"Because people are inherently social," the Harvard business professor Anita Elberse points out, "they generally find value in reading the same books and watching the same television shows and movies that others do." What's more, and equally understandably: "People have a taste for winners: if, say, a book is popular and has been widely discussed in the media, consumers have more reason to read it." [from Guardian review]
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She very convincingly picks out examples of major conglomerates that have tried more austere, penny-pinching approaches ... and shows, with forensic financial detail, how disastrous this invariably proved.
Interesting that she's not simply referring to production, but also as much about distribution, and the marketing muscle and capacity to make very widely available and prominently placed a given release, Lady Gaga being one such example she dissects.
You can preview some samples by using Amazon's 'look inside' feature, or GoogleBooks (add keywords related to cinema, music or whichever industry you're most interested in to get the most relevant sections), and its for sale as a Kindle book too.
Here's a few snippets from various articles/reviews:
"Because people are inherently social," the Harvard business professor Anita Elberse points out, "they generally find value in reading the same books and watching the same television shows and movies that others do." What's more, and equally understandably: "People have a taste for winners: if, say, a book is popular and has been widely discussed in the media, consumers have more reason to read it." [Guardian review]
From the Harvard Business School site:
[a sample from the transcript:] it is extremely difficult to predict what the next blockbuster will be. We know some ingredients. We know that it takes high production value. It needs to look really good especially if you have a movie, for instance, that has, has a--that relies heavily on special effects. It tends to have A-list talent even though that is not always the case, but more often than not, yes when you're talking about blockbuster films. You tend to see that films that are based on existing properties whether it's a book or a videogame, or a previous movie that those do really well. And obviously it's not just about the product; it's also about the marketing. So you need to spend heavily to make sure that everyone knows about it. So those are, those tend to be the ingredients for a blockbuster. But even if you do all those things very well, it's not guaranteed that you'll have a blockbuster. If it really were that simple, if it really were all about throwing lots of money after ideas, then anyone could be a studio head, and I don't think that's the case.From a Forbes magazine interview:
Welcome to the risky strategy of “blockbusters,” practiced increasingly by movie, TV, and recording companies; video game developers; advertising agencies; and even nightclubs, among other industries. The idea: Invest big money in a few top talents or brands—think Jay-Z, LeBron James, or Marvel Comics—to create buzz for a “tent-pole” product that produces most of a company’s profit and holds up the rest of the organization.Bloomberg raised some question marks over her premise:
Anita Elberse: I define a blockbuster strategy as one in which a content producer makes huge investments to acquire, develop, and market concepts with strong hit potential, and then banks on the sales of those titles to make up for the middling performance of their other content. Today’s leading film studios, television networks, book publishers, music labels, video game publishers, and producers in other sectors of the entertainment industry live by this approach.
You might think that spreading resources evenly across product lines is the safest approach, especially because no one seems to know for sure which products will catch on. Or you might think that making big bets in general is too risky a strategy, and entertainment businesses should vigorously try to save costs in an effort to increase profits. But in my research I have found that betting heavily on the most likely blockbusters and spending considerably less on the “also-rans” is in fact the surest way to lasting success in show business.
In my book, I show that the biggest investments have the highest average returns. Take the example of film studio Warner Bros. When I analyzed the performance of its films over a five-year period, I found that the studio’s 10 percent most expensive films—its so-called tent-pole movies—accounted for roughly a third of its production budget and nearly half of its revenues. There can be big flops, of course, but in general the blockbuster strategy works.
Elberse’s research has now culminated in the publication of her first book, Blockbusters: Hit-Making, Risk-Taking, and the Big Business of Entertainment, in which she makes a bold, if slightly wonky, case against fiscal timidity in the entertainment industry. Over time, entertainment and media companies (ranging from book publishers to movie studios and television networks) tend to generate the greatest profits, she persuasively argues, when they focus their budgets on making a smaller number of expensive products aimed at mass audiences, rather than a larger number of cheaper ones aimed at selective niches. “The future of blockbusters in the entertainment economy shines bright,” writes Elberse.
The book’s arrival is well-timed. In June, Steven Spielberg threw the Hollywood blockbuster complex into an unprecedented state of self-doubt. “There’s eventually going to be an implosion—or a big meltdown,” the famed director warned. “Three or four or maybe even a half-dozen megabudget movies are going to go crashing into the ground, and that’s going to change the paradigm.” Over the following months, as if on cue from the forefather of the genre, a phalanx of big-budget movies—including The Lone Ranger, After Earth, R.I.P.D., and White House Down—imploded at the box office. “Industry insiders,” the Guardian reported, “are referring to this season as ‘the summer of doom.’”
Enter the PhD-wielding Elberse: “You can’t put too much weight on a few observations,” she says. “You need to look across the whole population for a number of years. When you do that, you see that the blockbuster strategy is still the way to go.”
Another Harvard Magazine piece kicks off by contrasting her theory with Chris Anderson's now well-established, and widely accepted, 'long tail theory':
In 2006, Chris Anderson, then editor of Wired magazine, published The Long Tail: Why the Future of Business is Selling Less of More. He argued that the Internet era was changing markets. Take books, the original niche of Amazon.com. As an online vendor, Amazon can stock far more titles than any brick-and mortar bookstore—so instead of cashing in on 50 bestsellers, Amazon could prosper by selling a few copies each of 100,000 different titles. We are moving away, said Anderson, from a demand curve focused on the “head” of a statistical distribution—where there are many occurrences of one value (“mega-hits”)—and toward the “long tail” of the distribution, where there are many different values, but only a few occurrences of each one.(NB: Elberse takes on this argument directly in her book)
Hence, he projected, Amazon would tap a goldmine of existing assets, as older “backlist” books continued selling for years. Netflix would cash in on movie studios’ vaults—never mind the current box-office smash. The profusion of cable- and satellite-TV channels would make a thousand niche programs bloom in a million living rooms, not just a couple dozen crowd-pleasers atop the Nielsen ratings. A new, far more diversified era of entertainment was at hand.
Guardian's Poole takes issue with her refusal to consider quality rather than quantity (the numbers):
"The purpose of this book is not to pass judgment on what makes for 'good' or 'bad' products," she insists, "or to question purely creative decisions; there's no arguing about taste, after all."
The Latin tag of which this last phrase is a translation – de gustibus non est disputandum – is often a resort of the philistine, as though debating the merits of artworks made as little sense as arguing furiously over whether salt and vinegar Squares crisps are superior to roast beef Monster Munch. (For the record: they are both delicious; it just depends what mood you're in.) In any case, Elberse's haste to dispose of the question of aesthetics is rather undercut soon afterwards by the reported opinion of a studio executive. If you're going to bet large on blockbusters, the chairman of Disney tells her, you have to make the right bets. "There is no hope if you just make a bad movie," he says. What Elberse rather grandiosely dubs "blockbuster strategy", then, only works if the films are good more often than not – but she has taken any discussion of what makes a film good off the table.