Early this summer at the University of Southern California, Steven Spielberg sat before an audience and worried aloud that Hollywood had become too dependent on blockbuster movies. The director, hardly a stranger to big summer hits, was concerned that studios were fixating on franchises and sequels to the point that they no longer wanted anything else. “There’s going to be an implosion,” Spielberg warned, “where three or four or maybe even a half-dozen megabudget movies are going to go crashing into the ground.”
The next few weeks seemed to bear out his prediction, as “The Lone Ranger” (reported cost: $215 million), “R.I.P.D.” ($130 million), and other big titles flopped. But then a funny thing happened. When summer came to an end, Hollywood had brought in more money than ever: a domestic box office of $4.76 billion. For every “Lone Ranger” there had been an “Iron Man 3” and a “Fast & Furious 6.” Hollywood wasn’t collapsing under the weight of its blockbusters. It was enjoying its best summer ever.
That might have surprised Spielberg, but it’s exactly what Anita Elberse expected. Elberse, a professor at Harvard Business School, has spent a decade studying the entertainment industry and how it’s changing in the online economy. Many observers had predicted the Web would revolutionize our culture and wildly expand our choices—and in some ways, it has. But in her new book “Blockbusters,” Elberse argues that for entertainment companies at least, the digital shift has only amplified the star system already in place. Movie studios now succeed by sinking extra resources into a handful of super-hits, and the public responds by flocking to them. “Blockbusters” shows that this strategy has also worked for book publishers, music labels, TV networks, and video game companies.
Elberse analyzes the realm of culture with a rigorous, numbers-driven approach. One of her central findings has been that Chris Anderson’s influential “long tail” theory, which imagined a digital future in which we would happily browse a niche-filled utopia, hasn’t quite worked out as promised. In the pages of the Harvard Business Review, and now in her new book, Elberse has mounted a forceful argument against it, showing that instead of producing a “long tail” of modest successes, consumers respond to an overwhelming mass of products by drifting back to the biggest brands. “Blockbusters,” she writes, “will become more—not less—relevant in the future.”
The notion that blockbusters are doing better than ever has been a big relief for entertainment companies worried that digital content would gut their business. For the wider culture, however, it might not sound so encouraging. Who wants to live in a world where there’s “Fast & Furious 12” and little else?
It’s easy to blame movie studios and publishers for crassly chasing the easy money. But Elberse’s book shows the reasons lie with us, as well. We may think we’ll use the Internet as a gateway to marvelous and obscure new music, books, movies, and so on—but to a significant extent, we’re really using it for a mass discussion of Miley Cyrus’s new number one hit. A blockbuster economy, it seems, is what happens when people get what they really want.
Elberse’s office on the Harvard campus isn’t that of a typical business professor. “Most of my colleagues have research awards on the shelf,” she jokes. “I have party invites.” In one corner sits a guitar autographed by the guys in Maroon 5; on the wall hangs an invitation to LeBron James and Jay-Z’s Two Kings’ Dinner.
Before she was an expert on the entertainment industry, the Dutch-born Elberse was a fan. “I spend way too much time watching television, going to sports games, going to movies,” she says. But for all the cultural chatter about those events, Elberse noticed that very few scholars were studying them empirically. “It struck me that there’s an awful lot of data in the public domain for these sectors,” she says. “The movie industry publishes weekly sales numbers—not many industries do.”
While a graduate student at the London Business School, Elberse decided to quantify the best entertainment business strategies, building complex models that controlled for all kinds of factors. Subrata Sen, a professor in Yale’s School of Management, still remembers the novelty of Elberse’s 2002 dissertation on the film industry. “She doesn’t just wave her hands and make some general statement,” Sen says. “She actually works with the numbers. She does the math.” Once she got to Harvard in 2003, Elberse began mixing in more qualitative research as well, including interviews with book publishers, music executives, and movie producers.Continued...