The obvious reason that you're right is that people keep showing up to big, loud sequels in movie theaters, so studios keep making big, loud sequels. But the most interesting part of your book is the not-so-obvious ways that spending more money on fewer projects is smart. For example, if you're known for making big popular movies, then you attract artists and creatives who think they're sitting on a big popular idea.
Yes. And you can price yourself out of the market for great entertainment by not spending big on high production value. This is true in film. It's true in television, where NBC tried to manage costs for a few years, saw margins decline, and lost out on some major new projects. If you're a book publisher, and you don't compete for the biggest and most promising books, you'll lose shelf space at Barnes & Noble, and leverage with Amazon, making it harder to get and promote future books.
So what you see is that efforts to save on cost might improve profitability in the short run. But in the long run, you're undermining the very essence of what builds blockbusters. Studios and publishers need help from talent and from retailers to make these big hits.
And there is a trickle-down effect. The companies that made the last successful blockbuster, whether it's a book or a TV show, tend to be well-positioned to produce the next successful blockbuster. How do blockbusters beget blockbusters?
If you haven't had a hit in a long time, it's harder to build the next one. One hit has a halo effect. [The opposite effect] is what NBC is experiencing. They haven't recovered from the period when they managed for margins.
You see the same dynamics in movies, too. Think about trailers you see in theaters. If you're seeing a Warner Bros film, the studio might have three of the five trailers. So having a hit helps you create the next hit. If Macmillan publishes Bill O'Reilly's book "Killing Jesus," and it sells well, Macmillan can urge him to interview me about my new book [also published with Henry Holt - Macmillan] driving up sales for my book. Hits create hits.
And in music?
It's very much the same. One way you see the trickle-down is in concerts. If you are the record label who owns Lady Gaga, and you have a new artist coming up, you can say, "Let's have the artist play just before Gaga." Now you've exposed the huge Gaga audience to the new artist. It's similar to showing a trailer before a movie. The hit creates a hit.
I think my friends are most familiar with the blockbuster formula playing out in movies, and my sense is that they hate it. They see big loud sequels and adaptations taking over and they want to know who to blame. So who's to blame?
There are a number of people who are negative about blockbusters, and that surprises me. Put yourself in the mind of an executive. They know everybody pays the same amount for a movie, whether the studio invested $10 million or $300 million. To complain about studios overspending is odd, because the price of the ticket doesn't change. In what other industry do we complain about companies increasing their spending when they don't raise prices? In video games, it's the opposite. People are thrilled when companies spend more on the next [Grand Theft Auto].