Tentpoles are the future of entertainment

Book Review: Blockbuster (2013) by Anita Elberse 

In 2004, Chris Anderson, proclaimed: “Forget squeezing millions from a few megahits at the top of the charts. The future of entertainment is in the millions of niche markets at the shallow end of the bitstream.” The then editor of Wired magazine followed his article on the subject with his much hailed book, The Long Tail.

So what happened? Did we end up with a wider range of entertainment producers making decent profits by producing niche titles – or, Anderson would put it, a thick healthy tail with a smaller head?

A decade later, professor of business administration at Harvard Business School Anita Elberse says the opposite has turned out to be true. In her book “Blockbusters Hit-making, Risk-taking, and the Big Business of Entertainment”, which covers the movie, music, book, TV and – perhaps surprisingly to some – sports industry, she explains how and why betting high on a few products is much more profitable than spread betting.

According to Elberse, the blockbuster era commenced in 1999 when Alan Horn, Warner Bros.’ newly appointed president and chief operating officer, chose to single out four or five tent-pole or “event” films for “greenlighting” and pumped a large part of the studio’s budget into them. Meanwhile, Jeff Zucker over at NBC Universal, did the complete opposite by “managing for margins”.

In 2010, Warner’s top three biggest “bets” accounted for a third of the total production budget, yet they were responsible for more than 40% of the domestic and 50% of the worldwide box-office revenues generated that year. Elberse calculates that 60% of the year’s total surplus came from the studio’s top three movies – 70% from its top four investments.

By 2011 Warner Bros. became the only studio in history to surpass $1bn at the domestic box office for 11 years in a row. And NBC? It had gone from being the highest-rated network to fourth place, behind its broadcast rivals, and Zucker was ceremoniously sacked.

Why is pumping massive amounts of dollars into fewer titles such a recipe for financial success? According to Horn, the average movie-goer in the US sees only five or six movies a year (in international territories the figure is even lower), so it’s important to stand out from the competition, to make the release an event.

Of course, Horns’s strategy carries massive risks as well, as the infamous case of Heaven’s Gate proves, having caused the collapse of United Artists after it sold just $3m worth of tickets on a $40m investment by the studio. But, importantly, a studio would be taking a greater risk if it put more emphasis on movies with lower production budgets.

One of the reasons for this is that advertising costs are not directly proportional to the production budget. In other words, a movie that cost $150m to make doesn’t require twice the amount of spend on marketing as a $75m movie. And, as Elberse explains in graphs, the profit a studio makes from one blockbuster is way larger than what it can make in profit from a moderately successful smaller movie.

Blockbusters is a dense and somewhat dry read, lacking the lightness and humour of similar books on the entertainment industry, such as Robert Levine’s Free Ride. That may be because it appears to be more of an instruction on how to build a successful entertainment company.

This, however, doesn’t mean that it doesn’t feature some interesting case studies, such as the marketing strategies behind Lady Gaga’s Born This Way, and Jay Z’s memoir decoded.

We’re also taught the somewhat obvious lessons that a movie or book subject that resembles an already successful title has more of a chance of being successful than one that doesn’t – and that, still, it’s important to take chances on new ideas and untried talent, making smaller bets as well, in order to discover the next big-hit franchise/superstar.

The meaning of “blockbuster” is perhaps stretched a bit far. For example there’s considerable space dedicated to football clubs that buy players at the peak of their career (Real Madrid) and those developing the young ones’ potential (Boca Juniors).

At times it can feel a bit repetitive, as she goes through examples of the same phenomenon in a number of entertainment industries, such as how indie labels develop talent that then gets picked up by major label that magnify its success in the same way small football clubs act as hothouses for top premier league clubs.

It’s true that sport pulls in a large part of TV revenue, and that sports stars get paid even more than movie stars – yet one can argue that sports teams have a much larger window to earn back their money than, say, movie studios that largely rely on first weekend box-office receipts in order for theatres to continue screening their films (Horn adds that the DVD sales, rentals, streaming and TV markets are all driven by a movie’s theatrical performance), and record labels that rely on first week sales to enter the top 20 of the charts (a requirement by many radio stations to keep playing the record).

Meanwhile it’s somewhat puzzling that Elberse has not included video games in her studies, as that entertainment genre suffers more from “blockbusterites” than pretty much any other field. It also perfectly illustrates the ever-increasing focus on sequels as an even safer bet.

Of he UK Entertainment Retail Association’s (ERA) top 20 selling entertainment titles of 2013, which covers movies, video games and albums, only three were not sequels of blockbusters : the movies Les Mis (6), Django Unchained (13) and Life of Pi (14). The only albums that managed to sell enough to be on ERA’s top 20 list were Now That’s What I Call Music 86 (9) and Now That’s What I Call Music 85 (10).

Blockbusters doesn’t lament the fact that the “head” of the entertainment market has grown bigger while the “tail” has thinned out, or that investment is skewed towards these “safe” bets – it simply instructs its readers on why they should invest in fewer tent-pole projects. As a recent Hollywood Reporter headline declared: “TV’s Latest Risk: Spend More Make More $$.” It’s a strategy that few can practice.

One is left with the lingering question of how this will affect diversity in the long run. Paradoxically, the internet has given us more choice and simultaneously increased attention deficit. Could it be that the winner ends up being the lowest common denominator?

Helienne Lindvall
Columnist The Guardian