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Thursday, July 13, 2006

Cutbacks at Disney, and Why Dick Cook Should Create a New Division

Disney isn't just cutting staff by 20 to 25 percent, but also the number of movies it'll release each year, to about 10. (That's down from 14 to 21 each year over the last five years.) Claudia Eller of the LA Times writes:

    The latest moves are part of a nearly decade-long retrenchment by Disney to boost profitability of its films as the financial risks in the movie business grow more treacherous.

    Disney's overhead cuts follow similar moves made recently at competitors Warner Bros., Metro-Goldwyn-Mayer Inc. and Paramount Pictures and its newly acquired DreamWorks SKG unit. Despite Hollywood's box-office recovery this year, studio profits are still being eaten away by higher production and marketing costs. In addition, growth in the lucrative DVD business is slowing dramatically.

The reduction of the number of Disney releases, to ten a year, means that Disney's strategy is to spend more on each movie (`Pirates 2' cost about $200 million to make), lavish each movie with more management oversight, and market the hell out of them when they're released. This is like launching the Space Shuttle: it's expensive, and there are lots of things that can go wrong.

The only reason that 'the movie business [is growing] more treacherous,' as Eller writes, is that studios are increasingly adopting this `less is more' approach: in a world where the Internet supports incredible diversity, and Netflix lets a million niches bloom, hey, let's trying satisfying people by giving them fewer choices.

Disney doesn't do badly with big-budget movies: look at `Pirates 2,' `Cars,' and `Narnia.' (But don't look at `Hidalgo' or `The Alamo.')

I would humbly suggest that, in addition to making these ten big-budget movies a year, Disney studio chairman Dick Cook would be smart to start up a new division called Cheapskate Digital Pictures. Give the entire division a budget of $20 million -- one-tenth what it cost to make `Pirates 2.' Assign two executives -- no more -- to run the whole division. Give them the cheapest, rattiest office space you can find on the Disney lot. Make them suffer with just one assistant apiece, and hand-me-down Blackberries. And tell them that their objective is to not just turn a profit for the division...not just to make the next `Napoleon Dynamite' or `My Big Fat Greek Wedding,' or to find the next `March of the Penguins'... but to make more movies with their $20 million budget than the rest of the Disney studio is making with its annual budget of roughly a billion. (Of course, all movies would be shot digitally, and would rely on the Web to generate interest in advance of their release dates.)

Finally, some unrelated links:


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