once wrote, "that which does not kill us makes us stronger" — or at least Hollywood hopes that's the case, as it tries to adapt to a new world.

Horn says there are ten lessons that could be learned from what happened in 05, including one about technology: "The medium is everything." He writes:

The next generation of movie fans may avoid the multiplex and take in the latest releases on their iPods, wi-fi laptops, Xboxes or Bluetooth cellphones, devices that often can provide a better entertainment value than many movie theaters. Some future films may enjoy video-on-demand or direct-to-DVD premieres. "We're very realistic about what's happening in our marketplace," says Donna Langley, Universal's production president. "We're making a conscious effort not to have our head stuck in the sand and educate ourselves as much as we can." One company — 2929 Productions — plans to release Steven Soderbergh's "Bubble" next month simultaneously in theaters, on DVD, via pay cable television and on satellite TV. If other Hollywood companies stick to their century-old distribution model, they may find themselves in the same league as the music business, which dawdled before embracing change.

- Variety has a piece titled, `Who's on top? H'w'd vexed by vid as tentpoles fade in DVD while mid-level movies soar'.

The story suggests that some of the biggest theatrical hits may not be raking it in like they once did, when they're released on DVD. There's also some interesting data about how the audience feels about release windows:

One Nielsen EDI study on changing moviegoing habits, obtained by Variety through a studio source, asked moviegoers if they'd be more likely to see movies in theaters if they had to wait six months for the DVD compared to the average of four months now.



The results found that while 41% of people who are already the most frequent theater attendees would be more inclined to see pics in theaters, 76% of the least frequent attendees would still wait for the DVD.



J.P. Morgan analysts last month issued a report suggesting studios would actually make more money overall if they released films simultaneously in theaters and on DVD. While collapsing the window would reduce box office receipts by 49%, the bankers said they would expect a 76% increase in DVD revenues would lead to an overall 36% increase in studio revenues, from $14.9 billion to $20.2 billion per year.

- Finally, the People's Daily Online reports that Warner Brothers is planning to build a digital cinema in Beijing by next summer - and 170 by 2007. The article says:

The new cinema, to be located in Beijing's "silica valley" -- the Zhongguancun district, will have seven digital projection halls with 1,100 seats, said the official.



According to the official, the new cinema in Beijing was jointly invested by Warner Brothers and the Guangzhou-Based Quanyi firm company.



Currently, Warner Brothers has opened eight digital cinemas in major Chinese cities like Shanghai and Nanjing.

Happy holidays

Posting will be light over the coming week, as I head for the East Coast....

I'm gearing up for a series of big events in January, including the Consumer Electronics Show in Las Vegas, Macworld here in San Francisco, and the Sundance Film Festival in Park City. Let me know if you'll be at any of those...

Scott

`Bollywood set to embrace digital cinema'

Here's a good overview of what's happening in India, from UPI. The article makes the case that Bollywood is more eager to adopt digital cinema than Hollywood.

Two things I wish this piece had touched on: how many digital cinemas are there in India today? And what resolution are most of the projectors there?

The UPI article suggests that d cinema and "e-cinema" are synonymous. (Digital cinema and electronic cinema.) But lately, I've been hearing people using e-cinema to refer to installations whose resolution is lower than 2K. Most digital theaters in India are 1K or less, I'm told. So a big question going forward is, while Bollywood may supply these lower-res theaters with content, will the Hollywood studios? Their DIgital Cinema Initiative has specified 2K as the minimum resolution.

From the piece:

...[U]nlike the United States, entrepreneurs in Bollywood have adopted cheaper modes of digitization that involve "low-quality projection equipments" requiring investments between $22,000 and $45,000 each. "Both movie hall owners and movie goers in smaller India cities are willing to compromise on the quality of movies screened for getting to see the latest releases," [Manmohan Shetty of Adlabs Films] says, adding that "this is also why digital roll-out has not been very successful yet in larger Indian cities because film exhibitors can get away with lower quality projections in smaller cities."



Moreover, Shetty says that theaters in larger cities do not need to spend on conversion to digital screening since "theatre owners there can charge five times higher ticket rates anyway and to screen a celluloid-like resolution, investment in digital projection would need to be similar to U.S., which doesn't pay here either."



Nevertheless, "the biggest reason why Bollywood is opting for an aggressive digital roll-out," says [Pranav] Roach [of Hughes Network Systems India], "is that against traditional cinema delivery, digital cinema offers the most effective ability to curb piracy, a menace that has afflicted the industry for years."



This is because digital cinema takes away any physical handling of the film or print. Roach says that Hughes Network Systems first transfers a film to a digital medium, which is then beamed via satellite or cable to all the theaters at once. "We feel that a movie is most likely to be pirated while its celluloid prints are in transit," says Roach.

The Cuban/Wagner Report

If it seems like I write pretty frequently here about Mark Cuban and Todd Wagner, and what they're up to at Landmark Theaters, 2929 Entertainment, and HDNet, you're right. But that's because their experiments are some of the most interesting things happening in the movie business right now.

So a few pre-holiday items about the duo...

- I've got a piece in the current issue of Fast Company titled `Maverick Mogul'. The subhead is, "As he builds his own digital version of the vertically integrated movie studio, Broadcast.com founder Mark Cuban is questioning everything about the business--and naturally ticking a lot of people off."

- You may also want to read (or listen to) two of the interviews I did with Cuban as part of my reporting of the story. Here's the transcript of a conversation we had back in July. And here's the audio (mp3) of a second conversation we had in October. (The quality isn't the greatest, but it is listenable. I'll also note that it wasn't intended as a podcast, so the questions jump around a bit. This was simply a working recording that I made for the Fast Company article.)

- As I was working on the Fast Company piece, Cuban and Bill Banowsky, who runs Landmark, seemed to be getting increasingly frustrated that while they'd committed to buying six of Sony's new, high-res 4K digital projectors - Landmark was the first US cinema chain to do so - Sony was missing its delivery targets. (In our first conversation, in July, Cuban said that he hoped the first three projectors would be in place by the end of the summer.) As the fall dragged on, there were hints that Landmark was also considering installing some 2K projectors from other manufacturers; this was probably intended to light a fire under Sony.

I'm now told that Landmark has received at least two of the Sony 4K projectors. From Cuban, via e-mail, on December 5th: "installations are in progress. We have installed our first 4ks and continue to install and test. Nothing final till these are battle tested." I don't think that negates the possibility that Landmark could also install some 2K projectors. Sony doesn't have an exclusive.

- Finally, Randall Stross wrote about Cuban in last Sunday's New York Times. The article was titled, "Is Mark Cuban Missing the Big Picture?" I didn't link to it at the time because I didn't think it broke any new ground. Stross writes, "[Cuban's] rationale for making hugely expensive investments in Landmark Theaters, the art-house chain owned by 2929 Entertainment, seems dangerously ungrounded in reality."

Stross makes three points that I think are wrong.

First is that people won't notice the difference between today's 35 millimeter projectors and 4K digital. I think he's wrong, and would be curious if he has ever seen a 4K digital projection. (I suspect not.)

Second is that he seems to think that as home theaters improve, there's no reason for out-of-home theaters to survive. That's an assumption that geezers make as they age and find going to the movies more of a hassle; young people are still eager to have their own place outside the home.

Third is that Stross seems to think that Cuban should have just waited until companies like Technicolor or Christie/AIX offered to install digital projectors in his theaters for free, rather than paying for them out of his own pocket. Two problems there - those projectors would most likely be 2K, not 4K, and also, neither company has shown much interest (yet) in working with art house chains like Landmark. They're more interested in mainstream multiplexes.

Even more interesting, I think, than Stross' article are two responses to it Cuban posted on his blog. He doesn't really lay out his points of disagreements with Stross - but instead opens fire with both guns. Here's the first entry and here's the second.

I don't think Stross has a blog, but I'm offering him space here if he'd like to respond or start a conversation.

DVDs, Oscar tix, and a holiday iPod treat

Three quick links:

- Thomas Arnold of the Hollywood Reporter says that DVD producers are scrambling for extras that'll pique buyers' interest. (One reason: consumers aren't scooping up DVDs as avidly as they once did.) Arnold writes:

"The Interpreter," "Fever Pitch," "The Outsiders," "Titanic," "The Perfect Man" -- all arrived on DVD earlier this year with alternate beginnings, alternate endings or both.



Expect a lot more down the road. Universal Studios Home Entertainment recently surveyed consumers and found alternate endings are their favorite bonus features, according to executive vp Ken Graffeo. New Line Home Entertainment executive vp Matt Lasorsa, whose studio pioneered putting alternate endings on DVD with "Austin Powers: International Man of Mystery" in 1999, likes them because they provide "an inside look at how studios test movies."

- The NY Times reports that a pair of tickets to the Oscars last year (face value: $700) sold for as much as $40,000. Tix could cost up to $60,000 a pair next March.

- A portable yule log for your video-capable iPod

It ain't just Hollywood having problems...

Video game makers Electronic Arts and Activision are reporting lower-than-expected sales this holiday season, reports Matt Richtel in the New York Times. He writes:

NPD, a market research company, reported last week that video game software sales were down 18 percent last month from November 2004.



The evidence suggests the video game industry is experiencing its most lackluster holiday selling season in at least a decade, and one of its most disappointing quarters ever.

The hypothesis: everyone's waiting to get their Xbox 360 for Christmas, so they're not buying new games for their old consoles. Can that possibly be the only reason? (EA also delayed the release of its game based on the "Godfather" films from this year to next.)

One analyst calls this the "worst quarter in 10 years" for the videogame industry.

Fox chases teens; NATO hopes to jam cell phones

Two links from my morning info-trawl:

- Rupert Murdoch seems to have given the order to get Fox focused on tomorrow's entertainment consumers, buying MySpace.com for $580 million and, now, starting a division of Fox Filmed Entertainment to focus on teens and young adults. Here's the NY Times piece. Says Jerry Rice, who'll be running the new division (and will continue running Fox Searchlight):

...the new division, which does not yet have a name, will acquire and produce up to eight movies a year with budgets in the area of $20 million each, and have its own production and marketing staff. But it will take a broad approach to the youth market, producing entertainment for distribution over the Internet and cellphones, in addition to conventional feature films, he said.



Young people are "still the most avid filmgoers, the most avid purchasers of film and entertainment, even if there has been a decline in theatrical viewership this year," said Mr. Rice. "They are the most potent part of the filmgoing public."



He said the division expected to release movies similar in appeal to "Mean Girls," the comedy starring Lindsay Lohan from Paramount, or "Sin City," Miramax's R-rated, blood-soaked film noir by the director Robert Rodriguez.

(Here's the LA Times coverage of the story.)

- John Fithian, head of the National Association of Theater Owners, is planning to ask the FCC for permission to block cell phone signals inside movie theaters. (Here's a UPI piece on the same topic.) My prediction: no way will he get it. You're going to block the doc's cell phone, and prevent him from getting an emergency call from the hospital? When there's a fire in the theater, you're going to block patrons from calling 911?

Analyzing the ape

From John Horn's article in today's LA Times about `King Kong':

Although "King Kong" was No. 1 at the box office, the unexpectedly sluggish opening adds to growing fears that U.S. audiences might be forsaking the multiplex: For the first time in more than 40 years, Hollywood by year's end will have recorded declining attendance for three consecutive years.

In 2005, North American attendance will total about 1.4 billion tickets, down more than 6% from the previous year, according to Exhibitor Relations Co. Inc. Total box-office receipts should be about $8.7 billion, down from $9.2 billion in 2004, according to Nielsen EDI Inc.

"This was one of the films that was supposed to help get the business back to last year's levels, and clearly it didn't happen," Richard Greenfield, a media analyst with Fulcrum Global Partners, said of "King Kong."

Christie/AIX lands a first big customer; What Clickstar is really up to

- The Christie/AIX joint venture has landed its biggest customer so far: Carmike Cinemas. Accoding to the press release, the "rollout is scheduled to begin in January, 2006 and to be completed by October 31, 2007." It'll include up to 2300 screens. Carmike is the third largest national movie theatre chain in the country.

- The New York Times has a total rehash story about the vulnerability of movie release windows. Morgan Freeman once again says that his company, Clickstar, wants to distribute movies over the Net while they're still in theaters: "We want to give people what they want, when they want it." The company still offers absolutely no details about how they're going about it.

I had conversations earlier this year with Clickstar CEO Nizar Allibhoy and Kevin Corbett, who manages Intel's investment in the company. Neither was exceptionally forthcoming, but they did say a little bit more than was in today's Times piece.

Allibhoy, a former exec at Sony Pictures Digital, told me, "Our focus is on early window content – content that is available in the first window. [At the same time as the theatrical release.] We're creating what we call `artist-created content channels,' giving the artist a voice to deliver content in a manner that is unique and compelling from their perspective." Clickstar aims to give the artist "a way of reaching consumers, and vice versa – so that the consumers can also interact with a service – not necessarily in the trafitional interactive TV mode – but leveraging the community poiwer of the Internet." Clickstar will give "the artist an opportunity to talk about what they want to talk about."

Corbett said, "The approach at Clickstar is to begin with independent producers – many of these highly talented people who are building movies – not $6 million films by up-and-coming artists – but your experienced artists who are producing and directing their own films - a category in the $15-$60 M range – but are financed outside the studio system." Clickstar hopes to figure out how to make those films available on the Net, over broadband. "There’s tension in the system," Corbett admits. "It’s not an easy project. We have discussed it for over a year."

North vs. South (and video iPods)

Two quick pointers to pieces of mine that appear in newspapers today on opposite coasts:

- In the San Jose Mercury News, I write about the contentious relationship between Silicon Valley and Hollywood. I like the headline they wrote for the piece: "This could be a beautiful friendship."

- In the Boston Globe, I start a new monthly column called Entertainment 2.0. The first one focuses on the revolutionary potential of Apple's video iPod. "...[A]s holiday shoppers evaluate Apple's new $299 video-capable iPod, the question hanging over the entertainment industry is whether the iPod can do for motion pictures what it did for music. Does its arrival signal a transition from the era of scheduled TV, DVDs, and videotapes to the age of Internet downloads?"

DreamWorks SKG: Following the wrong leader

What does the sale of DreamWorks SKG to Paramount mean?

If you believe this piece from the Los Angeles Times, it's an indicator of just how hard it is to succeed as an independent operator in today's Hollywood, dominated by lumbering mega-media brontosauruses. Claudia Eller and Sallie Hofmeister write:

When the self-proclaimed Dream Team announced the formation of DreamWorks SKG at the Peninsula Hotel 11 years ago, director Steven Spielberg said that he and his partners, Jeffrey Katzenberg and David Geffen, were creating a multifaceted entertainment empire that would "outlive us all."

It didn't.

This week, the trio reached an agreement for their studio to be acquired by Viacom Inc.'s Paramount Pictures, underscoring how hard it is for independent firms to survive among media giants. The pending sale, the latest evidence that stand-alone movie studios are a losing proposition, also prompted the question: If S, K and G can't do it, who can?

I would argue that DreamWorks' fatal flaw was that it patterned itself after the major studios, rather than envisioning a new way of operating. Small companies that want to be influential (and profitable) need to take advantage of their size, nimbleness, and clever ideas - rather than trying to mimic the big guys.

I had a conversation this past week with Tom Sherak of Revolution Studios, in which I found myself asking the same questions I often ask of people in the movie business: why are studios focused on making fewer (not more) movies, for bigger (not smaller) budgets? Why do star salaries (and their back-end takes) keep rising even as their ability to open a movie seems to be declining?

Sherak replied, basically, by saying, if you're making an action movie and someone tells you you can have Tom Cruise for $20 million, are you gonna go and make that movie without Tom Cruise? (Well, yeah, I might.)

From my perspective, DreamWorks, started by Hollywood insiders, got sucked into that Hollywood groupthink mentality. The founding trinity (S, K, and G) also ensured that they were all paid as moguls from the very start - rather than as entrepreneurs. That probably lent the studio the atmosphere of having already arrived - rather than struggling to make a different kind of mark. Here's another snippet from the Times story:

Sources at studios that have distributed films that Spielberg directed say he typically is guaranteed as much as 25% of a studio's gross.

As a result, the 2002 hit "Minority Report," which grossed $354 million at the worldwide box office, made only a small profit for DreamWorks and its partner, News Corp.'s Twentieth Century Fox, according to people familiar with the financial details who requested anonymity for confidentiality reasons.

Based on typical industry practices, DreamWorks would have had to release at least twice as many movies a year as the seven it averaged to justify its $100-million annual overhead.

One other question I posed to Sherak: why don't studios make more movies like "Napoleon Dynamite" or "My Big Fat Greek Wedding" or "Memento," movies with tiny budgets (and no stars) that turn into giant hits. "That's like catching lightning in a bottle," Sherak said, adding that it's impossible to know beforehand what movies will explode like that.

But why not use those kinds of movies as a model - cheap and original, with unknown and charming actors - rather than using the behemoth tent-pole movies as a model? Studios like DreamWorks spend so much time and energy focusing on big-budget, star-laden, potentially-franchise-creating films ("The Island," anyone?) - when they could be doing something different.

My take: DreamWorks SKG didn't fail because its founders tried to clear a new path. It failed because they followed the old one.

New blog: Outside Hollywood

Quick pointer to Isaac Botkin's promising new blog, Outside Hollywood. Botkin seems to be based in New Zealand. Definitely outside Hollywood... those very close to Wetawood.

Making the movies nicer

Sharon Waxman has a story in today's NY Times about what theater owners are doing to try to lure patrons back to the movies. The answer seems to be "not much."

There are vague suggestions of hiring more ushers to shush obnoxious audience members, asking patrons to check their cell phones at the door, reducing the number of ads before the show (won't happen), putting a lid on ticket prices (ditto), or blocking cellphone reception in the auditorium. (The cell phone lobby will fight that to the death.)

"We have to attack rude behavior - fighting, bickering, talking too loud," John Fithian, head of the National Association of Theater Owners, says.

When was the last time you saw an usher come into a theater while a movie was showing, just to check in? When was the last time you saw an usher actually talk to a patron who was acting rudely, or throw him out of the theater?

And let me just ask one more question: was the movie in black and white?

Digital cinema roll-out, Robert Altman, `Hoodwinked,' Pixar, and Kong

I'm traveling in LA this week, doing a bunch of great interviews for my book...cinematographers like Scott Billups and Steven Poster, directors like Randal Kleiser and Robert Greenwald, execs at Paramount who were involved with the Digital Cinema Initiative, Tim Sarnoff at Sony Pictures ImageWorks, Tom Sherak at Revolution Studios, and Glenn Kennel of Texas Instruments.

So just some quick news tidbits for now:

- This news isn't totally unexpected, but it sure takes some wind out of the sails of AccessIT and Technicolor, who've been trying to get momentum for their own digital cinema roll-out plans. The gist: National CineMedia, a joint venture owned by AMC, Regal, and Cinemark, is putting together its own financing plan for projectors and servers. Nicole Sperling writes:

The plan will be open to all industry exhibitors as well as NCM's founding partners with the goal of driving down digital cinema costs from the sheer size of NCM's network of theaters.

"NCM's primary objective is to work with manufacturers to reduce the cost of digital cinema equipment through volume purchasing for NCM partners' 13,000 screens and other participating exhibitor screens," Hall said. "NCM will also seek to develop an efficient financing structure for the purchase of the digital cinema equipment that will be open to all capital sources and that will provide a transparent, cost-effective arrangement for exhibitors, distribution partners, capital providers and all other key constituents."

- Sheigh Crabtree of the Hollywood Reporter writes about the HD camera set-up used on Robert Altman's "A Prairie Home Companion."

Altman wanted to be able to record for at least 30 minutes consecutively without reloading as some scenes in the film are as long as 23 minutes. The HD cameras also came in handy because some of the interior settings had low lighting levels.

Cinematographer Ed Lachman ("Far From Heaven") headed up the camera department, which used the first-generation Sony HDCAM F-900s with the latest Fujinon HD zoom lenses.

- Here's Variety's review of the first CG-animated film that's being distributed by the new Weinstein Company, "Hoodwinked!" Justin Chang says:

The Weinstein Co.'s first toon acquisition, which opens today in Los Angeles for a one-week Oscar-qualifying run, is a pint-sized production that could rack up modest family biz when it goes wide Jan. 13, though investors probably won't be marveling, "My, what big box office you've got."

- Roberta Smith of the NY Times has a review of the new Pixar exhibit at the Museum of Modern Art. She says:

The overall impact is more educational than artistic, and up to a point, it is interesting to learn about digital animation, which could well be as important to the 21st century as film was to the 20th. But unsurprisingly, the exhibition demonstrates that the final magical products - the films are far more engaging than the process.

The learning curve was steep on opening night, and signs of hit status were rampant. In the museum's new video gallery, people applauded enthusiastically as a video projection roughly the width of Monet's "Waterlilies" cycled through preparatory drawings for the various Pixar features and shorts. Images popped from color to charcoal graininess, or from flat rendering to the startling three-dimensionality that is basic to the Pixar style. Spaces opened and then yawned into infinity: the steep mountains and mesas of the next Pixar feature, "Cars," or the astounding door vault of Monstropolis, the setting for "Monsters, Inc.," or a drifting flurry of Joan Mitchell-like brushwork, also from "Cars," that is suddenly aerated into a spacious cloud. Such transformations, enhanced by unexpected shifts in scale, are momentarily delightful, but they can also cloy because the drawings are so conventional.

Turning toward the opposite wall, visitors gasped and applauded again as a computerized zoetrope swung into action, using strobe lights and a revolving stage to create a ravishing bit of 3-D animation that orchestrated multiple versions of the characters from "Toy Story 2" into bouncy concentric rings of repeating actions. Woody rides his horse while, circling in the opposite direction, Buzz Lightyear bounces along on a brightly colored ball. Aliens dodge the horse's hooves and catapult repeatedly into holes, thanks to the well-timed landings of Wheezy the Penguin on the end of a seesaw. At the center, parachuting toy soldiers spiral repeatedly downward, like grooms escaping from a wedding cake.

- Finally, I wanted to post this passage from A.O. Scott's review of "King Kong," just because I hadn't before thought much about how acting will change as new technologies arrive:

The rapport between [Naomi] Watts and [Andy] Serkis is extraordinary, even though it is mediated by fur, latex, optical illusions and complicated effects. Mr. Serkis, who also played Gollum in the "Lord of the Rings" movies, is redefining screen acting for the digital age, while Ms. Watts incarnates the glamour and emotional directness of classical Hollywood. Together they form one of the most unlikely and affecting screen couples since Anthony Quinn and Giulietta Masina did their beast and beauty act in "La Strada."

Meet Hal, the blockbuster-predicting computer

Here's the most interesting story I've seen in quite a while: `Computer spots a blockbuster from box office flop'. The software was developed by a professor at Oklahoma State, Ramesh Sharda, who may be named to head a major studio any minute now. From the Reuters piece:

"We are trying to forecast the success of a movie based on things that are decided before a movie has been made," he told Reuters by telephone.

Sharda, an expert in information systems, has been working on the model for seven years and analysed more than 800 films before publishing a paper which appears in "Expert Systems With Applications" early next year.

Sharda applied seven criteria to each movie; its rating by censors, competition from other films at the time of release, star value, genre, special effects, whether it is a sequel and the number of theatres it opens in.

Using a neural network to process the results, the films are placed in one of nine categories, ranging from "flop," meaning less than $1 million at the box office, to "blockbuster," meaning more than $200 million.

The results of the study showed that 37 percent of the time the network accurately predicted which category the film fell into, and 75 percent of the time was within one category of the correct answer.

I'll be interested to hear more about this... seems like you could lose a lot of money on the 63 percent of movies where the computer can't accurately predict. And some of the criteria the system uses, like number of theaters a film opens in, and competition from other films, aren't things that studio chiefs know when they're considering whether to green-light a film and commit millions of dollars.

Variety on CG animation and the stock market

Great article in Variety, about how Wall Street views CG animation powerhouses Pixar and DreamWorks. David S. Cohen writes:

CGI toons have been the most consistent moneymakers in the movie biz, and that's turned Pixar and DreamWorks Animation into Wall Street darlings.

Wall Street's preoccupation with CGI toon makers has to do not just with their profitability but their stock volatility. Both Pixar and DreamWorks have proven exquisitely sensitive to any news about CG animation, moving not just on the results of their own titles but also on those from other companies.

Pixar stock, for example, jumped when Disney's "Chicken Little" opened strong, fueled by speculation that Disney would buy Pixar outright.

These stocks behave like no others, says Keith Goodman, media analyst for Glenhill Capital. "There's about $10 billion of market capitalization that's affected by the performance of only two or three films a year," he says.

The small number of releases from these companies, Goodman explains, gives each new "data point" enormous significance to investors. "Any company's equity is based on its ability to generate and sustain cash flow. The number of events that can tell you whether a company can generate or sustain cash flow, for these CG animation companies, may be one film every two years."

Only videogame and music publishers come anywhere close to the stock sensitivity of publicly traded CGI shops, Goodman adds, "but they're nowhere near as dependent on a limited number of events as a CG-animated film company."

`Apple's Next Move": Linking the iPod with the TV

Adam Penenberg has a piece in Slate today that argues that Apple could get pushed off the digital video playing field by cable companies, satellite companies, other tech players (including Microsoft), and presumably telcos...if it doesn't figure out how to link the iPod with the television. He writes:

While the iPod has given Apple a foothold in cars and offices, it has yet to make the move into living rooms. The cable companies have a clear advantage here, as does Microsoft with its Media Center PCs and the enormously popular Xbox. Apple will become a force here on the day you can plug your iPod into your television—not to mention your car stereo and broadband network. If Steve Jobs can make the iPod an entertainment hub, Apple will be the company to beat, a feat it could never accomplish with personal computers.

But that's a big if. Apple's attempt to cram the functionality of the iPod into a phone has been a failure, namely because you have to hook it up to your PC to download music. Music and video that sound and look fine on an iPod also isn't necessarily up to snuff on high-end stereos and big-screen TVs, especially as consumers slowly embrace high-definition television. While it takes only a minute or two to download a song from iTunes, it can take hours to download video that looks good on a big screen. That gives set-top boxes a distinct advantage.

The longer the iPod stays anchored to the personal computer, the further behind Apple will fall.

The world will be watching Macworld 2006 next month for an announcement along these lines.

Inside the DreamWorks/Paramount deal

Sharon Waxman has an inside look at the $1.6 billion sale of DreamWorks SKG to Paramount/Viacom. The acquisition was officially announced yesterday.

"This for Paramount is a new beginning," Mr. Grey said in an interview on Sunday. "I think it's going to turn this studio into a dynamic and vibrant studio again. This studio is 100 years old, there have been extraordinary years. We happen to be in a cycle that needs a new architecture. This is going to go a long way in that strategy." (That's Mr. Grey at right.)

Analysis of the deal in the Journal is a bit better, I think, focusing on how GE and NBC Universal (who lost out) pursued a more buttoned-down, numbers-oriented approach, while Paramount and Viacom were more relationship-oriented and willing to take risks. Merissa Marr, Kate Kelly, and Kathryn Kranhold write:

Some analysts have questioned whether a small studio with a mere 60 titles in its library is worth so much. Mr. Spielberg, who founded DreamWorks with David Geffen and Jeffrey Katzenberg, extracts a high price for his services as a director and a producer. DreamWorks's recent track record is dotted with bombs such as the $126 million "The Island," which sold $36 million of tickets domestically.

Nevertheless, Viacom's 11th-hour steal epitomizes the reasons why Hollywood can be a difficult place for a management-intensive company like GE to succeed. In a movie industry that values relationships and high-stakes bets, industrial and financial behemoth GE puts a premium on rigid return-on-investment calculations and a deliberate timetable. While Viacom schmoozed Mr. Spielberg and made things easy by not sweating small deal points, neither Mr. Immelt nor NBC Universal Chairman and Chief Executive Bob Wright directly solicited the support of the famous director.

Even Viacom chairman Sumner Redstone got involved, according to the Journal story:

Mr. Redstone says he picked up the phone at his Los Angeles residence and made calls to Mr. Spielberg, Mr. Katzenberg and Mr. Geffen to tell them each how excited he would be for DreamWorks to be part of the Viacom empire. "I told Mr. Spielberg how much I would love him to be the lead director and producer on the Paramount lot," said Mr. Redstone.

ILM's new roommate: Deluxe Labs

From Friday's press release:

Deluxe Laboratories today announced an agreement with Industrial Light & Magic, a Lucasfilm Ltd. company, to open an EFILM Digital Laboratory at the new Letterman Digital Arts Center (LDAC) located in San Francisco's historic Presidio. LDAC serves as headquarters for Industrial Light & Magic (ILM). This pairing of the industry's leading visual effects company and the industry's leading digital lab on one campus presents outstanding digital filmmaking solutions for studios and directors.

"We have always had a strong relationship with Lucasfilm and ILM and we are extremely pleased to be part of this phenomenal new digital facility," said Cyril Drabinsky, President & CEO of Deluxe.

The new EFILM facility, scheduled to open in early 2006, will become a preferred provider for ILM's digital imaging services, including digital intermediate. The initial staff includes colorists, technicians and producers served by a scalable computer based infrastructure as well as high speed fiber connectivity between LDAC, Skywalker Sound and EFILM Hollywood . EFILM specializes in award-winning digital intermediates, digital cinema, digital mastering and 2K & 4K scanning and recording on projects such as Star Wars: Episode III Revenge of the Sith, Jarhead and Rent.

`Doing the math: What Hollywood slump?'

This piece from today's NY Times observes that total revenues for movie studios aren't doing so badly - when you factor in things like home video and merchandise sales. But despite the sunny headline, the piece does point out that there are fewer mid-level hits (movies that earn between $100 and $200 million), and that the domestic home video business isn't growing like it once did.

On this year's box office (down 6 percent), here's a quote:

"The audience has become much more discriminating about what they go to," said Michael Lynton, chairman and chief executive of Sony Pictures Entertainment, adding that "it's the middle that has gotten hurt."

Edward Jay Epstein on movie downloads: the future of Hollywood

Edward Jay Epstein has this great piece in Slate, `Downloading for Dollars: The future of Hollywood has arrived.'

He argues that the future of Hollywood will be the small screen - not the big screen. (I still find it interesting - and probably the result of fear of this trend - that no full-length features are available on iTunes for the video iPod.)

Epstein writes:

The studios stand to gain ... from a huge audience willing to pay to download movies from their libraries. Unlike DVDs, which require manufacturing, warehousing, distribution, and disposing of returns, it costs almost nothing to download a movie or cartoon. Indeed, all the costs of transmission would be born by the cable operator (or a site like the Apple Music Store), whose cut would be less, under present arrangements, than retailers get on DVDs. So, if a movie were a huge hit, such as Shrek, and millions of orders flooded in, the marginal cost of filling them would be zero. The consumer, once he bought the download, could watch it where and when he chose to just as he once watched a DVD.

The real issue for the Hollywood studios is how they can dig into this potential gold mine without undermining their existing revenue streams.

Later, he writes:

...[W]hile the studios may find this embarrassment of [content delivery] choices somewhat paralyzing at present, as more and more consumers get digital recorders or video iPods, downloading for dollars may prove irresistible—even if it means doing away with the windowing system.

Great piece - well worth a read.

Promising new blog: "Self-Reliant Filmmaking"

Tennessee-based filmmaker Paul Harrill has a promising new blog called "Self-Reliant Filmmaking." (Harrill teaches at Temple University, was awarded a Jury Prize for short filmmaking at Sundance, and was a fellow at the MacDowell Colony and Yaddo.) From Paul's first post, a declaration of principles:

The purpose of this weblog is to talk about and to encourage the practice of making high-quality films at a low-cost and/or with small-labor systems. A good term for this practice is "Self-Reliant Filmmaking."

Self-reliant filmmaking is interesting for at least two reasons:

Less interference, more production: Self-reliance can let filmmakers bypass in whole or in part the common gatekeepers of cinema production (i.e., studios, production companies, etc.) and exhibition (i.e., major distributors). Needless to say, not needing a corporation’s permission to make a movie can free you to make more of them.

Handcrafting: We believe, quite simply, that the way something is made shapes the nature of the thing itself. Self-reliant films are by definition handcrafted, and this is a good thing for today’s cinema, which needs as many human, soulful works as it can get.

While some might consider this naïve, we see examples of self-reliant filmmaking throughout the history of cinema -- from the Lumiere Brothers' first films up to works by some of today's leading filmmakers, like Abbas Kiarostami and Lars Von Trier.

I look forward to reading more.

Google Video's Jennifer Feikin at `Digital Living Room'

BusinessWeek's Stephen Wildstrom, by way of introducing Jennifer Feikin at the Digital Living Room conference in Silicon Valley today, observes that Google is a company unafraid of building products before it has figured out what the revenue model is. (He means that in a good way, I think.) Feikin is the director of Google Video. Previously, she worked at McKinsey, Fox Searchlight, Morgan Creek Productions, and AOL Time Warner.

Some notes:

- Wildstrom asks, How does this become a money-making product? He observes that a lot of content owners don't want to get involved without a business model.

Feikin says, "The next step - in the near-term - is to have a service where users can pay to download content. Content owners [can] set the price for their content. That will bring on a whole category of content owners who want to be paid for their content."

Wildstrom asks if the deal will be a revenue split between the content owner and Google. She says, "Probably."

- Wildstrom asks about the digital rights management issues involved with selling content on the Net.

"Suffice to say, we will have a copy protection system in place," she says - but she won't get into details. "Not all content owners," she continues, "are all that hung up about DRM." Some think it's more important for their content to be available - and get discovered by consumers - than to lock it up.

- Someone in the audience asks about advertising. "It's definitely something we're looking into," she says. Later, she adds, "Anything we do with advertising will be about pleasing the user. It'll be simple, like our homepage." When Google figures out how to place relevant ad spots before a clip of video - as they've done with text ads on Web pages - look out.

Going forward, some content will be ad-supported, and other content will be paid (she calls this "download-to-own," which I suppose is different from today's all-streaming version of Google Video.) She says that Google will test different price points.

- Feikin talks a bit about the partnership with UPN (to deliver episodes of "Everybody Hates Chris" after they'd initially aired.
She says there are other partnerships coming. But she views Google Video as being "different from [the] iTunes [Music Store.] It's not just about the popular entertainment content. We want the MIT Open Courseware lectures - also the travelogues - surgeries." (I'm psyched to hear that. I asked a question during the Q&A period about whether she thinks Big Media companies will worry about having to compete in an open marketplace with indie filmmakers and documentarians. She says the hasn't heard those concerns expressed - at least not yet.)

- What's popular on Google Video? It's eclectic. A parody of a Backstreet Boys video "almost broke the banks of our servers," she says. Users can click a "send" link to send a video to someone else. "The way that we're finding what is popular is by this send link."

"First we just had a search box," she says. "But it's hard to figure out what you want to search over." Google Video now has two tabs on its homepage, `random' and `popular' - just put up last week. A browsing-type environment (versus searching) is what users are comfortable with, Feikin says, since it helps users find things they didn't know about.

Wildstrom observes that Google's famous `page rank' algorithm, which puts your Web search results in a descending list of relevance at Google.com, doesn't work so well for video. He asks how Google Video will help users find the stuff they're looking for. "The more metadata [video submitters give us], the better. A time-coded transcript is the best way to index that piece of content. And a lot of people submitting content don't have that today."

- Feikin says, "We are truly agnostic about where the content lives, as long as we can connect users to it." Content can be on Google's servers, or elswhere - though all current content is hosted on Google Video. "Right now, we're taking in all file formats...[but] some are taking longer to transcode than others."

- Google does have people who look at the videos, to ensure that there are no blatant copyright violations - or porn.

- Someone in the audience asks about mobile video. Sounds like Feikin doesn't think it's quite on the verge just yet. "There will definitely be a time at which we get there. Wherever the user wants us to be is where we'd like our search results and our video to be."

- She gets into some history. The initial motivation behind Google Video: "Wouldn't it be really interesting to be able to search all of the world's video content? The idea was to take a step outside of web content." Started off with still screen shots - and transcripts - because Google didn't have rights to replay videos. Google likes to iterate and get a lot of user feedback (not wait a long time to make Google Video comprehensive.)

"The next project was user-submitted content - hundreds or thousands of user-submitted videos - home movies, travel, medical, non-profits, museums. The idea is, content owners who are looking for an audience. It's a free streaming model."

Robert Rodriguez chat

This'll be cool: director Robert Rodriguez will be chatting online here tonight, at 8:30 PM Eastern /5:30 PM Pacific, to promote the release of 'Sin City: Recut, Extended, Unrated.'

UPDATE: here's the transcript.

New content and pricing on iTunes; Soderbergh Q&A

- The Unofficial Apple Weblog says that NBC content has started to show up on the iTunes Music Store, and at price points higher than the $1.99 we've seen so far. (Conan O'Brien's one-hour 10th anniversay show is priced at $9.99.) That's interesting, given that in the past, Apple has resisted allowing record labels to charge more or less 99 cents a single.


- Wired's Xeni Jardin has a phenomenal Q&A with director Stephen Soderbergh. Three questions from that conversation (taken out of sequence):

WIRED: Why did you decide to release `Bubble' [Soderbergh's next release, coming in January] in all formats at once?

SODERBERGH: Name any big-title movie that's come out in the last four years. It has been available in all formats on the day of release. It's called piracy. Peter Jackson's `Lord of the Rings,' `Ocean's Eleven,' and `Ocean's Twelve' - I saw them on Canal Street on opening day. Simultaneous release is already here. We're just trying to gain control over it.

WIRED: What's the reaction in Hollywood to your release experiment?

SODERBERGH: People are waiting to see what happens. A movie that costs only $1.6 million doesn't have to be a cultural event to turn a profit.

WIRED: What's the biggest impact technology is having on filmmaking?

SODERBERGH: When the changeover from film to digital happens in theaters in five or 10 years, you're going to see name filmmakers self-distributing. Another thing that really excites me: I'd like to do multiple versions of the same film. I often do very radical cuts of my own films just to experiment, shake things up, and see if anything comes of it. I think it would be really interesting to have a movie out in release and then, just a few weeks later say, "Here's version 2.0, recut, rescored." The other version is still out there - people can see either or both. For instance, right now I know I could do two very different versions of `The Good German.'

WSJ: Sony spends, Disney experiments

Just renewed my subscrip to the Wall Street Journal Online - which had lapsed for about a year. They're doing some great coverage lately of the movie industry:

- "Sony's Stringer Faces Havoc at Two Units," is one story from today's paper. The units in question are music and movies. Kate Kelly and Ethan Smith write:

"...the company's movie unit, Sony Pictures Entertainment, has had one of its worst runs at the box office in recent years. Of the two dozen movies Sony has released this year, several have cost more than $100 million to make, but only one, the romantic comedy "Hitch," has sold more than $100 million of tickets domestically. The situation has prompted Mr. Stringer and the division's heads, Michael Lynton and Amy Pascal, to re-examine the way in which they set budgets, approve pictures for production, and decide how many movies to release each year, according to people familiar with the matter. While these people say that neither executive presently is in danger of being replaced, prolonged dismal results could put added pressure on them in the new year.

Such management and financial troubles come at a time when Mr. Stringer can ill afford them. The task of fixing the electronics units has kept Mr. Stringer circling the globe almost nonstop. Now the entertainment units' failures have added a painful irony, given that it was Mr. Stringer's solid track record as head of the Sony Corp. of America, where he had overseen the music and pictures divisions since the late 1990s, that helped him clinch the top Sony job earlier this year. After his promotion, Mr. Stringer chose not to replace himself in his old job -- leaving him on the hook for the growing mess in the entertainment units.

Later, they point out that this month's "Memoirs of a Geisha" and "Fun with Dick and Jane" could prove to be hits - but that at least one "Titanic"-sized gamble is on the way:

"...[R]educing the cost of movies is a challenge. A case in point: `Spider-Man 3,' scheduled for release in 2007. Already, the budget for the film is said to be between $250 million and $300 million, people close to the studio say -- a gigantic price tag, even for an immensely successful franchise."

In a Q&A today with Disney CEO Bob Iger, the top dog gets one thing very right and one thing very wrong:

Right: Experimentation can invigorate an entire company to think differently about its business.

WSJ: You smashed the glass with the deal to sell episodes of "Desperate Housewives" and "Lost" for $1.99 on the new video iPod. What were the most important achievements of that agreement?

Mr. Iger: Firstly, we'll learn more about consumer behavior and using new technology in a new window with different pricing. Secondly, I really wanted to use it as a catalyst to get the company thinking more about breaking with tradition and following the consumer. Interestingly enough, nothing has done more to reignite the company than this deal. It almost has created more value for the company than the deal itself.

WSJ: How have your troops responded?

Mr. Iger: I think the troops love the fact that we were first. It's had a great impact on the company's spirit. The feeling is tangible; whether that translates into behavior change is a little too early to tell, except that I do sense that there is a lot of exploration going on at all of our businesses. The other thing that's good is that the company seems to have learned very quickly that it shouldn't be about just making a deal, it has to be the right deal. We've been besieged with other opportunities but instead of just getting in line and just checking off 25 other deals, we're actually being very selective.

WSJ: Did advertisers complain about the iPod arrangement?

Mr. Iger: We heard from just about everybody. Affiliates, advertisers, mass retailers. No one quite knew what to make of it. Everybody wanted either to make a little noise or register a complaint almost in advance of any change in the marketplace conditions.

Wrong: There's an idea and talent shortage in the movie business, and that means studios should concentrate on making fewer big budget films, and spending more on marketing them.

WSJ: You mentioned that too many movies are made these days. What do you mean by that?

Mr. Iger: I think the business has changed, it's gotten more competitive, but movie companies are following a business-as-usual approach. I'd rather that everybody made fewer movies and they were more selective in the movies they made. I don't think the talent pool has expanded enough to feed the number of movies being made.

WSJ: Will the slate in 2006-2007 reflect that criticism?

Mr. Iger: It will at Disney. I can't speak for the others. We're reducing the number of films. At Miramax, we're using the opportunity of ending the relationship with Harvey and Bob Weinstein to cut back our investment in that business by hundreds of millions of dollars.

Iger also talks with the Journal about changes to movie release windows, and the Pixar relationship.

Times clips: Sundance, video-on-demand

Two quick links from the NY Times...

Swell piece yesterday about how the selection process works for the Sundance Film Festival. John Clark got a inside look into how Geoffrey Gilmore and his team of programmers make their choices. They winnowed 7459 films - features, shorts, and docs - down to 120 final selections. Gilmore alone says he watches between 800 and 1000 films a year. Every film is seen at least once in its entirely. Wonder what the process would look like if it was distributed, using the Net, to an army of a hundred or a thousand programmers... Would the 'widsom of crowds' effect kick in - and would the selections be better or worse? (Click on the graphic at right - it illustrates how the process works.)

Richard Siklos writes in Monday's Times about the wrangling that's taking place in the video-on-demand:

"...the road to video convergence is crowded with convoluted business relationships and potential conflicts. Behind the press releases, a major power struggle is unfolding among a wide group of stakeholders - from studios to satellite operators to manufacturers of consumer products - as new ventures are being devised for the digital age.

"We've taken a couple of steps forward, but there really isn't a clear business model yet," said David Zaslav, the president of NBC Universal Cable.

One issue is whether consumers ought to pay for their shows individually or whether on-demand access should be a free component of a subscription to video services provided by cable or satellite operators or newer competitors like Internet or telecom companies. Another is whether the shows will be sold for viewing during a set time period, or will be permanent so that consumers can collect them like DVD's. And, not surprisingly, a big point of contention is how the revenue generated by these new services is shared. As a result, only a handful of the most popular shows on television are available on-demand so far.

iPod scuttlebut: New content deals, streaming

Think Secret has this piece hinting that Apple is on the verge of announcing content deals with NBC, CBS, and Paramount Pictures. Wonder if we'll start seeing full-length films on the iTunes Music Store soon - and what the price will be. (My guess is somewhere around $3.99 or $4.99 - certainly not the $1.99 they're charging for hour-long TV shows.)

Think Secret also says that new technology from Apple will enable the company to sell streaming movies or TV shows that never exist on the buyer's hard drive (IE, a one-time-only viewing). Think Secret's Ryan Katz writes, "The system will also likely support downloading the video content to supported iPods but at no time will it ever actually be stored on a computer's hard drive." I have no idea how you can get content from the iTunes Music Store to a Mac to an iPod without ever having a copy of it on your hard drive. You?

21st Century Fox

Jim Gianopulos, co-chairman of 20th Century Fox Filmed Entertainment, was at the Reuters Media and Advertising Summit in New York yesterday, and he was talking about the future of the movie business. (I would’ve asked when they’re going to change the studio’s name to 21st Century Fox…or are they for some sentimental reason tied to the last century?)

I’m not sure Gianopulos takes seriously the challenge of competing with pirated movies – he seems to think that “you can never compete with free,” when you probably can compete by making consumption of movies cheap and convenient. But he has some sharp ideas about expanding access to movies:

"If you look out five years there is virtually no place you would not be able to watch a film," Gianopulos said.

In fact, he said, Fox would be open to a deal with Apple Computer iTunes music and video service.

Are you a video iPod owner?

For an article, I'm hunting around for people who own video iPods... drop me a note at kirsner@pobox.com -

SK

Pixar: An appreciation at MoMa

New York's Museum of Modern Art has an exhibit opening December 14th called "Pixar: 20 Years of Animation." From the museum's description:

Featuring over 500 works of original art on loan for the first time from Pixar Animation Studios, the show includes paintings, concept art, sculptures, and an array of digital installations. These works reveal the intricate, hands-on processes behind Pixar’s computer-generated films—including Toy Story, A Bug’s Life, Toy Story 2, Monsters Inc., Finding Nemo, The Incredibles, Cars, and numerous shorts. The exhibition also includes a complete retrospective of Pixar films. Demonstrating the symbiotic relationship between traditional and digital media pioneered by the studio over its twenty-year history, Pixar: 20 Years of Animation is a tribute to the artists whose work has reinvented the genre.

There's also a screening series at the museum to accompany the exhibit. Sounds cool; hope to catch both.

China gives OK to digital cinema chain

The Chinese government has given its seal of approval to businessment who plan to start the country's first privately-funded chain of digital cinemas.

The name's a mouthful: the Time Huaxia Digital Cinema Line. Tickets will cost about $1.20, compared to about $12 in a conventional cinema. Time Huaxia plans to have four hundred franchise cinema's built by the end of the year, according to this piece. I know they move fast in China, but 400 within a month? Likely they mean the end of the Chinese year...