Slate Money – The Hollywood Edition (March 31, 2018)

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This episode of Slate Money plunges into the business of Hollywood with guest Ben Fritz (Wall Street Journal reporter and author of The Big Picture: The Fight for the Future of Movies). The discussion centers on how franchise filmmaking has transformed the movie industry, the rise and fall of the movie star, the implications for diversity and inclusion in Hollywood, and the impact of streaming services like Netflix. The hosts and Ben Fritz explore how globalization, shifting content consumption habits, and studio strategies are redefining both the economics and culture of entertainment.

Key Discussion Points & Insights

1. The Formula of Hollywood: From "Nobody Knows Anything" to Franchise Reliability

• The Rise of Branded Franchises
  • The long-held belief that "nobody knows anything" in Hollywood (credit: William Goldman) is now outdated.
  • Ben Fritz: "Somebody finally figured out something about the movie business, which is that if you have branded franchises... you can get a fair amount of reliability and predictability in the movie business." (01:31)
  • Major brands like Marvel have achieved an unprecedented streak of successes ("18 films in a row with essentially zero flops" (02:08)), creating a formula for robust earnings.
• Why Franchises Work Now
  • The global audience demands movies that are visual, simple, broadly accessible, and not culturally specific.
  • The spectacle of blockbuster films provides a reason to visit theaters, contrasting with the complexity and quality that is now readily available on TV.

2. The Migration of Midrange Movies to TV and Streaming

• Shifts in Content Platforms
  • Mid-budget films and period pieces are now thriving on streaming (e.g., The Crown on Netflix) rather than at the multiplex. (04:54)
  • TV is no longer "the idiot box," and the distinction between TV and movies has blurred; serialized, high-quality storytelling is common on streaming platforms.
• "Movies as TV Shows"
  • Ben Fritz analogizes Marvel's success to TV: "The correct way to understand Marvel, I think, is as a TV show... Black Panther, I think correctly understood, is the pilot for a new show that is a spinoff of Avengers." (05:11)

3. Cultural Impact: Movies vs. Television

• Shared Experiences
  • Discussants note diminished simultaneous cultural conversations around TV, contrasted with movies like Black Panther and Get Out which ignite public dialogue because theatrical windows coordinate the viewing experience. (08:22)
• Quality Standards Rising
  • Ben Fritz notes that "the audience can smell cynicism" and fresh elements are necessary for continued franchise success, as seen in Marvel's ability to integrate novel themes and genres within its formula (e.g., the political tone of Black Panther, the genre blend in Guardians of the Galaxy). (10:20)

4. Studios vs. Movie Stars: The Shift of Power

• From Star-Driven to IP-Driven
  • Movie stars once extracted enormous "rents" from studios (e.g., Will Smith in Men in Black 3), often capturing much of the film’s profits. (13:06)
  • Now, intellectual property (IP) owners—primarily studios like Disney—retain the profit, as franchises take precedence over individual star power.
  • Ben Fritz: "It's going to the IP owner... and back in the day... [stars] would demand huge cuts of the gross revenue before there was any profits..." (13:06)
• The Exception: Dwayne "The Rock" Johnson
  • Johnson is possibly the only contemporary star with leverage to extract significant deals (e.g., $22 million upfront plus 30% of profits for the upcoming Red Notice). (17:07)
  • His unique, truly global appeal makes him stand out from other stars whose draw is now largely franchise-dependent.

5. The Global Movie Market & American Cultural Exports

• Hollywood's Unique Export Model
  • U.S. movies dominate global markets; American audiences rarely embrace foreign-made films, and efforts by China to produce global hits for export have been unsuccessful. (20:13)
  • Failure of "hybrid" co-productions (e.g., The Great Wall) illustrates the challenge.
• The Blockbuster Flop Risk
  • Today, films can tank harder than ever, with high-budget, star-driven projects sometimes grossing virtually nothing domestically (e.g., By the Sea, Suburbicon). (21:51)
  • Tom Rothman (Sony): "There is no bottom." (21:51)

6. Inclusion Riders, Diversity, and Representation

• What Are Inclusion Riders?
  • Newly spotlighted by Frances McDormand at the Oscars, these are contractual clauses requiring a certain level of on- and off-screen diversity. (23:08)
  • Though still rare (“I’m not aware of it on any major studio movie, certainly ever being used before” (23:31)), major agencies and some stars are beginning to push for them.
• Practical Considerations for Implementation
  • Challenges include data collection, union constraints, and subjective creative decisions, leaving much to be figured out in practice.
  • Hollywood’s poor record on diversity is attributed to unconscious bias and long-held industry tropes.
• Movie Brands May Foster Diversity
  • With audience loyalty focused on franchises rather than individual stars, studios may now have more freedom (and incentive) to diversify casts and hire more inclusively (32:04).
  • The success of films like Black Panther and the Fast and Furious franchise (noted for their diverse casts) shows diversity is both socially just and good business.

7. Streaming’s Disruption: Netflix, Data Opacity, and Industry Economics

• Netflix's Secrecy and Spending
  • The hosts and guest express skepticism about Netflix’s lack of transparency in audience data and their unsustainable spending practices. (40:00–43:37)
  • Netflix produces a staggering amount of content (e.g., 700 originals in 2018), spending more per hour on prestige movies (e.g., Scorsese's The Irishman at ~$150 million) than on TV shows. (44:11)
  • Their business model (reinvesting all revenue into content for subscriber growth) is compared to Amazon’s "land grab," but without immediate profitability.
  • Netflix’s valuation and future pricing power questioned as competition mounts from Disney, Amazon, Hulu, and others. (45:19)
• Impact on Movie Business
  • If Netflix ever scales back, movies (with much higher per-hour costs) are likely to be the first cut, despite their cultural cachet.

Notable Quotes & Memorable Moments

• On the Economics of Franchises:
  • "It seems that they are flop-proof...produce 18 films in a row with essentially zero flops. And that's what Marvel's done." —Ben Fritz (02:08)
• On the Globalization of Hollywood:
  • “When you're trying to reach a global audience, then they need to essentially be very simple and accessible stories.” —Ben Fritz (03:24)
• On the Decline of the Movie Star:
  • “[Franchises] have kind of stopped that economics. Now the rent extraction is all going to Disney.” —Felix Salmon (13:06)
• On Inclusion Riders and Diversity:
  • “There's so much romanticism...it's finally being run rationally...movie theaters...comparative advantage...is the big visual spectacle." —Ben Fritz (06:36)
  • "Why are they so bad at giving women lines? ... There's no good reason for it, right?... it's just old fashioned sexism and unconscious bias." —Ben Fritz (28:54)
• On Data Transparency:
  • “Bright is the $100 million Will Smith movie that was on Netflix in December and made such a big cultural impact that you've never heard of it. And Netflix claims...it was their most watched original film.” —Ben Fritz (40:00)
  • "They do not like to give the, 'here’s how many people are watching' numbers." —Ben Fritz (42:04)

Timestamps for Critical Segments

• 00:24–03:00: Introduction of Ben Fritz, discussion of Hollywood's shift to franchise model.
• 03:00–06:00: Global audience and television’s transformation.
• 07:37–09:21: Shifts in cultural conversation from TV to blockbuster movies.
• 10:20–12:27: Marvel’s unique formula and Disney’s acquisition strategy.
• 13:06–15:17: Power shifts from stars to studios; Men in Black 3 as a cautionary tale.
• 15:17–17:07: Discussion of Dwayne "The Rock" Johnson as last movie star with real leverage.
• 19:54–21:02: The challenge of global film exports and failures to produce cross-cultural hits.
• 21:51–22:59: The risk of massive flops in the streaming era.
• 23:08–25:39: Inclusion riders explained, their infancy in Hollywood agreements.
• 28:54–32:04: Systemic hurdles for women in film, role of unconscious bias.
• 33:01–34:05: How successful branding enables increased diversity.
• 40:00–44:47: Netflix’s opaque metrics and its impact on content economics and industry structure.

Numbers Round

• Anna (35:06): "30.8% of lines spoken by female characters in animated films"—showing persistent gender disparity, even where creators could invent any characters they like.
• Felix (37:17): "Four"—the number of U.S. screens on which The Death of Stalin opened, used to discuss word-of-mouth platforming for non-branded films.
• Ben (39:43): "Unknown"—how many people watched Bright on Netflix, emblematic of the streaming giant’s secretiveness. Later, Ben offers: "700"—the number of original pieces Netflix was producing in 2018.

Final Thoughts

• The economics and business models of Hollywood are being rewritten by franchises, globalization, and streaming platforms.
• Diversity remains both an ethical imperative and a proven route to creative and commercial success, though implementation faces inertia and structural obstacles.
• The streaming wars (led by Netflix) have shifted power, secrecy, and spending in ways that both liberate and destabilize content creators, studios, and the future of movies.

Recommended by hosts:

• The Big Picture: The Fight for the Future of Movies by Ben Fritz
• The Death of Stalin (film)
• Wormwood (Netflix miniseries)

Closing:
A lively, far-reaching exploration of how the blockbuster age, streaming, and activism are shaping the future of film and Hollywood itself.