Where Einstein Meets Edison

Hollywood, show me your startups!

Hollywood, show me your startups!

Oct 4, 2013

Hollywood is over a decade behind most other intelligent industries in its approach towards innovation. Its centralization around a few giant studios, the evaporation of independent funding sources and the increasing focus on mega “tentpole” productions, has led the industry to produce an overwhelming amount of formulaic content – not formulaic in the intelligent evolutionary meaning, but formulaic in the repetitively predictable meaning.

Of course, one could claim that every independent production company is a startup and that there are plenty of those (arguable statement). Well, besides the fact that most of them are just grinding the same creative water, even if they had all been innovative and groundbreaking their content needs distributors to reach viewers (aka the customers).

That aspect of the industry can provide clear evidence concerning the true entrepreneurial mindset in Hollywood. So where are the startups of Hollywood distribution? Show me the Startups!

One answer to that question would be – here they are:

1 Number of Releases per Distributor


The above chart shows the number of feature releases by distributor. At first, it looks amazing – look at all those movies distributed by companies that are not the big guys!

But wait. Quantity is never a good measure on its own. Lets look at real grosses by distributor:

2 Real Grosses - by Distributor


Oh snap. That doesn’t look as good. In fact, it seems that while everyone is weeping about overall box-office stagnation, the big guys are actually growing. It’s the little guys that are having their share of the pie significantly eroded.

Another way to look at this is through ticket sales:

3 Tickets Sold - by Distributor


Same picture. The leakage in total ticket sales is coming only from the “others” compartment – not from the big players.

And finally, let’s look at market shares – the ultimate battle score:

4 Market Shares by Distributor


Again, we see that since 2004 the little guys’ market share had evaporated from 29.7% to 12.2%. The big distributors are eating into their share.

What does this mean?

It means that we are seeing more and more movies being released by new players that are not part of the “Big-7” (I include Lionsgate in that list), but these players are fighting among themselves for a shrinking piece of the pie. It means that indies are hurting. It means that this industry needs shock treatment or it will consolidate into a predictable formulaic machine.

Dear studios, Indies were once your dogs – the ones who ran ahead and brought you innovation in their jaws. But now during this winter, you feast on their own flesh, feeling good about your own growth – but what will you do after you’ve eaten up all your dogs?

I realize that big studios own the big distributors and that even bigger conglomerates own the big studios. I realize that cinema is evolving into nothing more than a promotion tool for home entertainment, merchandize, and amusement parks. I realize there is a bigger picture. But the even bigger picture is that at the core of all this is creativity and innovation – new heroes, new genres, new formats.

It’s great that over 650 movies were released last year, but if the vast majority of them were screened in a couple of hidden locations in Tribeca, what’s the point? Innovation rarely comes from fat and happy incumbents, which is what we have here.

* This article was originally published on the blog The Hollywood Quantifier (HollyQuant.com). Re-published with permission from author.

** Raw nominal data source: The-Numbers.com. The data there is very similar to the data on boxofficemojo.com, but runs further back to 1995; CPI index (for nominal to real conversion) source: http://www.bls.gov/cpi/


Stav Davis