3 D Won't Save Hollywood from the DVD Collapse

The Financial Times reports that films without a broad audience, but made in 3-D, are flopping. The 3-D craze, indeed, may be killing Hollywood's effort to find a way out of the DVD collapse. Even films like "Eat Pray Love" are getting in on the merchandising business with handbags, t-shirts, necklaces, day beds, wines, and more featured in the movie sold on Home Shopping Network. Considering the fairly anemic gross of the movie's opening weekend box office ($23 million), as an indicator of interest, even the best-selling (9 million copies) Elizabeth Gilbert novel could not turn out the opening weekend box office of $31 million for "Sex and the City 2". Thus the futile search for new technology, and new "deals" to save the business model of Hollywood.


Ed Driscoll notes that the business of Hollywood consists of making "dark and edgy" material that does not appeal to audiences but Hollywood insiders. “Making something commercially successful and appealing to a broad public, like The Incredibles, is less likely to get a Rebecca Romijn look-alike to sleep with you than making dark, hard-hitting, critically acclaimed material like Million Dollar Baby,” the post quotes Michael Medved. That business model was sustainable as long as movies like "Rocky Balboa" brought in lots of revenue through DVD sales. Yesterday, I saw that very same movie on sale in the local supermarket for $6.99. The movie is four years old, being released in 2006. As the LA Times noted last year, DVD sales are collapsing, with films like "Indiana Jones and the Crystal Skull" that do well in box office but poorly in exit polls and word-of-mouth, under perform vs. say, "Iron Man" that retain audience affection. Films that pump up box office by mega-marketing don't bring in revenue anymore, with tight wallets and the loss of DVDs as a novelty. "Hancock" also under-performed, in DVD sales, vs. family films like "Madagascar" or "Wall-E."

The LA Times article noted:

Although studios are extremely secretive with DVD numbers, especially the figures involving conversion rates, I was able to study one studio list of the films that performed the worst, in terms of conversion from box office to DVD. It was a long list. Films that fared poorly included a host of year-end releases whose DVDs arrived this spring. They included such box-office hits as "Quantum of Solace," "Yes Man," "Seven Pounds" and "Saw V." The list also included a huge number of adult-oriented awards-season films, from "The Reader" and "Milk" to the Oscar winner itself, "Slumdog Millionaire."

To understand what this all means is to first understand how complicated it is to interpret the numbers from the DVD end of the business. For example, did "Slumdog Millionaire" have a disappointing showing in DVD because everyone who really wanted to see the film had gone to a theater? Or did it perform poorly because Wal-Mart, by far the biggest single outlet for DVD sales, especially with the demise of more upscale retail outlets like Circuit City, is not a hospitable home for an exotic specialty film? Even top-ranking studio executives admit that much of the DVD business is a mystery to them. I was on the phone with one high-level executive who insisted that the DVD business was down only 10% to 12% until he grabbed hold of a new study on his desk, skimmed the cover sheet and said, "Hmmm, I take that back -- this study says it's down 18%."

The problem is that studios have invested years in obfuscating their DVD profits, fearful that A-list actors and filmmakers would get wind of how much money was pouring in and want a bigger piece of the action. By Sunday, everyone knows what movies made in theaters -- it's a carefully monitored cash business. DVD has little of that transparency, especially with some DVDs being rentals, while others are sell-through purchases, making the numbers more difficult to quantify. When studios announce their opening day DVD numbers, they aren't actual sales figures--the numbers represent the amount of DVDs shipped to stores. The DVDs that don't sell get shipped back to the studio. The industry abounds with stories of studios who have warehouses full to the ceiling with DVDs that went unsold and were shipped back, left to rot in storage. 

Secrecy is still the order of the day. DVD numbers are so well hidden that when one studio chief was preparing a budget estimate for a British period project, he asked his home video people how many DVDs Focus Features had actually sold of "Atonement." He still doesn't know -- nobody in home video could come up with a good answer.

No one has any real answers about the DVD downturn either. Obviously the country's economic woes have played a role. The DVD business has long ago lost its novelty, so many consumers don't feel the need to stock up on as many new releases. Many consumers have turned to downloading and rentals, with Netflix in particular enjoying a burst of popularity -- a good thing for filmmakers, but not such a good thing for studios, who make a lower profit margin on rentals than sales. 

More recent news stories have estimated DVD sales slides to more than 25% from the prior year. This is not good news for Hollywood. Which is locked in to its model of making movies for itself, so the forces behind the "dark, edgy" movies can "sleep with a Rebecca Romijn look-alike" by getting accolades from their peers. Think about this: John Lasseter has produced for Pixar, hit after hit after hit, with movies that under perform vs. expectations or other Pixar films, still very profitable. Yet because he resolutely produces family fare, he has less power, prestige, and imitation than say, Quentin Tarantino or Oliver Stone, two writer-directors with not very many hits but a cult reputation for being "dark" and "edgy." Hollywood did not need to copy Lasseter, it had an easy stream of first Video Cassette revenue, and then DVD revenue. Which has now declined inevitably, as bad content, hurting wallets, and the end of DVD novelty brings the great Hollywood cash boom to an end.

Larry Meyers at Big Hollywood believes that the Netflix deal to acquire streaming video rights from Epix, the joint venture between Lionsgate, MGM, and Paramount, is a deal changer. The deal really is not a game-changer. Among other things, MGM is essentially a dead studio, with the value of "dead" studio Miramax's film library set during its recent sale at around $900,000 or so per movie. Lionsgate and Paramount don't release many films any more, not to the extent that say, Warners, or Fox do year in and out. The deal won't really transform Hollywood significantly, contra Meyers.

Because the biggest problem is not HOW people watch movies and television (serial) entertainment, it is WHAT is offered to them.

Consistently, people will pay (but not too much) for good, solid content. As the Financial Times graphic points out, family oriented animated films do well, "edgy" stuff from M. Night Shymalan or exploitation fare ("Step Up 3D") do not do well. Even if they are in 3-D. Which after all dates from the 1950,s and was famously mocked by SCTV decades ago as "Dr Tongue's Three D House of Stewardesses":



As the FT story notes:

Yet, a string of recent 3D films has stumbled at the box office, notably Cats & Dogs: The Revenge of Kitty Galore, which flopped, and Step Up 3D, which made less than the first two films in the dance series, both of which were released in 2D.

Hollywood studios like 3D because consumers have so far been willing to pay a premium to see the films. But with 3D tickets costing as much as 50 per cent more than comparable 2D films, analysts have expressed doubts about whether consumer appetite for the format can be sustained – particularly if the films are poor.

“The studios and theatres are overpricing 3D films and there’s too much of it out there,” said Richard Greenfield, an analyst with BTIG Research.

“They are converting all of their movies into 3D without any regard to quality.”

A US ticket for Cats & Dogs, which was panned by critics, cost up to 50 per cent more than Christopher Nolan’s Inception, which was released in 2D recently to great critical acclaim. Yet Cats & Dogs cost less to make than Inception and was only converted into 3D after production had finished.

“Why should releasing a film in 3D and having the audience wear 3D glasses cost more?” asked Mr Greenfield.

...

Proponents of 3D insist that it can be a powerful tool when used correctly. “It’s a tool for filmmakers and a premium entertainment experience for moviegoers,” says Rick Heineman, vice-president of marketing at RealD, which makes 3D projection systems for cinemas.

But other analysts say Hollywood is playing a risky game by betting on unwavering consumer enthusiasm for 3D – and for higher prices.

“The studios are guilty of short-term thinking,” says Brandon Gray, president of Box Office Mojo, which tracks film box-office performance. “They all jumped on the 3D bandwagon but they’re avoiding the real issue, which is their bankruptcy regarding storytelling.” [Emphasis added]

Patrick Goldstein at the LAT seems to think that Hollywood can stave off irrelevance by offering the theater equivalent of box seats and corporate luxury boxes found in Baseball and Football stadiums. Or that the real threat to Hollywood is people watching on IPads or phones, instead of DVD players connected to TVs or in theaters.

Hollywood has the ability to get paid, if it makes broadly accessible movies and TV series that people will pay to see, in one form or another. Jimmy Iovine believes bad Ipod earbuds and mp3 mixes are destroying the music business. Instead of, bad music that no one cares about to begin with. If you've heard one Lady Gaga techno mix, you've heard them all. Regardless if the sound is in full, CD quality mastering, or even analog recording, with great speakers or headphones.


“The people we work with spend hundreds of millions of dollars every year getting the sound exactly right.” But then, says Iovine, his emotions rising, much of what has been so carefully captured in the studio recording process has to be “dumbed down” or compressed by 20-25 per cent to be copied on to a CD, before being further compressed into an MP3 file format for playing on a computer or mobile phone with a sound processor likely to have cost just 50 cents. Sound quality is lost at every step of the process. “That’s like taking the Beatles master [recording] and playing it through a portable television,” he says with revulsion. Ramping up the similes, he points out that 80 per cent of 18- to 24-year-olds listen to music at home through computers whose speakers, typically, “make the helicopters in Apocalypse Now sound like mosquitoes”.

Bad sound, he warns, is destroying the music business.

Yet the Beatles made most of their sales, back in the era of cheap, tinny transistor radios broadcasting over mono (not stereo) AM radio. The richness and warmth of their music came out loud and clear, as did Elvis Presley's, or Buddy Holly's, or Frank Sinatra's, or Duke Ellington's and Louis Armstrong's music decades before them. Good music


Beats’ founders have ambitions far beyond headphones. “This is only the beginning of something huge,” Dr Dre claims. Iovine concurs: “Beats is a headphone now but it’s [also] an idea to fix the ecosystem of music.” Together, they intend to develop music’s answer to the Blu-ray disc or 3D movie, a premium technology that helps a business hurt by illegal downloading.

For most people, high fidelity in music went out with the hi-fi, sacrificed for the portability of the Walkman, Apple’s desirable iPods and the tinny MP3 format used by countless peer-to-peer websites, mobile phones and also-ran digital music players.

The music business did not suffer when people purchased mostly 45 rpm singles, cheap and ubiquitous, in the Presley-Beatles era. Musicians and labels still made money in the Cassette era, and then the CD era, as consumers left the "warm sound" of LPs for more portable and durable formats. Having music with you, was more important than great sound that was not portable.

The music business only came a cropper when bad content drove out good. Copying and making "mix tapes" was pretty rampant, and impacted sales. But enough good music remained even through the 1980's to make copying by cassette tape (and later CD recorders) a minor matter. It was only when U2 became the next generation of the Rolling Stones, a "legacy" super-group instead of an up and coming band, and Britney Spears, or Justin Timberlake, or utterly interchangeable rap stars became the dominant musical choices, that the music industry revenues fell apart.

The same thing is happening in the movie industry. As the music labels could not and would not find young musical talent with widespread appeal, instead choosing to create manufactured talent like Justin Bieber with appeal to pre-teen girls and their mothers, or variations of rap, so too the movie and TV industry wants the same thing: to appear "hard" or "edgy" or "hip" and create formulaic junk that few outside a group of "one quadrant" (say young women) want to see.

3 D movies won't save Hollywood any more than Dr. Tongue could. Deals for streaming won't save Hollywood, or doom it either. The key is always, content. If Hollywood makes movies that most people like, the studios will make money from them streaming them to phones, or IPads, or Netbooks, or whatever, as folks take entertainment on the go. If they don't, they won't. Simple as that.
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Twin Tragedies: Masculine Heroism and Feminine Partying

Two tragedies, separated by a couple of months, both featuring young people in the LA area, highlight the extreme differences in masculine (and feminine) behavior by people who are not that dissimilar in race/ethnicity, but miles apart in how they behave. Incidentally, it highlights the benefits society reaps and the costs it incurs when masculine behavior is erased and passive, feminine playfulness replaced in young men. In the Mojave Desert, when disaster struck, people reacted instantly to help as best as they could. In the LA Coliseum, total chaos reigned.

[BIG FAT WARNING. Electric Daisy Carnival pictures below the Jump are NSFW. Some not in a "good way" either. Read on at your own risk. Did I mention, NSFW?]


First, the recent Lucerne Valley tragedy, where the California 200, staged in the Mojave Desert, ended in disaster with at least 8 people dead, more seriously hurt, as a truck careened off the course and hit spectators, many only feet away from the racing trucks. While full coverage can be found here, what is most notable is the instinctive, and instant heroism of a young man who deserves remembrance, Andrew Therrien, only 22, who saved the lives of two children:

Derek Cox, a friend of victim Andrew Therrien, told KABC-TV in Los Angeles that Therrien, 22, pushed children out of the way as the truck barreled toward them. He was killed in the accident.

"I owe my son's life, as well as many others. They were inches away from him and he saved their lives," Cox said of the Riverside resident. "He's a hero in my book."

March said he and other fans lifted the truck, which came to rest with its oversized wheels pointing toward the sky, and found four people lying unconscious underneath.

It took rescue vehicles and helicopters more than half an hour to reach the remote location, accessible only by a rutted dirt road. Spectators said off-duty police and firefighters in the crowd joined paramedics hired by the race organizer to help the injured and place blankets over the dead.

Six people died at the scene and two others died after being taken to a hospital, authorities said. Most of the 12 injured people were airlifted to hospitals.

It is not shocking at all, that a young racing fan when faced with oncoming disaster, chose instinctively to save his own and a friend's little child. That the race was dangerous, and that conditions for years have been terrible, with spectators poorly policed, and not removed from danger, in spread-out courses with few security barriers or personnel, is of course obvious and likely to be remedied (by the sport being banned in California and on federal land).

But people did not act passively. At the link are pictures of people in the crowd lifting the truck off the injured and dead. Off-duty police and firefighters were there to enjoy the race and joined in. Children (unwisely it turns out) were present. It was an entirely different atmosphere than the other recent LA area tragedy: the Electric Daisy Carnival.

In the Electric Daisy Carnival, a 15 year old girl died from an Ecstasy overdose in the two-day rave event, held in the LA Memorial Coliseum.

Here is an example of the Electric Daisy Carnival:



Here is an example of the 2009 (not the tragedy) California 200:



Here are some of the Electric Daisy Carnival attendees, courtesy of the LA Weekly, go there and see the entire slide show (60 pictures in all):



























The crowd in the California 500 is only about six or seven years older, for the most part, but the atmosphere is far different. While tattoos and flatbiller type hats and attire might include Tapout or marijuana leaves (a favorite of ravers, those living in the 909, reacted with courage and initiative when it counted most.

Those urban hipsters at the Electric Daisy carnival? Mostly carrying Elmo backpacks. [Yes, I understand the pacifiers are for protecting the teeth from grinding during an all-night dose of Ecstasy, the Elmo backpacks and stuffed animals allow petting of objects for obsessive Ecstasy takers, and the rather gay attire of the guys is there to be, well gay. All that being said, I'd rather be a Bro. For all their faults, Bros still look and act like men. The ravers, not so much.]
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The Ground Zero Victory Mosque: the Mau-Mau Consequences

Now that Obama has strongly backed the Ground Zero Victory Mosque, celebrating 9/11 and the Muslim victory over America, it is fair to ask, what will be the consequences? The consequences are easy to foresee, though few wish to speak of them. The Mosque will be built. It will be the focal point for Jihadist, Islamist preachers to celebrate victory and dominance, and 9/11 explicitly. Infiltrators will find a way to smuggle cameras in and post video of Muslims dancing and celebrating 9/11 and the hijackers, praising bin Laden and AQ. Muslims will use the Ground Zero Victory Mosque as a base to march and intimidate 9/11 mourners with the passive police approval of the Bloomberg Administration (and that of Obama's Administration). Any protest against the Mosque will be met with protective investigations and arrests by the City of New York and the Feds. Meanwhile the provocative weakness of allowing the Ground Zero Victory Mosque will be so tempting that large amounts of domestic jihad against non-Muslims among Muslims residing in America, and mass casualty plots from abroad against Americans, many of them successful, will produce a massive death toll. In New York and elsewhere in America.

Until anger among the non-Muslim population is so high, that an American Mau-Mau movement will spring up. It did not have to be this way. But it is now inevitable. As sadly destined as the trenches of the Somme were in 1912. The smell was not yet manifest, but those who could see, saw it coming. Even if years later the Kaiser lamented, "this is not what I wanted!"


There is, globally in the West, and America is no exception, a bizarre, three-sided struggle. On the one hand is the elite, the rulers of the West, who hate and despise their own people. In part because their advantages are hereditary, and they aim to keep them that way by keeping their own native peoples down and repressed, or replaced by alien peoples. Hence support for mass immigration into the US by Mexicans, for votes and population replacement, and mass immigration into Europe, for votes and population replacement, as the link from Andrew Breitbart's Big Peace story on the Africanization of France demonstrates.

A rising, competitive, native White population in Europe, or America, produces strong competitive threats to current elites in the West. The Simpsons could be just as funny if their writers came from say, University of Idaho, or Cal State Long Beach, as Harvard. They'd certainly be cheaper. Hiring on merit of course would reduce the patronage power of head writers and producers from Harvard, and move that power to folks who would resemble Spielberg who started at Cal State Long Beach. Hence the need to suppress them (and also the fear associated with them) by mass immigration that can "drown" the competitive threats demographically.

Culturally, the elites wish to distinguish themselves as much as possible from ordinary people. Hence granite counter top kitchens, or a hip and trendy coffee place not named Starbucks, or hipster affectations. There is of course, a gender component:



The infamous Staples "Dell Ink" commercial (idiot White guy replaced by hunky, smart-together Black guy) comes to mind, but any number of commercials follow this rule, or movies for that matter. In "Salt," the Angelina Jolie thriller, the bad guy is the smooth and handsome White guy, and the good guy is the Black CIA agent. The CIA is apparently filled with Black and Hispanic agents and computer experts (in reality the CIA is among the Whitest of the National Security agencies, and filled with desk-bound analysts whose idea of excitement is a new restaurant in Georgetown). Computer experts are found in the NSA, or the DIA.

While part of this dynamic is accounted for by the dominance of gays and women of color in Advertising Agencies that dream up these spots, and terminal PC in Hollywood, success in the business/corporate world depends mostly on go-along, hard work, punishing hours, and not making waves. In a word, "boring" compared to the dreams of masculine dominance pushed by Hollywood and desired by most women. If the idea that the ordinary White guy was so boring (and lame) that it was repellent to most women consumers (the targets of most advertising), no matter how much that message resonated among Ad Agencies (or Hollywood screenwriters and executive suites), most of it would be dialed down. As Judd Apatow explained to LAT movie critic Carina Chocano, White guys get all the jokes and laughs in movies, because they are the only ones writers can make fun of in any significant way. Screenwriters and executives don't welcome the inevitable protests and demands by advocacy groups. Western women, freed from massive insecurity that characterized women's lives even fifty years ago, now wish for excitement among men and find most Western White men who by nature of advancement, must be boring, well ... boring.

So Western elites, with some assistance from Western Women, desiring excitement and followers of fashion and "correct" elite opinion (just watch any episode of the View or peruse a gossip magazine in the Supermarket checkout counter), have allied themselves with Islamists and Muslims (and in America, La Raza reconquista folks). This state of affairs has lasted from essentially, the mid 1980's (the 1986 Immigration and Reform and Control Act) until the present day. PC rules, "Big Man" exceptions (neither Mel Gibson nor Oliver Stone lack for defenders, and Charlie Sheen got a raise in his sit-com), de-masculinized ordinary men, hyper-masculinized Big Men, and the imposition of "tolerance" to the point of decadence and weakness, have characterized American (and Western) political and cultural life up until now.

Which the Ground Zero Victory Mosque has brought to a head.

But just like any bubble or ponzi scheme, the alliance with Islamists and Jihadists, and the La Raza folks, by the Western Elites, is not sustainable. Eventually things fall apart, because of money.

Ordinary people, and the state the depends on them, are running out of money. Joe Biden claims that 8 million jobs lost will never come back, in the "new normal." Toleration of drib-drab jihadism and terrorism in phony credit-fueled boom-times, with shiny new cars, electronic toys, and so on was one thing. Prospective decades of massive (real terms, around 22%) unemployment and declining or stagnant wages, coupled with massive vulnerability to commodity (oil, food, water) shocks created by natural disaster or deliberately by regulations, make ordinary Americans boiling with anger.

Politicians can be voted out of office, by massive voter tides of angry ordinary people, but judges, lawyers, law school deans, law schools, Hollywood, the news media, and the like cannot. Particularly given the natural tendency of defeated elected officials to huddle with those still in office and form a lobbying-NGO-governmental barrier to produce more of the same. More PC, more "tolerance" (weakness and decadence) and more invitations to Jihadists and Islamists to provoke and attack ordinary Americans.

No doubt most on the Left, and amongst the elite, would welcome another attack (as long as they are not victims) as a "teachable moment" to humble ordinary Americans and make them surrender more to Islam and Jihad. This was the effect in Britain to the 7/7, and 7/14 and 7/21 suicide bomber attacks. Islam is now a special, protected religion with unique privileges and rights not available to ordinary Britons, who must show deference at all times to Muslims and Islam.

America is not Britain, however. Among other things it is far, far bigger, subject to the tyranny of distance.

Much like returning African soldiers to Kenya, who had fought for Britain against the Wehrmacht or Imperial Japanese Army, saw both British weakness (against Germany and Japan) first-hand, and betrayal of the promises they found implicit, i.e. fight for Britain and get Kenyan independence, ordinary Americans will likely soon see the mighty humbled, if the projected wave of Democratic defeats happens. And implicit with the defeat will be the betrayal of the promise Obama and Dems gave in the fall of 2008, to restore the economy and put Americans back to work at good paying jobs. Instead we have the "new normal" of permanent unemployment of 22%, or more, and a constant:

I think it was a ballsy, unpolitician-like thing to do. He could have folded before all your BS birther-secret-muslim crap and took the cowards way out, but nooo…. He waggled his junk right in your faces and said “Teabag this!” Awesome.

The anger of ordinary Americans stems from a sense of betrayal (by the media, by the Democratic Party, by Obama personally), along with economic desperation and a sense of weakness, egged on by needless provocations by the Professional Left.

Meanwhile, Islamists and Jihadists confuse Western elite decadence and "tolerance" for that of the people, and keep escalating their "war aims" to include Sharia and domination in Western lands. With a man born a Muslim and of obvious Muslim sympathies (who may or may not be an observant Muslim but is definitely culturally Muslim) in the White House, jihadists and Islamists see this as their time for decisive blows to get guaranteed concessions, arguing that "fighting spirit" can trump the larger non-Muslim population in the West, as it had in places like Spain, Southern Italy, Sicily, Egypt, North Africa, and the former Byzantine Empire.

Building the Mosque at Ground Zero, on the grounds of a building damaged beyond repair by the falling debris of the World Trade Center, is nothing less than a deliberate provocation by Muslims world-wide and in America (no American Muslims have protested against it), designed to show dominance and American submission. It is the guaranteed flashpoint for the new Mau Mau.

Jihadists will not be able to resist the desire to "waggle their junk in your faces" and shout their pleasure at 9/11, and the "total victory" of Sharia replacing the Constitution and indeed, the American Way of Life. With a Muslim President (culturally at the least) in the White House, and a green light to engage in provocation, celebrations of the "9/11 Martyrs" and "victory over America" are bound to happen. As well as conspiracies hatched from that place, immune to eavesdropping and surveillance by a Federal and Local government on the side of Islamists.

Inevitably, small concealed video cameras will catch the worst of it, including likely open calls to Jihad and killing, and the applause of the Muslim audience. Infiltrators are almost certainly preparing, with careful back stories, and their own efforts that would have required news organizations or police forces now available to ordinary people who are pissed off.

Youtube and other venues will feature inflammatory videos calling for death to America, and submission to Sharia, and praise of bin Laden as the future ruler of America, along with Obama as his willing partner. At a certain point "waving his junk in your faces" becomes the starting point for a fight. Elite weakness provokes Jihadist attacks and thus populist anger and open revolt.

The old Mau-Mau, in which Obama's grandfather took part, stood in part for a Swahili Acronym meaning "Let the European go back to Europe, Let the Kikuyu get Independence". While European settlers were certainly targets, the main targets of the Mau-Mau were those collaborating with British rule, many being killed by herding into huts that were then set on fire. Atrocities such as this:

Perhaps the most famous Mau Mau victim was Michael Ruck, aged six, who was killed along with his parents. Newspapers in Kenya and abroad published graphic murder details and postmortem photos, including images of young Michael with bloodied teddy bears and trains strewn on his bedroom floor.

were widely publicized, though by all accounts the White victims were about 40 or so, while the Kikuyu victims were about 20,000 or more, and the horrors they underwent practically unspeakable. [It has been suggested that Obama's grandfather was an unwilling collaborator, one who broke under torture, given his relatively light sentence and less brutal physical treatment than others. Less brutal in that he was not castrated, or had a bullet through his head, or impaled, all actions done by British Imperial powers "unofficially" to the Mau-Mau.]

Obama's grandfather, who was initially sceptical of the revolt, noting accurately that "the African cannot build his own bicycle" was later enthusiastic, believing that the superior numbers and will would break the British effort to retain colonial control (which it did).

The elites in the West have police, military, cultural, and economic power — but not the confidence of the people. The Islamists and Jihadists are hated and loathed by ordinary Americans, and the Ground Zero Victory Mosque is a permanent provocation to all Americans. The elites, instead of surrendering gracefully and garnering what concessions they can to a populist revolt, are likely to cling to power by judicial and executive fiat, fairly repressive measures that are characterized by "Revolutionary Suicide" that deprive American Federal (and State) governments of legitimacy and standing, and will reflexively side with what amounts to "Imperial Colonial Troops" from another part of the world imposed upon the native populace. Writ smaller, this is the situation all across the West as well. It characterizes France, Spain, Britain, Germany, the Netherlands, Italy, and Denmark as well as the rest of Scandinavia.

The likelihood is a long, slow slide into violence. Because all possibilities for real social and political and economic change will blocked by the elites, with the threat of Islamist/Jihadist violence used to justify "colonial stasis."

Kenyan Kikuyus were not "unique." They behaved like most colonized peoples, fed up with a colonizer they viewed as both weak and illegitimate. There were serious barriers to any possibility of success, early, and so extreme violence against innocents to make statements that Kenya belonged to the Kikuyu and not Europeans or allies, to instill terror and fear, were the tools the Mau-Mau employed.

The dynamics are clear. Elites plan to rule, to "wave their junk in your faces" and say "teabag this!" no matter what. Islamists and Jihadists plan to rule as well, using "fighting spirit" and terror as their own tools for domination and what they see as God-willed submission by America, given not just weakness but provocative weakness by elites. Eventually, ordinary Americans will turn to these tools as well, using them first against elites who remain allied to the Jihadists, as the Mau-Mau did to colonial collaborators and sympathizers, and then against the hated Jihadists. And the struggle is likely to be long, bloody, and marked by hardening "war aims" the way WWI turned most of Western Europe into a charnel house with both Allies and Axis rapidly escalating War Aims and demands.

The people are likely to demand an internment, and expulsion, of all Muslims from America. It may not happen a year from now, or even ten years from now, but if this struggle of low-level, constant violence amidst poverty and economic recession drags on from decade to decade, it will happen. The Jihadists are likely to demand total and complete submission to Islam and the imposition of an Islamic state along the lines of Taliban run Afghanistan as the price for peace. The elites are likely to desire nothing less than massive replacement of the existing White majority by Mexicans and others, with mass immigration to "drown" the opposition to their rule. Which in turn is likely to be resisted by Mau-Mau means, as a constant, dreadful level of violence and reprisal and ethnic cleansing characterizes America (and the West).

All sides are relatively evenly balanced. The people have demography (for now) but little power and less organization, the Tea Party, tools like Facebook, blogs, the internet, or parties like Gert Wilder's notwithstanding. In their struggle, they are likely to find their own Mau-Mau, from people not even yet engaged in the struggle, and like the Mau-Mau, be mostly disorganized, mostly the victims not the perpetrators, and yet capable of astonishingly cruel acts of terror against those they view as oppressors.

The elites have political, social, economic, and cultural power, but all are eroding amidst a rapid shift from bubble-boom to permanent economic decline and a "Rendezvous with Scarcity" (ala Ed Driscoll) that limits their power. Few patronage opportunities on a wide scale (ala FDR) abound, with limited money, non-Whites being first come and first served (Affirmative Action preferences), and erosion of female preferences for elite rule (with vast economic uncertainty making boring Beta males a better bet than exciting Alphas, and critically the policies that favor the one group over the other). Most importantly, nearly all institutions including Congress, the Presidency (and this particular President), the Media, the judiciary, the law itself, have lost confidence and legitimacy. Only the US military retains support and confidence, and outside the General staff is profoundly hostile to Obama and Dems.

Moreover, the elites by their nature cannot help "waggling their junk in your faces and saying teabag this!" It is second nature. Making any successful appeal to the widespread populace doomed.

The Muslim jihadists and Islamists have at their disposal, vast amounts of Gulf and Pakistani and Iranian oil money. A vast and seething population of men afflicted by polygamy (pricing most of them out of the "proper marriage market" with "proper Muslim women") gives a near limitless number of lean and hungry men willing to use violence to become Big Men or find 72 virgins in the afterlife. The vast Muslim population outside the US, and the tiny one within it, senses decadent weakness among the elites, and a green light for any atrocity that might produce an abject surrender. Contact with the US military has led to a winnowing out of ineffective jihadis and a wealth of experience among survivors, along with a sense of innovation in mass-killing that produces a feeling of terror and helplessness among victims and triumph and victory among perpetrators.

Like WWI, the fight can go on for a long time. False "victories" such as the failed Ludendorff Offensive, bogging down in defensive trenches far to the rear, are likely to characterize the struggle. The Reconquista of Spain took nearly 700 years, and the Muslim conquest of Byzantium took nearly 1,000. Victory is likely to go to those with more resources, or those with most effective resources (the side who uses it most effectively and wisely). In this, the very bigness of America, its wide open spaces, its large population, its relative freedom from widespread welfare states, may prove the decisive factor.

The borders may simply be declared "open" and anyone who crosses them declared a "citizen" instantly able to vote, demand Affirmative Action privileges, and welfare. But the "bigness" of America lends itself to extra-legal action as Prohibition provoked, along the lines of massive individual illegal behavior. Not perhaps drinking in speakeasy joints, but refusing to hire, rent to, serve, or otherwise accommodate the wave of immigrants from collapsing Mexico, itself falling to narco-trafficantes and terminal corruption. Other means could include States openly defying the Federal Government with their own "border patrol" in all but name, with various state offenses shifting around in response to Federal challenges and refusal to allow "instant citizens, just add water" to vote or receive any government resources. For every Federal/Elite action, or Jihadist atrocity, there is a populist response, soon itself counter-attacked, but likely to "flow" into the next battle. The race card itself being null and void, and the legitimacy and power of the Civil Rights movement at an end.

But sadly, the lights are going out all across the West. It is unlikely we will see them lit again in our lifetimes, save a Mau-Mau type firing of huts filled with people, or the equivalent by the "colonial authorities." It is certain that the America that results from this struggle will be radically different, as Germany and England and France were, from the one that went before it.

A long struggle will make the Federal (and State and Local) governments irrelevant and indeed, hostile to the needs and wants of ordinary Americans, and considered that way for generations to come. American and Western peoples will inevitably organize themselves along ethnic/racial lines, as multiculturalism falls apart in real world challenges of providing security and prosperity, and the ethno-state proves itself once again. Either America will be Hispanicized, and turned into a variant of Northern Mexico, or the great masses of Mexicans will be expelled inevitably along with Muslims. The reality of limited jobs, and other resources, guarantee the sort of action seen when an Indian tribe gains a casino — they kick out as many tribal members as they can to maximize wealth.

An America, or the West, not drowned in immigration, is likely to be a fairly brutal, discriminatory, ethno-state, without the slightest bit of guilt, oriented around mercantilism, protectionism, somewhere between Japan, China, and Russia today, though with far weaker leaders and far more power pushed downwards. That is the power of conflict, to reshape a people in ways that would have been unthinkable before. The reverse, of course, will be the replication of Brazil or Mexico or Cuba onto the West, with a Big Man rule, and some type of Sharia and Muslim rule to produce a "peace" (of the sort found in Egypt).

At any rate, the 1986-Present consensus of PC and Multiculturalism is coming to an end. The growing power of the Muslim world, the weakness and decadence of the elite, the frustration of the people, and the equalizing role of technology among those less powerful (the people, with the internet and cheap video cameras, Muslims with nukes) to the old elite-led nation state, is likely to produce profound changes.

It did not have to be this way, but the self-serving emotional power of "waggling his junk in your faces" proved too much.
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The Ground Zero Victory Mosque: Obama's Extended Middle Finger to America

With Obama strongly backing the Ground Zero Victory Mosque celebrating 9/11, he has raised a middle finger to America. This is not surprising, Obama was born, and raised a Muslim, to a Muslim father, grandfather, and step-father. He's celebrated one of his half-brothers conversions to Islam in his book, "Dreams From My Father: A Story of Race and Inheritance." Obama has systematically refused to celebrate birthdays (Muslims avoid it because that custom is viewed as Christian), delayed for years in getting his kids a dog (Muslims dislike dogs), recited the call to prayer in Arabic from memory to a NYT reporter, and as Doug Ross reports, Obama wanted to eliminate the White House creche display during Christmas over "separation of church and state" but backs the Ground Zero Victory Mosque.

The decision to do so, is in the words of one Ed Driscoll commenter (perhaps or perhaps not, impersonating the professional Left):

I think it was a ballsy, unpolitician-like thing to do. He could have folded before all your BS birther-secret-muslim crap and took the cowards way out, but nooo…. He waggled his junk right in your faces and said “Teabag this!” Awesome.

A decision opposed by super majorities of the US, around 70%.The question is not "is Obama a Muslim sympathizer?" because the answer is of course, yes. Obama even wrote in his second book, "The Audacity of Hope" (taken from a Rev. Wright sermon) that he would side with Muslims over America. The issue instead is why Obama chose to extend his middle finger to America, shortly before mid-term elections. The answer could be that Obama is approaching the Jonestown moment, one filled with "Revolutionary Suicide."


A revolutionary suicide, moreover, approved of heartily by Obama's core supporters. The danger of course, is that revolutionary suicide can take with it, the rest of America.

Part and parcel of Obama's political career is the studied insult that has no real pay-off other than energizing his supporters and making himself look like a "Big Man." This is common among tribal peoples, counting coup and offering meaningless insults, described by those who knew the Plains Indians, the Sioux, the Comanche, the Kiowa, and also the Apache in the Southwest. Stone age peoples in the Amazon, and Borneo also engage in this behavior. It is not limited to those groups either. Gunfights over "dissing" are common in the Ghetto, and the barrio, and Italian and French politics are filled with "Big Man" insults where one leader gratuitously insults a rival or political grouping. Obama's surreptitiously extended middle finger to Hillary and McCain during debates, his "brushing off" gestures taken from rap videos, his insults to no good reason or outcome of British leaders (for apparently, imprisoning his Mau-Mau terrorist grandfather) are by now common.

Gratuitous insults to Middle Class White America saying "teabag this!" are common among Black leaders whose Black voters find it amusing and emotionally rousing. Trinity United, Obama's church for twenty years, explicitly rejected (and still does) "Middle Classness" which Michelle Obama in her many speeches also rejects. Both Obama and his spouse have spoken many times of their horror of polite, middle class society going to anonymous and boring jobs, saying they themselves were "better" than that and destined for a "nobler purpose." The constant insults, the "police acted stupidly" (regarding the Skippy Gates Affair), the insulting of the British and Israeli Prime Ministers (the latter brought into the White House via the back door next to the garbage, and photographed there by arrangement from the White House), all fit into the pattern of "sticking it to the man." No matter that the President of the United States, is by definition, the man.

The Professional Left, the reporters, editors, announcers, newscasters, educators, university professors, lawyers, judges, Hollywood executives, actors and actresses, Hollywood producers, and so on find this amusing and compelling. They hate ordinary people too, along with their values. So they find the insults and particularly, backing the Ground Zero Victory Mosque, an exciting insult to the America they loathe.

But from a professional political standpoint, its disaster. This extended middle finger tells vulnerable, swing Democrats that the party and leader is about to go harder Left than it has before, and with a Republican House at least blocking economic changes to solidify Government control over the total economy, Obama and Democrats will fight to remake America culturally. By pushing surrender to Islam, Sharia, and terminal political correctness so that America is merely a nation without borders, values, a unique people, or anything else but a global stop on the globalized mish-mash of anti-Western struggles.

This in a time of deep, and seemingly permanent recession,with a double-dip perhaps just weeks away if not here already.

Absent are Clintonian "I Feel Your Pain" episodes of lip-biting, and "end of Welfare as we know it" or picking fights with Sistah Souljah, aimed at reassuring nervous middle class White voters that the Democratic Party is comprised of ... middle class White leaders. Now every Democrat will have to answer if he or she supports the Ground Zero Victory Mosque, or agrees with Republicans against the President that it should be moved elsewhere.

It seems the "real Obama" with the requirements to keep his massive, super-majority (over 60 votes in the Senate, a massive House majority) now slipping away, is emerging. One defiantly determined to give America, which he hates, a permanent middle finger. So he can feel better about himself, and perhaps engage in "Revolutionary Suicide." By taking America down with him.

Lame duck sessions to push radical agendas, including cap and tax, reparations for slavery, national gay marriage, gun confiscation, some form of "Sharia Light" and formal rule by Executive Decree are all but guaranteed. Including perhaps the ability to suspend elections and rule by Executive Order should the President deem it a "national emergency" (when the police "act stupidly" again, or something).

Obama had a perfect chance to provide his own Sistah Souljah moment, in the Ramadan Dinner, to blast Muslims as lacking patriotism, devotion to America, or sensibility to victims of 9/11, and demand the Mosque be moved. Given that non-Muslim American voters who are deeply suspicious and angry with Muslims outnumber Muslims by about 100 to 1. Instead, Obama reflexively sided with Muslims against Americans (just as he predicted in his book), for deep political cost with no gain. Counting Coup without any pay-off from increased adoration by his followers. They already consider him "kind of like God" (according to Chris Matthews), so there was no benefit for telling Americans "teabag this!" and "waggling his junk in their faces."

Revolutionary Suicide is coming. Be prepared.

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Google Will Sell Your Data: Craigs List for Criminals and Terrorists

Google will sell your personal data. Why? Because as growth slows, Google needs the money. The era of (mostly) private internet activity is over. Companies like Google, Facebook, Twitter, and Yahoo will collect as much information about users as they can (add Adobe with Flash in the mix) ... and sell the information. They will do this, because there is so much money in doing so. Money from advertisers, money from direct marketers, money even from criminals, other governments, and even NGOs, and terrorist groups. Google's "Street View" troubles where they hacked into user's unsecured Wi-Fi networks and collected personal information including e-mails and other private data were no accident.


Indeed, Google is likely slower than most (due to size related inertia and lots of cash in the bank) to take advantage of the ability to sell the most personal and private information about people in mass quantities. This development marks the beginning of the mass-identity theft movement, so to speak, and is likely to spread to sites like Hulu, or even Netflix, Amazon, Wal-Mart, and other mass market service and retail providers. In turn, it is likely to create among ordinary users a desire to avoid constant surveillance. Through anonymizers, cookie filtering, even MAC address spoofing and surfing over free Wi-Fi spots. The sites and service/retail/entertainment providers that survive will ironically mostly do so by not selling their user's information but by providing either useful news or entertainment, like Hulu's free service or say, various news sites (DrudgeReport being the model), analysis and/or links like the Instapundit.com or City Journal sites, specialized reporting (Blackfive or Slashdot for military or computer affairs respectively), or value added service, such as Amazon's site, the Wall Street Journal, and the Financial Times.

As the article in the Journal points out, Google is experiencing slowing growth, and increased competition for user time and users period, from social networks like Twitter and especially, Facebook. The latter being notorious for collecting massive amounts of user data ... and selling it. To almost any comer. The pressure to keep earnings up (and the money rolling in) is going to be too big for Google to ignore. "Don't be evil," is weak sauce compared to all the potential money. Controls are likely to be weak, too, in selling user data, which is really only valuable when ALL information about a particular user is collected and correlated.

Anonymous browsing information about searches, email content, Google Docs content, Google Mobile content, and more, all disconnected, is worth far less to everyone than specific information about a person, from all sources, correlated and ready for analysis. Ford, GM, Chrysler, Honda, Toyota, Kia, Hyundai, Nissan, Mazda, and Subaru would all like detailed info about each person searching for cars, including price points searched for (say on Edmunds.com), any ads viewed and particularly, clicked on, yearly salary, zip code, phone numbers, places visited (Starbucks vs. McDonalds), taxes paid, and anything else that allows "mass personalization" of ads targeted directly to the person in question. Or avoids targeting the person in the first place (because of disqualifiers like low income, or existing other-brand preference, and the like). The ad might not sit on a webpage a user visits, or a Google Email ad inside an email, either. It could be delivered to a smart phone, or sent as a text message, or even be the subject of a "mass customized" robo-call to phones. Already Wal-Mart and other retailers are experimenting with "coupons" sent to users smart phones — in the store!

That of course is merely the benign usage of sold information. Governments, including those abroad, would be intensely interested in ordinary users information, the better to collect taxes, or fines, for all sorts of activities. Indeed the tax and fine angle is likely to predominate, but there is no particular reason that say, Iran, could not collect information about masses of users who viewed "anti-Islam" or "anti-Jihad" material — and use that to issue international arrest warrants that many governments (particularly in Europe with large Muslim voting blocs and populations) would honor. This would be particularly popular with failing regimes wanting to either create a shake-down of "anti-Muslim Westerners" or real punishment, both likely hugely popular among their Muslim subjects and citizens.

Gangsters too, are likely to want that information. Blackmail, identity theft, or both, could be lucrative sidelines with little risk for those based outside nations with a strong civil society and police enforcement. Russia, China, Pakistan, Iran, Turkey, Egypt, much of Latin America, would be likely home bases for such action. Failing states such as North Korea and Pakistan would be likely to get in on the action by officials. Imagine the blackmail possibilities of anyone visiting porn or other socially unacceptable sites linked to actual, real identities, and demands for payoffs else specific contacts are notified about said online activity. With the ability to mass call, i.e. "robo calls" this could be quite lucrative, say blackmail of 5 million people at $400 a pop, is $2 billion. Computers enable crooks too, particularly the imaginative and organized. Since half the Third World governments fall into the category of "organized crooks" this is a real threat.

Nor would the fundraising be limited to say, the Zetas or Kim Jong-Il. Al Qaeda and other terrorist groups are always short of funds, and would also like to make statements. Blackmail, or simple identity theft and fraud, on a massive scale, combined perhaps with explicit "examples" distributed to free-lancers over the internet, the equivalent of a "Craigs List for Terrorists" has the ability to turn AQ's fairly distributed nature after the US response to 9/11 into a huge plus. Glenn Reynold's "Army of Davids" in a way he never anticipated.

The impact of Google selling user data is not individual stalking, or anything like that. It is opening up the biggest storehouse of user-data on the planet, a more comprehensive and LARGER database than any compiled by the Stasi or other Communist-era, early computer age secret police, that is likely to bring the downside of globalization home personally to every user of the internet.

In NBC's "Life" the lead character (played fantastically by "Band of Brothers" lead Damien Lewis) mused that "everything is connected" (via Zen and plotlines). Now, everything is actually connected. North Korean secret police, Zeta gangsters, Pakistani ISI agents, Al Qaeda, and the US and UK governments can all peer into great masses of user data (the Chinese likely already have peered into Google's vast user database given their alleged hacking of Google's servers and code). Use the data to find tax cheats, people who did not sort their rubbish in wheelie bins, or five million potential blackmail or identity theft victims. With the release this week of "Max Headroom" on DVD, "fifteen minutes into the future" looks in some ways much like, well, Max Headroom. Not a Blade Runner, dark and bleak, recycled Road-Warrior technology, but no escape from constant surveillance and an "always on" media presence. Its not Television (in "Max Headroom" it was illegal to install an "off-switch" on TVs) but the internet. People are unlikely to go to the extremes of "erasing" themselves from databases like the character "Blank Reg" ("Remember when we told you there was no future? Well, this is it." — the best line ever on TV) and in fact, they cannot. Because Google will never let them.

But the internet is likely to become rapidly a two-tiered system. A crummy, crime-ridden place much like Network 23's dystopia in "Max Headroom" where no one has privacy or security, and "gated communities" where folks pay to be secure. Google, a company that explicitly sought to change the world for the better, is likely to be one of the main drivers towards a future that digitally at least, will resemble "Max Headroom."
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More on Hollywood's Declining Profitability

In his book, "The Big Short," Michael Lewis details the key attributes of a bubble about to burst: lots of fraud, sudden cost cutting, and other shady dealings. By these measures, Hollywood has had a bubble for decades. New York Magazine reports two key details: Paramount, the studio behind Tom Cruise's new Mission: Impossible 4 movie, will pay Cruise a very reduced up-front salary and money after "cash break even" and that the movie itself is receiving about half the production budget of around $135 from David Ellison, heir to Oracle billionaire Larry Ellison.


Cruise's "Knight and Day" movie has pulled in only $74 million domestically, and less than $190 million world-wide (most of which due to market fragmentation will be hard to recover). Clearly Paramount has little confidence in Cruise, seeking outside financing (and the involvement of Ellison who is desperately seeking an acting career alongside nascent mogul status) and limiting Cruise's payout. What Blogger/Commenter Furious D calls a "self-fulfilling idiocy" is more likely the sign of hidden, but real declining profits, as studio execs frantically try to shore up declining bottom lines. Box Office Mojo has the all time inflation adjusted box office rankings.

The box office champs are relatively evenly distributed throughout the decades. The 1980's and 1990's being slightly lower than the other decades, but not terribly lower. What's notable is how the "self-fulfilling idiocy" (of screwing over actors/producers/directors in "Hollywood accounting") only came to the fore when Hollywood was having problems making money away from hit movies.

Hit movies are great, but don't pay the bills day-to-day. Hits are erratic, often coming from over-the-hill "has-beens" (The African Queen, in 1951, from "has-been" John Huston) or "never-were" types (Star Wars in 1977 with fairly new director George Lucas). Outside of Pixar, few studios or divisions within studios have been able to create them after the fall of the old line studio system. It was only when Hollywood ran into trouble, studios being sold to giant mega-corporations, with declining profits even though the studios invested heavily in TV, that the attitude of "screw the talent" became widely practiced. Actor James Garner fought with Universal for years over money due him for "the Rockford Files." Perhaps the most famous incident being the David Begelman embezzlement and black-listing of Cliff Robertson for reporting said embezzlement.

Needless to say, that's not the type of thing you'll find in money-making industries and companies.

If you compare, for example, the software and computer industries, episodes of fraud and mis-reporting (ala Dell's SEC fine for not reporting Intel payments not to use AMD chips represented 76% of Dell earnings) come when software and hardware companies are not making much money. Thus, the need to book say, AOL subscriptions at some enormously inflated rate during the 1990's (when AOL was seeing little real subscriber growth compared to the cost of mailing out those CDs or disks), or SAP's adventures in accounting in the mid 2000's. The same is true for Hollywood. During the mogul days, of course, stars were paid straight salaries. During the collapse of the mogul system in the 1950's to 1960's, the aftermath of the Federal lawsuit requiring the studios to spin-off their wholly owned theaters and the competition from TV, earnings were still high enough that there was no real need for widespread cheating of the talent through questionable accounting.

It was only when the deep pockets of acquiring mega-corps (such as TransAmerica, purchaser of United Artists) ran out of patience that the David Begelman strategy came into play. That the studios were sold in the first place of course was a sign of trouble, in that they could not generate enough cash on their own to stave off acquisition or become big enough so that acquiring them would be fairly rare.

Hollywood's day-to-day films were becoming less profitable. Films like "Dog Day Afternoon" or "Taxi Driver" might have been artistically superior to say, a Doris Day movie, but Doris Day movies made money, while the likes of "Dog Day Afternoon" did not. Cumulatively, the drag on Hollywood from most of the movies being unprofitable and relying on hits led to funny accounting, in a bid to keep most of the declining profits for insiders.

Then, the VCR and Video Cassette revolution hit, allowing first sales of recent (and old) films and then the lucrative Blockbuster rental model (where Hollywood traded lower cost for the cassette in return for about 40% of the rental revenues). The introduction of the DVD, and soaring revenues from both sales and rentals merely extended the life of the VCR/Video Cassette revolution. But all things have an end, and a combination of tight consumer shelf space ("Do I need a 101st movie in my collection?"), tight budgets as recession-strapped consumers pay down debts, and declining movie quality (who is going to buy "I Now Pronounce You Chuck and Larry" or "Green Zone?") meant the drop of up to 25% in revenues from video rentals and consumer sales.

Edward Jay Epstein notes that in 2003, roughly 83% of Hollywood revenues came from the combination of TV, and video/DVD money, with only 17% coming from theatrical box office. This is about where Marvel's operating revenues came from, with respect to comic book publishing (between 11-17%) compared to licensing and movies. Needless to say, revenue from TV rights (pay and free) are declining, as well as rentals (from Netflix and Redbox pressures) and direct consumer sales. Piracy too plays a part. When riders on LA's Blue Line can purchase $5 DVDs of movies running in theaters, openly, from regular vendors, there is a problem.

While Blu-Ray and 3-D TV will help with affluent consumers wanting immersive movie experiences, there are not enough of them, even in the global economy, to make selling 3-D versions of say, "High School the Musical" to make Hollywood profitable. Meanwhile cost-cutting, and shady accounting such as the Peter Jackson-New Line lawsuit over Lord of the Rings payments continue. Even Tom Cruise must forgo hefty up-front payments and lucrative "first dollar" gross payments from receipts of box office and video/video-rights sales. Epstein is wrong, Hollywood's Library money machine is breaking down, with the sale of Miramax valuing the individual film at less than a $1 million a piece. Foreign distribution rights, pre-sales, TV and DVD/Blu-Ray release money is declining rapidly in an economy that is over-stretched globally. A bad grain harvest in Russia? Perhaps global pressure on food prices. The bet that Hollywood was immune to recessions seems to have come up snake eyes, like that on the housing market never declining nationally.

Frantic cost-cutting. Reliance on shady accounting. Disputes with key talent over payment. A few hits carrying many turkeys. Lack of much of anything new and exciting. [Three D technology dates back to the 1950's and uses basically the same type of technology.] All paint a portrait of Hollywood in significant earnings trouble. Miramax, MGM, which studio will be next?
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More Hollywood Economics: the Folly of World Box Office, Diversity, and Film Libraries

Several recent events show how Hollywood is both afflicted with deep stupidity, and chasing bubbles about to burst. The Miramax sale puts a dollar amount on what films are worth past their recent release. Which is not much. The Television Critics Association revealed deeply stupid broadcasting networks more concerned about "diversity" than finding an audience and making money. And finally, the Wall Street Journal reports on the folly, of chasing foreign box office.


First, the Miramax sale to private investors, which the Hollywood Reporter notes is $660 million, by Disney to a consortium of private investors. Including, bizarrely, actor Rob Lowe, best known for his TV role in "the West Wing" and a sex scandal involving a threesome during the 1988 Democratic Convention, which included a 16-year old girl. The deal, includes the 700 odd films in the Miramax library. Which puts a dollar amount on the films, including "Chicago," and "Pulp Fiction," and "Shakespeare in Love" at roughly $942,000 per film. That is how much the rental revenue, including DVD, TV rights, foreign DVD, and foreign TV rights, are worth. Taking, say, "Shakespeare in Love" and the running time of 123 minutes per average, that amounts to about $7,600 per minute. For an equivalent TV series, running at a nominal 42 minutes per episode, that would amount to $321,000 per episode, or roughly $7 million for each 22 episode season. That's back of the envelope calculations, but interesting. Since this was how the deal was valued, it is the best guess for what movies (and likely TV as well) are worth, globally, into the future, discounted back to the present (i.e. the deal represents in aggregate about the expected value of all future revenues from the film library, which are the only assets Miramax has).

Its interesting that Disney chose to sell off the company and the library, instead of simply keeping them for its own use. The answer is of course, that Disney is choosing to make expensive toy commercials, rather than movies, because that is one of the few reliable ways to make money (and as astute commenters noted in the post Toy Story Economics, revenues don't have to be shared for product placement OR toy / licensing dollars). Meaning Robert Downey Jr. does not get a cut of Iron Man toys, nor will Tom Hanks get any money from Toy Story 3D bedsheets, despite voicing the character of "Woody."

Disney didn't think Miramax was worth keeping around, and the valuation of the library is instructive. Under a million per movie, and using the same metrics, about $7 million per TV season. This despite an explosion of Satellite TV channels and services aimed at the Middle East, India, China, Latin America, including Brazil. Which are some of the fastest growing parts of the world.

As the story in the Hollywood Reporter notes:

A number of earlier potential buyers valued Miramax at only $550 million to $600 million, so the $660 million value is seen as top of the market. Investor Ron Burkle, working with brothers Harvey and Bob Weinstein, who first created Miramax and built it into a force in film, earlier this year lost out on Miramax when a bid of $565 million was rejected by Disney, which had indicated that it wanted $700 million.

So the top of the market valuation may be a bit optimistic. Prices may be indeed lower, as we will see later on.

Meanwhile, Deadline Hollywood Daily reports on the Television Critics Association presentations by the Networks. Diversity is first and foremost in critics and executives minds. Not enough gay characters, in shows aimed at families. Not enough Black characters, and self-satisfied boasting by "Undercovers" star Boris Kodjoe that his series is the "first" to feature two Black leads. As if "Sanford and Son," "Tenafly," "Good Times," "Franks Place," "the Jeffersons," "In Living Color," "Gabriel's Fire," never existed. Redd Foxx was making White audiences laugh in 1972, and the show during its six seasons was always a top 30 show, for the first five a top 10, often ranking #2.

America just a few years out of the Civil Rights era had made Black actors among its TV favorites. Americans of all backgrounds could repeat catch phrases, and comic bits. More recently, Dennis Haysbert, has played the lead in CBS's "the Unit" for a number of seasons before that show's cancellation. But the bizarre focus on "diversity" guarantees the failure of shows like "Undercover" or whatever clone of "Glee" is being cooked up.

First, in 1972, America was a lot different than it is today. For example, America in 1970 was 87% White, with Whites far more open to adopt non-Whites as cultural icons. It is striking that "I'm so pretty," and "Dyno-mite!" and "I'm coming to join you, honey," and "What you talkin bout Willis?" all stem from the 1970's to 1980's. Quick, what was George Lopez's catchphrase on his sitcom? Moreover, with only three television networks, Blacks were not able to watch Black-only television as they can now with BET. Making Blacks as small but significant portion of the audience, as opposed to today where their impact is mostly on Cable.

But the biggest change in TV from the 1970's to today is the total absence of men as a core audience. TV back as recently as the 1970's, was a mostly male affair, on network TV. Today, it is a female-gay ghetto, with shows from "Glee" to "American Idol" featuring singing, dancing, and other female and gay obsessions. While non-Whites do play a role in that, it is a minor role, to the glittery princess fantasies that TV serves up, from Desperate Housewives to "Real Housewives of New Jersey." Making broadcast TV a narrow audience, mostly upscale women in the End of the Brandon Tartikoff Strategy.

Diversity as such may make Maxine Waters, soon to be irrelevant one way or another, given her corruption and ethics trial in the House of Representatives, and upcoming Republican take-over of the House, happy but it will not gain viewers. The only way to gain viewers is an ever-more "shocking" and "Twilight" based appeal to various Princess fantasies, a losing bet, or a concerted effort to win back male viewers, and families, as "cheap but good" entertainment that is not a waste of time, and a good alternative to cable fare and repeat viewing of DVDs. There is no evidence that "diversity" puts people in front of TV screens, and the WB's ill-fated "Want Blacks" strategy of "Black-coms" such as "Moesha" failed miserably compared to the #2 ranking of "Sanford and Son" during most of its run. Somewhere, Redd Foxx is laughing, along with Fred G. Sanford. So too did some of UPN's more ill-conceived sitcoms, including "Homeboys in Outer Space" (as bad as it sounds) and "Secret Diary of Desmond Pffeifer" (a "comedy" about a slave in the White House during the early days of the Civil War). Even well regarded dramas such as UPN series "Kevin Hill" (starring perhaps one of Hollywood's most handsome men) have not fared well in the "diversity era."

And just as notably, "Diversity" does not sell well overseas. Buried in the Wall Street Journal article about Hollywood Foreign Box Office, is the gem that:

Fox Searchlight was recently developing "Baggage Claim," which chronicles a young flight attendant's search for Mr. Right and stars an ensemble of African-American actors, including Oscar nominee Taraji P. Henson.

But that film ended up in "turnaround," the Hollywood term for when a studio abandons the rights to a project and allows others to acquire it. It was heavily targeted to an African-American audience, a factor that often means the film won't play well abroad.

Indian, Chinese, Middle Eastern, European, Japanese, and Latin American audiences do not like Black actors and characters. Will Smith is not an international draw, he remains an American only movie star, while Brad Pitt, with questionable US appeal, is an international star whose presence has up till recently meant good paydays for films abroad.

Emphasizing "Diversity" may make TV critics (who are irrelevant) and Maxine Waters (who is also irrelevant) happy. It is likely to make sales of "Undercovers" assuming it makes it to a full season which is doubtful, far less than $7 million (for combined DVD profits, foreign rights fees, etc.) as revenue from abroad is likely to be very low. I doubt Indian broadcast or satellite networks will be keen to pick up on it.

Finally, we have the meat of the Wall Street Journal article. Which states, that the bulk of film revenues and profits now come from foreign sources, as DVD revenues have dried up drastically:

Decades ago, a movie's foreign box office barely registered with studio executives. Now, foreign ticket sales represent nearly 68% of the roughly $32 billion global film market, up from roughly 58% a decade ago, according to Screen Digest Cinema Intelligence Service.
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The rise of the international box office has as much to do with a shifting global economy as with the evolution of the movie business. For years, Hollywood's bottom line was propped up by double-digit growth in DVD sales. From 2000 to 2005, for example, home-video sales increased by 91% in the U.S. But during the tough economy of the past two years, home video—which used to account for the bulk of a film's profits—fell more than 20%, according to Screen Digest U.S. Video Intelligence Service. Dwindling in-theater audiences in North America also have contributed to the shift.

Another factor: Regions from Asia to Eastern Europe went on a credit-fueled building boom, erecting shopping malls—often with multiplexes attached.

Hollywood is in panic mode. The easy money off DVD sales, which were easy and did not require much overhead, or back-office staff to track and hound for payment, is over. So too, domestic box office, with relatively honest reporting and revenue sharing.

Now Hollywood is betting on credit fueled, rather than organically grown, foreign theater growth. Built by dice-rolling cheap credit, instead of savvy and experienced theater managers with their own money in the game, who expect to make money. It is the equivalent, globally, of Dubai's Palm Island or other boondoggles characterizing a wild, out of control bubble.

Hollywood faces four main challenges in emphasizing foreign box office over domestic. None of which it is equipped to face.

The first, is that by "de-Americanizing" films, it makes them repellent or simply not interesting to US moviegoers, particularly those willing to buy toys, bedsheets, and the rest. Superman standing for "Truth, Justice, and … all that" means disappointing US box office, lackluster DVD sales, and not much in the way of toy sales and bedsheets sold to 11 year old boys because the Euro-Asian friendly global product had as much appeal as a lecture from "South Park's" guidance counselor. M'kay. In other words, the commercial for the toys will suck, making the toy sales pretty low.

The second, is that foreign markets are developing their own, sophisticated movie industries, notably in South Korea, and existing industries are riding increased domestic demand. Who can make movies that appeal to Mexicans the most, Americans or Mexican movie-makers? This challenge is already eating into Hollywood "global" exports.

The third, is that piracy is rampant in the movie industry, made easier by "digital" projection which is an open invitation to piracy. As noted in the post Life on the Blue Line, DVDs of "Iron Man 2" which was playing in theaters, were being sold openly for $5. They are probably considerably cheaper in places like Beijing, or Shanghai, or Bombay. Precisely the places Hollywood plans to make a lot of money at, by box office and DVD sales. Warners has closed its Korean and Spanish language DVD operations due to piracy. Eli Roth found his (loathsome) "Hostel" torture-porn series sold in Mexico City on the streets for the equivalent of 25 cents US.

The fourth major problem for Hollywood is the sheer overhead, required, to manage a "global" presence and the constant effort to ride herd on non-Western concepts of accounting, contracts, and enforcement. While places like Japan, the UK, Denmark, and Canada are likely to be fairly scrupulous in their accounting of receipts and honest profit-sharing, the same is unlikely in the extreme in the projected growth centers: China, India, Latin America, the Middle East, and Eastern Europe. None of which are exactly open, transparent societies dedicated to the rule of law, enforcement of contracts (much less with distant and unpopular foreigners), or honest accounting. Plus there is the sheer size of the effort. AVATAR, for example, made 27% of its gross box office ($749 million) in the US, compared to $1.98 billion overseas (73%). That makes revenues extraordinarily dependent on honest accounting from overseas exhibitors and actual payments, from many, many countries [see WSJ's article for the interactive graphic]:



Not even Honda Motorcycles is this ambitious. Honda, Toyota, GM, Ford, all have local partnerships in major countries they operate in, with manufacturing often done locally, providing jobs and patronage/protection, as well as a robust local dealership network that again provides incentives to locals to grow sales not cannibalize them. Global car and truck companies can act globally, because a sale of vehicle is just the beginning of a relationship with the nation, local business partner, and end-customer. Repair, service, parts, will all be required by the global manufacturer. Ongoing business with future sales of the same type of vehicle is expected. Meanwhile, Hollywood depends on basically, "one-off" cooperation from folks all over the world, far more nations than where the global manufacturers do business.


World-Wide Ticket Sales % by Nation:

Nation	1999	2009
U.S.	40.8	33.0
Japan	9.5	7.5
France	5.3	5.9
U.K.	6.2	5.0
India	2.6	4.8
Germany	5.1	4.6
Spain	3.1	3.2
China	0.7	3.1
South Korea	1.8	3.1
Canada	2.6	3.0
Italy	3.4	2.9
Australia	2.7	2.9
Russia	0.1	2.4
Mexico	1.8	2.0
Brazil	1.2	1.6
Netherlands	0.7	0.9
Poland	0.5	0.7
Switzerland	0.8	0.7
Sweden	0.8	0.7
Ireland	0.3	0.7
Turkey	0.4	0.7
Denmark	0.5	0.7
Belgium	0.7	0.6
Norway	0.4	0.6
Austria	0.6	0.6
Taiwan	0.8	0.6
Greece	0.4	0.5
Hong Kong	0.7	0.5
Colombia	0.1	0.4
Argentina	0.9	0.4
Venezuela	0.2	0.4
Philippines	0.5	0.4
Singapore	0.4	0.4
Malaysia	0.1	0.4
Israel	0.5	0.4
New Zealand	0.4	0.4
Portugal	0.3	0.3
Indonesia	0.3	0.3
Thailand	0.4	0.3
UAE	0.1	0.3
Finland	0.3	0.3
South Africa	0.4	0.2
Chile	0.2	0.2
Czech Republic	0.1	0.2
Egypt	0.1	0.2
Hungary	0.2	0.2
Ukraine	0.1	0.2
Romania	0.0	0.1
Slovakia	0.0	0.1
Bulgaria	0.0	0.1
Croatia	0.0	0.1
Slovenia	0.0	0.1
Lithuania	0.0	0.1
Iceland	0.1	0.0

China and India, for all their vaunted population growth, and GDP growth, still account for less than 5% of Global Box office, each. There is no way Hollywood can make off global distribution like this, because the amount of people to manage the box office receipts, actually getting back to the studio, is simply too large. There is too much of a requirement for people on the ground, going to theaters personally, and building relationships with theater owners so the temptation to simply screw say, Fox and say "I got only this much from AVATAR showings" when the real number is five times that quoted, to make money. Because the order of effort will be too large for the payoff. Even in China and India, the "future" of global movie-going, the amount of tickets sold in dollar amounts is still too small.

How in the heck can anyone look at that table and think there is any way to make money with each nation being such a small part of ticket revenue? Each requiring its own unique advertising campaign, its own marketing materials, and accounting procedures? Without the dealership network model, which has extensive parts/service revenue (often shared) to build profitable cross-border relationships with global manufacturers and local dealers?

It makes no sense other than Hollywood is simply too stupid to read the numbers and realize that global business is not for everyone.

So how will this play out?

Already, with the sale of Miramax, and the planned sale of MGM, several "studios in name only" but with substantial libraries are being sold, likely to be shut down as failures, as is likely with Guy Hands and the ill-fated Terra Firma leveraged buyout of EMI. [Creditors want the company sold at auction piece by piece, artist catalog by artist catalog.] The studios that avoid "global" product and stick to American-driven toy commercials will do the best (that is, survive the longest under the current model of least stupid sticks around). That means probably Disney/Marvel, with princess fantasies and now, boy superheroes, if they can avoid screwing things up with Marvel which is probably a faint hope. Probably also Time-Warner, with massive corporate receipts and the ability to show re-runs of Law and Order into the next millenium. Not looking good are Comcast-NBC/Universal, and Sony, with its parent under earnings pressure from lack of good products, and lack of quality (almost everything is now manufactured in China, under fairly shoddy standards). Paramount is also questionable, with parent Viacom looking shaky.

Stupidity kills. In Hollywood, it just takes longer.
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