Rather than spreading resources evenly across product lines (which might seem to be the most effective approach when no one knows for sure which products will catch on) and vigorously trying to save costs in an effort to increase profits, betting heavily on likely blockbusters and spending considerably less on the “also rans” is the surest way to lasting success in show business.
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With such high stakes and money tied up in a few big projects in the pipeline, the need to score big with a next project becomes more pressing, and the process repeats itself. The result is what I call a “blockbuster trap”: a spiral of ever-increasing bets on the most promising concepts.
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Third, by extension, not bidding for sought-after projects makes it harder to get best efforts from sales and marketing representatives and other employees. After winning the hotly contested rights to a book like Dewey, Grand Central executives can forcefully make the case that this book will beat its competitors. (“It’s a sure bet to do as well as Marley & Me—why else would everyone be after it?”)
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Fourth, critically, if entertainment businesses forgo making big bets on likely blockbusters, they will find their channel power waning over time. Retailer support is decisive in most media markets, In the film industry, the number of screens a movie receives from exhibitors in its first few weeks remains the best predictor of its revenues. Exhibitors want to see evidence that a movie is worthy of their scarce resources; they like nothing better than to know that a studio is making a significant push for a film and planning an extensive marketing campaign.
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As this example again makes clear, the idea of smaller bets being “safer” is a myth. Blockbuster strategies reliably beat the alternative of more risk-averse strategies: the highest-performing companies in the entertainment and media sector thrive by investing a relatively large proportion of their resources in just a few titles and then turning those choices into successes by giving them a higher level of development and marketing support. It may be partly a self-fulfilling prophecy, but it works. And because the marginal cost of reproducing and distributing entertainment products is relatively low—especially compared to their up-front production expenses—and because of the economies of scale involved in advertising campaigns, the advantage of a bestseller, a box-office champion, or a ratings monster is huge.
The case the book makes is compelling and terrifying. It explains quite well the behaviour of most large media companies over the past few years. The implications for those of us who care about variety and diversity in our art and media are … disconcerting. Highly recommended for anybody who wants to be depressed about the state of art, media, and culture.