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Investment Firm Y Combinator Goes on Offensive Against Hollywood

bits.blogs.nytimes.com

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Re: Investment Firm Y Combinator Goes on Offensive Against Hollywood

#11

Post by eck »

I am sort of surprised that pg chose movies rather than music. Movies are hard. You need a lot of things to make a movie. I liked Avatar. You can't do that kind of thing on the cheap. Actors, sites, makeup, lighting, special effects, etc. For music, you need the band, which are essentially founders from an equity standpoint, and own their own instruments already since they know how to play them. You need like $1000 of recording gear and some dude to hit the "record" button.

Eventually movies will be democratized, but killing the RIAA/iTunes cabal seems like the obvious first step.

Re: Investment Firm Y Combinator Goes on Offensive Against Hollywood

#12

Post by [deleted] »

eck wrote: post #11

I am sort of surprised that pg chose movies rather than music. Movies are hard . You need a lot of things to make a movie. I liked Avatar. You can't do that kind of thing on the cheap. Actors, sites, makeup, lighting, special effects, etc. For music, you need the band, which are essentially founders from an equity standpoint, and own their own instruments already since they know how to play them. You need like $1000…

[deleted]

Re: Investment Firm Y Combinator Goes on Offensive Against Hollywood

#13

Post by mbreese »

softbuilder wrote: post #8
ajhit406 wrote: post #3

What hollywood has going for it, is a track-record of executing on the operations behind producing movies that make money. People who invest in movies invest for the same reasons all of us invest in anything-- to make money. Hollywood is a business, albeit one rooted in entertainment, but let's face it-- many artists are also just in it for the money. I don't think our world view of "entertainment" is going to shift…

You have to ponder the inefficiencies of an ecosystem that supports a $200 million movie. I'm reminded of Firefly. Such a great show, with lots of loyal fans. I guess it just wasn't a big enough fan base for Fox. I thought at the time that the producers should go independent and distribute straight to the consumer. Maybe that was too risky in 2002. I don't think it would be today.

Don't forget that this was the era when Fox also cancelled Family Guy and Futurama. Both of these series were able to be resurrected due to their DVD sales and syndication numbers. Fox made a lot of mistakes during that time, but were just learning about the secondary sales potential for their shows. I'd like to think that a similar set of shows would be able to stick around longer now. Those shows were able to be resurrected easily because they are animated. Firefly, not so much. But another show (Arrested Development) cancelled by Fox in that era is getting resurrected by Netflix, which while not straight to consumer is more direct than through the studios.

Also, Joss Whedon (and the rest of Hollywood) I think learned a lot about distributing directly to the consumer with Dr. Horrible's Sing-along Blog. I think that this grand experiment was a good template for future direct-to-consumer productions.

Unfortunately, you still have to deal with the problems of initially funding large movies. I can imagine a system where instead of having dedicated studios, you have smaller one-off production companies. These companies would then be funded VC style by funds that seek to mitigate their risk by diversifying their pool of movies. You could fund a few flops, so long as every now and again an Avatar comes along.

Re: Investment Firm Y Combinator Goes on Offensive Against Hollywood

#14

Post by learc83 »

ajhit406 wrote: post #3

What hollywood has going for it, is a track-record of executing on the operations behind producing movies that make money. People who invest in movies invest for the same reasons all of us invest in anything-- to make money. Hollywood is a business, albeit one rooted in entertainment, but let's face it-- many artists are also just in it for the money. I don't think our world view of "entertainment" is going to shift…

>I think most of us (unfortunately) are still going to want to watch movies like Transformers 3 at a $200 million budget than a $1million dollar indie flick.

At some point special effects are going to peak and the 1 million dollar indie flick will look exactly like the 200 million dollar one.

There will still be other differences, but technology is going to go a long way towards leveling the playing field.

Re: Investment Firm Y Combinator Goes on Offensive Against Hollywood

#15

Post by ajhit406 »

learc83 wrote: post #14
ajhit406 wrote: post #3

What hollywood has going for it, is a track-record of executing on the operations behind producing movies that make money. People who invest in movies invest for the same reasons all of us invest in anything-- to make money. Hollywood is a business, albeit one rooted in entertainment, but let's face it-- many artists are also just in it for the money. I don't think our world view of "entertainment" is going to shift…

>I think most of us (unfortunately) are still going to want to watch movies like Transformers 3 at a $200 million budget than a $1million dollar indie flick. At some point special effects are going to peak and the 1 million dollar indie flick will look exactly like the 200 million dollar one. There will still be other differences, but technology is going to go a long way towards leveling the playing field.

"Peak" in popularity or in terms of return on expenditure?

With cost reduction of special effects, I agree that the playing field will gradually level...

...but to contradict myself a bit, perhaps it won't ever level because new technologies will continue to be introduced to improve the entertainment experience that are proprietary and therefore expensive.

Re: Investment Firm Y Combinator Goes on Offensive Against Hollywood

#16

Post by ajhit406 »

mbreese wrote: post #13
softbuilder wrote: post #8

Earlier quoted context omitted.

You have to ponder the inefficiencies of an ecosystem that supports a $200 million movie. I'm reminded of Firefly. Such a great show, with lots of loyal fans. I guess it just wasn't a big enough fan base for Fox. I thought at the time that the producers should go independent and distribute straight to the consumer. Maybe that was too risky in 2002. I don't think it would be today.

Don't forget that this was the era when Fox also cancelled Family Guy and Futurama. Both of these series were able to be resurrected due to their DVD sales and syndication numbers. Fox made a lot of mistakes during that time, but were just learning about the secondary sales potential for their shows. I'd like to think that a similar set of shows would be able to stick around longer now. Those shows were able to be re…

The line is blurring.

Zynga and Hollywood are much closer in terms of their provision of value to consumers than ebay and hollywood.

What I'm trying to say is, that VCs are getting closer to cannibalizing the entertainment investment business, online and iOS gaming is a good gateway drug.

Re: Investment Firm Y Combinator Goes on Offensive Against Hollywood

#17

Post by inkaudio »

ajhit406 wrote: post #3

What hollywood has going for it, is a track-record of executing on the operations behind producing movies that make money. People who invest in movies invest for the same reasons all of us invest in anything-- to make money. Hollywood is a business, albeit one rooted in entertainment, but let's face it-- many artists are also just in it for the money. I don't think our world view of "entertainment" is going to shift…

You pretty much nailed it. YC don't understand entertainment, just like the entertainment industry refuse to understand web technology. Transformers is really an edge case, many hollywood films can be made for half of that[1]. Not your typical YC type of investment, but still doable by tech industry, after all we have tech startups like color getting 40 million for an app. The question is will the Tech industry be willing to make investment in an industry it really does not understand. Contrary to some misconception being a great entertainer does require some kind of discipline and experience like being hacker. It takes time, many entertainers start young and spend many hours working on their craft, just like hackers. The stereotypical drugs and alcohol abuse come after. Hollywood type talent is not something you can just whip up. An interesting note, Mark Susters is a tech VC investing in entertainment[2] to disrupt the market. But Mark is working on the low end of the scale, with very low budget productions (compared to hollywood) and average actors and directors. This too is not enough. If YC is seriously going to attempt to kill Hollywood it's going to have to take on risk it never did before. The entertainment crowd is much different from the tech crowd.

[1] The average cost as of 2008 is 106.6 million http://articles.latimes.com/2008/mar/06/business/fi-boxoffic... in 2009 MPAA, the organization compiling and reporting the figures stopped. http://latimesblogs.latimes.com/entertainmentnewsbuzz/2009/0...

[2] http://www.bothsidesofthetable.com/2011/11/03/the-future-of-... In his presentation Mark Suster made some correct but to obvious observation, what I disagree is his take on talent, namely he thinks the cost of talent is going up. He's not completely wrong, in that the cost of mediocre talent has gone done, but talent that people want to see, the talent that can sell tickets and drive views, their pay is going up.

Re: Investment Firm Y Combinator Goes on Offensive Against Hollywood

#18

Post by inkaudio »

learc83 wrote: post #14
ajhit406 wrote: post #3

What hollywood has going for it, is a track-record of executing on the operations behind producing movies that make money. People who invest in movies invest for the same reasons all of us invest in anything-- to make money. Hollywood is a business, albeit one rooted in entertainment, but let's face it-- many artists are also just in it for the money. I don't think our world view of "entertainment" is going to shift…

>I think most of us (unfortunately) are still going to want to watch movies like Transformers 3 at a $200 million budget than a $1million dollar indie flick. At some point special effects are going to peak and the 1 million dollar indie flick will look exactly like the 200 million dollar one. There will still be other differences, but technology is going to go a long way towards leveling the playing field.

We have tech, cost of tech is going down. But you still need talent to operate the tech, and the best talent are not cheap. The workers have unions and the ones that are not part of union do this full time and want to support at the very least a middle class lifestyle. For a hollywood movie, you don't want to use just any crew. You want the best film crew, the best makeup, wardrobe, casting, post & pre production. All the above cost money, lots of money.

Re: Investment Firm Y Combinator Goes on Offensive Against Hollywood

#19

Post by secoif »

eck wrote: post #11

I am sort of surprised that pg chose movies rather than music. Movies are hard . You need a lot of things to make a movie. I liked Avatar. You can't do that kind of thing on the cheap. Actors, sites, makeup, lighting, special effects, etc. For music, you need the band, which are essentially founders from an equity standpoint, and own their own instruments already since they know how to play them. You need like $1000…

This is true for some music genres, but not all. Same way you can just press record on your camera phone, you are unlikely to film the next blockbuster on that.

Commercial quality polish (generally) takes expensive engineers and expensive equipment, and a lot of time, and this is true of most multimedia fields, with exception of Indy sub genres.

Re: Investment Firm Y Combinator Goes on Offensive Against Hollywood

#20

Post by learc83 »

inkaudio wrote: post #18
learc83 wrote: post #14

Earlier quoted context omitted.

>I think most of us (unfortunately) are still going to want to watch movies like Transformers 3 at a $200 million budget than a $1million dollar indie flick. At some point special effects are going to peak and the 1 million dollar indie flick will look exactly like the 200 million dollar one. There will still be other differences, but technology is going to go a long way towards leveling the playing field.

We have tech, cost of tech is going down. But you still need talent to operate the tech, and the best talent are not cheap. The workers have unions and the ones that are not part of union do this full time and want to support at the very least a middle class lifestyle. For a hollywood movie, you don't want to use just any crew. You want the best film crew, the best makeup, wardrobe, casting, post & pre production. Al…

That's all true for now. But eventually you'll be able to throw some actors in front of a green screen and do everything--makeup, wardrobe, special effects in post production, with one guy.

Hell, when computers can generate photo real actors, actors will just be people in mocap suits (except that we won't need mocap suits by then), and they won't even need to be attractive. Eventually one person will be able to create the equivalent of a Hollywood blockbuster.

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