Transcript

Jim 00:00
Welcome to the Inside. This was the week that Hollywood began to prepare for a long hot summer without the help of script writers, as both sides reported that they weren’t even talking at this point. On a happier note, at the box office, the Super Mario Brothers movie broke $1 billion in ticket sales. And in France, the Cannes Film Festival premiered films including Killers Of The Flower Moon, from Martin Scorsese to enthusiastic receptions. I am Jim Chabin in Los Angeles, and with me is Wim Buyens. He serves as CEO of Cinionic and he joins us live from Brussels, Belgium, where it’s evening. Good evening, Wim.

Wim 00:39
Hey, good morning Jim. Good to hear you.

Jim 00:42
Wim, we have been talking here for months about the anticipation for this Summer’s Box office. The numbers this week are really heartening. Fast X: The Fast and Furious franchise generated $319 million in the opening weekend worldwide, Guardians Of The Galaxy is now at $659 million from Marvel, and Super Mario Brothers is now the number three animated movie of all time at $1.25 billion in just a few weeks. Fantastic. Is this what you were… isn’t this what you’ve been wanting?

Wim 01:16
You know it’s hard to predict, but when it comes together like it does today, or like I say it does this period of time, then it’s fantastic. I mentioned before that we need a couple of consecutive quarters of good box office numbers, and I think we are on the process of as an industry to build it, which is fantastic.

Jim 01:32
Well, we’ve got Across the SpiderVerse from Sony and The Little Mermaid from Disney in the next few weeks. But those numbers really just give you the sense and the confidence, right, that the movie fans are there, they’re there to buy the tickets if the product’s in the theaters.

Wim 01:49
No, that’s true. And I think there’s a couple of blockbusters right now, which of course are known titles you would say, right? So people recognize them. I think that’s important to get them back. I think we need to get people back in the habit of going to the theaters and I think that what this shows is that we not only make good box office, but it gets repeat business, right? So I feel very inspired about the outcomes right now.

Jim 02:11
We have wanted for some time to get today’s guest on this show. We’ve wanted to get a big picture of the state of our business and the changes that are gonna affect us moving forward, and we’ve got the perfect guest to talk about it. J.D. Connor is an associate professor in the division of Cinema and Media Studies at the University of Southern California. He’s the author of several works, including the book, Hollywood Math and Aftermath, the Economic Image In The Digital Recession. He served on the faculty at both Yale and Harvard in film and media studies. His research and teaching focuses on the art and industry of contemporary Hollywood. Welcome J.D. Connor.

J.D. 02:50
It’s a pleasure to be here. Thanks, Jim.

Wim 02:53
J.D., thanks very much for joining us today and it’s fantastic to get an insight on your unique perspective here. Can you tell us on how you see the state of the cinema industry on an overall perspective, and also how do you see the outlook of the business looking from one hand on the studio site and from the other hand on the theatrical one.

J.D. 03:13
It’s obviously a time of enormous change and so while I’m gonna say what I think the state is right now, come back to me after dinner and it might be a little different. I think for theatrical, this is gonna be a really interesting and a good year, particularly at the top, the ways in which, as you’ve discussed already, blockbusters are finding their audiences, they’re finding audiences that are broader than perhaps just one might have expected. Older audiences are starting to find their ways back to the theater and rebuild that habit as well. Even a movie that had a kind of strange release, like Air, shows that there is a market for older people in theaters. There are some challenges though, and I think we really need to, we really don’t know how they’re going to turn out.

Jim 03:58
J.D., we want to ask you about the major players in Hollywood and start with Disney. Bob Iger back in charge seems to be trying the right size the company, so they’ve had some layoffs, but it’s a small percentage of their overall employment workforce. But what are the challenges that Disney is trying to sort out right now?

J.D. 04:19
Disney has a lot of challenges, but they have a lot of strengths that I think we’ll see them through this. The first is that the parks are doing great business right now, and having that much money spin out of the parks allows you to make decisions, not in a panic mode, not to make decisions you know that are rushed and that you’ll regret. There’s this Hulu question going forward. Will Disney, which now owns two-thirds of Hulu, spend the money to buy the rest of it? It’s a big charge. Hulu has a lot of interesting subscribers who watch a lot of ads in a recession. Ads supported subscribers are really valuable for a place like Disney, so that’s a strategic decision. It looks like Disney’s gonna go ahead and do that.

Jim 05:02
Bob Iger wrote in his book that if Steve Jobs had lived, he thought that Disney and Apple would’ve merged. Do you think that makes sense today?

J.D. 05:09
Yes, I think that it makes perfect sense and that it will in fact happen. The only thing that might stop it would be kind of different revivified antitrust ruling from the Biden administration. But Apple doesn’t have a studio of the size even of Fox. It doesn’t have a studio the size, you know, of MGM. And so there isn’t really a worry there. It’s of vertical integration and what we’ve got is a real culture match between Disney and Apple. They are both dedicated to very high end production inside digital spaces. That kind of attention to detail, which you know is part of the Jobs’s DNA. That company seems to fit very nicely with Apple. They don’t have a lot of things that they would need to spin off. I think it will be probably the first of the next wave of huge mergers that we see. Wow. But, you know, I’m way out on a limb when I say that and we’ll see what might happen.

Wim 06:12
So, J.D., new management team of Warner Brothers is also working through their recent merger with Discovery. How do you see the outcome of this, and do you think this will have a long lasting impact to the industry?

J.D. 06:25
That is a tricky merger because they did, although it wasn’t a private equity buyout, it was basically built like one. There’s a huge amount of debt that they’re trying to pay down, which is why the cuts came so hard and so fast. It’s why the Warners was the first place to really make the commitment to move what they would call non-performing content off of the streaming service and license it to these free ad supported streaming companies such as Roku and Tubi. And they clearly are in the process of trying to clean up that balance sheet, which is not something you want to ever hear as a creative, to clean up that balance sheet in order to prepare it for sale. Again, the way that merger took place was through a kind of complicated financial transaction called a Reverse Morris Trust, and in order to basically be tax free, they had to agree that they weren’t going to sell it right away. But the moment that that alarm bell goes off, Warner Brothers Discovery is for sale. And I think we can see, expect to see them move within a year of the end of that just very, very fast.

Jim 07:36
So that tees up our next one. Brian Roberts and Comcast have been very successful recently with Universal’s Super Mario Brothers. But there has been speculation that eventually Brian Roberts might try to either buy Warner Brothers or sell NBCUniversal to a larger company. How do you read that?

J.D. 07:55
I think that they are a buyer, not a seller in this market. The data pipeline from the Comcast side is like the Disney parks. It spins off a huge amount of money and it’s relatively price insensitive as opposed to the cable bundle, which everyone is cutting. At their most recent earnings call, Brian Roberts was almost dismissive of the amount of money they were making on the cable side. Now that was partly propaganda because there’s such a collapse in that revenue with more cord cutting. But I think that, yes, them purchasing Warner Brothers Discovery and bringing Zaslav over to run the content side makes a great deal of sense. Because they’ve just come through yet another sexual scandal at Universal. They are looking for a new head. So they have a gap where Zaslav, who clearly has positioned himself as somebody who can right size, as we were saying, one of these mega conglomerates would fit in a kind of complimentary way. Now, stylistically, you’d be hard pressed to find two people very different than Brian Roberts and David Zaslav. This would be an an interesting personality clash. But I think the work makes sense with the two of them coming together. I can’t believe I’m in the biz of predicting like all of these mega mergers, but like, why not?

Jim 09:16
Let’s, let’s, why not? No, this is why you’re here. So the question is, what kind of timeline are we talking about? Some of these things.

J.D. 09:24
So I don’t know what the Disney-Apple merger timeline is, but given that Iger has said that he would be in the job for two years, he’s six months in, I’ll say within 18 months. And given that the Reverse Morris Trust over at Warner Brothers Discovery expires in basically a year, I’ll say within two years there. The biggest thing that’s sort of hiding in the bushes in all of this is what happens with the two players who have done absolutely nothing about merging and acquiring. That is Sony and Netflix. Netflix has always said that it didn’t need a studio. It didn’t want to be in the theatrical business. It also has said it didn’t want advertising. It’s also said many things that has changed its mind about, that it was always gonna do binge releases. It’s obviously moving away from that too. Sony is the only one that doesn’t have a streamer that isn’t tied up with that. I think if Netflix and Sony look around at a landscape where. Apple-Disney have merged, and where Warner Brothers Discovery and NBC Universal, Comcast NBC, Comcast Universal, have merged the two of them as a tech company and a hardware company, make a lot more sense than they did say five years ago or 10 years ago. And we could see that as a kind of, I don’t wanna call it defensive play, but a counter move over there. They’re also the two with the best balance sheets right now.

Jim 10:47
Where does that leave Viacom and Paramount?

J.D. 10:50
Yeah. I think it leaves them as the odd person out in the way that Lionsgate may be the odd person out in the way that, you know, odd company out. They may get bought, but by someone else. But the tricky thing for Paramount Viacom, for Paramount Global is that they are a studio. And so if they want to merge with another studio, it looks like that’s the line in the sand that the Biden Administration is currently drawing. And so, Paramount may not have a buyer out there. Lionsgate is smaller and clearly is preparing itself in some ways. You know, they have benefited from, again, one of these tremendous blockbusters that we were talking about earlier, the tremendous performance of John Wick the spring. But we’ll see. I’m, you know, any of these things could go someplace differently. If, you know, if Brian Roberts and David Zaslov have a terrible meeting together, then maybe NBCUniversal goes after Paramount Global. It’s, I think, less of a compliment there, but it could happen.

Jim 11:48
Wim, let me bring you in here. If you have all of these super companies, theoretically, these super merged companies, does it make it easier for the business to get done or more difficult? It sounds like three or four giant combined companies could be on our horizon.

Wim 12:04
It’s hard to predict, right? I think that what’s important for the industry of theatrical at least, is that we have, that there’s enough content. Diversity in the content, right? Coming for different audiences. And we need to make sure that, that the exhibition world can be profitable, right? Because otherwise they cannot keep on investing in the great experience. So I think that those are underlying fundamentals which we need to have to make a great industry. I dunno if, if those big giants will make it better or worse. Hard to predict. But if, if the content keeps on being there at the right size, with the right quality, I think for broad audience. That’s, that’s really what’s key.

Jim 12:43
J.D., while we’re at it real quickly, Amazon, what does Amazon do?

J.D. 12:47
So I don’t think Amazon is in a position to buy another studio or another content mill of one kind or another just because of these antitrust concerns. I think the MGM deal was the one they could make. They made it. There’s been a lot of second guessing about Amazon’s theatrical strategy over the last couple of years, and I think we’ll see what it looks like going forward. They’re perfectly willing to spend money. You know, Air is a very expensive movie for them, and I think it performed the way they wanted it to, and maybe that’s all they need out of this. They may not be out there hunting franchises in the wild other than say, the Lord of the Rings series, which I think the numbers that were released showed that that did not do what they had hoped it would, and I think that’s largely because it wasn’t theatrical.

Jim 13:36
Our guest insider today is author and educator, J.D. Connor from the University of Southern California. We’ll be right back.

Ad Break 13:46
The Insiders Show is made possible through the generous support of Cinionic, providing future ready technical solutions to cinemas. With more than 100,000 projectors installed, Cinionic now illuminates more than half of the world’s cinemas every day. Visit cinionic.com.

Jim 14:06
Our insider today is J.D. Connor, whose latest article is entitled Universal Solvent: Experiencing Mario. It’s published in the Los Angeles Review of Books.

Wim 14:17
J.D., we’ve seen an increased number of crossovers in narratives between gaming, film, and television. Most recently, the Super Mario Brothers had a great audience reaction at the box office. Looking ahead, how do you see the conversions on the gaming and cinema? Where do you believe the IP will be coming from for the next decades?

J.D. 14:37
I think one of the things that’s crucial to see in the way games have become more successful, both in theaters and on television, is to see that what’s happened is that there’s been a recognition that different games should be adapted differently. The Last Of Us probably would not have had anything like the impact that it had, had it been done as a single movie. It would’ve just come across as a zombie movie and probably been sort of tamped down by that. But by surrounding it in the HBO prestige, making it a little bit more durable, it really said what we want out of this is character arcs and that kind of meshing of narrative and character that only prestige TV can give you in the course of, you know, 10 weeks in a row. At the same time, the Sonic movies were very successful and tremendous fun and, you know, that went back to an old fashioned kind of version of how you would adapt a video game. And then we have Mario. And Mario is different. I think Mario is different in the sense that it was just, it is the Moby Dick of video game franchises and it had no theatrical presence. Its televisual presence was minimal, so there wasn’t a legacy you had to live up to. And then, you know, the question is whether some of these franchises that have been enormous in anime or outside the United States, will find more theatrical traction in the U.S. Will that be the case with Demon Slayer? And I think that there is certainly room for that kind of breakout from some of these other video game IP universes.

Jim 16:14
J.D., you’ve been a historian of Hollywood. We are in the middle of a writer strike. Those are not new in Hollywood. What do you make of the current situation and how do you think this gets resolved and when?

J.D. 16:26
This is a particularly tough strike. I think because the demands that the writers are committing to in public are very, very hard for a lot of the studios to publicly agree to. The minimum staffing makes perfect sense for the writers, the demand that they be staffed earlier, kept on through production. That’s how you build writer’s careers. It’s also how you build a set of skills that the industry needs more than ever. The studios, on the other hand, are looking out there and saying, we wish we could just save some money by paying people less because we are spending money doing other things. Maybe overpaying actors, maybe overpaying showrunners, maybe overpaying for our streaming services, which continue to bleed actual billions of dollars. So even if the overall company is profitable, that sector will need, they say discipline. It’ll need to be shrunk. It’ll actually have to be contracted even as there are more series. So I think the things that change, the loggerheads that we are at right now, will be whether or not SAG, the Screen Actors Guild, joins the strike when they’re negotiating window closes here. Is there a way that the studios can find their way to making an agreement if say the actors, writers, and even maybe the directors go out with them? It’ll be tough and it would require, I think, a kind of industry leadership that one wonders where that would come from. It’s certainly not gonna come from David Zaslav, it might come from Bob Iger, but Disney is notorious for wanting to, you know, keep its costs down by paying its labor less. That’s in the DNA of that company and has been since Walt. So I just don’t know where that would come from. It’s gonna be tough.

Jim 18:19
For most of our career, there was a gentleman, Lou Wasserman, who ran Universal, who negotiated with all the unions and called them together and I remember talking with the president of one of the unions who said, you know, he sits you down and you come to an agreement and it may not include everything, but he calls the other studios and says, we have a deal and we’re not going to interrupt our business here. So it’s interesting that you think that there needs to be some sort of a statesman to step in here and that all of these current leaders have their own challenges. That may preclude them from being the one who leads the way?

J.D. 18:54
I think so. Wasserman had the advantage that he had been on the agency side for a long time. The agencies are in a really tough spot. They want some of the things that the guilds want. The agencies absolutely want more transparency about viewership. That way they can ask for the right quotes for their clients. That’s a crucial demand. But the agencies also probably don’t care that much about the writers’ staffing duration because every deal is, you know, another deal that the agencies get to make. And if you know, they would much rather see 500 series than 400 series because there’s just that many more deals to be made. So their interests are tricky to assess in all of this, I think the writers have been very strategic. They have won in the court of public opinion to the extent that that’s significant and they’re doing so at a time when there’s more pro-labor sentiment in the United States than in certainly in at least a generation and maybe more. So I think we could be in for a very long strike here, and it’ll be interesting to see where the bends and breaks are.

Wim 20:02
J.D., what role do you see A.I., artificial intelligence, will be playing within this business moving forward? And you see this technology, how is it affecting the creative process right now; do you believe that there is some kind of areas where it can play in commercial side and can play in entertainment?

J.D. 20:19
So this is, I think, a huge question. We deal with it in so many ways just on campus now, and I think in the entertainment industry, it will have just a whole range of, I think, largely unpredictable but also diverse effects. And one thing I would just hope people would do is say that it’s not like there is a box that has an AI in it that does everything. There are so many AIs and so many of them do different kinds of things, some of which we are all in favor of, and some of which are kind of terrifying and are being litigated as we speak, whether that’s through contracts or through lawsuits. So for example, you need to use good old fashioned machine learning tool to come through a podcast and take out all the times when I say “um” or to remove the clicks that turned out to be in the background, nobody objects to that. The audio engineers are thrilled to have it and so on. If though I have taken all 700 episodes or whatever of the Simpsons, and I have ingested them into a bespoke AI that can produce Simpson’s jokes, And that gets good. And so the writer’s room at the Simpsons gets smaller. That seems like the kind of thing that is obviously as fraught as the writers have made it out to be and is going to be fraught going forward, but that’s a very different kind of computing technology and we are not there yet.

Wim 21:52
With so much attention paid by media companies to their streaming and SVOD services. How can a tradition of storytelling continue to center around theatrical experience. What does a cinema possess that should give us optimism about its future?

J.D. 22:08
I’ve always been optimistic about theatrical releases, particularly for titles that people might or might not want to go see. And now that we’ve had several years of data to look at, theatrical releases only seem to help streaming releases. That the amount of good word of mouth that you get from a theatrical release, plus the box office that you get there seems only to benefit the streaming release, the ratings that come after they don’t cannibalize each other, that it makes a perfect window order, and that that’s true even in 2022, 2023. So I’m quite optimistic that at some point we’ll build back the habits of going to all these different sorts of movies, not just blockbusters, but also specialty smaller box office windows will get longer and shorter depending on the title, but I do think that. Streaming benefits from theatrical, and I think the data are incontrovertible now at basically every budget point.

Jim 23:13
J.D., our industry is lucky to have you. You are a great resource and a great sounding board for the ideas of the industry, and we could ask you questions all day long. So the only solution is to ask you and put you on the spot. To ask you to come back and talk to us again soon.

J.D. 23:29
I’m more than happy to. I’ve made so many wild predictions I need to come back and correct myself.

Jim 23:35
We’re gonna hold you to ’em, every one of ’em. Thank you J.D. Connor. Wim and I will be right back.

Jim 23:41
Wim, what a conversation.

Wim 23:44
Absolutely.

Jim 23:45
I felt like I was in a college classroom with the professor, I was really struck that he seems that there’s almost an inevitable sense of mergers, super mergers that will come over the next few years. What was your take away from that?

Wim 24:02
Yeah, so I had a feeling that what I think he was expressing is it’s not stable today and it needs to get a more stable place and that that’s gonna lead to mergers, right? So of course we come out of an unstable situation, Covid, which, you know, especially for our industry I think we are coming out of that right now and finding our ground back. But, but some of the fundamentals about the balance between, you know, streaming and television, theatrical and those things for those companies is fundamental. And then I think there are also some companies which have deep pockets, right? Which needs to figure out what to do next. So that combination, I think is fueling the idea that mergers are inevitably one of the things needs to happen. But listening to that, these are super mergers, right? Those are ones. You have to have a strong captain right. To be on the ship there, so.

Jim 24:48
Yes. And it comes back to are we creative companies or are we technology companies? You know, if Disney merges with Apple, what are they? If Warner Brothers Discovery with all their technologies, merges with Comcast.

Wim 25:04
Yeah. That I do believe, Jim, we talked about it, you know, years back for the, the society, right? The importance of getting technology and creative, getting that closer together and this mergers is articulating this potential mergers, I would say articulating that, that even more, right? When we founded at Cinionic, we said we need to be close to the content because we believe that remastering is gonna be an inevitable kind of technique we need to do to get a better, you know, visual or better sound experience to our audiences. And that means that that content and technology needs to work together. Do we need to be in one company? We can debate it, of course, but do we need to work more together? Inevitably it needs to happen.

Jim 25:41
Well, I thought it was interesting that you were at the Cannes Film Festival showing filmmakers your new technology. This very much speaks to your desire to put the technology in the hands of the people that that tell the stories. What were the reactions to people who saw your new laser projection?

Wim 25:59
Barco, HDR Light Steering demonstration we did was very well received. Now we had somebody demonstrating it, which also is a colorist. And so he was showing them how the work is done and how this is different compared to what they do today. So it really helps them to really understanding the bridge, not just from the picture but from the process. Because if you think about it, whatever new we want to introduce, if we bring something in which dramatically change the process of making a movie, we induce a huge amount of cost. Or we induce a huge amount of inefficiencies, which the industry doesn’t like. And so he was clearly showing them what steps needs to be taken and that on top of the picture quality gave them a fantastic view. So I think the takeaways was this is definitely something we can handle, right? So very intuitive. And the other piece was, this has clearly a different visual experience than what we used to have with a standard solution. And I think those were the two big takeaways I would say came out of the audiences there.

Jim 26:58
Well, congratulations on that and we’ll look forward to seeing it in a theater near us. Our quote of the day comes from Rolling Stone’s Review of Killers of the Flower Moon by David Fearer. He writes, the end result was indeed worth the weight structured as the sort of throwback big picture epic that characterized ambitious movie making in the seventies and eighties. Killers Of The Flower Moon at its core is a love story, but it’s also a mystery above all, it’s a Martin Scorsese picture brimming with reverence. For a culture that survived a horrible trauma, it is filled with exhilarating flourishes. Film history references. And explorations of the fault line between the sacred and the profane, and yes, it’s a masterpiece. Thank you, JD. Thank you Wim. And thank you all for listening.

Jim 27:49 The Insiders is presented by Cinionic and produced by the Advanced Imaging Society in Hollywood. Our executive producers are Adam Cassels in New York, and Mike Piltzecker in Los Angeles. Brett Harrison produced today’s show and our technical director is Matthew Bach-Lombardo. This is AIS.