Thursday, August 12, 2010

Reading The Tells

worst-poker-hands

So it seems the desperate for cash Ontario government has come up with a new way of making money. They're getting into online gambling.

I seldom gamble recreationally because I have to do too much of the real life version when it comes to my career. But a lot of people do, with off-shore sites now reaping Billions in profits.

I'll leave the morality of governments getting into all that to others. At least the problem gambler suicides will likely happen at home now instead of causing a nasty scene in a casino washroom.

As an economic decision, owning a virtual casino probably looks pretty good in theory. But Canadian governments are also the only casino operators in the world who have consistently not done well at the trade.

Some of that's due to their insistence on supporting their social programs by eliminating smoking, free drinks and other frowned upon vices in their establishments. The mindset which once decreed you had to buy a meal in Ontario before you could order a drink on the Sabbath is alive and well.

Most of the losses, however, come from running while also regulating the industry.  I had a Las Vegas casino manager once tell me that he'd turned down a job in Canada because it was career suicide -- "Everybody knows you're part of a rigged game up there".

His point was that when you both own the casino and make its rules, the house has an even bigger advantage, one it can't help but exercise when times get tough. Players eventually realize their chances of winning are always being reduced and they take their money elsewhere.

And it would appear the same approach will eventually turn online gambling into a money losing government initiative. In order to sell the idea, Ontario insists it will limit the amount of time anyone can play as well as how much they can wager over a set period of time. Yeah, that'll make the hard core players close out their accounts in Antigua.

They also claim they'll operate more secure and trustworthy sites than those off-shore fly-by-nighters. Tell that to folks in British Columbia, whose government opened their own online casino last month. The site went down in the first hour after it was discovered that dozens of accounts had been hacked so gamblers could bet with somebody else's money.  Four weeks later, they still aren't open for business.

But here's where this impacts those of us who make movies and TV for a living.

To be successful at the poker table, you need to know how to play the cards you're dealt. But more important, you need to know what the other guys at the table probably have in their hands. That means reading the "tells", those little ticks and idiosyncrasies that telegraph whether or not somebody is bluffing.

Well, our governments aren't bluffing. They're financially stretched to the limit.

Tell #1: This morning, amid reports that an entire hospital ward in Victoria is being readied for hundreds of arriving Tamil refugees thought to be suffering from Tuberculosis, I heard one Toronto talk show caller assert that her husband can't get speech therapy because the Ontario Health Insurance Plan claims they can no longer afford to fund his treatment.

Tell #2: Despite mounting evidence that the newly introduced HST is wreaking havoc with construction trades and the real estate market, that restaurant business is off 25 - 40% and even golf courses have seen a precipitous drop in greens fees, the Legislature is not rethinking its implementation.

Tell #3: Although thousands of artists mounted a spirited campaign against the British government's decision to axe its version of Telefilm, the UK Film Council, that decision is final.

Our governments will need to go "All-in" sometime soon. And let's not forget who brought the deck we're all playing with and shuffled the cards.

The Minister in charge of the UKFC went so far as penning a column for the Left leaning Guardian to lay out his reasoning for closing down the UKFC, noting how many millions had been saved in everything from car allowances to officials' salaries. In effect, claiming that more money could flow to filmmakers now than had under government supervision.

You gotta know somebody over here is reading that column, noting how little a public anxious over its own health care and crumbling roads seemed to care and is putting a checkmark next to Arts funding on their "Where can we cut" list.

Those are the cards we're about to be dealt. Maybe in the next federal budget. Maybe in the first one that follows our next election. So we need to start getting ready to play this hand as intelligently as we can.

I've heard all the arguments about every dollar spent on the Arts multiplying "X" fold. For years American governments claimed every dollar in Food Stamps created $1.71 in the broader economy. Now they are cutting the Food Stamp Program back. You can use statistics a lot of ways, but they've never seemed to work in our favor.

We can threaten that governments don't want to piss off the Arts community. But that's the same argument that says they have to bring Omar Khadr home to placate the Muslim community or allow boatloads of Tamil refugees to land so as not to upset their Diaspora.

Artists don't vote in blocs anymore than Muslims do and for every artist you satisfy you piss off some guy hanging drywall. We need to get out of Groupthink and start thinking about what helps us as a Group that's part of a broader culture.

I've long advocated weaning ourselves off the government teat. But we're still going to need to find sustenance somewhere.

Maybe the financing can be found online. But with a massive government sponsored campaign pending to tell Canadians how easy and fun it is to spend their web time gambling, that uphill battle will get much steeper in the short term.

In my opinion, our best strategy is to lobby for clearing the shelf space for the goods we already sell and then making their availability known.

In past postings, I've talked about setting aside a specific percentage of movie screens for Canadian content and mounting initiatives to encourage networks into putting more Canadian programming in Prime Time. Maybe that won't solve all we're facing, but it will help us survive until the economy gets better or smarter ideas come along.

Because when you're sitting at a table with somebody who needs money right now and doesn't care who he has to hurt to get it, your best option is to find another game.

6 comments:

DMc said...

Dear Unca Jim,

We've crossed swords recently a bit more. But...

Sigh.

You speaka da trooth.

That is all.

John McFetridge said...

Next up for the government:

Getting into the porno biz.

JA Goneaux said...

John: you, ah, beat me to it, pardon the pun.

Not sure which mafia movie/book/reality show said it, but the "old school" mustache petes basically believe they were only giving people what the wanted and weren't allowed to have: booze, gambling, women. Drugs was a bit of a problem, obviously, but as someone who has dead and dying relatives due to alcohol and tobacco, and one gambling addict about to lose her house, I say, really?

Now, government runs and gets the take for booze and gambling. Why not porn, if not outright prostitution? Why can't I kill the fucking dandelion on my lawn, but I can read (for entertainment purposes only, of course) dozens of ads for whores in my "alternative" newspapers. Or on craigslist. Or in the Toronto Star for that matter?

Besides, a porn mag is taxed at the same rate as National Geographic and Dog Walker's Monthly. I'm sure some genius has already run the numbers...

What's the under/over on whether the government is more out of ideas than Hollywood anyway?

Anonymous said...

You brought up your cry once again to bring quotas for Canadian theaters. Quotas won't help the Canadian film industry.

First of all, when a Canadian film distributor does as much work releasing a film in Canada as the Americans do, it has no problems getting a wide release. Look at movies like "Men With Brooms", "How She Move", "Mambo Italiano", "The Rocket", and "Screamers", among others. All these movies got theater counts just as big (or bigger) than American movies at the same time.

The problem is that few films the Canadian government funds are commercial. Distributors are too reluctant to spend money giving Canadian films a wider release. And since they can get the rights to a Canadian film cheaply, they have no incentive to do well in theaters - a quick sell to Canadian TV networks forced to buy Canadian content, and the Canadian film distributors have a small but guaranteed profit.

Obviously, if quotas were suddenly imposed, and Canadian theaters were screaming at the Canadian distributors for product, the Canadian distributors would not lift a finger to better market and distribute films funded by Telefilm. They would still be convinced that spending time and money on a wide release of a Canadian movie would just make them lose money.

Quotas would not encourage private investment. Canada has a private film industry already (mostly making direct-to-DVD movies), and the private industry seldom releases its product widely in theaters (or at all.) Why? Because they know that their cheap product could not compete with slick, big-budget and star-filled Hollywood movies. If, for example, a $5 million dollar movie comes with a $2 million advertising budget (the minimum for a wide release), that makes $7 million. If the theater chains take half of the gross, that means the movie would have to gross $14 million just to break even - and only Hollywood movies get to that level. TV sales and DVD sales would not make the difference. As for foreign sales, the demand for non-Hollywood product worldwide is less than that for Hollywood product. When was the last time you saw a movie in theaters from Argentina? Or Denmark? Or Taiwan?

Thinking that the Canadian theater chains will take care of the marketing and distribution of Canadian films is also a foolish notion. They would have to spend at least $2 million on marketing a Canadian movie to compete with American films. Also, the people behind the movies would demand their cut of the box office gross, making it very unlikely the theaters would make their money back. Theaters would close down, or the theaters would do what many theaters do around the world when forced to deal with foreign product and suitable foreign product not being around - simply pay a fine for not showing the quota of local product, and show an American film instead.

That's why quotas won't work.

Keith said...

You brought up your cry once again to bring quotas for Canadian theaters. Quotas won't help the Canadian film industry.

First of all, when a Canadian film distributor does as much work releasing a film in Canada as the Americans do, it has no problems getting a wide release. Look at movies like "Men With Brooms", "How She Move", "Mambo Italiano", "The Rocket", and "Screamers", among others. All these movies got theater counts just as big (or bigger) than American movies at the same time.

The problem is that few films the Canadian government funds are commercial. Distributors are too reluctant to spend money giving Canadian films a wider release. And since they can get the rights to a Canadian film cheaply, they have no incentive to do well in theaters - a quick sell to Canadian TV networks forced to buy Canadian content, and the Canadian film distributors have a small but guaranteed profit.

Obviously, if quotas were suddenly imposed, and Canadian theaters were screaming at the Canadian distributors for product, the Canadian distributors would not lift a finger to better market and distribute films funded by Telefilm. They would still be convinced that spending time and money on a wide release of a Canadian movie would just make them lose money.

Quotas would not encourage private investment. Canada has a private film industry already (mostly making direct-to-DVD movies), and the private industry seldom releases its product widely in theaters (or at all.) Why? Because they know that their cheap product could not compete with slick, big-budget and star-filled Hollywood movies. If, for example, a $5 million dollar movie comes with a $2 million advertising budget (the minimum for a wide release), that makes $7 million. If the theater chains take half of the gross, that means the movie would have to gross $14 million just to break even - and only Hollywood movies get to that level. TV sales and DVD sales would not make the difference. As for foreign sales, the demand for non-Hollywood product worldwide is less than that for Hollywood product. When was the last time you saw a movie in theaters from Argentina? Or Denmark? Or Taiwan?

Thinking that the Canadian theater chains will take care of the marketing and distribution of Canadian films is also a foolish notion. They would have to spend at least $2 million on marketing a Canadian movie to compete with American films. Also, the people behind the movies would demand their cut of the box office gross, making it very unlikely the theaters would make their money back. Theaters would close down, or the theaters would do what many theaters do around the world when forced to deal with foreign product and suitable foreign product not being around - simply pay a fine for not showing the quota of local product, and show an American film instead.

That's why quotas won't work.

Anonymous said...

Maybe quota's would work but of course not if "suddenly imposed".

The way distribution is set up in Canada is based on the system in place now. Telefilm requires that a Canadian distributor be involved in the financing of your film. There are few distributors in Canada and if they put $200,000 into the financing pot, it's only because you have $200,000 in presales for pay TV or whatever.

The distributor rarely puts any money into P & A. The film runs in a theatre for the minimum requirement and the distributor makes their money back from pay TV, DVD, Pay-per-view, broadcast TV etc.

BTW, contact a theatre chain about getting your film shown without a distributor and be entertained by the laughter. "You have to have a distributor". So...you need an intermediary to "distribute" i.e. courier the film to the particular theatre.

So, put a "tax" (yeah, I chose the worst word possible) on the price of a movie theatre (maybe a 10% tax on concessions would be easier to swallow. A more voluntary cost).

This money goes to subsidize CANADIAN theatres to show CANADIAN films.

Maybe other countries overwhelmed by American movies would adopt this system. Certainly Canada wouldn't be the pioneer.