Close the Curtain

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This is a nice, entertaining (so to speak) dust-up here.

Paramount Pictures, Metro-Goldwyn-Mayer Studios and Lionsgate decide they're not going to be paid enough money after 2010 by Showtime. So they don't just take their movies and go home. They go directly after Showtime, saying they will launch a “game-changer” of a pay entertainment service.

Now, that's a lot of pique for not getting paid what you want for, essentially, 45 new movies a year.

And, if you're Showtime, you're wondering if even those 45 are that big a deal. The new movies, after all, that might actually drive a TV consumer to sign up for a premium service are the blockbusters. Those are the ones, by the calculation of Matthew Duda, executive vice president of program acquisitions and planning for Showtime, that pulled in $150 million or more at the box office.

If those are the movies you really need, the number of those that qualified in the last three years from these three studios can be counted pretty much on one hand.

Start with Lionsgate. The highest-grossing movie it has put out to date is Michael Moore's Fahrenheit 9/11, at $119.2 million. Its biggest perennial winners are the Saw movies, where a dying vigilante known as the Jigsaw Killer puts victims in traps and gives them the chance to repent from their poorly carried out lives before he eliminates them. But, oh, Showtime has its own original series, Dexter, featuring a vigilante working as a blood-pattern analyst for the police. Yes, he's a serial killer; and yes, he's executing justice on bad people, too.

Then, go to Paramount Pictures. It delivered the highest-grossing movie of all time, Titanic. But that was a decade ago. In recent years, its blockbusters have been Shrek the Third (2007), Transformers (2007) and War of the Worlds (2005), according to Box Office Mojo. Two of those hardly seem to fit Showtime's current version of itself, a pay service for adults with dark leanings (and who put a value on a lot of sex and expletives).

MGM?

Doesn't even show up. Its biggest hit? Gone With the Wind (1939), $189.5 million.

But it has the James Bond franchise, which is enjoying a resurgence with actor Daniel Craig as 007.

(News flash from the MGM set: Filming was stopped Friday on the new James Bond movie, Quantum of Solace, after a stuntman was seriously injured in a car crash during shooting in Italy. According to The Guardian, this was the second accident on the set in four days, and the third since January.)

The breakup boils down to this: What exactly are movies worth anymore?

Just like every other medium out there, from music to news to television, the pressure is on from digital technology. In some cases, like publishing, increasingly lightweight and functional computing has turned participants into producers, making it harder to charge for professional product.

And, in the case of movies, digits collapse barriers. If your customers are dishonest, they get first-run movies from pirates, either on platters or through the Internet. And if your customers are honest, they have so many ways to get each movie, from DVD to download, that the thrill can be gone by the time a movie hits TV.

So the answer for Viacom's Philippe Dauman and his colleagues at Paramount Pictures, Lionsgate and MGM is not to launch a movie channel, into the maw of HBO or Starz. And forget any pique with Showtime.

It's to figure out the real riddle. Before wild cards such as Steve Jobs at Apple or Jeff Bezos at Amazon or Rupert Murdoch at News Corp. (can you say MySpace?) figure out how to make a truly compelling digital-entertainment service that incorporates films, TV shows, short and long clips from amateurs and the like, get there first.

The still-virgin turf, which doesn't require distribution deals, is the World Wide Web, accessed with broadband connections. Almost 62 million households now have broadband connections, even in this country, at this point, according to Leichtman Research.

Premium cable is a good growth business — but only if you're already a player. In the past five years, the number of overall premium cable subscriptions has risen from 49.6 million in 2003 to 53.6 million this year. About 800,000 new “premium cable units” a year.

This is unmistakeable: The days of the movie channel as a compelling innovation in personal entertainment are long gone.

What comes next is what matters.

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