Hollywood studios are clueless and in trouble...

Hollywood studios in midst of their own horror show
October 6, 2009
John Horn, Ben Fritz and Rachel Abramowitz
Copyright © 2009, The Los Angeles Times

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The recent firings and hirings of studio executives at Disney, Universal and elsewhere point to a widespread corporate panic amid sharp declines in DVD sales.

... as DVD sales have collapsed by as much as 25% at some studios, access to outside financing has vanished and production and marketing costs remain sky-high, media companies are cracking under all the pressure.

As the lineup of newly elevated studio executives scramble for solutions, expect an even greater emphasis on so-called "branded entertainment": sequels and movies based on toys, old television shows and other familiar themes. ... There also will likely be far fewer adult dramas and less reliance on movie stars -- many of whom can no longer draw ticket buyers, and are seeing their guaranteed salaries slashed.

"They still haven't found a new business model to replace the old one."

For years, DVD sales, coupled with the growth in international markets, compensated for box office losers.

But as the global economy tanked, so did DVD income.

At the same time, foreign monopolies in paid television have driven down the formerly generous license fees paid to American studios for cable and satellite reruns, while increasingly popular local language productions ... have cut into the international box-office returns for U.S. productions.

As profits vanish, new capital has become as unattainable as the best picture Oscar.

When times were flush, the studios spent like sailors on shore leave, handing out lavish producer deals, flying private jets, adding millions in overhead (including their own compensation) and pouring fortunes into poorly executed projects ...

Thanks to Kidsis for the link.

This just highlights the problems in Hollywood. A-list actors got paid too much. Producers got greedy. Studios chucked money at bad projects because they had too much money available. Studios depended on DVDs to make up for losses on bad projects. We trained people in studios in other countries to make 'American-style' movies, who now make them in their own languages. Their financing has dried up, probably due to referring to investors as "suckers".

What's so sad is that I could make movies for the rest of my life and still make money on most, if not all, of them. Hollywood is clueless as to what really is selling the movies.