District 4 Presents Back Lot- Strategies for Future Hollywood Moguls

in Real Talk

When you look at the “entertainment business” you often see the directors, producers, and stars getting all of the glory in Hollywood. However, it is actually the studio moguls and head executives that really run the business for the entertainers.

This is an article for the striver, that person that has stars in their eyes believing that show business is all about the show. Many have come to Hollywood seeking a creative outlet, fame and fortune but before long (sometimes even long after one achieves their intended goal of being a well-known in their chosen career) one realizes that however disguised entertainment is a business, and to survive and/or succeed a head for business must be prominent.

We will dive deeper into this as District 4 presents an executives’ interview discussing the business of entertaining:

Q. What developments in the past year have made you the most concerned with the future of the business and the challenges top executives all face?
A. Well I would say the decline of DVD hard goods multiples’ we are selling half of what we sold in the earlier 2000s, it makes it more challenging to derive the kind of revenue we need to justify making movies and paying what we need to pay to make them-that use to be the revenue stream that you could count on now we are much more reliant on the volatile theatrical market; In terms of the domestic and international, so much is coming out of the first market now.

Q. There have been some tumultuous years [at the box office], we have seen some very big movies come and not perform. I can remember The Lone Ranger lost 200 million or something like that, was that a moment when you thought this business?
A. (interrupts) Well, I think, the answer I would give you is-we had evolved to a business strategy [at that time] to having “event” movies like The Lone Ranger. Our studio took the risk understanding that when they work, they really work, and when they don’t they become these sort of high profile failures for the media and such-that doesn’t mean that the strategy or philosophy for making these types of movies is flawed; In fact if you think about the international market place where we are increasingly dependent on, they produce a lot higher numbers. [From a business standpoint] Yes if we produce a failure [domestically] it’s disappointing and high-profile but (he shrugs his shoulders) it goes with the territory.

Q. How does this sort of philosophy translate for other mediums? Say, Netflix for example or does it?
A. Well at Netflix we have a one on one relationship with our subscribers if you don’t like what you are watching on Netflix or you are not impressed with what you see, you can just click a button to cancel (he gives pause to let that thought resonate) you can’t do that with traditional television and theatrical releases. That makes us have to make noise we have a business model where we are making “event” television and it is not a cheap thing to do, so we do have to take those big swings every once in a while. If you think about it we are not competing with, you know, ABC sitcoms for example. Netflix is competing with-Pokémon go (he chuckles), we are competing with 20 million dollar blockbuster movies. We are competing in a really noisy world for attention.

Q. Netflix has spent about 6 billion so far? Where does that ceiling end?
A. It depends on the subscribers (he shakes his head as if to say who knows).

Q. But the rate of growth in subscribers has slowed in the U.S.?
A. Well it’s the law of big numbers so of course the rate of growth has slowed but we are continuing to grow at a very healthy pace (he motions with his hands to demonstrate a sliding scale). When you join Netflix in the US or in Mexico it is the same revenue pool. If a movie does well in Korea and bad in the US still revenue-there is a method to this, and so I think that the content budget is a direct reflection of the subscriber base.

Q. When an executive is trying to negotiate for talent, is it more difficult when places like Netflix has that kind budget?
A. Oh it’s a headache (he laughs) but I think it ends up being based on what kind of story they want to tell. If you are wanting to tell a story about a Young Sheldon or a movie about Black Panther then certain places will make better sense for your vision. At the end of the day artist want to be creative that’s the show. We place more value in the numbers because we are the business.
We pause here to bring thought to this timeless conflict the struggle between the artistic vision and the numbers man [or woman]. The key is to figure out which one you are, can you be both at the same time?

Q. For our final question-In two to three years how do you project that your business will be different, there have been a lot of mergers, reality television verse unscripted, Black Panther changed the paradigm for many, rumors of spins offs, and such. How will your business be different for up and comers?
A. Well the job hasn’t been the same for the last two/three years (he laughs) and so the changes are rapid but I can see more original programming, more streamlining, more collaborations. Branding means building, diversifying, and keeping abreast now for what’s new.

In short, think we would rather build it, than buy it-that will keep you in demand.
End of interview. This interview was edited.

Written & Edited by Alex Love, Interview by P.Mucclintock & Alex Love

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