Hacker News Reader

Comment by rsbrown | Hacker News Reader

"You will never be able to fund a movie like Avatar. And if you can't do that, you'll never be able to take on Hollywood."

I don't have to make an Avatar to beat Hollywood. That's fighting fire with fire. We can fight fire with water. If a consumer watches one of my studio's productions instead of watching Avatar, we didn't just earn $0.99 -- we also stole a $10.50 purchase from 20th Century Fox.

I'm betting that when given a cleaner, more enjoyable alternative to the mandatory commercials, overpriced fatty junk food, and general awfulness that the current moviegoing experience has degraded into, we can steal a fair amount of business.

View on HN

>If a consumer watches one of my studio's productions instead of watching Avatar, we didn't just earn $0.99 -- we also stole a $10.50 purchase from 20th Century Fox.

That's not how the economics work. Consumers have a level of disposable income. Just because they spent 0.99 on your movie doesn't mean that they won't also spend $10.50 on Avatar. The allocation of disposable income is not based on price as much as quality.

Secondly, $0.99 vs $10.50 is a failure in signal theory. You immediately signal to the consumer that the value of your movie is far less than most other forms of entertainment. The reason why the $0.99 model works for music on iTunes is that all songs are priced the same. There is no signaling of quality between songs. The 99 cent model works for iPhone apps is that it is low enough of a cost to value to risk ratio that it's worth 99 cents to try something out. If it is bad, there's no real loss to it. There's little opportunity costs associated with it.

But you can't sell a $10M budget movie at 0.99 and make a reasonable revenue.

> Consumers have a level of disposable income. Just because they spent 0.99 on your movie doesn't mean that they won't also spend $10.50 on Avatar.

The number of movies people see isn't limited by their disposable income, it's limited by the number of movies they want to watch. If they get one for five dollars instead of twenty they're probably going to put the change on their mortgage or their car, or maybe their spending on food will increase as they realise they have a little more money to play with.

What they won't do is go to four times as many films as they otherwise might. I'll grant that demand is elastic, but it's not a linear relationship. Reducing the cost of film viewing in this way will absolutely reduce the amount of money spent on it.

(That disagreement aside, I think the rest of your post is pretty reasonable.)

At that price its no real loss to skip the movie either. You can always watch it 'later'.

You get checkmated here by the Holly wood buzz machine.

People will go with their mainstream aware friends for the major holywood release over your movie. They will watch your movie independently, later.

As has been said in this thread, the only real competiton is time - Holly wood is dying already, because they are fighting for time, which is being eroded by video games, mmos and the likes of zynga.

> If a consumer watches one of my studio's productions instead of watching Avatar, we didn't just earn $0.99 -- we also stole a $10.50 purchase from 20th Century Fox

Why would the consumer not just watch movies from Fox too? Especially since if he only pays you $0.99, he'll still have plenty of money left to give to Fox.

I would argue it's a matter of time more than money. I treat a theatre trip as a social event, which means I have to get a group of friends together. There's only so many hours in evenings and weekends when people can get together, and I'd rather not spend all of those hours watching films. Therefore my upper limit is driven by time rather than cost.

Bingo.

There are only a few waking, non-working, non-chore-related hours in the day for most people. I can't keep up with all the movies I would be interested in seeing as it is.

Which is why it's difficult to beat Hollywood for those few movie-watching slots. Your time is more important than the $10-15 more Hollywood will charge over an alternative production. So your alternative has to compete in something other than blockbuster special effects and well-known actors. The likely suspects are originality (e.g., Blair Witch Project) and story (Sling Blade).

Have you been to the Alamo Draft House in Austin, TX? I can no longer watch movies in any other theatre (and I live in San Francisco now, so this means I don't watch movies outside of my home). They have solved all of the problems you mention in the last paragraph, and it's amazing.

You're in luck!

https://www.sundancecinemas.com/kabuki.html

Book your assigned seats online, buy alcohol and quality food there or bring your own, no children at many showings, no ads, etc.

>I'm betting that when given a cleaner, more enjoyable alternative to the mandatory commercials, overpriced fatty junk food, and general awfulness that the current moviegoing experience has degraded into, we can steal a fair amount of business.

This is a very important and overlooked part of their machine. The cinema distribution model. If I remember correctly Hollywood charge an astronomical amounts to theater for showing their movies, I think it eats almost 100% of the ticket price. Cinemas then make their profit by selling overpriced popcorn and sugary water.

A new start-up could also focus on an alternative distribution model aimed at smaller theater with more reasonable license prices. This way theaters could focus in the movie experience instead of selling crap to noisy people.

Or forget the cinemas and just go for watching online. Lots of money there.

Reply on news.ycombinator.com