Collective intelligence does not create value in the movie industry
Crowds fail in the movie making business as their three key value propositions are not applicable – modularity, customer selection or talent attraction.
The secret sauce of a successful movie lies within the overall coherence of the artistic genius. Modularity, the key of crowd-disrupted industries (TopCoder in IT market), hinders movie making process. We have seen different unsuccessful attempts to introduce modularity into film production. A UK team behind 50 Kisses gathered 1870 script submissions and 127 completed films. The result? 50 writers, 50 filmmakers, and one movie with very low Imdb score (5.5). Iron Sky pursued a path to crowdsource the collective intelligence selectively. “With our film the idea was to use the community to develop ideas and issues that are problematic rather than get them working on the script. We needed lyrics for the national anthem of the moon Nazis, and I don’t speak German, so it was something we put to the community.” Crowds participated, but the overall movie scored 5.9 on Imdb.
Crowdsourcing creates value by letting customers select what they like, what they value. In the movie industry, movie goers many times do not know what they want. Moreover, it is very difficult to judge the quality unless they see a large part of the movie. This is a moment when most of the cost is already sunk and only incremental changes can be done. Crowds can bring attention to already known topics, but will never produce the next big thing.
Crowdsourced movies are pre-determined to be market for lemons. The best talent is attracted to the biggest studios as they know that this is the place where their movie has the biggest chance to succeed. Julia Roberts wants to star in a blockbuster, not a niche Kickstarter movie. What are the chanced that the top artistic talent across acting, directory, production, marketing and distribution would meet on a digital platform?
Digital crowd efforts are not strong enough to capture value in the movie industry
To succeed in the theatre movie making industry, you need big audiences, great connections and big opening weekend. Crowds have not been able to compete at this level.
The traditional movie studios follow a blockbuster strategy. The value capture is based on bets spread across a balanced portfolio of 15-25 movies per year. You need big money, big teams, top talent and strong connections in the distribution market. Only the big make it even bigger. And only some of them. Tomorrow land did not attract sufficient numbers to theatres to break even despite a great cast (George Clooney), massive production budget of $190 million and major studio support (Disney).
Users innovate well when markets are small and uncertain. Digital crowds definitely help movie makers to get closer to consumers, to activate them. However, you need millions of paying spectators to recover cost. Scale matters. The most successful Kickstarter movie campaign (Veronica Mars) attracted 91,586 backers. Digital crowds of tens of thousands are not sufficient even for a low budget movie. Production of Veronica Mars, backed by Warner Brothers, cost $6 million (low-cost compared to $150 million Jurassic World). Despite the large and loyal followership (number of Imdb raters is 15% of those of Jurassic World), it was able to earn only $3.5 million in gross box office ticket sales (0.2% of Jurassic World).
The interconnected world of movie making and movie distribution presents another hurdle for crowdfunding efforts. The team behind Iron Sky comments on the UK release: “The fact that they are releasing Iron Sky for just one day (in the middle of the week) shows a great disrespect for us, the film-makers, who have been slaving to make this film as cinematic – with big special effects, sounds and great action – as possible”. It may be disrespectful, but this is the reality of the industry.
Crowdsourcing is praised for its ability to prove initial demand. Compared to consumer products, the profitable consumption of a movie in theatres is very short lived. You do not get a second chance to reiterate the “prototype” and to capture the value later. Sequels are scarce. Grassroot release may work well for artists in music industry, but works poorly for movies.
Theatre movie making is an art, a very difficult type of art. Crowds will definitely bring to life some small niche projects that could not be founded before. We saw a successful example of non-commercial initiatives such as Life in a Day, which gained 11.4 million views on YouTube. However, crowdsourcing and crowdfunding will most probably not be able to disrupt the big screen movie industry.