By Carolyn Gray Anderson
UCLA Anderson Forecast’s first quarter report included special consideration of the entertainment industry and its relationship to the Los Angeles economy. Forecast economists Edward Leamer, Jerry Nickelsburg, David Shulman (’66) and William Yu presented the report to an audience at Culver City’s Kirk Douglas Theater, sharing the good news that the U.S. economy appears to be strong and stable amid international volatility. Two panels of experts focused on how the California economy is affected by ebbs and flows in the entertainment industry.
Guest Peter Guber, CEO and chairman of Mandalay Entertainment Group, in conversation with UCLA Professor of Marketing Sanjay Sood, provided the energetic high point of the event. Guber, who is a lecturer at UCLA Anderson, has a lot to be excited about: he was chairman and CEO of Sony Pictures Entertainment, chairman and CEO of Polygram Entertainment, co-founder of Casablanca Record & Filmworks and president of Columbia Pictures. He’s a best-selling author and has produced or executive produced major films that garnered five Best Picture Academy Award nominations, including a win for Rain Man.
But he couldn’t be more enthusiastic about the technological shifts decentralizing the industry.
Most revolutionary, he said, are products like Oculus Rift and Google Glass — devices and platforms that will soon allow complete immersion into live events from anywhere in the world. Live entertainment like concerts and sports events carry high value and, Guber said, compete favorably against digital media. But a device that gives you a 360-degree view of a faraway environment and a front row seat there provide live entertainment experiences even to the most remote viewer. New technologies allow users to be participants rather than passengers. “It’s the most transformative thing I’ve seen in my lifetime and in the business,” said Guber.
The “digital tsunami,” as Guber called it, has transformed many an industry. But Guber said he doesn’t think this means it has to disenfranchise entertainment professionals. According to afternoon panelist Lori Kozlowski, editorial director at Atom Factory and former Forbes correspondent, the real benchmark for tech is whether it can replace the in-person interactions so vital to producing high-quality entertainment. No matter how the technology changes the nature of delivery and consumption, stories will always need to be told by writers, actors, producers and directors. “Technology is going to offer us a big bouquet of economic opportunities,” Guber said.
Yu, who conducted special investigation into the entertainment sphere, said that Los Angeles still dominates the industry: with a 48% share of it overall, total employee compensation ($55 billion) dwarfs that of other regions and cities. Tinsel Town boasts the highest density of creative professionals in the nation. Yu said his research and industry analysis show certain encouraging correlates: “One additional production day on a feature film or TV show will predict at least one additional job in the entertainment industry.” However, our signature industry’s growth here is disappointing compared to the U.S. as a whole. Employee payroll has fallen 14% since 2001, owing in part to a 47% decline in the music industry. And, although entertainment is a healthy industry nationwide, its growth is lower than star industries in other major metro areas, such as Silicon Valley’s high-tech sector or the oil business in Houston.
It’s up to locations to make themselves attractive as locations. The panel participants addressed in greater detail the extent to which U.S. cities and states, including ours, create incentives for the film and TV industries to take root. Georgia and New Mexico build in long-term plans to ensure the future of the business in their states, and stakeholders in Maryland, Massachusetts and Florida pressure their state governments not to let that sector weaken. California tries to compete, but budget might sometimes trump advantages like weather and a concentration of industry experience.
Guber said that how the state copes with changes in the entertainment industry will be different from how artists and financiers cope with them. He remains resilient. “When I was growing up, change was linear. Then it became exponential. Now it’s three-dimensional. There’s no way you’ll get your arms around the future. You have to say, ‘How do I manage the opportunities?’”
Read more Forecast news:
Los Angeles Times: Entertainment
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