In a losing race with the zeitgeist

SHOWBIZ people are prone to exaggeration, but when everybody is exaggerating about the same thing, you know something bad is happening. There’s a dark cloud of unease hovering over Hollywood. A top CAA agent calls it “mayhem.” A studio marketer says “it feels like Armageddon.” A production chief puts it this way: “Each weekend there’s more blood in the water.”

Malcolm Gladwell might call it a tipping point.

The era of moviegoing as a mass audience ritual is slowly but inexorably drawing to a close, eroded by many of the same forces that have eviscerated the music industry, decimated network TV and, yes, are clobbering the newspaper business. Put simply, an explosion of new technology -- the Internet, DVDs, video games, downloading, cellphones and iPods -- now offers more compelling diversion than 90% of the movies in theaters, the exceptions being “Harry Potter”-style must-see events or the occasional youth-oriented comedy or thriller.

Anywhere you look, the news has been grim. Disney just reported a $313-million loss for films and DVDs in its fiscal fourth quarter. Sony has had a disastrous year, with only one $100-million hit (“Hitch”) among a string of costly flops. DreamWorks not only has had theatrical duds but also saw its stock plummet when its “Shrek 2” DVD sales fell 5 million short of expectations. Even Warners, the industry’s best-run studio, laid off 400 staffers earlier this month.

Although the media have focused on the economic issues behind this slump, the problem is cultural too. It’s become cool to dismiss movies as awful. Wherever I go, teenagers say, with chillingly casual adolescent contempt, that movies suck and cost too much -- the same stance they took about CDs when the music business went into free fall. When MPAA chief Dan Glickman goes to colleges, preaching his anti-piracy gospel, kids hiss, telling him his efforts don’t help the public, only a few rich media giants. Say what you will about their logic, but, as anyone in the music business can attest, those sneers are the deadly sign of a truly disgruntled consumer.

There are still optimists who say the sky isn’t falling, who insist that a few hits will turn things around, or gas prices will come down, or that the business being off 7% this year has more to do with the absence of a left-field sensation such as “The Passion of the Christ” than a long-term decline in moviegoing.

To them, I say -- go ye to Costco or Best Buy and watch the giant HDTVs zooming out the door, the TVs that used to cost $7500 that now go for $1995 and allow middle-class people to have a marvelous moviegoing experience right at home without $10.50 tickets, $4 popcorn, 20 minutes of annoying commercials and some guy in the next row yakking away on his cellphone.

Once people spend all that money on a home entertainment system, they’ve got to feed the machine. I’ve watched friends who used to regularly go to theaters mutate into adjunct professors in DVD-ology, scanning the ads for the new video releases and rhapsodizing over Netflix the way other people swoon over TiVo or XM radio.

This only highlights the biggest crack in the system: that most of the movies in theaters don’t deserve a theatrical release, at least not by the rules of today’s game. Until the DVD and pay TV money kicks in, they’re money losers. Yet the studios are forced to spend more marketing money every year to chase after increasingly resistant moviegoers, then go dark for months before spending another big chunk to remind people the DVD has arrived.

The studios have no one but themselves to blame. Motivated, as always, by an obsession with quarterly earnings, they began shrinking the DVD window from nine months to six months to 90 days. Universal’s “The Skeleton Key,” which opened in theaters in mid-August, made its DVD debut last week, barely three months later. When the six-month window still held sway, the theater beckoned -- half a year felt like a long time away. Three months seems like just around the corner. All too many movies, even ones with big stars in them, including “The Weather Man,” “In Her Shoes” and “Dreamer,” have died on the vine, with millions of Americans staring at the TV spots and thinking, “I’ll wait and see that on DVD.”

And that’s just the adult side of the equation. What’s really driving the studio folks crazy is that a huge chunk of their core constituency -- young moviegoers -- has evaporated. Poof! They’ve scattered to the winds. Young males aren’t just AWOL from movie theaters, they’re also not seeing the studio’s TV ads -- either because they’ve stopped watching TV altogether, or because they’ve got the TV, iPod and IM all going at the same time -- not exactly a situation in which an ad leaves much of an imprint. The only movies that are reliable drawing cards today are behemoths such as “War of the Worlds” or “Harry Potter,” or cheap youth-oriented genre films such as “Saw II” or “The 40 Year-Old Virgin.”

One of the movie industry’s crucial failings is that it’s simply too slow to keep up with the lightning speed of new technology. Who would’ve believed six months ago that the day after “Desperate Housewives” aired on ABC you could download the whole show on your video iPod? But when someone pitches a movie, it takes at least 18 to 24 months -- if not far longer -- between conception and delivery to the movie theaters. In a world now dominated by the Internet, studios are at a huge disadvantage in terms of ever lassoing the zeitgeist. Everybody is making movies based on video games, but it seems clear from the abject failure of movies such as “Doom” that it’s almost impossible, given the slow pace of filmmaking, to launch a video game movie before the game has started to lose its sizzle.

New technology is also accelerating word of mouth. Thanks to instant messaging and BlackBerries, bad buzz about a bad movie hits the streets fast enough to stop suckers from lining up to see a new stinker. Even worse, the people who run studios are living in such cocoons that they’ve become wildly out of touch with reality.

That’s the only explanation for why Sony Pictures could’ve imagined there was any compelling reason this summer to see a wan remake of “Bewitched.” Or why any of the studio’s highly paid executives didn’t wonder why it should shoehorn an obscure family movie into the one-week window between the Disney-powered “Chicken Little” and the latest “Harry Potter” juggernaut, especially when the movie, “Zathura,” has a title that sounds like it should be followed by the warning “side effects may include leakage or sexual dysfunction.”

The ultimate perk of being a studio chief is having your own screening room, which puts only more distance between you and the rabble -- ahem, your customers -- who spend $75 to take the family to a movie. Too often studio people have the same ideas about the same things, a groupthink that has led to them anointing one Hot New Thing after another, from Josh Hartnett to Brittany Murphy to Kate Hudson to Colin Farrell, who’ve yet to connect with rank ‘n file filmgoers.

What should studios do to come to grips with this new era? In a world bursting at the seams with new technology, it’s hard to justify the antiquated idea of studio development, which keeps churning out movies such as “Be Cool,” an Elmore Leonard novel from 1999 that was hilariously out of date by the time it reached theaters, having a storyline that revolved around Chili Palmer’s exploits in the music business, perhaps the least cool place on the planet.

Hollywood needs a new mindset, one that sees a movie as something that comes in all shapes and sizes, not something that is wedded to the big screen. Studios have to do what record companies refused to do until they nearly went out of business: embrace the future.

People increasingly want to see movies on their terms, today on a big TV at home, tomorrow on an iPod or cellphone. It breaks my heart that people have fallen out of love with movie theaters, but if I were king, I’d start releasing any movie with multi-generational appeal on DVD at the same time it hit theaters, so the kids could get out of the house and the parents could watch at home.

The music business has already adopted this two-tier system, selling downloads and CDs simultaneously. TV networks are starting to do the same thing with their shows. It’s only a matter of time before movies are forced to do the same. The day isn’t far away -- desperation being a great motivator for innovation -- when a studio opens a blockbuster on Friday in theaters and on Saturday on pay-per-view (at $75 a shot) so fans could watch it with a bunch of friends at home.

As it stands, Hollywood has become a prisoner of a corporate mindset that is squeezing the entrepreneurial vitality out of the system. It’s not just that studios are making bad movies -- they’ve been doing that for years. They’ve lost touch with any real cultural creativity. When you walk down the corridors at Apple or a video game company, there’s an electricity in the air that encourages people into believing they could dream up a new idea that could blow somebody’s mind.

At the big studios, the creative voltage is sometimes so low that you wonder if you’ve wandered into an insurance office. The dreamers have left the building. Back in the 1950s, David Selznick, out walking one night with Ben Hecht, glumly said, “Hollywood’s like Egypt, full of crumbling pyramids. It’ll just keep on crumbling until finally the wind blows the last studio prop across the sands.” As I said, show people like to exaggerate, but these days when I go around Hollywood, I can see the crumbling pyramids too.