In 1986, the world of comic books changed forever. DC comics published Frank Miller’s Batman: The Dark Knight Returns and Alan Moore and Dave Gibbons’ Watchmen. In a time when the comic book industry was moving away from the superhero genre and, more specifically, the classic heroes of the so-called Golden and Silver ages, these two comics brought public attention back to the industry and to the superhero. Comics began to sell at blockbuster levels and it would only be a few short years before Hollywood began to make superhero movies again. Unfortunately, this event occurred alongside the economic boom of the early ‘80s which, for those of you who haven’t seen the film “Wall Street,” was a time during which businessmen would leverage their own grandmother for enough to ride the subway. Then they would jump the turn styles and keep the money. Smart men invested in energy and financial institutions. Very smart men would use LBO’s to buy and sell entire companies. A couple of geniuses, however, invested in comic books. Comic book speculation during this period of time was rampant. Here’s how it all went down.
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| More or Less. I'm not an economist. |
It all started when people began to buy more and more comics. Supply-and-demand takes over, and in two years the price of a comic book nearly doubles. Publishers and their smart investors realize a cash cow when they see one and more or less reinvent comic book collecting overnight. They spread the word that “rare” comic books are selling for thousands of dollars and simultaneously begin to introduce gimmicks such as holographic covers, polybags, glow in the dark panels, embossing, etc. Meanwhile the overall quality of the writing and art began to dip because of how many new “rare” comics were being mass-produced by the publishers. And comic readers became comic collectors and bought a dozen of each in hopes that they would someday be worth even more. And the cycle continues. The only ones who make money are the ones who sell their comics to other speculators and, of course, the genius investors who got out before the whole thing came crashing down. From 1993-1997, two thirds of comic book stores close. Publishers are either run out of business or are bought up. Marvel Comics declares bankruptcy. Batman is crippled and Superman dies. Literally.
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| Everybody came to the funeral, except Clark Kent. |
Today, the cost of comic books has doubled twice since the ‘80s, and while Art Spiegelman won a Pulitzer, the industry is at its lowest point in generations. And yet companies like DC and Marvel have fully recovered and are now making more than ever. But how can this be? Simple: These comic book giants don’t really make comic books anymore. In 2000, the film X-Men hits theatres and is quickly followed by a decade of superhero movies, each one a blockbuster. The entire time, companies like Marvel are making a killing off of royalties, rights, and merchandising. In 2003, less than 25% of Marvel’s revenue came from comic books. Today, it’s less than half of that. Where the comic book industry should have been able to stabilize and recover, the sudden explosion of the internet bubble moved the world’s attention away from anything on paper. So while the superheroes might have survived, the comic book had never seen darker days.
Some of you who read the title might be asking yourselves “What does any of this have to do with Hollywood?” The answer, of course, is everything. Like any entertainment industry, the film industry rests on the backs of a few very powerful companies. The “Big Six,” as they are called, consist of Time Warner, Viacom, News Corporation, The Walt Disney Company, Sony Corporation, and Comcast/General Electric. Together they control 85.9% of every movie and television show you’ve seen or heard of in the last twenty years (And the rest is divvied up between CBS, DreamWorks, MGM, The Weinstein Company, Lions Gate, and Summit, with a tiny tiny amount left over for everybody else). From here on out, when I say “Hollywood,” I’m referring to these guys:
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| Casual Friday. |
The average feature film costs roughly sixty million dollars to make and makes on average about as much, which on the surface appears to be a pretty tough business. Of course, these are only averages. When you start to look at particular genres such as, say, the superhero movie, you see that the movies cost almost three times as much to produce and that they make almost TEN times as much at the box office. That kind of a return is the sort of thing a genius might consider investing in. And invest they have. It is a story very similar to that of the comic book industry. As more and more people go to the movies, the cost of a movie ticket increases, and studios begin to produce more and more films (In 1986 there were fewer than 200 films released. In 2010, almost 900 films were released). They spend more on gimmicks (CGI, 3D) but they also can cash in on recognizable commodities such as A-List actors and proven successes like comic book superheroes. And people see more and more movies. And the cycle continues. Now we’ve caught up to the present. We haven’t seen signs of a crash yet, but that’s because we might not be looking in the right place.
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| They've started charging more for popcorn since they realized it came in 3D. |
Japan’s animation industry, while not quite as lucrative as Hollywood, is every bit as prolific. Or, rather, it was every bit as prolific. Over the past few decades, a significant fraction of revenue for most of the major anime studios came from offshore marketing to western and American markets. Nearly every successful commercial anime has a subtitled and/or a dubbed version of it in English among other languages. And with western markets several times larger than domestic markets, Japanese studios which could make use of these markets became the most successful during a period in which the industry had been in decline. Similar to the comic book companies of the ‘80s, the anime companies of the ‘90s found an eager market with very deep pockets (recall all the money from the dot-com bubble, if you will). Programs such as Pokémon, Dragon Ball, Sailor moon, among numerous others became worldwide successes. And, in what should now be an all-too-familiar pattern, geniuses at the anime studios began to realize that they could be making a lot more money if only they were to produce a lot more anime. And produce they did. From 1995-2005 there was an explosion in the anime industry which featured studios buying up the rights to several titles which had small cult-followings. Nearly every successful manga was adapted into an anime series (some into more than one) and series were produced with literally hundreds of episodes. All the while, in order to keep up with production, the quality took a dip. Animation was outsourced to cheaper markets, sometimes mid-series, and what few artistic gems were produced were drowned out in a sea of mediocrity. Recently, partially as a result of the ongoing worldwide recession, foreign anime DVD sales are way down. Many studios have stopped subtitling or dubbing some series entirely. Some of the largest studios are scaling back across the boards and profits are down even domestically. Finally, with the emergence of internet “fan-subbing” and illegal downloads of anime series by western markets, the DVD-focused studios are hurting these days.
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| Quality does matter. |
While economics could have predicted the rise and fall of the comic book and the anime, just as it seems to suggest a grim future for Hollywood, it does not entirely explain the difficulties faced by these industries. It was perhaps unhappy coincidence that the comic book bubble should crash just as the world was leaping onto the internet superhighway or that anime should begin to falter just as torrents and file-sharing reach their peaks. Or perhaps the economy is not without a sense of irony. Either way, what put the nails in the proverbial coffin in both cases are the advancement of technology and the abandonment of business models. Comic books as a product are selling at their lowest levels in years because most people are more interested in what is online than what is on paper. The anime industry is withering because it is no longer practical to sell 400 episodes on 20 DVDs. The greatest threat facing the video game industry (whose in-depth analysis is another day’s blog entry) is Angry Birds, for goodness’ sakes. As technology progresses, entertainment must evolve. And it does so, gradually. But an economic crash is analogous to a meteor strike and the largest and oldest companies, the proverbial dinosaurs, are the most affected. What does survive these periods of near-extinction are the smaller, more nimble companies. Today, independent comic book and graphic novel studios are self-publishing electronic copies of their work, available on the iPad and other tablet computers. In Japan, independent and smaller studios are moving away from series to focus on very high quality features, which have proven to be highly successful both in Japan and overseas. And while DC, Marvel, and Anime’s analogue to the “Big Six” still control most of their respective industries, public attention and consumer money is moving towards the little guys.
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| Yup. That's pretty much how it went. |
A Hollywood blockbuster makes five hundred million dollars because it utilizes technology that costs a hundred and fifty million dollars to use. That’s its advantage. The smaller pictures, while lacking CGI and 3D, still cost a significant amount of money to produce with cameras, lighting, sound, and every other technological component audiences have come to expect. But that won’t last forever. 2009’s Best Picture winner, The Hurt Locker (while not a commercial success) cost around 11 million dollars to make. At the same time, 2004’s Primer cost only $7,000 to make, but ended up grossing nearly half a million dollars. That means that while Iron Man made four times what it cost, Primer made SEVENTY times what it cost. The reason why all of this is possible is because technology is moving faster than even business can. The technical capabilities of the cameras used to film Star Wars are more than doubled by your average cell phone. It will not be long before people with innovation, creativity, and talent can produce feature-quality films on the most modest of budgets. And when that happens, Hollywood won’t need to wait for an economic crash. The big studios have been slowly sacrificing quality for volume over the last few decades and they’ve been able to do so because they have the technology to back it up. Once anybody can get that technology, the “Big Six” will only be necessary for the most expensive of films. For the rest, it will be the independent studios (whose meager share has been growing over time) who take over because, as long as the ticket price is the same and they can’t tell the difference between the technologies, people are going to pick the movie they think is better.
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| They made it for $7,000. In their spare time. And it's about time travel. |
And that is how Hollywood will die and how the worldwide entertainment industry (including television, books, music, video games, and anything else you can buy) will change forever.
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