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April 2, 2012

The Death of Film, Pt II

by Howard Suber

When I first started teaching at UCLA in the late 60’s, Eastman Kodak made the film stock that was used in every academy award-winning film, as it had since 1928 and would continue to do until 2008. It made 90% of all film shot in the United States and 85% of all cameras sold here. It is hard to think of another American company that such total control of the U.S. market.

The article linked below, translated from the German newspaper, Der Spiegel, talks about what led Kodak to declare bankruptcy a few months ago, and makes the point that the digital camera was, in fact, invented at Eastman Kodak, but not developed there.

The reason for that is a familiar and pretty consistent one: they were afraid of cannibalizing their existing product line. Like so many other companies that have followed a similar trajectory, they knew the good old days were going to end, but they were going to hold on to what they had as long as they could. A sort of controlled suicide.    

I suspect that theatrical exhibition will become an example of this. The switch from film to digital that my last missive discussed will not enhance its ticket sales (nor, I think, will they significantly distract from them).

I think it’s hard to explain, from a purely economic analysis, why the distributors and exhibitors have converted to digital. Yes, the cost of prints can come to three or four millions of dollars, but the exhibitor doesn’t pay for the prints – the distributor does. But the distributor loans the money to each film, which in our day is likely to be a self-contained company. If the film makes back its costs, the distributor takes the cost of prints (plus a profit margin) out of the returns for the film, so they are only stuck with print cost on those films that fail to make back the money invested in them.

Exhibitors couldn’t praise the virtues of digital over film – you’re lucky if audiences don’t notice the difference, and you certainly can’t charge more money for them the way you can with 3D and Imax. This explains why it’s taken theater owners so long to convert. (They’re only doing so because the distributors are helping share the cost.)

But goodbye film, the product of organic chemistry that was once considered the cutting edge of technology (well, it still is in pharmaceuticals). To rephrase a line from my last note, where there is much life, there is also much death.

Copyright (c) 2012 Howard Suber

http://www.spiegel.de/international/business/0,1518,815488,00.html

 

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