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The Slow Death of Hollywood
interesting riff on centralization of movie production, which leads to franchises like Marvel and Netflix cancelling after 2 seasons
6 days ago by saranrapjs
The slow death of Hollywood • Substack
Matthew Stoller:
<p>In the old system, studios sold content, often over-priced, often shoddy, but they sold it to people who bought it. The end network, either theaters or TV stations, had to choose from distributors what content to offer to customers. They had to make money to say alive. They have to follow one of the basic rules of pre-1981 American competition policy, which is that combining inputs into a final output should create a profit, an indication that the business agent has in some way generated something of value. This means that if you build a better mouse trap, or in this case, a movie or show people want to see, you can get it to market and sell it.

But Netflix violates this rule. Despite its claims of accounting profits, Netflix is a massive money-loser, projecting it will burn through $3.5bn in cash just this year. Netflix is taking inputs and combining them into something that is of less value than those original inputs. But the company doesn’t really care if people watch its content, because it doesn’t sell content. The company is selling a story to Wall Street, that, like Amazon, it will achieve dominant market power. The story is that users will buy Netflix streaming services and it will be too much trouble to switch to a different service, which is a variant of a phenomenon called “lock-in.” So no one will be able to compete, the company will be able to raise prices and lower costs, and voila, another Amazon-style monopoly. It will be one of the few left standing after the inevitable shake-out.</p>

Stoller tells this tale via comparison with old successes such as Back To The Future and The Hangover. Certainly, Hollywood is struggling - because as he says (higher in the essay) the distribution system chokes films more tightly.

And yes, the funding bubble has to burst at some point. Quite how close that point is? That's tougher.
netflix  hollywood 
13 days ago by charlesarthur

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