by Ben Fritz
Few in Hollywood were sad to see Lynton leave. To his friends, he had endured too much corporate chaos for too long, whether it was infighting with Steve Mosko, profit pressure from Tokyo, or the devastating fallout of the hack. To his enemies, it was long overdue justice for the man who had backstabbed Amy Pascal after the hack and had spent more than a decade believing he was better than the industry in which he worked, as evidenced by his efforts to escape Hollywood for the more refined world of academia. How did a CEO who didn’t even want to be there get to stay an additional four years, they murmured at parties, while the woman who lived and breathed movies got the ax?
Just two weeks after Lynton revealed his plans to leave, it became clear just how bad a state he was leaving Sony Pictures in. Sony Corporation announced it was taking a $1 billion write-down on the studio, due primarily to a drop in profit projections for the movie business as DVD sales continued to plummet and it had no Star Wars–size hits to make up the difference.
In general, 2016 and 2017 were tough years for Hollywood. The pile-up of box-office flops boggled the mind. Some tried to claim that the failure of so many big-budget franchise movies, like King Arthur, a reboot of The Mummy starring Tom Cruise, the sixth Alien movie, the third Smurfs, the fifth Transformers, the sixth X-Men, the second Alice in Wonderland, the third Divergent, and the fifth Teenage Mutant Ninja Turtles, indicated audiences were losing interest in recycled fare and wanted originality.
But people weren’t rushing to mid-budget original films either. The top-grossing films of both years were, as of this writing, all sequels, spinoffs, remakes, and reboots based on well-known brands like Star Wars, Marvel, the X-Men, Warner’s DC superheroes, Fast & Furious, and Disney animated classics. The growing number of franchise flops was a symptom of the fact that studios were making more and more of this type of film while chasing the same audience, who weren’t actually going to theaters more frequently.
Even though the number of bombs was sure to grow as a result of the heightened competition, studios attempting to act rationally had no choice but to focus primarily on expensive franchise movies, with just a few cheap horror films and comedies to round out their slates. Studios that didn’t have massive global franchises already in their pocket, like Sony, were still stuck in a hole that seemed all but impossible to climb out of.
It was no coincidence that around the same time that Sony announced Lynton’s departure and the $1 billion write-down, Hollywood’s second-longest-serving studio CEO, the head of Paramount, Brad Grey, was fired. Like Sony, Paramount had also suffered from years of underinvestment by its parent company and strategic missteps that left it with bad box-office results, poor employee morale, and few globally popular franchises. Midway through 2017, Sony and Paramount were ranked at the bottom among major studios at the box office for the third year running.
Paramount’s parent company, Viacom, had sold almost 49 percent of the studio to China’s Wanda Group the prior summer, and as Sony tried to determine a future for its studio post-Lynton, many questioned why it didn’t get out of the entertainment business entirely. Promises to find synergies with the rest of the company had never come to fruition after all, and fundamental questions existed as to whether a studio like Sony or Paramount could really come back in the current environment.
Perhaps Amazon would significantly expand its entertainment ambitions, or Apple or Google would launch their own by buying a studio and merging the old-fashioned movie business with a digital giant that represented the future. Perhaps Wanda’s Wang Jianlin or another Chinese giant would finally fulfill the ambition of becoming a global entertainment powerhouse by buying one of the studios. Or maybe a more successful Hollywood company, like CBS or Fox, would use its profits to simply acquire a struggling competitor.
One way or another, it was clear by 2017 that Hollywood was unlikely to continue much longer with six major studios pursuing similar business models. There was sure to be consolidation, and Sony Pictures was at the top of most people’s list of studios that might not exist in a decade.
Turnaround Efforts
In the meantime, though, Sony’s leaders had no choice but to try to turn things around. Tom Rothman in particular was a ferocious competitor who badly wanted to win. After replacing Amy Pascal in 2015, he attempted to refocus the movie division on international markets and global franchises—the areas in which the studio under Pascal had long been weak. But two years later, there was little to show for the effort.
The Melissa McCarthy–led reboot of Ghostbusters in 2016 was a money-losing flop. That December’s Passengers, a science-fiction thriller starring Jennifer Lawrence and Chris Pratt, which was the biggest bet on an original script by any studio that year, also proved a disappointment. It was decimated at the holiday box office by the Star Wars spinoff Rogue One, demonstrating once again that spending big money on anything original in the age of franchise film dominance is usually a suicide mission.
Things were better at the television group, but leadership questions remained in the wake of Mosko’s controversial ouster. In June, just a year after Mosko’s departure, his former deputies and widely respected heads of TV production, Zack Van Amburg and Jamie Erlicht, were poached by Apple to head up its new original content efforts. It was another blow for Sony and a threat to Hollywood, as America’s richest tech company signaled it was going to start making its own TV shows, and possibly movies too.
Tony Vinciquerra, the low-key but well-liked former Fox TV executive who was named to replace Lynton in May, now faced massive challenges: finding new leaders for the TV division that provided most of his profits, coming up with strategies to fend off the threats of new technology, and salvaging his still flailing movie business.
What was the future of Sony’s movie business? Nobody knew for sure whether reboots like Jumanji, long-awaited sequels within series like Bad Boys and The Girl with the Dragon Tattoo, or a new animated family film about emojis would turn into the next major franchise. But the odds, most people in Hollywood believed, didn’t look good.
The only sure thing, it seemed, was the most valuable asset Sony Pictures has had this century. Spider-Man: Homecoming was one of the most anticipated movies of summer 2017, in large part because fans knew the web-slinger had finally come home to the Marvel universe, with a reboot produced by Disney-owned Marvel Studios and featuring its superstar, Iron Man. Sony didn’t have to worry about making the movie, in other words. It handled the marketing and kept all the profits (while Marvel got the money from toys and other merchandise that a hit movie would spawn).
It would also mark a turning point for Amy Pascal, who was on set for every day of Homecoming‘s shoot in Atlanta, as its producer. Since leaving the Sony executive suites, Pascal kept her head as far down as humanly possible, staying out of the press and quietly starting life as a producer out of a bungalow on the Sony lot that used to be the schoolhouse for young stars like Judy Garland and Mickey Rooney.
She was the happiest she had been for years, free from the pressures of developing franchises and meeting profits targets for a Japanese electronics company. Though she was making less money and no longer had a grand office and impressive title, she could spend her time making the movies she wanted, including the mid-budget dramas for adults that she struggled so hard to make as a studio chief.
On a Friday in October 2016, an executive at Pascal’s production company showed her an original screenplay by an up-and-coming writer about the Washington Post‘s decision to publish the Pentagon Papers. She fell hard for the script and bought it that night.
Sony, which had first right of refusal on any movie Pascal produced, passed on making the movie. But as the Trump presidency made freedom of the press a more relevant issue than it had been in decades, Pascal’s project became a hot one in Hollywood, and she attracted Steven Spielberg to direct and Tom Hanks and Meryl Streep to star. Co-financed by Spielberg’s Amblin Entertainment, one of the new breed of companies like Doug Belgrad’s that are makin
g more diverse types of films, and Fox, it looked likely to earn Pascal an Oscar nomination less than three years after her ouster.
Why We Make Movies Now
Films like The Post are still an endangered species in Hollywood, but if you’re willing to open your mind to something beyond traditional movies made by traditional studios for traditional reasons, things get a lot more interesting.
By 2017, the most successful and revolutionary film companies were the ones making films for nontraditional reasons. Amazon and Netflix were upending the lower tiers of the film business, from low-budget indie productions all the way up to $100 million star vehicles, in order to sell video subscriptions, shoes, and garden hoses. Apple looked like it might soon follow in their footsteps, making movies in order to sell more Apple TVs and iPads.
The biggest, most successful studios had ulterior motives too. Disney may have been generating record-breaking profits from its Marvel, Pixar, and Star Wars films and live-action remakes of animated classics, but ultimately its movie studio existed to launch and maintain franchises that sold toys and T-shirts and drew tourists to theme parks. Universal was the second most successful studio of the 2010s, but its parent company, Comcast, made movies first and foremost to ensure that there would be compelling content on its cable and video-on-demand systems.
Warner Bros., the studio that consistently made the most movies, was poised to join that group in 2017. The wireless giant AT&T had agreed to buy its parent company, Time Warner, for $85 billion, and the business-friendly Trump administration appeared likely to approve the deal. For executives at Warner, it was a reason to cheer. No longer would they, like Sony, live and die by the profits of their movie slate each year. Now their primary purpose would be to create films that kept people paying to gobble up data on their phones and tablets.
Branded franchises would remain important because what better reason could passionate fans have to subscribe to AT&T than getting the best offering of Warner’s DC superheroes, Harry Potter wizards, and Lego animation?
But it was good news for people who wanted other types of movies too. Indie films were a terrible business on their own, as Bob Iger correctly observed, but perhaps they made more economic sense if they kept people subscribing to a certain wireless or cable company. It wasn’t a coincidence that Universal saved its specialty film division, Focus Features, despite years of red ink and the threat of Amazon and Netflix. Executives at the very top levels of Comcast insisted that the studio keep trying to make it work so art-house films would always be available to rent and stream on cable boxes.
Whether they’re making Fast and Furious 27 or Moonlight, however, it became very apparent that companies like Comcast, AT&T, and Disney view film as a means to an end, not as a special part of our culture in which they are privileged to participate. If the 2010s were the peak of the age of franchise films, the 2020s were starting to look like the age in which films would become nothing more, or less, than another type of content.
This was most clear in a long-simmering debate that reached a boil in 2017 over how long movies should play exclusively in theaters before they could be watched at home. Cinema chains like AMC and Regal had long insisted on a minimum of about ninety days during which people would have no choice but to watch a movie on the big screen, and studios had dutifully, if reluctantly, agreed. But as leverage in the movie business started to tilt away from theaters and toward the studios with mega-franchises that accounted for most of the box office, the argument shifted. The ninety-day window was archaic, studio executives argued, because millennials were used to getting what they wanted when they wanted it, on the device of their choosing, and companies like Netflix were offering great movies online the same day they opened in theaters.
Theater owners had obvious motives to oppose such a move, but certain directors who worship the silver screen and believe film is much more than a type of content that plays in theaters on its way to the iPad were horrified too. “The only ‘platform,’” said Christopher Nolan at an industry convention, while scornfully throwing up air quotes, “I’m interested in is theatrical exhibition.”
The plan for “premium video-on-demand” was to offer movies somewhere between two and six weeks after they debuted in theaters for $20 to $50, a high enough price that wouldn’t immediately undercut theatergoing, but a reasonable price for a family or group of friends who wanted to see a new movie but couldn’t or wouldn’t head out to a multiplex. Studio heads argued that such a move would help preserve, rather than undermine, theaters. While premium VOD was sure to make his soon-to-be bosses at AT&T happy, the Warner Bros. CEO, Kevin Tsujihara, also made a compelling case that premium VOD would help save the “adult dramas we’re having problems with right now on the theatrical side” because it would create a much-needed new stream of revenue for them.
By mid-2017, negotiations continued between the theater owners and studios as to how exactly premium VOD would work, but few doubted that it would happen. And everyone knew that once it launched, the prices were sure to fall over time, as would the number of weeks between a movie’s launch in theaters and when it could be watched on an Internet-connected TV, a tablet, or a pair of Snapchat Spectacles.
Films or Content?
For those who viewed moviemaking as a unique art form and the Hollywood studios, for all their flaws, as one of the great American achievements of the twentieth century, this was alarming. The easier it was to watch movies at home, the less special they might become. Films at their best are cultural moments, when millions of us gather to laugh, cry, scream, or dream together in a theater with a huge screen and a state-of-the-art sound system. These movies completely immerse us and for a few hours make us forget about our Snaps and our Instagram likes.
Would Wonder Woman have sparked a national conversation about the representation of women in our culture, or would Get Out have everyone talking about the intersection of horror and the African American experience, if so many of us weren’t watching the same movie together at the same time? Perhaps these films would have suffered the same fate as the Brad Pitt political satire War Machine, which debuted on Netflix with as much hype as the streaming service could muster but made about as much impact on popular culture as skywriting on a windy day.
It’s easy to be a pessimist and conclude that if movies simply take their place on our content queues, in between the latest seasons of The Walking Dead and Fuller House, they’ll have been devalued beyond repair. The fact is, though, that since VCRs became ubiquitous thirty years ago, cinema has not actually been a cinematic experience for most people. Regardless of how movies are intended to be watched, or “should” be watched, most movies are watched on the TV in the living room. And no matter what studios and film lovers do, that living room TV will be replaced by portable digital devices sometime in the next few years. Pragmatically speaking, the golden age of television is in the process of becoming the golden age of digital visual content, and movies will become a part of it.
The traditional economics of film, whereby each production aims to be profitable through a mix of box-office dollars, DVD sales, and television licensing, will become more and more challenged. That’s sure to further narrow down the types of movies that old-school studios like Sony make to the big, loud, and financially safe superheroes, sequels, and spinoffs.
But the new economics of film, in which two- to three-hour visual stories are funded by subscriptions to video services, wireless packages, and free product shipping, will flourish. The studio executives working under this model will no longer have to obsess, as Amy Pascal did, about whether every individual movie will be profitable enough on its own to satisfy a corporate parent’s expectations. They won’t have to gin up laughable revenue projections to justify making the films their gut tells them will work, or that they simply want to make.
If you love movies, you should be thrilled to realize there will be as many and perhaps more of them than ever. If you want to buy a ticket and see them on a big scr
een, you’ll still be able to do so.
Of course, it’ll be a lot easier if it’s a Marvel movie or one of its many offspring in competing cinematic universes. Original, mid-, or low-budget motion pictures for adults will increasingly play for just a few weeks, in a few dozen theaters, in major cities.
Most of the time, we’ll be watching those types of films the same way we watch television, YouTube clips, and virtual reality experiences: at home and on the go.
The terminology we use for visual content is already antiquated, given how often we watch TV shows on devices other than TVs and view films without any cellophane in sight.
But if movies aren’t stories we go to movie theaters to see, then what are they? Are they just, as Ted Sarandos argued, visual stories we can watch in a single night, rather than the several nights it takes to watch a television series? Realistically, the answer is yes. Most people already watch more movies at home than in theaters, and the bigger chunk that Netflix and Amazon and perhaps eventually Apple take of the business, the truer that’s going to be.
Nonetheless, I think something will be lost if we don’t preserve cinemas as a gathering place where hundreds of us can watch the same story in the same room at the same time and then collectively talk about it as a culture. Get Out is a great movie, no matter when and where you watch it, but it becomes a culture-shifting event when millions of us find ourselves scared and shocked and provoked in groups together over a period of a few weeks.
But you can’t force that to happen. If studios want people to go to movie theaters, they have to make movies worthy of getting off our asses. That might be because the film is an eye-popping spectacle you can’t fully enjoy on a TV or because it’s a zeitgeist-busting event that everyone wants to see together, right now.
The fact is, however, that there won’t be enough releases like that each year to sustain a healthy movie industry and a vibrant movie culture. For those to survive, we have to accept that most films will be streamed to digital devices at viewers’ convenience, whether a few weeks after they play in theaters, or at the same time, or having never played on a big screen at all.