Hollywood Losing the Digital Plot, Says Former Studio Executive

Hollywood is losing its grip on the movie business, believes Teddy Zee, producer and former high-ranking studio executive. He was speaking at the Mobile World Congress Shanghai event in China last week.

"It's new competition, new distribution and new technology", he says. "We've all seen what happened with the music business, Hollywood needs to learn its lesson."

It's more than unusual to hear this from a Hollywood executive, particularly one with such a track record as Zee's. During his career, he has held senior positions at Columbia Pictures, Paramount Pictures, Sony-based Overbrook Films and Fox-based Davis Entertainment. He now runs his own independent production company while consulting and investing in a number of digital media startups in the US and Asia.

Zee has produced and been involved with films that have brought in more than $2.5 billion in Box Office revenue. They include The Pursuit of Happyness, Hitch, Charlie's Angels, The Cable Guy, Indecent Proposal and Star Trek VI: The Undiscovered Country among others, and have starred A-listers such as Will Smith, Eva Mendes, Lucy Liu and Angelina Jolie.

Zee predicts that China's box office will surpass Hollywood, and he attributes that to Hollywood having "its head stuck in the sand."

He feels macroeconomic shifts in the two countries are facilitating this change. "China has a massive emerging middle class, while in the US you are seeing a society where the 'haves' and the 'have-nots' are separated."

He points out that cinema in the US tends to follow that kind of clustering. "You have films that have either a very big budget, or are made on a micro-budget.

"I'm very bullish on China for the next few years," he says.

He says that the theatrical release window, which is very important in the movie distribution cycle, is a very US-centric concept. In other countries, he is seeing titles released via other distribution channels including mobile.

"Digital production has reduced costs, and now rather than shipping spools of film, we are mostly distributing digitally. This has reduced costs," he agrees. "And you would think that production costs would therefore be lower for film, but instead Hollywood is trying to leverage the technology for even better special effects and viewer experiences. So the costs continue to rise."

But, he added, "today this means that you can create 250 hours of TV programs for the same cost as one big budget movie that doesn't even last two hours. Given OTT consumption trends, things like Netflix, Hulu etc., people are using them. But that's [big budget films] where Hollywood is focused."

He sees film production very-much oriented around the big-screen experience in Hollywood, and fears that approach will lead to its undoing.

"Hollywood [in the past] focused on the theatrical release. So it's trying to protect it. They find it very scary that people can now just skip their traditional channel where they have spent decades building up a strong position."

For operators, Zee sees significant opportunities. He advises operators to take three steps: invest in new technologies as partners, take risks, and have a vision for the future.

Zee is particularly bullish about virtual reality. For him, it is a potential game changer for the world of cinema.

"Yes, you have theaters and cinemas but now you can enjoy a potentially better experience in your own home with VR," he says. "Millennials are lazier, less interested in theaters.

"I've seen the future", he says. "And if someone my age can see the advantages, imagine what it can do to an 18-year-old."

He also sees opportunities to take theme parks such as Disneyland and make them virtual experiences. Rather than invest in thousands of square meters of land, just develop a virtual environment, virtual rides that you don't have to go anywhere to experience.

He believes there are opportunities for mixing VR with TV, creating virtual game shows and interactivity. "It converges mobile, broadcast, VR, video games etc.

"Major players have so much invested," he says. "They have to hold on to it. But the key is letting go."

— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation