Every time I hear that, I always smile and I'm always just nervous that they're going
to kick us off because I licensed it for episode 0 to 50.
And I hope that that works versus typing in the episode title every time.
Find him.
Licensed people.
His handle is cypherpunksinny.
Sue the shit out of him.
Oh, man.
He's so good.
Apparently, the Better Buy handle still is not approved yet, but we're good.
Yeah, Zach, you had a couple of interesting thoughts about what's going on in the world
today.
Apparently, China is about to get wrecked or we about to get wrecked.
Generally speaking, I think in fights like this, everybody gets wrecked.
I think everyone can prepare their anus.
Buckle up, boys.
You can put that one on the recap.
How well did that short perform?
Probably well.
Yeah, I don't know.
I mean, we were kicking around on the thread, this rumor going around that Hollywood movies
would be tariffed or whatever.
I think that's TBD.
But it brings up an interesting question about there's a few things on my mind.
You got the fact that Hollywood is objectively broken.
I can't even say how many meetings Corey and I have been in where that's basically the
consensus view.
Something's broken.
It needs to be fixed.
So does this situation we're in with tariffs and whatever's going on result not just in
a broken Hollywood being fixed, but a broken global order being fixed?
And then the other question is like, you know, Hollywood used to export culture and if our
culture is struggling, then that export will struggle as well.
And then the other question is like, how do we tariff things in a digital environment?
How do you tariff digital goods?
Which is not something I've thought about at all, but is worth thinking about if anybody
has any opinions.
You had a good point I'd like you to dive into about bonding for films.
And if, let's say that they did tariff movies over to China or whatever, how that would
affect the financing side of movies.
Thoughts?
Yeah.
It would go immediately upstream into every single movie that's being developed right
now and being underwritten.
The studios look at what they can get from the domestic market, from America, from a
3,000 screen theatrical release.
They know how many marketing dollars go into that.
And when you see crazy film budgets of $150 to $300 million and assume generally that
marketing spends about as much as the budget on a big budget movie, these are like big
studio movies, general, this is all very large generalizations, but they want to make their
money back on the American market or get close, maybe 60 to 80 percent of their money back
on the American market.
And then the international market is where they make up most of the rest of it.
And if you look at the tables of where movies are watched and people really spend money
on movies, most of the places around the world where you buy a movie ticket, it's not 20
to $25 like it's become in America.
It's like 10 to 14 maximum.
So you're getting a lot less dollars and you need a lot more eyeballs for it.
So the primary driver of foreign territories is the Chinese market because they can mobilize
hundreds of millions of people.
They can get another America to watch the movie and send that money back.
And they're counting on that.
The studios are counting on that.
There were some really ham-fisted ways like that movie, The Great Wall with Matt Damon.
It's like an AI movie before AI where they typed in who plays well in China, what's a
Chinese concept that we could do that would also be watched here, smashed it together,
someone wrote a script, and yeah, it came out.
Some of China watched it, so it wasn't a total disaster, but it was a pretty big disaster.
But every Marvel movie, when you see that Avengers Endgame made $1.6 billion or something,
a lot of that is the American market watching it three times, but a huge amount of that
is every single Chinese viewer went to see it.
So it goes all the way back upstream.
You think most of the mid-tier movies went away, but at least we have these big budget
movies that the studios are still doing.
If this were to go on for an extended period of time, there is nothing that would be green
lit over $150 million.
And if you're a cinephile, you might say, oh, boo-hoo, we won't get a bunch more retreads
and sequels and whatnot.
But if those things go away, that literally sustains an enormous pillar of Hollywood.
The ripple effects of that could be massive layoffs and studios shutting down, actors
who are counting on that completely out of work, and the crater in real estate, the crater
in the L.A. area could be extremely significant if you imagine how many billions of dollars
every year we're counting on from China.
And if that were to just go away, if you put a 100% tariff on it, it essentially means
you wouldn't ever have a U.S. movie distributed in China.
The upstream effects of that, if that were even in place for a year, could be absolutely
devastating to Los Angeles.
You talk about theatrical releases, obviously that's declined significantly and we're in
the age of the streamer.
How are they calculating revenue for streaming services, let's say just a Netflix-only movie
that they're not releasing theatrically?
How would the calculus be on that?
As far as I know, they have their own streaming services that have these big licensing deals,
so I think it would move upstream in the same way, where they still have to pay a lot of
money to put them on their own streamers.
I don't know the economics of that as well, and as far as I know, the streaming deals
in China, it's still the theatrical release in China that's the big needle mover for it.
It used to be the DVD market, we could sell DVDs over there, and then that went away.
So I think it still would move upstream, and of course the economics of the streamers financing
their own movies is totally different, because three of the major streamers don't need to
make any money, and the other ones do, which is a whole other dynamic that's going to keep
playing out over the year.
But if you look at empirical theatrical data, the worldwide number is only down a couple
of percent over the past five years.
We think of it as cratering, but mostly that's because we spent five times as much money
as we did previously, and a lot of those movies lost money.
But the actual empirical number is just creeping down slowly, it looks just like an industry
slowly in decline, it doesn't look like a crater, apart from the COVID years, of course,
before and after.
If we adjust that number for inflation, they're down like 40%.
It's probably even worse than that, right?
It's wild to me, and I'm actually curious, Corey, if you could corroborate, my understanding
is that a studio success is 2x total P&A, right?
So it's like if you have a $150 million movie, including P&A, which is prints and advertising,
so it's like everything, so it's like the production budget plus what you spend advertising
and get eyeballs.
If you have a $150 million movie, like total, including production and everything, so usually
it's half, so it'd be like a $75 million movie with $75 million P&A.
You need to make $300 million back, or it's not a success.
They're not going to kind of look back at it as a proper thing.
You need to make 100% on your money, essentially.
That's still the conventional wisdom, as far as I know, yeah.
And so it's interesting because it continues to give credence to the Mr. Beast model, right?
You get, I think Mr. Beast is a really interesting character because he's actually, I would consider
him the Elon Musk of content, and what I mean by that is he will throw 100% of his money
into everything he does, and it's the same thing with Elon with his companies.
Elon will throw 100% of his money.
He burns the ships, if you're familiar with the Cortez quote.
He will burn the ships to make the thing work, and it's really interesting because it's working,
you know, and we don't really see that in Hollywood anymore.
I actually think the last vestige of something like that is like a, you know, Nolan doesn't
need to do that, but I would say he does it from a credibility perspective.
He puts all of his credibility into his next project.
Hasn't been always a success, if you have seen Tenet, but it's, yeah, I don't know.
It's interesting.
Like, how do you think that dynamic is going to change if we get to this world where you
have to make now 3X your money?
You know, $150 million, maybe now you need to make $450 million with only the US market,
or I guess that would include China, but it's like if 104% tariff is there, you now need
to make $450.
So, it's literally you can only do temples, you can only do Marvel, essentially.
Yeah, and I mean, I'm saying if you get 100%, yeah, 100% tariff and it doubles the cost
of a ticket, of a movie ticket functionally, right, if they pass that on to their consumer,
you just have to assume you lose at least half or, you know, go down to a quarter of
the audience.
If the American movie is $20 and the Chinese movie is $10, like China has a robust, you
know, its own Hollywood.
They make a lot of movies and they have a lot of great filmmakers, so they need American
movies less than they did before, before they had that.
But I think, you know, even farther upstream, like exactly what you're talking about, like
the $300 million tentpole is kind of the standard right now.
Every studio has a couple of $300 million movies and every streamer is coming out with
those as well.
But if you just go upstream from that and they say, now the upside of that, the success
is $600 million and we think now that the Chinese market is, let's just call it gone
or let's just call it like a 10th of what it was before, maybe a quarter of what it
was before.
That means we can only spend, you know, let's just, you bring it all the way down, just
the Chinese market.
You bring the $300 million budget total down to like $200 million.
And then every other country, right, even if it's not a 100% tariff, like what is the
haircut that every other country is adding when you take out that foreign sales?
You're counting on the foreign sales being bigger.
We're talking about more than half of the budget being heavily, heavily impacted.
So I think there's only a handful of directors that can command that.
And Nolan's one of them.
Villeneuve is one of them.
And even, you know, even some of the, like Scorsese, the only reason Scorsese got $200
million for Killers of the Flower Moon was because Apple wanted to buy an Oscar.
No other studio would give that to him because they knew it didn't underwrite.
I think you're going to see that more and more.
And the only movies at that scale that would get made that way would be vanity projects
from companies that don't actually need to make the money back.
And that's a very, very tenuous, right?
You have Jeff Bezos on the control of one of those.
You have Tim Cook on the control of one of those.
And literally, they could just change their mind about the risk profile of that.
And they're holding, you know, the balance of LA big budget movies just in their hand
based on a balance sheet of a company that has nothing to do with movies.
And that's an unbelievably unrooted risky place for Hollywood to be.
I think that we're just witnessing the death of this model.
You know, tariffs might speed it up.
The economic situation might speed it up.
But same thing in 2008, you know, you had catalysts that pushed something, that pulled
something forward that were going to happen anyway with the advent of the internet and
new revenue models.
You know, kind of to your point, JD, about we haven't seen these things come out of Hollywood
where people are putting everything on the line.
But the reason for that is because of the corporate structure.
There's no one who has any incentive to do that because there's not one person who owns
or has control of, you know, a studio or a given project that can monetize it, you know,
in a way that would give a return, like in the way that Saylor owns MST, you know, controls
micro strategy or that Elon controls what he does with the revenue and the investment
in his companies.
You know, I think that we're going to see this fragment and I think that we're going
to start to see individual filmmakers or content creators start to generate their own little
empires and you're going to see platforms like Indie Hub and Substack and whatever start
to facilitate the plumbing of, you know, individuals that end up having a massive,
massive following.
So I really do honestly think, I don't know about the timeframe exactly, but I really
think that we're witnessing the end of the total death of the old model and we're going
into something completely new.
Yeah, I agree.
And I think Hollywood itself primed the pump for a catalyst like this to happen because
an increasingly risk off model since COVID and since the strikes and an increase, a heavy
increase in the costs of film production in America have led to riskless thinking, which
is anti-cultural engagement and cultural resonance, right?
And we've talked about that before on this podcast, but you know, you've got at least
five to seven years and you can even trace it back to 08 when the $40 million adult drama
disappeared and you look at the movies in 07, there's like 15 of them.
You know, prime filmmakers hitting, uh, you know, hitting 400 in the majors, like unbelievable
lineup of movies in 07.
And then you start to see that class of movies slowly start to disappear.
The, the, um, revenue of the best picture winner over the past 15 years has gone down
and down and down and down.
So like what Hollywood has regarded as the best movie every year has been a less.
Nope.
And he's gone and he's gone long up considering it's been that long since one has made over
a hundred million dollars.
So, um, Hollywood was ready and vulnerable for an attack like this because they've been
doing that for so long.
So I think it's going to be pretty vicious.
It's interesting to call it an attack, right?
Because I actually think that's correct because people are not thinking about this.
From the outside, looking in and the adversarial approach.
And so what I mean by that is the studios have always looked at anybody from the outside
in as an attack.
It was always a walled garden.
Same thing with the union.
Same thing with anything else.
Like it was always, you know, Oh, you want to do this other thing?
That's an attack.
It's an attack on us.
AI is an attack on us.
You know, any type of offshoring is an attack on us.
Like moving to Atlanta, moving to Chicago, moving to Nashville, moving to Toronto, moving
to, you know, Quebec, wherever you're going.
And it's really, really interesting that they just didn't see what happened in 2000 with
the Internet when you had a walled garden of information in books, essentially.
And then you just gave everybody instant access to that walled garden, which is a free and,
you know, thank you to the cypherpunks who kind of made this free exchange of information
and other continue to fight to keep information exchange free.
But what's interesting, though, is the attack piece of this.
As you're saying about kind of these, you know, new people like the door brothers and
all these A.I. filmmakers kind of like jumping up and like sprouting.
It's interesting to think that, you know, and I'm curious your take on this, Zach.
Do you look at the rise of the A.I. filmmaker because I'm going to call them an A.I. filmmaker,
right?
Because they are they are still they're using a tool to create a narrative film.
Do you do you look at that as like an attack on like the craft of acting or do you look
at it more of as like an opportunity to find a new way for it to evolve?
And is it inevitable?
Right.
I'm just curious.
I don't I don't see them as attacks.
You know, it's an evolution.
A.I. is a tool just like actors use their bodies as tools.
Cinematographers use a camera as tools.
Technology is constantly changed how we have told stories and it will continue to do that.
So I don't I don't see it as an attack, you know, in some adversarial sense, but it's
what's happening and it's what's going to continue to happen.
And the point of a story really is to is to boil down some truth, you know, and express
some truth and whatever tools people have at their disposal to, you know, present their
idea or, you know, whatever I say, truthful ones resonate, I guess, is my point.
You can tell something that's sort of bullshit, but generally doesn't resonate.
So, you know, will will actors be out of a job in the way that we were employed previously?
Yeah.
I mean, it's going to change and people are going to have to figure out how to how to
deal with that.
I mean, you know, we've talked about this a little bit, but like prompting and one of
the things that I complain about is writing over the last 15 or 20 years.
Writing is really great.
Writing has taken a massive hit and we may see a resurgence on that with prompting.
Prompting is basically great writing, very, very hyper specific writing and screenwriting
is like this really interesting combo of technical understanding about how the story is being
told visually combined with, you know, a writer has all these tools at their disposal, right?
They have actors, they have camera angles, they have titles, they have, you know, all
of these all of these things at their disposal.
So, you know, I think that I filmmaking and and traditional filmmaking will sort of bifurcate.
I think that, you know, there will always be a market for traditional films, at least
for for the foreseeable future.
But, you know, it's an evolution and I think we're definitely looking at a fork in the
road.
What's the next iteration of Hollywood in your mind, Corey?
Like how does how does this revitalize Hollywood?
Like do we get to, you know, everything is Altadena for five seconds and nothing exists
and we have to rebuild from nothing or, you know, what does this look like?
Yeah, it's not hard to imagine in an environment like this, it's not hard to imagine a cataclysmic
event.
But there is a lot there's still so much interest and still such a cultural fixation on Hollywood.
There always seems to be money to bail somebody out over the past five years.
We've had Hulu, Peacock, Paramount Plus, Lionsgate all fail financially and the new investors
come in, they merge, they lay off a bunch of people and they go under some other shingle
with a brand new investment and they're all still making movies.
So it's not like I've been calling it Flint, Michigan around here, which is a little overdramatic
because that in that case, literally just the executive state and everything else about
that industry disappeared.
And I think that could happen over a longer period of time.
I don't see it being as dramatic as just offshoring a factory and then, you know, thousands of
people are out of work.
But that is happening pretty quickly on Hollywood standards, which moves very, very slowly.
That's happening pretty quickly.
Rob Lowe went viral recently for saying it's it's cheaper to fly 100 Americans to Ireland
and shoot a movie in Ireland than it is to shoot in L.A.
And he's right.
You know, that's true.
And so that's happening.
Very little is shooting actually in L.A.
And I've toured a bunch of studios around the world and they're all full of American
shows and big budget American shows that are now staffed with international people.
So to me, I think the revitalization of Hollywood is a much smaller, physical Hollywood, way
fewer film professionals in Los Angeles, fewer executives who are smarter, who understand
the actual environment, who aren't trying to bring back the movie world of 1994, which
when you talk around town, like I said, Hollywood moves slowly.
There is still kind of this sentiment that we just push through, just carry on, stay,
and eventually it'll become 1994 again.
I think that's the regressive way.
That's the way that you can get really bummed out and and lose all hope.
But I think in the new environment, with a lot of new tools and with worldwide filmmaking,
you'll still be able to have an incredible cultural impact.
The right writers and the right directors can still have their voices amplified.
We just have to get these three hundred million dollar movies reoriented around reality.
And then we have to bring back, you know, five to ten million dollar tries that are
much more like oil prospecting, right?
Take a hundred million dollars and make ten movies and see which one hits and then learn
from that, learn from each other rather than, you know, this riskless, this riskless thinking.
Part of what's dying, people like Zach and I don't, you know, obviously it's terrible
whenever anyone loses a job or loses a house or anything like that.
We take no pleasure in that.
But if what's dying is like the 18th Marvel movie, actually, that's even low.
It's probably like the 27th Marvel movie by now, right?
The movies that nobody is asking for, but they know that enough people will go to financially
justify it.
So they do it.
No one really wants it.
No one really wants to make it.
There's no passion around it.
Those are the types of things that should be cannibalized by AI.
And I think the 2000 analogy is very good in that way.
And I think too, like, you know, like peak cinema was basically peak boomer culture and
career.
You know, like just look at a film set and look at who was making the best movies in
the 80s, 90s.
You know, these are basically like 40, 50 year olds who were at the absolute peak of
their career, you know, putting out the peak of the culture in which they grew up.
And that's gone.
That's done.
We have a completely new generation coming up.
Boomers are being sunsetted.
Power is being sunsetted.
And it's not going to look anything like what the boomers experienced or grew up in or built
their businesses around.
It's going to be far more localized.
It's going to be far more specific.
It's going to be far more niche.
You know, I've said this before, but the whole world is we're going away from peak
centralization and peak centralization for humanity was basically post-World War II.
And that's going away.
That's dying.
So, you know, I think that here's another thing.
Here's another point, right?
Like movies always play a huge role in propaganda as well.
And there's, you know, to your point about, you know, Apple only funding this movie to
get an Oscar, like essentially that's a small group of people, you know, flexing or wanting
to put out a particular kind of propaganda.
They can do it at a loss or whatever.
Those are going to remain.
Those are going to stay there.
But just like in 2008, what we've seen post-2008 is you just have a massive market built up
underneath what was once, you know, a total empire.
How do you, you know, how do each of you guys then see L.A. kind of evolve?
Like what's the next version of L.A. in your opinion?
Like my personal opinion and my personal hope is that we become Taiwan and we have like
a massive like semiconductor manufacturing plants, like high-tech, high-quality manufacturing
because of report city, right?
I think there's a really good case to be made about, you know, the globalization and by
that I mean the on-shoring because the globalization of semiconductor production is making it not
in China.
So like U.S. actually would be globalizing semiconductor production.
But I think that feels to me like a pretty interesting area because I don't know if,
like storytelling is going to be an export I think for a long time, but I just don't
see with A.I. how this changes and so I'm just kind of curious your takes on like, you
know, does it stay storytelling?
Like what do you think?
I think it begs an interest, a broader question of a globalized or deglobalized world or a
tariff world or however you want to say it in the age where digital things have more
value than they've ever had.
Physical goods are really easy to slap a tax on, but digital goods are becoming increasingly
valuable and, you know, I think ultimately that's the question, right?
Like California has fantastic weather.
It's got a, you know, it's got a fantastic, L.A.'s got fantastic, you know, quality of
life so to speak.
But I personally don't see, yeah, minus that, I don't see manufacturing coming back to California
just for politics.
I mean, it makes logistical sense, but they don't want anything manufactured here.
The people who run this place, they're totally anti that.
And it makes no fiscal sense at this point.
You can't put the toothpaste back in the tube on that, right?
Yeah, totally.
The kinetic energy is gone on that deal.
Like that's not coming back.
So I don't know.
I really think that L.A. is a big question mark right now.
I think that there's always going to be a ton of value in a place that's just chill
and has good weather.
People are always going to pay a premium for that.
But as far as L.A. exporting, anything of tremendous value, like I really don't know,
man.
It's hard to say.
I would say what the what the inelastic good is that Hollywood has been providing for a
long time is stories and stories.
I forget what the name of that theory is, but the longer something has been around,
the less likely it is to disappear.
Right.
It's like stories and farming and prostitution.
Right.
As as far back as we have history.
And so that's that to me is the inelastic good.
That's the demand for stories is not going to go anywhere.
It's so core to humanity.
And Hollywood, specifically in filmmaking, has had this monopoly on it because they've
been the only ones who could centralize the writers and the directors through the director's
medium.
So they had the talent signed to them as a studio.
So if you wanted to make a movie anywhere else, you had to start with the two hundred
and fiftieth best director in the world, which isn't good enough in movies and the supply
chains.
You didn't have the ability to distribute it.
Exactly.
So there's all of this centralization, the centralization of power.
So I think the question now is, do directors still have to live there?
And even if they don't live there, you know, my you know, most of my director friends who
have careers don't live in Hollywood, but their managers do and their agents do and
the financiers do and the distribution does.
So there's still that supply chain running through Hollywood, even as there's been this
big decentralization that we've been talking about for 10 years.
Most of what that's meant is that people who can call in rather than be in meetings
leave and then everyone else who has to be in meetings has to be there.
Right.
And I feel that pressure continuing.
The Lindy effect, by the way, is that Lindy's law.
In big budget productions, you still it's still a film.
You still need to be there.
You still need gaffers.
You still need sound guys.
You still need actors.
You still need crafty.
You still need a big, giant studio that's relatively quiet.
So, you know, I think the big budget stuff will hang on for quite some time, but we're
going to see this.
We're going to see the periphery, you know, the independence, all of that stuff is going
to start to find a market and find a way to produce things elsewhere.
And the real question I think we're asking is, how do how do stories make money going
forward and the instance that somebody can make money and not do it here?
They're going to.
And I think that we'll see a 10 to 25, 30 year disbursement of that.
And, you know, it's still going to be a hub just for all of the physical constraints we
talked about.
But there's the transition is happening, to be sure.
Yeah, it's interesting.
The you know, that exact that's exactly right.
Like the last shoots that I've done have been in Florida and then literally I was in Seattle
yesterday on a shoot and now I'm back in L.A. and it's it's it's cheaper for some
somebody to hire me to fly out of L.A. to do a shoot to come back.
I'm just talking about people with some shoes today that are not in L.A. and, you know,
it's wild.
That.
Just aspect of things, but it makes sense because the the, you know, it's the whole
thing about why do people move to San Francisco to work in tech so you can get a job in tech
so you can move out of San Francisco because you don't want to live in San Francisco.
It's you know, those people who can dial in, dial in and the people who can't dial in are
stuck to stay here.
And that's interesting.
It's like it's literally a form of indentured servitude.
If you really think about it like it's it's the modern day form of an indentured servant.
And I'm just thinking about this a lot as I have a lot of friends from from church who
are actors and they're trying to figure out what to do right now because they haven't
worked in months.
And their agents basically say, if you leave L.A., I'm going to fire you.
And so it's this really weird.
Dichotomy because as you're talking about to Corey, like, yeah, all of the successful
people I know who are showrunners or directors or whatever it is, are not here.
They live in Austin or they live in Atlanta or they live, you know, a couple of the people
I know are like in Chicago or Nashville.
And so it's interesting.
And then they just it's like, I'll come in for a meeting when somebody wants to do.
But you're going to pay for my ticket to come out here.
And so, yeah, it's it's it's interesting this this, you know.
The Hollywood facade, right?
You know, it's everything is real and nothing is real at the same time.
One of the practical things that's just hyper different and I think just illustrates what
we're talking about is, you know, back in the day, you get called up last minute for
an audition.
You get your fucking sides faxed to you.
You need to be there for a meeting.
You needed to be localized.
And all of that has changed.
Most auditions are all on tape.
I mean, if you're going to network or whatever, you're going to want to meet people.
But it's just, you know, that like if you leave L.A., I'm going to fire you.
I mean, that's just like old school agent mentality where people needed to congregate
here for obvious reasons.
And that's still always going to be true.
You know, people bump into each other.
They go to parties.
They have friends.
They have a life outside the business.
And that's all has a tremendous amount of value.
You know, like to your point, J.D., the reason people go to San Francisco is because that's
where all of the other smart entrepreneurial people are.
And that's where the liquidity is at, so to speak.
Like where's all the trading taking place?
It's where the best parties at.
And that's just a matter of like that's just kinetic energy.
That's just a bunch of energy has been put into this place and it's going to be very
hard to unseat that.
But it is it is definitely being unseated.
There's no question about that.
And I think they're all, you know, maybe we land on a different city.
You know, I mean, there's always going to be proximity is always going to have value.
It's just can people afford to be, you know, approximate in an area that's too expensive
to live in?
Yeah.
Austin's a really interesting one, because Texas is making a very strong state play with
a lot of money, a lot of state money to bring, you know, people there.
And they did the exact same thing with Elon Musk.
And as soon as it was financially reasonable for him, he just moved there.
And there go all of those jobs and all those taxes and all of that.
And if you look at some of the ones I mentioned earlier, like NBCUniversal is not in a good
place.
Right.
We did this one sack right with NBC, NBCUniversal, Comcast, NBCUniversal, right.
And then it's and then it'll be like, yeah.
And now that's NBC.
And similarly, Paramount, right, Lionsgate, all of even Sony is doing OK.
But Fox had to be acquired as soon as now they have these overlord companies.
Those companies are not run by film fans.
Those companies are run by boards of Wall Street people.
And we went from having the best agent ever running the studio to now the former CEO of
Boeing running the studio, right, which is, you know, wildly different outlook.
So there's going to be no romanticism as soon as it's more profitable and more effective
to have this to have these things in Austin versus L.A., which I think is the primary
the primary competition right now is Austin that they'll do it.
They'll do it in a heartbeat.
There's no more romance, I don't think, around making I mean, they maintain an office here,
of course, but there's no more romance around it.
I don't think that would I don't think that would take long at all once the waterfall
starts.
And you've also got you've also just got straight tax, right?
If you if you, you know, domicile as a famous actor in L.A., you're paying an exorbitant
amount of money to do that.
I mean, Phil Mickelson talks about this from from the golf perspective.
Why the hell would you know, he was a California guy.
He's like, I can't I can't continue to pay these exorbitant taxes on my winnings like
I'm out.
I'm done.
Yeah, happening.
Yeah.
So I so many live in Arizona and then they come play golf in L.A. and go back.
Yep.
Yeah.
It's interesting because I'm like looking at the because I just had the definition for
the Lindy effect up here and it's, you know, I'm constantly reminded of how everything
is physics, right?
The laws of physics apply to everything.
And that's literally what the Lindy effect is.
The Lindy effect is just, you know, that that theory of something that's been popularized
for an extended period of time.
The longer it's popular, the longer it's popular until it's not until it's not.
And it's usually one of those things, though.
But but but if you think about that, that's literally a conservation of momentum type
thing.
Yeah.
It's like you get momentum in the machine, you get it going.
And I really think it's going to be interesting because, like, again, I, you know, used Mr.
Beast as an example.
But like the kids in North Carolina, right, and he's apparently built the biggest film
studios in the plural in North Carolina because South Carolina is because that's what it is.
That's what he's doing.
And all these other people like The Daily Wire and other people, it's like, oh, I'm
going to go build a studio somewhere else.
Angel Studios in Utah, right.
Angel Studios.
A perfect example.
And actually, Jeff, the block.
Yeah, you're going to you're going to continue to see that beast is Mr. Beast is a good it's
a good example because he's a singular guy.
But you're just you're I just I really think that we're going into this world where you're
going to have a much, much, much more vibrant ecosystem of a bunch of way smaller players
carving out their niche and crushing that niche as best they can.
Movies are movies are interesting because when you're browsing for one, you want them
to be in the same spot.
Like I'm not going to sign up for Angel Studios and Angel Wire Daily Wire and Angel Studios
and Disney and NBC.
I'm not signing up for all of them, you know, like so the second somebody can kind of figure
out where the best party is at and get people to agree on that and figure out a way to make
it profitable is is going to, you know, have a pretty outsized advantage, in my opinion.
But in the meantime, you know, technology is the same thing, right?
Like when digital cameras started coming out, and this is true over anything, I just
saw it in L.A.
You had this massive explosion of cameras, massive explosion of companies, all we're
going to do this, we're going to do that.
And then it eventually the whole market just collapses on the one or two or three that
they like.
And that's it.
So we're in this we're in this explosion right now.
We're going to have an explosion of different, you know, content creation companies or storytellers
or whoever.
And I think it's going to be huge.
I think it's going to take a really long time.
But eventually the market will settle on where people are browsing for those as opposed
to having to figure out, you know, I'm going to manage forty five different subscriptions
or whatever.
Yeah.
It's interesting.
The unique thing to think about, then, is like how far up the hardware chain can you
go?
Right.
Where it's like, how do you get Indy Hub or some of these other things is like the exclusive
bill.
It's like Samsung with their phones is like you can pay a bunch of money to be like preloaded
on a Samsung phone and because it's advertising, whereas like Apple doesn't do that.
And so it's just unique to see how content creators are thinking about that kind of stuff,
because you're right.
It's distribution.
Distribution is the.
Is the key.
It's all about eyeballs.
And so it's going to be.
Yeah, it's going to be unique.
You know, do you do you think I'm actually curious, both of your perspectives on this.
What happens to movie theaters like what what is the next iteration of a movie theater?
Do these just become big boxes that become studios like they're actually super ripe to
be turned into studio spaces because it's just these giant like sound control boxes.
But what you know, what do you think is next?
Like are people just going to rent them out?
Is it going to be one of those things like, oh, I go here and I play freaking Fortnite
on a big screen?
I think I think you most of them will collapse.
The big ones will collapse because they just can't sustain themselves.
Rents too expensive.
Tax insurance, blah, blah.
And I think you're going to see a bunch of little ones pop up in local communities where
they're basically just like their own little film club.
It becomes a social deal where people go to hang out with each other.
They watch movies, they do their thing much smaller, much, much nicer, much more comfortable
with people, you know, people can rent them out.
You could four wall them.
You could throw a festival at them or whatever.
And the people who run those basically that's their whole life.
And they don't necessarily have some giant agreement with the studio to distribute a
movie.
It's just a localized thing.
I think that we'll see.
I'm not saying like an insane amount of these pop up, but I think that that will replace
the Megaplex for sure.
Yeah, I think I would agree.
Every major city has that right.
LA's got 15 of those and they're always full.
Random went to a Tuesday night screening of Tarkovsky's Stalker, which is like a three
hour long Russian epic and one of my favorite movies on a Tuesday night.
It was full.
It was packed.
Right.
And that's the city where that would be packed.
But there's something about I love that place called Bidiots and there's, you know, another
dozen of them.
There's something about that.
There's someone in charge who's curating what movies they're showing.
That makes me almost able to show up on any night and know that there's going to be quality
there.
And that's completely gone from the Megaplex.
You know that AMC is just showing what they've been given.
There's no curation of that, you know, whatsoever.
Yeah.
You're going to start paying.
Yeah.
Tastemakers.
And it's this, right?
It's what we're doing right now is we're trying to, you know, find our voice in this void
that is the next generation.
Sneak.
We lost him.
Good mute.
I just did it too.
Maybe it was contagious.
Excuse me.
Sorry, man.
Yeah.
I was like, I don't want to blow everybody's ears off.
I think I pulled something in my neck.
That was cool.
That was a fun one.
This is 40.
God, man.
It's wild.
Come up in like the home stretch here, but I guess, you know, Corey, you've been traveling
a bit.
What did you see kind of internationally on the cinema front?
And do you think any of this stuff that's happening with the U.S. and tariffs and things
like that are going to continue to encourage or discourage the creative, you know, industry
globally?
Yeah, it's interesting because when I was in Ireland, you could tell there was a palpable
movement of Hollywood to Ireland specifically because their tax incentive is so good.
They have a history of having good film crews.
This is the other thing that people outside the industry don't really think about or expect.
But you can't just drop a big budget movie into any country because you need so much
local talent.
You need to know that they're good on a set.
And it's really rare in countries that don't have a history of filmmaking to be able to
rely on that.
And so they'll send advanced teams to train people so that they can keep up on a Hollywood
fast paced, big budget film set.
In Ireland, they already have them, right?
They have an incredible number of really strong film crews.
Romania, Hungary are building that.
Croatia is building that.
You know, that's where that's where Game of Thrones was.
So, you know, you have you just pull all of those people.
Malta is a small community for that.
And then you have the Italy, France, Spain, Germany that have a history of their own filmmakers.
And, you know, the other thing I would say from spending two months in Italy on a film
set and with filmmakers is because of the language barrier of all of those places, their
incentive is either to make small movies for their country or big English movies that can
travel to America, because they as what I was saying at the beginning about needing
the Chinese market is true times 100 for every other country wanting to make a movie that
would actually make make some sort of serious financial return.
Hollywood is still unique in the way that it can export a movie around the world and
make a lot of money.
Almost no other country in the entire world can do that.
So when I was in Italy talking to Italian filmmakers, they're saying we want to make
this an Italian story.
We want to make it in Italy.
But the maximum amount of money we think we can actually make on an Italian movie is maybe
20 to 40 million dollars.
But if we make it in English and we get an American star in it and we tell that story,
there's a chance we could make 150 or 200, 250 million dollars.
So as America goes, much of the rest of the world goes in terms of where the big dollars
are.
In terms of scale, it's still orders of magnitude ahead what Hollywood is doing versus the rest
of the world.
Zach, do you think...
Say nothing of talent and quality of movie, by the way.
Yeah.
And I think that actually goes to my next big question is, you know, and if you guys
aren't familiar with the movie, The King's Speech, it was an old Oscar winner, but and
by old, I mean, like, you know, 10, 15 years ago.
But the the guy who got that movie made was Franklin Leonard.
And Franklin was like an assistant who read that movie.
It's going to happen.
He created this thing called The Blacklist.
And he just like kept pushing it at people, basically, like kept like putting in their
stacks of...
So basically, the executives, you see, like printed out stacks of scripts that they would
go read over the weekend.
And then, you know, usually as an assistant, because at one point in time I was, you would
like read these things and you'd write coverage, like I've written coverage for TV shows, like
I wrote coverage for like one or two TV shows that like ended up being made.
And it's just always like weird, like coverage is basically you read the script, you basically
make like a one page synopsis and you need to be good at writing one pages, page synopses
to tell people, read this, don't read this, because if you know you write good coverage
and then they read it and it's actually something they make, you know, they trust you more.
Where I'm going with this, though, is, you know, the tastemaker thing we were talking
about.
I'm curious, Zach, what do you think that is going to kind of like look like in this
next world?
Because things like The King's Speech, or even more recently, like Squid Game, right?
Are things that some tastemaker somewhere saw and they're like, yes, and they're making
big bets on it.
And so like, how do you think that's going to iterate and change?
Are we going to get to a point where we have like decentralized, like, budgeting, whereas
like Angel Studios, they literally are making $100 million a year with their guild where
people are paying them $100 a year to just kind of like pre-watch movies.
Like, are we going to get more like guild type stuff where it's that or do you think
it's going to be, you know, the studio model surviving in some way, shape or form?
No, I think everything further decentralizes.
You know, I think that as companies try to figure out how to monetize storytelling again,
you know, the interesting thing about movies is that they really have this curve of attention
and profitability.
And it's generally kind of early on in its life cycle, and you might have a couple of
waves and whatnot down the line.
But in other words, the point I'm trying to make is that there need to be a steady stream
of novel, new ideas and movies being pumped out to continue to be profitable.
And so I think any company vying for talent or good movies is going to have to have their
own quote unquote, tastemaker, you know, on staff and those people are going to have relationships
with directors and actors and producers.
And you know, in a model like Indie Hub, you know, those types of people can just say,
hey, I'll bake myself onto this cap table.
I've got a relationship with the guys over at such and such dot whatever.
And you know, I vouch for these guys.
I have a good track record.
You know, nine out of the 10 movies that I thought would hit, hit.
And so you need my opinion.
Like I think these people can commoditize themselves to some extent.
And it's just much more interesting way to do it in a decentralized world rather than
hey, I'm going to go, you know, apply for a job at Universal or whatever, as opposed
to I'm my own kind of freelance contractor and I've got good relationships and I know
a particular market is going to respond to a particular idea in a particular way.
So I think those people, you know, kind of end up generating their own category, so to
speak.
And again, my theme on all of this is just further decentralization, you know, movies,
the business of movies and how movies coalesce and fall apart are very entrepreneurial and
they're very contractor driven.
And you know, you don't need to be employed by one, you know, again, back to peak centralization,
right?
Like a studio put a director under contract or a writer under contract and that person
worked for that studio.
But I don't think that we're going to that world.
I think it's going to continue to be exceptionally entrepreneurial and relationship driven.
In a digital world where you don't need to be in a physical place to have contact with
somebody who might be a tastemaker or who might be a great director, you don't need
to be conversing with people on the backlot at lunch every day to make connections.
You've got social media for that.
So, yeah, I don't know if that answered the question, but I just think we further decentralization,
further decentralization.
And in aggregate, I think that that increases the value of the industry.
It's just that the financial benefits of those don't get plowed into one entity.
Yeah, I agree.
And yeah, we have those.
Yeah.
Did you want to ask a slightly different question?
I was going to riff on that.
You can jump on it, but I'll answer that thing.
But what I want to know is, do you think it's going to be more advantageous to own a small
theater or drive-in in the future?
I'd still say a small theater because we still, for all of our technology, we've never solved
sound and drive-ins.
It's terrible.
When I was going to say about the tastemakers, I would say that most of the people with the
proclivity for tastemaking who have really good taste in scripts and executing movies
and have been developing that skill for their whole careers are still at the studios.
And over the past two and a half years, 40% of them have been laid off.
And they're all somewhere.
And I would guess that right now, most of them are carrying mortgages or wondering what
to do next and trying to get back in.
But I don't think those jobs are coming back.
And that means I think there's an enormous amount of people with really good taste who
are really good at developing scripts, who have a really good eye for talent, who know
how to make movies.
And I think that's only going more away from the studios.
They're still there because the people that can really make the movies at scale are still
the studios.
That's the thing that's dying.
And if you want to make a quarter million dollars to read scripts and make movies, then
you have to be in one of those places.
Those are the only places that are paying you to do it.
As those jobs continue to go away, I think you're going to have what Zach was talking
about of a peak boomer, but a peak millennial of 40 to 50-year-olds who have this skill
that's still valuable in the marketplace somehow.
And if someone can figure out how to grab all of those people and market them or even
a handful of those people and empower them, I think you're just going to see that move
elsewhere in Hollywood as these studios fail.
But right now, it still is the gate that everyone's trying to get to.
It's just getting smaller and smaller with more people trying to get through it.
How do you get those guys involved with AI?
I'm very curious if you guys have thought about this, but you actually just hit something
that I didn't even think about.
I have good friends who are over at Sony and people over at CBS, and they all got laid
off.
That's actually a really interesting thing, is you have these people who are really good
at taste-making and really good at plussing things, and then you have these kids who are
really good at prompting.
How do you connect those two?
That's an interesting thought.
It's an interesting thought.
I still think we're really far away.
For as exciting as AI is and as fast as it's moving, I think we're so far away from an
AI actually making a movie on its own apart from a very expensive production.
And by very expensive, I mean like $5 million.
And maybe AI can now take a $5 million production and make it look like a $12 million production,
but I don't think we're anywhere close to $200,000 looking like what we consider a $25
million movie to make.
Or these Trump music videos.
Well, that's the thing, right?
I do the image generation and I see it, and I think you're more seeing the actual practical
things like some of the VFX jobs.
I think a VFX house is very close from needing to be 100 people to needing to be like 20
people, and that's devastating for that element of the business.
But we're not even close to taking a performance, like a strong actor performance or a dynamic
between two people on screen that comes out of the magic of acting and directing and being
able to recreate that with AI.
I just think we're adding a tool that's going to make it generally cheaper, but I don't
see it replacing it at all.
Yeah, we're seeing the old thing die and a new thing has to be born.
And for the new thing to be born, you've got to crawl, then you got to walk, then you got
to run.
Nobody's going to be running anytime soon.
But what I would say to people like that is get your crew together.
You're a good showrunner.
You know some good people.
You have some interesting ideas.
Get some young, talented filmmakers together.
Throw up something great.
Whip up a little bit of an audience.
Put it on Indie Hub.
Bake yourself into the cap table and get paid in a novel way that you weren't able to get
paid before.
In other words, test out a new way of doing things.
Test out a market.
Test out a way to monetize something that's different than the old model and see if you
can figure out a way to say, OK, we did something this small of this budget and got this return.
How can we make this bigger?
How can we import an audience from one platform to the other platform?
I mean, it's why I founded Indie Hub.
But I really, really think that the relevant question for the whole thing is where is the
money coming from?
And how is that revenue being distributed?
Those are the big questions.
And if you can solve for that a little bit with the way tech is now and the way payments
work, it's going to take time.
To Corey's point, like the peak millennial, he's going to have to be the old guy now who
teaches young guys how to do things.
But he has the overall knowledge on how to do it.
So you've got to take people under your wing.
You've got to take risks.
You've got to try new things.
But I really think that the answer to almost all of this is saying the corporate structure
is no longer sustainable.
It's too heavy.
It's too overweight.
It's too admin heavy.
And you've got to go out and take risks and try to put it on platforms like Indie Hub
and get yourself paid in a novel way.
Yeah.
Good stuff.
Do you guys have any last kind of thoughts on anything or anything you guys are working
on just coming up?
You want to shout out before we wrap up for today?
Not too much other than go check out Indie Hub.
I do think it's worth, I don't know if we have any answers on this one, but it's worth
thinking about the difference of how to value something that's digital versus how to value
something that's physical and the constraints of something that's physical versus the
constraints of something that's digital.
You know, growing beef is going to be capturable, so to speak.
It's going to be, there's clear things that you have to do to deliver your product, but
that's not necessarily true in the digital world.
And, you know, I think that there's, I think that it's really worth thinking about in a
time of political uncertainty where the value chain, how the value chain works in a given
market and where the efficiencies lie and the inefficiencies lie.
Yeah.
Yeah, I'd agree with that.
And I think there's this temptation to think that because it's digital, it means free.
And I think we've just been renting things with our information for such a long time.
And I think as that goes away, people realize that none of that was actually free.
Your data was just being sold a lot.
And I think that era is slowly ending as well.
And I think we'll have more of a sense that things aren't free.
I think you could run into where you are paying for email accounts and things like that.
And I think, you know, as something's free, it becomes lower quality, right?
That's just necessarily.
So if all of your content, if all of your entertainment, you expect to be free, you're
going to be getting a pretty low standard of entertainment.
And I think this will demand that people pay for things.
It's interesting because that brings into, you know, going back, we haven't talked much
about Bitcoin on those, but that goes to Adam Back's idea of hash cash.
And so it's like, if people aren't familiar with this, but he was essentially, if you
wanted to spam somebody with email, you had to pay for it.
And that was part of the, you know, philosophy and stuff that Satoshi used in his thinking
to create like proof of work and all that other stuff for Bitcoin.
But I actually think you hit on something really, really interesting about, you know,
getting to a true Bitcoin future where things are, you know, Bitcoin based.
I don't want to use the word tokenized because that's not what I'm talking about.
I'm literally talking about a Bitcoin first foundation, because if you are charged 10
sats or one sat even to reach a person, I mean, people are doing that now with zaps
right on Nostra and then, you know, on Orange Blab.
If you are paying something, if it has a little bit of a sting to it, you're going to put
a little bit more thought into it.
It's not going to be one of those things you're just like, oh, it's like I'm going to reach
100 million people.
It's like, no, I want to reach 50 qualified people and I will pay more to do that.
But because I'm paying more to do that, I'm going to actually spend more time to do it.
So I think it's actually interesting.
You know, we'll get to a place where AI is just flooding the zone, which is where we're
at right now.
But it's going to come back like the pendulum will switch from flooding the zone to actually
like quality.
And so right now, though, we're probably, you know, we're on our way this way to flooding
the zone.
We're probably like here.
So we got a lot more zone flooding to happen.
But I do think the tool as it's sharpened when it comes back the other direction and
we're rebuilding things and we're seeing 3D printed sculptures and things like that.
I think I think we're in for a really I think the new cultural renaissance is going to be
really cool to see.
I think I've had some really interesting conversations from the Indie Hub side of things,
from the from the exhibition side of how do you how do you continue to monetize digital
content in where where everything digital becomes free when information is free?
How do you monetize that content?
And will that content have a viable business model at all?
And one of the things that I've I don't have an answer to it, but one of the things I think
about is like to Corey's point, things that are free are generally going to be the cheap,
lame thing.
And, you know, even if you get one filmmaker who's really good at at AI and is able to
pump out something that's really kick ass with AI, it's still going to generally be
better if you have 50 great people working on a thing.
And there's you know, the competition is always relative.
Like, yeah, we're going to be able to do things that we weren't able to do before with half
of the people.
But if we use the same amount of people we were using before, we're going to do something
that is significantly greater or more valuable, for lack of a better expression than we were
doing before.
So, you know, like I guess what I'm saying is products that require a lot of human talent
and coordination will probably always capture or demand some premium because it's the collective
efforts of a lot of people who are really fucking good at what they do, regardless of
whether they're using AI or not.
Yeah, it's still going to be a better output with better input.
The simplest way to say that is, and it's my favorite thing to do and look at is, but
two plus two in good business, two plus two always equals five, period.
Like two plus two must equal five or you're not actually doing what you need to be doing.
And five is the intangible.
Like four is table stakes.
Four is you made your money back, you made P&A.
Five is, you know, you have the Dark Knight series, right?
Two plus two equals five.
And then that thing of like, it's like cultural icon.
And it's one of those things that's got that intangible that is going to sustain and have
a Lindy effect.
Yeah, the whole should be greater than the sum of its parts, which is really, honestly,
the magic of filmmaking.
You know, I think you talked to most people who got into that business.
There is some just incredible thing that happens when you get a great group of people together
working on a project and you do something wonderful.
There's that extra element that comes in out of nowhere.
That's only possible when you've got great talent.
It feels like magic.
Like it literally is indescribable when it actually fires like that.
And it does.
It does equal more than the input for sure.
So yeah, there will always be a premium on that.
It's the cocaine.
Like it's interesting because I was even thinking about that indentured servitude.
It's like, why are people here who are actors or whatever?
Gaffer scripts who just haven't worked in a long time.
And it's that thing you're talking about.
It's like the ability to feel God, essentially, because I do think that that is the
big bang moment, right?
It's that it was that spark that kind of created everything, right?
And it's like you want that spark.
You're chasing that spark.
You're chasing lightning.
Well, I think it is.
I mean, the Genesis thing is important, right?
It's like God created man, then in his image.
Just that phrase implies that it is a godly thing to create and we are in his image so
we can create.
So when we create, we are acting like God, right?
It logically processes what I said at the beginning, that storytelling is one of the
oldest things.
It's like it's been a godly activity as long as we've been human.
Mm hmm.
I've had that.
I've had this conversation where people, sometimes with VCs or like business people
who just don't like, well, why would somebody, why are people like, where are all these,
you know, like, in other words, how many movies could you get on the platform?
Like there are 14,000 submissions to Sundance every year, the overwhelming majority of which
you'll never see or hear about.
And the question is, you know, from business minded people like, well, two plus two is
not equaling four in that situation.
I'm like, what you don't understand is that we're addicts.
We can't stop.
There is something else afoot here that's not just the balance sheet making sense.
Yeah.
So if you can just solve that, if you can just connect those markets, you can connect
the addicts that are constantly making things to people who are constantly consuming things,
you've got something that'll win.
Speaking of knickknacks and zen, this is not a tobacco ad, by the way.
No free ads.
I will do a shout out, though.
We're going to be doing some stuff for Bitcoin Film Festival that is going to be advertising
focused.
So be looking out for that.
And hang on a sec, bud.
And yeah, but I think that's probably the end for today.
So thank you guys for jumping in.
Thank you, everybody, for tuning in.
And we'll see you probably Thursday.
I think we're going to do another one.
So awesome.
Thank you, guys.
See you guys.