Is Hollywood Model Doomed? Steven Spielberg and George Lucas Think So

If they can't preserve the system, are its days numbered?

George Lucas and Steven Spielberg.
Araya Diaz/WireImage
George Lucas and Steven Spielberg.
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Whether they meant to or not, Steven Spielberg and George Lucas did more than just about anyone to build the blockbuster-driven business model that dominates Hollywood today. And now, they're saying that model is doomed.

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Speaking alongside Lucas at a panel earlier this summer at the University of Southern California, Spielberg warned students of "a big meltdown," saying that it would only take a few high-profile flops to make the current model – specializing in expensive, effects-driven spectacles that draw massive worldwide returns – collapse. "There's going to be an implosion where 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."

Lucas agreed, taking note of several factors – the skyrocketing cost of marketing movies, the rise of Netflix and other non-theatrical forms of distribution, and the current model's lack of room for edgy and unique personal voices – to suggest that the most creative filmmakers will migrate to television. (Indeed, film and TV critics, citing shows from The Sopranos to Mad Men, have been arguing for a decade that TV has surpassed movies as a medium for artistic storytelling.) Even filmmakers as powerful as these two are having difficulty thriving in the current marketplace, at least if they want to make more personal movies, Lucas lamented.

"We're talking Lincoln and Red Tails – we barely got them into theaters. You're talking about Steven Spielberg and George Lucas can't get their movie into a theater," he said. Spielberg agreed, adding, "You're at the point right now where a studio would rather invest $250 million in one film for a real shot at the brass ring than make a whole bunch of really interesting, deeply personal – and even maybe historical – projects that may get lost in the shuffle."

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How valid are Spielberg and Lucas' warnings? If these heavyweight can't preserve the current Hollywood system, are its days numbered? Should the system even be preserved?

Veteran producer Lynda Obst (Sleepless in Seattle, How to Lose a Guy in 10 Days) has said she agrees with Spielberg's assessment. Talking to New York magazine, she said of the blockbusters-only mindset, "The seeds of this model's destruction are in place. There are fixed costs for these kinds of movies that are immense. And all formulas will only work for a while. How many times can you see the same cities destroyed? How many ways are there to destroy them?"

Obst said she blames the increasing importance of the overseas market for the current fixation on blockbusters alone. Even superhero movies that make hundreds of millions of dollars in North America still make even more money abroad.  That's why there's so much focus on sequels and reboots of familiar characters and on visual spectacle at the expense of interesting scripts.

"We can't afford to spend the same kind of money marketing movies internationally that we spend here, so we need pre-awareness: titles and characters that are already known," Obst told New York. "International audiences love action, wild and exciting special effects that can only be created by our technology. No nuance. Not so good for so-called writing. And China won't look at anything that isn't 3-D, which means everything is made that way – even with domestic audiences rejecting it."

If Obst and Spielberg are right, the collapse could be imminent. After all, this spring and summer, we've seen the failures of Jack the Giant Slayer, After Earth and White House Down. So it should only take another giant flop or two to bring the whole system down, right?

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Not so fast. For one thing, Hollywood has way too much invested in the blockbuster business model to replace it with something unknown, at least overnight. Every few years, a mogul like Spielberg or his DreamWorks partner Jeffrey Katzenberg makes a call for austerity and more modest budgets, and each time, that call is ignored. Sure, blockbusters are expensive to make, and some of them fail, but when they succeed, they rake in billions, and that keeps the system going.

Even when there's evidence to the contrary, the accountants who run Hollywood will rationalize that evidence away. If there's a flop, it's because of poor execution, not because the model is flawed. And if there's a success outside the model (say, a movie like Bridesmaids, an original comedy centered on women), it's viewed as a fluke, the exception that proves the rule. Obst hinted at this when she told New York why Hollywood won't make more chick flicks, despite evidence that a sizable audience of both sexes wants to see them. "The movie marketers believe that women go to guys' movies if they're good, but guys won't go to women's movies ever. I've proved that wrong – as have many others – but they deeply believe that," she said. "And every time a women's movie works, they attribute it to the star, not the audience, even if the star has never opened a movie before. Also: Chick flicks don't tend to be sequel-izable."

If there is a threat to the current model, a threat bigger than the occasional flop, it's the new forms of distribution, from Netflix to pay-cable video-on-demand (VOD), that are slowly killing the domestic theatrical business. Hollywood has long tried to bypass the movie theaters (with whom it has to share ticket profits), either by shrinking the window of theatrical release before a movie comes out on home video (once more than a year, it's now down to three months), or by the occasional experiment with premiering smaller movies on VOD the same day they open in theaters. Still, it's the theatrical release that tends to drive the rest of the business, creating hype via trailers, star interviews, red-carpet premieres and critics' reviews. Besides the blow to a movie's marketing, bypassing theaters would destroy the long-cherished communal experience of watching movies together in the dark on a massive screen. At any rate, the home-viewing experience can't really duplicate the immersiveness of 3D or IMAX – at least, not for another few years.

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Nonetheless, the theatrical business is hurting, and movie distribution is moving inexorably toward your living room – or, heaven forbid, the tiny, afterthought-sized screen of your favorite mobile device. Maybe Lucas is right, insofar as a movie that fits in your pocket (or that you can watch while doing something else) has effectively become television anyway.

Whatever shape the new methods of distribution take, they'll cause more of an implosion than Hollywood's own creative failures. Still, as art-house exhibitor Russ Collins has noted, in a response to Spielberg's warning, distribution models have been changing and evolving throughout the history of motion pictures, and each new change looks like a potential catastrophe to people who thrived under the old order – indeed, as the changes wrought by Spielberg and Lucas in the 1970s must have seemed to the Hollywood moguls whose model preceded theirs. Besides, as Collins observed, there isn't just one film industry. There are several, including the independent cinema world, which is not about to mourn the death of the multiplex chains that depend on mainstream blockbusters.

"It is foolish to think that change will not happen," Collins wrote. "Change brings with it opportunity, and there is great opportunity for the Art House to flourish. Why? Because there are more movies made now than at any time in human history. This means all vital channels in which cinema can be presented can succeed – they won't, but they can."

If Collins is correct – that there are more filmmakers now than ever – then hope may lie with those USC students that Spielberg and Lucas were addressing. Perhaps one of them is the next Spielberg or Lucas, the movie impresario who will figure out how to connect that explosion of filmmakers with audiences – and how to make money doing so.