Why Films Are Getting Stupider (Probably)

When DreamWorks’ CEO, Jeffrey Katzenberg, stated last month that 2011 had so far been one of the worst years for cinema in recent memory, it was easy to see where he was coming from.

Sure, the CEO of DreamWorks complaining about the quality of filmmaking does reek of hypocrisy (this is the man responsible for the unforgivable Shrek sequels) and yes, this year is probably not worse than 2010 but still, it’s hard to imagine 2011 being remembered as a golden year for cinema (or une année d’or if you want to be all Cannes about it).

How will it be remembered?

Perhaps as the year Harry Potter part 7 part 2 was able to stake a legitimate claim to the title of ‘Best Film of the Summer’, or the year Hollywood was running so low on ideas that they made a freaking Smurfs movie even though no one asked for one and scientific studies (probably) showed that most people would rather have a knitting needle shoved into their eye than have to pass posters emblazoned with the vacuous faces of the smug blue bastards on the tube everyday. Or perhaps 2011 will quite simply be remembered as the year cinema got even stupider.

The central problem with cinema today is that the film industry is no longer making movies for adults. I believe that the blame for this can be attributed to one little word: ‘demographics’.  For a long time now, the balance between ‘show’ and ‘biz’ has been out of whack. Studios are so focused on revenue that films are increasingly being made solely to appeal to the broadest possible consumer demographic, forsaking little things like quality and integrity.

It seems that some marketing genius somewhere has also decided that people over the age of about 15 don’t go to the cinema anymore.  In addition to this, it’s common knowledge that the young, perhaps due to their not-as-yet-entirely-formed brains, are much more inclined to buy the ‘merchandise’ that movie studios are busy fashioning out of cheap plastic and the tears of orphans in some factory in the Far East. This has led to film studios pouring huge amounts of time and money into films aimed at teenagers and, God help us, tweenagers. (It should be noted at this juncture that this demographic of course deserves to be rewarded for its valuable

Unnecessary and irritating

contribution to our flagging economy and for the fact that it isn’t comprised of ungrateful squatters insistent on milking dry our society’s bizarre idolisation of the young).

This not only leads to more films being made specifically for a younger age group, but also to the tweaking of films that traditionally might not have been aimed predominantly at a youth market (this is why every big Hollywood film now has to have a seemingly unnecessary and irritating teenage character who makes wisecracks and adds little or nothing to the plot).

In addition to this, there are countless examples of screenwriters having their work butchered because Hollywood execs are worried that this youth market won’t understand words of more than two syllables or be able to focus on the screen for 15 seconds without an anaemic chase sequence or a cutesy CGI rabbit prancing around.  In short, they are attempting to make movies so stupid that even the stupidest person in the room can enjoy them.

Of course, this is based on the mistaken assumption that teenagers and children are idiots. I don’t believe this and I’m sure you don’t either. In fact, in my experience kids are more equipped than most to follow the plot of even the most byzantine blockbuster because not having student loans to pay off or a job to worry about means that they are able to focus much more energy on understanding the intricate details of a fictional world.

Naturally, some children are idiots in the same way that some adults are idiots (children and adults share many similarities like this, something the use of ‘demographics’ fails to elucidate) but on the whole, children are pretty smart. If you don’t believe me, just ask any little boy about his love of Star Wars or James Bond or dinosaurs and I guarantee that he will amaze you with an answer so extensive and detailed that even Temple Grandin would probably think it was a

All it takes is one strong gust of wind...

little over the top.

No, I don’t think that the youth market is stupid and neither do you, but as we all know, conventional wisdom has no place in Hollywood and clearly they think the little darlings are as thick as box of rocks.  Don’t believe this? Don’t believe that movies are getting stupider? I have a statistic: the average shot length (ASL) of US films in 2008 was 2.5 seconds (the most recent statistic I could find). This means that roughly half the time in 2010, movies could not go 2.5 seconds without cutting to a different shot. The average movie studio believes that we can’t go more than about three seconds without the under-15s getting distracted and leaping around the cinema trying to catch imaginary butterflies.

If this is not an absurd underestimation of our collective intelligence then I don’t know what is.

Compare this to the fact that in 2000 it was 4.7, in 1994 it was 6.8 and in 1972 it was a whopping 8.6 seconds and you have categorical proof that films are getting dumber and it’s children’s fault.

 

Of course, the fact that so many films are being so heavily targeted to the youth demographic means that anyone over the age of 15 is skipping the cinema and staying home to watch Game of Thrones on Sky Atlantic instead. This means that when the marketing guy checks the figures again, he naturally comes to the conclusion that no one over the age of 15 goes to the cinema and so he reports that the studio should be even more heavily targeting their output to the youth demographic who are of course all suffering from ADHD, anterograde amnesia

Did you know that if you watch Transformers: Dark of the Moon whilst simultaneously listening to Pink Floyd's Dark Side of the Moon it actually drowns out the piss-poor dialogue?

and crippling stupidity. This in turn, leads to more stupid movies and even fewer intelligent adults going to the cinema. The marketing guy then checks the figures again and so on and so forth. It’s a vicious circle, but I’m sure you’ve got that now (unless of course you’re a teenager, in which case we’ll be here for hours).

Compounding this problem is the fact that films getting steadily stupider means that cinemagoers (on the rare occasions that you do go to the cinema) are becoming less demanding, indoctrinated by this widespread idiocy. This means that the bar for what people will pay to see at the cinema just keeps getting lower. So when you forked over your hard-earned cash to see Transformers: Dark of the Moon (even the title has a typo) because ‘y’know it passes the time of day and there are like some real cool ‘splosions and such’ you were actually creating a demand for more horribly inane movies to be made. Basically, it’s your fault.

By now this relentless negativity, this somewhat condescending end-of-the-world-as-we-know-it attitude that I’ve adopted has started to wear you down and you’re probably left asking firstly, whether things are really as bad as I’m making out and secondly whether we can do anything to prevent cinema’s seemingly inevitable descent into idiocy.

Well, the answer to the first question is a tentative ‘not really, I’m being dramatic’. While on the whole, studios do seem to be churning out more and more movies that are little more than products designed to generate revenue, all is not lost. This year alone has seen

Apathy is bad

many surprising, heartfelt, challenging brilliant films such as Win Win, True Grit, Tree of Life, Beginners, Bridesmaids and Submarine so we definitely shouldn’t give up hope yet.

And the answer to the second question is ‘yes’, you can prevent it by going to see the films I listed above because demand creates supply.

If more people go to see intelligent and well-made films, then more intelligent and well-made films will be made, it’s basic economics. Now, I’m not saying that we all need to be watching Eastern European art house films with inexplicable costumes and ugly people crying, just choosing the better option.

If you’re going to the cinema this evening, don’t go and see Transformers, go and see Super 8 or Tree of Life instead. And later this year don’t go and see Final Destination 5 (5inal Destination, seriously?), go and see Woody Allen’s Midnight in Paris.

Have some self-respect and demand something from cinema. Demand to be challenged, to be moved, or to laugh. Demand to be exhilarated or befuddled. Demand to be angered even.  Just don’t allow yourself to be yet another pile of laundry who just sits in that dark room feeling nothing for 90 minutes and then immediately forgets about it afterwards because you are better than that and you deserve better than that. After all, we are lucky enough to be alive at a time when the likes of Terrence Malick, Woody Allen and Martin Scorsese are still making movies. Let’s take a moment to be grateful for that.

If you want to try to counteract the ill-effects of the cinematic junk food you are being force-fed, then please check out our new semi-regular feature, ‘Have you seen… ‘. The first of these is about the 1998 film Happiness and can be found here:    Have You Seen… Happiness?

Cowboys & Aliens Fails to Shoot Straight on Smoking

Cowboys & Aliens Fails to Shoot Straight on Smoking with Its Youngest Movie Goers

Universal Takes One Step Forward, Two Steps Back with Major Smoking Scenes in Youth-Rated Blockbuster, Opening Today

Cowboys & Aliens, released today, will be reaching young theater audiences around the country with images of smoking that could motivate many of them to light up for the first time. Previous research has already confirmed a link between smoking images in movies and youth smoking initiation.

Universal Studios, spotlighted just two weeks ago in a U.S. Centers for Disease Control and Prevention (CDC) report as one of three movie companies that pared smoking in movies rated for youth by 96 percent, released the PG-13 blockbuster today, which features a cowboy hero, portrayed by Daniel Craig, who is seen smoking in key scenes.

“Just weeks ago, we applauded Universal for responding to this problem so responsibly by nearly eliminating tobacco from their G, PG and PG-13 movies,” said David Dobbins, Chief Operating Officer of Legacy®, the national public health foundation devoted to youth smoking prevention and adult smoking cessation. “This reversal confirms that without a uniform policy, young people will continue to see images of smoking that can inevitably cause them to smoke. It underscores how critical it is for the Motion Picture Association of America (MPAA) to take a much-needed leadership role and adopt a comprehensive policy on smoking by which all studios must abide.”

In a July 15, 2011 CDC report,[1] findings revealed that Universal, Disney and Warner Bros., had reduced tobacco incidents per youth-rated movie by 96 percent on average between 2005 and 2010. The data found that three other major studios — Fox, Sony and Paramount — had performed remarkably less well (42%).

In order to reduce youth exposure to tobacco imagery and level the playing field for all movie companies, public health groups like Legacy recommended that future movies with smoking be R-rated. The CDC’s report earlier this month underscored that point, saying, “Consistent with the effects of anti-tobacco use policies adopted by the three motion picture companies, expanding the R-rating to include movies with smoking could further reduce exposures of young persons to onscreen tobacco incidents, making smoking initiation less likely.”

So far in 2011, major Hollywood studios have released at least 15 youth-rated movies with tobacco imagery, all but two with PG-13 ratings: Fox: Monte Carlo , Water for Elephants; Sony: Country Strong, The Green Hornet, Jumping the Broom, Priest, Midnight in Paris; Paramount: Rango (PG); Justin Bieber (G); Universal: Cowboys & Aliens, Hanna, Larry Crowne ; Warner Bros.: Sucker Punch, Unknown, The Rite.[2]

Cowboys & Aliens, distributed by Universal (Comcast), was produced by DreamWorks with Reliance (India), Relativity and Imagine Entertainment.[3] It was shot in New Mexico on a reported $100 million budget,[4] with public subsidies.[5]

[1] Glantz S, Mitchell S, Titus K, Polansky JR, Kaufmann R, Bauer U (2011) Smoking in top-grossing movies – United States, 2010. MMWR 60(27);909-913

[2] UCSF CTCRE preliminary analysis of Thumbs Up! Thumbs Down! Data (Breathe California of Sacramento-Emigrant Trails.

[3] IMDbPro.com

[4] http://www.movieinsider.com/m4251/3/cowboys-and-aliens/

[5] http://www.nmfilm.com/filming/downloads/filmographyFiscalYear.pdf

DreamWorks Animation Reports Second Quarter 2010 Financial Results

Company Announces New $150 Million Share Repurchase Program

DreamWorks Animation SKG, Inc. (NASDAQ:DWA) today announced financial results for its second quarter ended June 30, 2010. In the quarter, the Company reported total revenue of $158.1 million and net income of $24.0 million, or $0.27 per share on a fully diluted basis.

“Our strong second quarter was driven primarily by the blockbuster performances of Shrek Forever After and How to Train Your Dragon, two of the top 10 films of 2010 on both a domestic and a worldwide basis,” said Jeffrey Katzenberg, DreamWorks Animation’s CEO. “We have once again surpassed $1 billion in worldwide box office and with Megamind still to be released on November 5th, we are on track to make 2010 not only DreamWorks Animation’s single biggest year at the box office, but also the biggest year ever for any CG animation studio.”

Shrek Forever After, which was released on May 21, 2010, contributed $51.8 million of revenue in the quarter, generated by its domestic box office performance as well as merchandising and licensing activities. It has reached approximately $235 million in domestic box office and approximately $368 million in international box office for a worldwide box office total of approximately $603 million to date.

How to Train Your Dragon, which was released on March 26, 2010, contributed $33.4 million of revenue to the quarter, driven primarily by its domestic and international box office performance. It has reached approximately $480 million in worldwide box office to date.

The Company’s 2009 release, Monsters vs. Aliens, contributed $17.2 million of revenue to the quarter, driven primarily by international pay television. The film reached an estimated 7.7 million home entertainment units sold, net of actual and estimated future returns, by the end of the second quarter.

The Company’s 2008 releases, Madagascar: Escape 2 Africa and Kung Fu Panda, contributed $4.4 million and $2.5 million of revenue to the quarter, respectively.

Library and other items contributed approximately $48.8 million of revenue to the quarter.

Costs of revenue for the quarter equaled $98.7 million. Selling, general and administrative expenses totaled $27.8 million, including approximately $7.9 million of stock compensation expense and approximately $2.0 million of marketing expense related to the launch of the Company’s online virtual world, Kung Fu Panda World.

Additionally, the Company recorded an expense of approximately $8.7 million related to its tax sharing agreement with a former stockholder. Combining the amount due to the former stockholder with the Company’s income tax expense of approximately $0.7 million, the result is an overall equivalent tax rate of 28.1% for the second quarter.

The Company also announced today that its Board of Directors has approved a new $150 million share repurchase program. For the six months ended June 30, 2010, the Company has repurchased approximately 3.1 million shares for approximately $111 million.

The Company’s third quarter results are expected to be driven primarily by the continued international box office performance of Shrek Forever After. The Company expects its full year 2010 results, which will likely be heavily weighted toward the second half of the year, to be driven by the continued box office performance of Shrek Forever After as well as the home entertainment performance of How to Train Your Dragon and Shrek Forever After, both of which are expected to be released on DVD and Blu-ray in the fourth quarter.

Items related to the earnings press release for the second quarter of 2010 will be discussed in more detail on the Company’s second quarter 2010 earnings conference call later today.

Conference Call Information

DreamWorks Animation will host a conference call and webcast to discuss the results on Tuesday, July 27, 2010, at 4:30 p.m. (ET). Investors can access the call by dialing (800) 230-1096 in the U.S. and (612) 332-0107 internationally and identifying “DreamWorks Animation Earnings” to the operator. The call will also be available via live webcast at www.dreamworksanimation.com.

A replay of the conference call will be available shortly after the call ends on Tuesday, July 27, 2010. To access the replay, dial (800) 475-6701 in the U.S. and (320) 365-3844 internationally and enter 163006 as the conference ID number. Both the earnings release and archived webcast will be available on the Company’s website at www.dreamworksanimation.com.

About DreamWorks Animation SKG

DreamWorks Animation creates high-quality entertainment, including CG animated feature films, television specials and series, live entertainment properties and online virtual worlds, meant for audiences around the world. The Company has world-class creative talent, a strong and experienced management team and advanced filmmaking technology and techniques. DreamWorks Animation has been named one of the “100 Best Companies to Work For” by FORTUNE® Magazine for two consecutive years. In 2010, DreamWorks Animation ranks #6 on the list. All of DreamWorks Animation’s feature films are now being produced in 3D. The Company has theatrically released a total of 20 animated feature films, including the franchise properties of Shrek, Madagascar, Kung Fu Panda and How to Train Your Dragon. DreamWorks Animation’s next feature film is Megamind, scheduled to be released in 3D on November 5, 2010.

Caution Concerning Forward-Looking Statements

This document includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company’s plans, prospects, strategies, proposals and our beliefs and expectations concerning performance of our current and future releases and anticipated talent, directors and storyline for our upcoming films and other projects, constitute forward-looking statements. These statements are based on current expectations, estimates, forecasts and projections about the industry in which we operate and management’s beliefs and assumptions. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, technological and/or regulatory factors, and other risks and uncertainties affecting the operation of the business of DreamWorks Animation SKG, Inc. These risks and uncertainties include: audience acceptance of our films, our dependence on the success of a limited number of releases each year, the increasing cost of producing and marketing feature films, piracy of motion pictures, the effect of rapid technological change or alternative forms of entertainment and our need to protect our proprietary technology and enhance or develop new technology. In addition, due to the uncertainties and risks involved in the development and production of animated feature projects, the release dates for the projects described in this document may be delayed. For a further list and description of such risks and uncertainties, see the reports filed by us with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and our most recent quarterly reports on Form 10-Q. DreamWorks Animation is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.

** FINANCIAL TABLES ATTACHED**

CONSOLIDATED BALANCE SHEETS

December
June 30, 31,
2010 2009
—- —-
(unaudited)
(in thousands,
except par value and
share
amounts)
Assets
Cash and cash equivalents $76,918 $231,245
Trade accounts receivable, net of
allowance for doubtful accounts 46,558 42,175
Income taxes receivable 13,690 9,016
Receivable from Paramount, net of
reserve for returns and allowance
for doubtful accounts 161,259 171,292
Film, live performance and other
inventory costs, net 752,950 695,963
Prepaid expenses 33,018 25,505
Other assets 21,913 15,958
Property, plant, and equipment, net
of accumulated depreciation and
amortization 174,862 161,558
Deferred taxes, net 7,106 7,669
Goodwill 34,216 34,216

Total assets $1,322,490 $1,394,597
========== ==========

Liabilities and Equity
Liabilities:
Accounts payable $2,194 $2,400
Accrued liabilities 101,998 111,281
Payable to former stockholder 61,744 67,456
Deferred revenue and other advances 41,060 60,870
—— ——

Total liabilities 206,996 242,007
Commitments and contingencies
Stockholders’ equity:
Stockholders’ equity:
Class A common stock, par value
$.01 per share, 350,000,000 shares
authorized, 97,022,472 and
95,967,515 shares issued, as of
June 30, 2010 and December 31,
2009, respectively 970 960
Class B common stock, par value
$.01 per share, 150,000,000 shares
authorized, 10,838,731 and
11,419,461 shares issued and
outstanding, as of June 30, 2010
and December 31, 2009,
respectively 108 114
Additional paid-in capital 953,203 922,681
Retained earnings 841,940 796,296
Less: Class A Treasury common
stock, at cost, 23,612,421 and
20,430,031 shares, as of June 30.
2010 and December 31, 2009,
respectively (680,727) (567,461)
——– ——–

Total stockholders’ equity 1,115,494 1,152,590
——— ———

Total liabilities and stockholders’
equity $1,322,490 $1,394,597
========== ==========

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three Months Ended
June 30,
——–
2010 2009
— —
(in thousands, except per share amounts)
Revenues $158,095 $131,990
Costs of revenues 98,734 74,022
—- —-

Gross profit 59,361 57,968
Product development 422 93
Selling, general and
administrative
expenses 27,751 24,831
—— ——

Operating income 31,188 33,044
Interest income, net 171 979
Other income, net 2,004 1,613
Increase in income
tax benefit payable
to former
stockholder (8,668) (11,020)
—— ——-

Income before income
taxes 24,695 24,616
Provision (benefit)
for income taxes 720 (940)
— —-

Net income $23,975 $25,556
======= =======

Basic net income per
share $0.28 $0.30
Diluted net income
per share $0.27 $0.30
Shares used in
computing net
income per share
Basic 85,709 85,890
Diluted 87,582 86,382

Six Months Ended
June 30,
——–
2010 2009
— —
(in thousands, except per share amounts)
Revenues $320,238 $395,514
Costs of revenues 204,917 230,428
—– —–

Gross profit 115,321 165,086
Product development 607 2,461
Selling, general
and administrative
expenses 51,261 45,522
—— ——

Operating income 63,453 117,103
Interest income,
net 230 1,518
Other income, net 4,097 3,065
Increase in income
tax benefit
payable to former
stockholder (16,856) (27,030)
——- ——-

Income before
income taxes 50,924 94,656
Provision (benefit)
for income taxes 5,280 6,790
—– —–

Net income $45,644 $87,866
======= =======

Basic net income
per share $0.53 $1.01
Diluted net income
per share $0.51 $1.01
Shares used in
computing net
income per share
Basic 86,741 86,673
Diluted 88,972 87,390

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Six Months Ended
June 30,
2010 2009
(in thousands)
Operating activities
Net income $45,644 $87,866
Adjustments to reconcile net income to net
cash (used in) provided by operating
activities:
Amortization and write off of film, live
performance and other inventory costs 183,295 192,183
Stock compensation expense 15,210 14,695
Depreciation and amortization 2,526 1,831
Revenue earned against deferred revenue and
other advances (53,499) (51,667)
Deferred taxes, net 563 12,330
Change in operating assets and liabilities:
Trade accounts receivable (4,383) 2,427
Receivable from Paramount 10,033 72,534
Film, live performance and other inventory
costs (223,418) (183,574)
Prepaid expenses and other assets (15,540) (16,242)
Accounts payable and accrued liabilities (9,347) (27,749)
Payable to former stockholder (5,712) (1,466)
Income taxes payable/receivable, net (4,851) (8,001)
Deferred revenue and other advances 35,549 74,515
—— ——

Net cash (used in) provided by operating
activities (23,930) 169,682
——- ——-

Investing activities
Purchases of property, plant and equipment (26,590) (31,495)
——- ——-

Net cash used in investing activities (26,590) (31,495)
——- ——-

Financing Activities
Receipts from exercise of stock options 8,786 90
Excess tax benefits from employee equity
awards 673 –
Purchase of treasury stock (113,266) (52,125)
——– ——-

Net cash used in financing activities (103,807) (52,035)
——– ——-

(Decrease) increase in cash and cash
equivalents (154,327) 86,152
Cash and cash equivalents at beginning of
period 231,245 262,644
——- ——-

Cash and cash equivalents at end of period $76,918 $348,796
======= ========

Supplemental disclosure of cash flow
information:
Cash paid during the period for income
taxes, net $8,891 $2,373
—— ——

Cash paid during the period for interest,
net of amounts capitalized $281 $355
—- —-

Source: DreamWorks Animation SKG, Inc.