On Valentine’s Day, groups of Chinese young people waited for a Chinese movie, “Beijing Love Story,” at the Monterey Park AMC Theater. The movie was released day-and-date with China. The film made a strong opening weekend in North America, earning $128,000 from a limited release in nine screens over its first three days in the market following a Valentine’s Day premiere. Moreover, the film set a single-day record for a 2D film in China, with16.1 million Yuan.

“It’s a golden age of the China film market now. It is experiencing a prosperous development…China’s local movies beat Hollywood movies and now have begun to lead the market in the past few years…I remembered that 60% revenues are from our local movies, which could not be imagined in the past,” said Long Wan, founder of Fire Rock Global Media. Wan is doing pre-production as the supervisor producer for a US-China co-production film, which is going to be filmed in Las Vegas this summer.

“Beijing Love Story” is only one of the “miracles” made in February, the Chinese New Year month. Another blockbuster, “The Monkey King,” has earned 1.02 billion Yuan since it was released, making it the third movie of One Billion Club in Mainland China. According to box-office records from Huxiu technology blog, China’s February box-office revenues hit 2.96 billion Yuan (about 50 million US dollars). Experts predicted that the number would probably hit 30 billion Yuan at the end of 2014. It is a dramatic change, comparing to 2007, that the market earned about three billion for the annual box-office revenue.

The second largest film market

According to a report from the Motion Picture Association of America in March, China overtook Japan to become the second-largest film market after the United States, with box-office receipts of around 17 billion Yuan (about 2.8 billion dollars) compared to 2.4 billion in Japan.

More than 5,000 new cinema screens were added last year, and a massive 903 new complexes were opened. The State General Administration of Press, Publication, Radio, Film and Television (a national media censorship bureau) reported that China now has 4,582 cinema complexes and 18,195 screens, an increase of 25 percent and 39 percent respectively from 10 year ago, according to Variety.

In the past five years, more Chinese audience chose to spend time with friends and families in cinemas. Below the chart shows that 48.9 percent of audience who buy film tickets watched two to four films in 2009, but in 2012, the number of films has been diversity showing that 15.6 percent of audience watched more than 20 movies yearly.

The high price of movie tickets hasn’t dampened the public’s enthusiasm for cinema. In Shanghai, an ordinary movie ticket costs 100 Yuan (around 15 dollars) and a 3D movie ticket costs 150 Yuan (around 25 dollars), according to Want China Time. China’s movie ticket prices are reportedly the most expensive in the world. However, the high price helped emerge a lot of ticket groupon websites that were very popular with Chinese young generations.

The development of film marketing strategy companies also contributed to the prosperous market. “Do you know the average age of our audience is 22….do you understand those young people born in 90s?” Wei Liang said to the Chinese director veterans in an interview. Liang’s film marketing company, Magilm Pictures, is one of the pioneers marketing companies in China. “When I opened the company in 2009, there were only one or two big-budget productions seeking for professional marketing proposals….now tens of movies every year,” As the chart shows that 37.3 percent of audiences are 20-29 years old, according to Entgroup.

China’s cultural market & Propaganda

China has a long history of propaganda in both news media and cultural market. In 1942, Chairman Mao Zedong gave a speech in a cultural panel meeting in Yan’an, which emphasized that literature and art should serve workers, peasants, soldiers and proletariat. And movies are the tools of propaganda for educating people about the “right things,” and also have to express the right political views. At that time, the Chinese film market experienced a downturn.

During the Cultural Revolution, the film industry was severely restricted. Most of older films were banned, only a few new ones were produced. The most notable ballet version of the revolutionary opera was “The Red Detachment of Women” (1971). Film production revived after 1972 under the strict jurisdiction of the Gang of Four until 1976, when they were overthrown. The few films that were produced during this period, such as 1975′s “Breaking with Old Ideas,” were highly regulated in terms of plot and characterization, according to “Uncovering Chinese films”, a book talking about films during China’s Cultural Revolution.

China’s economic reform and opening in 1979 gave a new life to the whole country as well as its movie market. The government film distribution reform project, which was released the same year, said that film distribution companies could keep 80 percent for developing new projects and pay 20 percent of film revenues to central government. The film industry flourished for a short time as a medium of popular entertainment after the reform project. Around 29 billion people went into cinema in 1979, according to historical record.

In 1993, Chinese government released a new reform report to open doors for private film companies to produce movies. The newly formed SARFT, State’s Administration Radio, Film and Television strengthened supervision over production at the same time. DMG Entertainment, a Chinese-based private film production and distribution company was opened in 1993, which produced “The Founding of a Republic” produced, a new style of mainstream Chinese films in 2009.

Foreign films restrictions & Co-production

Since 1994, China set up an import quota system and started to import ten Hollywood movies every year. “China places a strong emphasis on censorship not only to ensure compliance with the political aims, but also because the country lacks a rating system. The SARFT censorship board regulates the content of movies to make them suitable for the entire national audience,” according to a research paper from Duke University. The board consists of 40 members, including government officials, filmmakers, academics, and representatives from interest groups. The Hollywood films, which apply for a quota slot, must submit either a script or a finished film to the board.

Each Hollywood studio expects to get four to six studio films each per year into China through the revenue-sharing quota system that expanded from 20 per year in 2011 to 34 in early 2012. The expanded total includes an additional 14 Imax and special category movies, according to Variety. Because of strict policies of the quota system, a lot of Hollywood moviemakers figured out another way to enter China film market. One of them is co-production.

“Every week, there is at least one Hollywood producer asks me if there is any good co-production projects in China…They are eager to producing co-production films with China,” said Wan.

“It’s actually really hard to tell one movie produced by one specific country…there are co-productions all over the world,” said Bo Guan, international selection committee member of FIRST International Film Festival.

The main point of co-production films is that they have the same right to share revenues with cinemas as local movies, around 43 percent of revenues, but imported quota films only share 25 percent.

“They want Chinese culture to spread around the world so that they are known and have influence. So we look at the problem from the macro level to figure out what we need to do so that all our partners—U.S. and Chinese—feel like their needs are being met,” Dan Mintz said to The Hollywood Reporter, CEO of DMG Entertainment Company.

“The Growing Pains”

Expansion was the key word of China’s economic development in the past years as well as film market. “Hot money”, which represents excessive money from different fields flowing into film industry, played roles in movie production industry. Lots of non-professional enterprises such as coal companies, which hold “hot money”, entered into film market accelerating the high-speed development. Moreover, genre films that became popular in the market, like fast-food movies, fan movies and young idol movies, which lack deep cultural elements attract most young audiences. At the same time, more Chinese audiences are used to watching films in cinemas recent years, which became another advantage for China film market. However, it’s still not a real mature “battlefield” for moviemakers who really appreciate the art of film. The blockbuster “The Man from Macau” earned not only more than 500 millions box-office revenues but also a bunch of bad reviews.

Where is the future?

Economic austerity is the policy that China released for the new planning years in 2013. People might save their money in banks rather than paying for high-price movie tickets. And also there might be fewer businessmen investing in films, which are more risky than other industries. It is hard to predict if there is any influence on Chinese film market in the future.

More Chinese students are choosing study film production or film related majors in US and they might be the main power of China’s new generation filmmakers. According to UCLA School of Theater, Film and Television, there are 65 Asian American students, which comprised of 13% of the TFT population.

“As I know, USC has more than 20 Chinese student in film school…UCLA and AFI both have less than 10,” said Ivy Yang, a recent graduate from film school in Los Angeles.

Yang is pursuing communication management master degree in USC now. She appreciates the mature atmosphere of film production in Hollywood but she also wants to seek more opportunities in China even though normative rules of a mature film industry haven’t been set up yet there.

“ No rule is the best rule. It’s easier for young filmmakers to get chances…I just want to have a try,” said Yang.

Graduated from USC film school in 2013, Alan Wang has spent almost one year in Beijing as a music video director. His plan is to become a famous MV director in China and then seek opportunities for long feature films.

“ I enjoy working here in Beijing except the air… it’s not about “rule” issue, I think every new graduate will face the same problem. We had lots of freedom for creating and shooting whatever we like, but here you have boss and clients…most of time you only can contribute 70 percent of your own ideas…I will stay here for longer time and see,” said Wang.

The north polar view of the world is not a common perspective, most of us may know it from the white on blue flag of the United Nations. However this view of the world may become increasingly common as the effects of climate change on the Arctic Ocean have opened new opportunities for Arctic trade routes. The opening of these trade routes is of particular interest to certain actors and nations and has the potential to change the face of global trade.

A dream of the seventeenth century explorer Henry Hudson, the fabled Northwest Passage over Canada was first navigated in 1906 by the Norwegian Roald Engelbregt Gravning Amundsen, who was also the first explorer to reach the South Pole. The other Arctic Sea route is the Northeast Passage over Russia’s northern coast, more commonly called the Northern Sea Route (NSR), it is a Russian-legislated shipping lane

Scientists predict ice-free summers by the end of the decade and navigable winters by the mid 21st century. Regardless of how one may feel about environmental politics, the question of the polar caps melting is not one of “if” but “when.”

Commercial traffic over the Arctic would most affect the Suez route. Suddenly ports along the Suez route would see much less traffic from China destined to Europe. Singapore, a commercial hub and one of the busiest ports along the route signaled its awareness of this threat by applying for permanent observer status in the Arctic Council, a regional governance institution. Singapore isn’t the only observer nation that seems out of place in Arctic Council. China, France, Germany, India, South Korea, Italy, Japan, Netherlands, Poland, and the United Kingdom are also permanent observers. Either as observers or members, nine out of the ten largest economies are in the Arctic Council.

As the Arctic’s pristine environment becomes accessible, commercial shipping is not the only encroaching human activity. Reduced sea ice is making accessible an estimated 30% of the world’s natural gas and 15% of the world’s oil. The combined potentials of Arctic shipping and resource extraction may tilt the scale in favor of developing arctic capabilities and infrastructure over environmental preservation. Professor Lassi Heininen, an expert in Arctic Issues at the University of Lapland, describes this problem as a paradox by which less sea ice means better access, which leads to more human activities which leads to less ice. The loss of sea ice is just one part of the environmental catastrophe unfolding in the Arctic and after speaking with Lassi the question he left for consideration is: “Are we willing to lose the Arctic’s beauty, or do we try to keep it for our grandchildren?”

“Are we willing to lose the Arctic’s beauty, or do we try to keep it for our grandchildren?”  A baby Polar Bear at Ranua wildlife park in Finland, June 2012 (Photo by the author).

The Russian Federation has already started developing infrastructure to service the Northern Sea Route. Between 2009-2013 maritime traffic has improved from a handful of vessels to several hundred. While most are research vessels several trade voyages have been made. So far Norway and Russia have been the primary navigators, but in the past few years Chinese shipping giant COSCO has turned its eyes northward. This past fall COSCO’s Yong Sheng became the first container-transporting vessel to make a journey from Dailan to Rotterdam via the NSR. Huigen Yang, Director General of the Polar Research Institute of China, announced in 2013 that as much as fifteen percent of China’s maritime trade may travel the route by 2020.

The Arctic region is governed by a combination of international agreements such as the UN Convention on the Law of the Seas (UNCLOS) and multilateral governance institution such as the International Maritime Organization (IMO, a UN Agency) and The Arctic Council (AC). The Arctic Council is made up of the eight nations that intersect the Arctic Circle: The United States, Canada, Russia, Norway, Finland, Iceland, Sweden, and Denmark by virtue of Greenland. In the past few years the AC has passed agreements on search and rescue and the IMO is finalizing a shipping ‘polar code‘ that is expected to be in place by 2016.

Most data estimates suggest that roughly 90% of mercantile trade is shipped. For China, the potential of arctic routes could represent savings of hundreds of billions of dollars. “Once the new passage is opened, it will change the market pattern of the global shipping industry because it will shorten the maritime distance significantly among the Chinese, European and North American markets,” said Qi Shaobin, a professor at Dalian Maritime University according to China Daily. Not to mention China’s traditional route to European ports passes through pirate infested waters that the Arctic Route would avoid.

Infrastructure is still the key obstacle to the expansion of trans-Arctic trade. There are very few ports in the Arctic and they are fairly underdeveloped. Missing also are extensive maritime charts as well as search and rescue capabilities. While the Arctic Council passed a search and rescue agreement for cooperation between Arctic States, investment in capabilities is still low. Icebreakers are expensive and the largest fleets number in the tens. Additionally maritime laws and insurance standards in the draft of the IMO’s Polar Code need to be adhered to and implemented before any substantial shipping would occur.

So far Russia has been the only player to make significant commitments to development by reopening research stations and arctic ports. Canada has done little aside from accepting a legal framework on paper. Notwithstanding, there has been an increase in maritime activity through Canada’s Arctic waters:

At a meeting in Stockholm with USC students in the summer of 2012, Gustaf Lind, the Swedish ambassador to the Arctic Council, accepted the possibility of Arctic Ocean Trade, but noted, “I don’t think we will see much shipping for quite some time.” Mike Keenan, an economist at the Port of Los Angeles, explains “You need long stretches that are regularly free of sea-ice and right now you don’t have that.”

There is an undeniable economic advantage to Arctic Trade Routes to connect not just China to Europe but China to the East Coast of the United States. Currently the typical shipping time from Shanghai to Rotterdam is twenty-five days, from Shanghai to Los Angeles is thirteen days and then seven days by rail to reach New York. Rotterdam to New York is another nine day sail. However a Northern Sea Route to Rotterdam from Shanghai would shorten the journey to ten days, making a sail from Shanghai to New York via Rotterdam last nineteen days. This number could be even shorter without a stopover but it already is faster than the current path from Shanghai to New York taking rail from Los Angeles. This means that without any time lost with stopovers and putting cargo on rails, the current route to New York from Shanghai is twenty days, an Arctic route would be nineteen days at most.

The Port of Los Angeles and the Port of Long Beach are, respectively, the top two busiest ports in North America. As entry points they are currently the fastest way for goods from China to reach consumers in most of the United States. It represents a huge economic asset that handles $260 billion of trade throughout the US. According to Keenan, “3.6 million jobs throughout the U.S. are related to the port’s activities.”

Whether Arctic Sea Routes posed a challenge to the port’s position seems an unlikely prospect for the port to consider in the near future. In addition to the infrastructure problem Keenan noted that “there’s simply too many variables to make any predictions for the port.” In terms of adapting to a changing trade environment “there’s a limit to what [the port] can do if you have a serious time advantage.” Keenan further noted that “the priority should be to focus on climate change and sea level rise” and pointed to the Port’s respectable environmental record and investment in clean technology.

Perhaps it is too early to quantify the effect of Arctic Sea Routes on global shipping but even if there is a long term threat to the Port of Los Angeles the sheer volume of trade between Asia and Los Angeles accounts for over ninety percent of the port’s volume. Mike Keenan asserted “cargo will always come here.”

Sarkis Ekmekian is a junior at USC majoring in communication. He’s taking four classes, is the show-runner for Speakers’
Committee, public relations chair at Trojan Pride, and is a campus centre consultant at the Ronald Tutor Campus Centre.

He also is a transfer student.

Ekmekian, one of 1,430 transfer students who enrolled in USC in fall 2013, transferred from Santa Monica College, a top feeder school for USC and the University of California. Community college transfer students have a strong presence at USC: 58% of the fall 2013 transfer class were community college students (up from 50% from fall 2012).

The California Community College system is the largest system of not only community colleges but higher education in the nation, with more than 2.1 million students and 112 campuses. According to the California Community Colleges Chancellor’s Office, “70% of state nurses and 80% of firefighters, law enforcement personnel, and emergency medical technicians” are educated at California community colleges.” Furthermore, most California community colleges have agreements with the UC and CSU system in regards to transfer students: 29% of UC and 51% of CSU graduates started at a California community college.

However over the last few years, California Community Colleges, along with the UC and CSU system, have suffered through severe funding cuts due to the Great Recession. Funding for California Community Colleges was “cut $1.5 billion – about 12% of its funding – between the 2007-08 and 2011-12 academic years,” resulting in about 25% of college courses to be cut.

As a result, there has been a significant decline in both the number of transfer applicants to four-year colleges and enrolment at community colleges in California. UCs received 1,653 fewer transfer applications from community colleges in the fall 2013 year, compared with fall 2011. California Community Colleges Chancellor’s Office also reported that “enrolment [in California community colleges] decreased by more than 585,000 students to 2.3 million in four academic years (from 2008-09 to 2012-13) due to severe budget cuts.”

Now that the economy has slowly begun to recover, the California government has been looking to put more money back in state-funded institutions. But do community colleges offer a significant enough economic benefit to the economy to warrant reinvestment from the government?

The state certainly believes that community colleges provide significant economic benefit to the economy. Recently, Gov. Jerry Brown proposed a budget which would increase funding to community colleges by $1 billion. The funding would freeze tuition rates at the current rate of $46 per unit and “allow colleges to increase enrollment by 3 percent. Enrollment [of new students] has been cut by up to 15 percent since 2010.” According to Brown, the additional funding would allow students to transfer faster by increasing the amount of classes, counsellors and academic resources available to students.

According to a report conducted by the American Association of Community Colleges, “in 2012 alone, the net total impact of community colleges on the U.S. economy was $809 billion in added income, equal to 5.4 percent of GDP.” Furthermore, “community-college graduates receive nearly $5 in a return on investment (ROI) for every dollar they spend on their education.” The report also found that associate degree completers earn an average of $10,700 more than someone with a high-school diploma at the midpoint of their career. Furthermore, according to the Pew Research Center, the unemployment rate of those aged 25 to 35 drops from an average of 12.2% for high-school graduates to 8.1% to those with a two-year college degree. The report also found that on average, two-year college graduates will earn on average of $2,000 more than high-school graduates per year.

From an economic point of view, it is evident that it is the state’s best interest to encourage more efficient transferring and graduation rates. According to the American Association of Community Colleges, “U.S. taxpayers paid $44.9 billion to support the operations of America’s community colleges in 2012.” In return society will receive “$1.2 trillion in benefits, the sum of the added income and social savings that the 2012 student population will generate in the U.S. economy.” Furthermore, when students earn more because of their higher education, they also pay more in taxes: “federal, state, and local governments will collect a present value of $285.7 billion in the form of higher tax receipts over the students’ working lives [due to community colleges].”

The proposal for additional funding has been met with approval from community colleges, professors and students who have long suffered from severe underfunding. “We have been underfunded for a really long time compared to K-12 and the UC system,” explained Mary Mazzocco, who is the journalism department chair and advisor for school newspaper “The Inquirer” at Diablo Valley College. “Given how many students we serve, given that we are the gateway for non-traditional college students, and given our role in helping retrain people who lose their jobs… I do feel like that they should at least give us the money to allow us to do the job that they have given us to do. And I feel like they haven’t done that in a really long time.”

Statistically, students who manage to transfer to four-year institutions are successful. According to the University of California’s Accountability Report, “transfer students entering UC since 2004 have a 50 to 53 percent two-year graduation rate and an 85 to 86 percent four-year graduation rate.” By comparison, freshmen from the same cohort who enter the UC system have a four-year graduation rate of 60% and a six-year graduation rate of 84%. According to the Pew Research Center, millennials with a bachelor’s degree or more earn on average $45500 – compared to the average income of $30000 for those with an associate degree.

Rachel Ann Reyes is a student at Diablo Valley College majoring in communication. She has been accepted to UC Davis for fall 2014, and is awaiting responses from UC San Diego and UC Santa Barbara. When she transfers, she will be the first in her family to attend an American university. “I’ve personally really enjoyed being at a community college,” said Reyes. “I think that sometimes community colleges get a bad rep for being almost being a continuation of high school, but I think it’s a great opportunity for people who want to save money. If they are determined enough to go to community college to get their AA degree or transfer, I think it can be a really helpful tool at a great cost.”

However, there are also concerns about the efficiency of community colleges – particularly regarding the students who either take too long or don’t manage to graduate or transfer to a four-year college. In 2009, the average graduation rate from California community colleges was only 25.08%, while the transfer rate was an even lower 14.36%. An op-ed in the LA Times also criticized the inefficiency of community colleges and the burden that it places on the economy: “Community colleges are subsidized through direct state and local government appropriations and through student grant programs. Every student who drops out represents an investment loss by the taxpayers in that student’s uncompleted education.” Through further investigation, they found that “of the full-time, degree-seeking students who entered California community colleges in 2007, more than 35,000 had not earned their degrees three years later, and most of them were no longer enrolled in any postsecondary institution.”

The state has attempted to address the low transfer and graduation rates of community college by pushing “state law requiring guaranteed transfer pathways for graduates of the two-year institutions.” Furthermore, new bills would require the CSU system to accept a wider range of transfer degrees when possible, with the transfer pathways focused on “areas of emphasis rather than majors.”

While Mazzocco realizes the importance that community colleges play in transferring students and awarding qualifications, she also worries that the mission of community colleges has taken a turn for the worse – and that too much emphasis has been placed on just the economic benefits of an education. “Historically community colleges were not just for transfer students, but the state has adjusted our mission – we are now supposed to focus on certificates and transferring,” said Mazzocco.

The campus library at Diablo Valley College in Pleasant Hill is nearly empty at the end of the day as the community college has suffered from budget cuts, its student population down 700 from last fall. Photo: Brant Ward, The SF Chronicle

“There’s a certain amount of worry that the states push for us to become more efficient and to cut classes that are not high demand, and to focus on certain classes that transfer or go towards a degree,” Mazzocco explained. “For example we’ve added another Mass Communication class because now it’s a part of two or three different majors that transfer. But now I probably have to take feature writing out of the curriculum… because it doesn’t fit into the transfer degree that was agreed upon on the state level… and that’s happening with a lot of classes that are good classes. There’s value to be had to be taking them and offering them, but they don’t fit the pattern that’s being established and are being squeezed out.”

However, there is still a value in attending community colleges that can’t be quantified for some students. “If I had gone to a UC or university straight out of high school, I wouldn’t know what to do,” admitted Reyes. “I think my three years at DVC (Diablo Valley College) have really helped me discover who I am. I got the opportunity to take different classes in different fields and figure out what I liked and didn’t like at an affordable cost. Through that experience I fell into journalism and communication and that is something I really enjoy – I would have never found that straight of high school. Because of community college I am more prepared, and more willing and motivated to succeed at a university because I know what I want and I can apply myself to that.”

Sam Nguyen wakes up everyday at around 8 AM to drive to work at his movie rental shop, “Video Town,” located in the city of Hawthorne. Throughout the rest of the day, he is met with a string of long-time customers that are either returning a movie or asking him for help on what the best new release is to rent.

“Is this movie good, Sam?” one 5-year-old boy asks, holding up a DVD.

“It’s horrible,” replies Sam, with a little laugh.

Sam has been fortunate enough to be able to keep his shop open for more than 15 years.

Sam, of course, is the exception.

With the sudden business transaction between Time Warner Cable and Comcast that was followed by Netflix paying Comcast for better streaming access, it is safe to assume that a majority of viewership is shifting towards the internet.

And although the majority of the attention is about the relationship between television shows and broadcasting channels, others are also discussing what this new found partnership means for the movie industry and what it has at stake from a financial standpoint.

The movie industry has not exactly been on smooth land. While almost all of the Motion Picture Association of America (MPAA)’s theatrical market annual reports show consistent progress, there are some cautious points to take into account.

Both the numbers at the box office as well as the ticket prices continue to have consistent progress, increasing at a good rate for more than a decade. But what is important to note here is the number of people that are actually taking the time to go to the movie theater.

There has been no consistent increase when it comes to audience. In fact, the graph above shows that the number of audience going to movie theatres appears to have reached a plateau with no signs of progress for the future.

There are a lot of signs that show lack of progress when it comes to the “physical audience” in a physical space.

Even when those movies have left the theaters and begin their way to the land of renting and purchasing movies from specific local businesses, not as many people are racing to get there at midnight.

What caused this very gradual shift?

Back in the mid 1980’s, US citizens would rush to stores in order to access their favorite movies without having to depend on television broadcast schedules telling them when they were going to watch it. In the 90’s, as Blockbuster rose up, making $785 million in profits on $2.4 billion in revenues: a profit margin of over 30 percent in 1995.   However, what is important about Blockbuster’s success was all the profit it made from overdue and late fees from customers who would forget to turn it their rentals as scheduled and the fact that people had no other method of viewing movies, aside from actually buying the movie.

But things have changed.

These “brick and mortar” shops are facing large competition from technological alternatives. Instead of going to a local rental store such as the once-upon-a-time giant Blockbuster, one can now quickly go to the grocery store and pay for their bread and then quickly rent out a movie from a Redbox machine all before leaving the store. It is important to note that a majority of Redbox success comes from the profits they make from late fees they acquire from their customers, allowing it to have a promising future.

Or if that is too much of a burden on people, the existence of Netflix and Amazon provide even more convenience by allowing consumers to access whichever movie they want from the comfort of their home. Netflix started their business model by showing commercials that focused on the fact that DVDs could be mailed to one’s house and one could mail it right back in the same envelope–and with no late fees.

Amazon also provides the same alternative to consumers, allowing them to both rent and buy movies from their website. Blockbuster attempted to compete with these emerging enterprises by creating its own website, but by 2007, it was tanking and going on the verge of bankruptcy (which it declared in 2010).

Even to those that are still seeking a physical space to purchase their product, the opposite is expected. Much like the way that Redbox is offered at grocery stores or outside convenience stores, the interior of the Redbox itself provides lots of options. One has the choice of DVDs, Blu-Ray discs and even video games when searching through the “Box”.

This abundance of product is why locations like Target or Best Buy seem to be struggling a bit when it comes to DVD and Blu-Ray sales. Joanna Cantu, manager at a Best Buy in Lawndale, CA, believes that Best Buy has been able to stay afloat for the moment because of the variety of products they sell when it comes to watching movies.

“Here, one can go into the DVD or Blu-Ray section and see something they like, want to buy it, and then decide they also need a laptop to watch it,” she said.

But the way that both DVD and Blu-ray sales are shifting towards that is hurting the Best Buy stores around the country. In a recent report by Zack.com, analysts reported that Best Buy’s ESP earnings had dropped for last year and were more than likely to drop for this year as well. Even their Zacks Industry Rating was 257 out of 265 (at the bottom 3% of all the companies that it ranks).

Best Buy might still get a majority of its profit from selling laptops, tablets and smart phones, but it is the movie purchases that are still going to stop it from surviving.

So what allows small exceptions like “Video Town” to survive when even big names like Best Buy are struggling?

For one, Nguyen receives a majority of his revenue from both customers wanting to rent the newest movie that is out but also those that wish to rent movies that are not available on Netflix or at their nearest Redbox. Amazon certainly gives Video Town a competitive run for its money but Sam Nguyen has always had a consistent price in his establishment.

Customers have a choice between renting one movie (regardless if it is a DVD, Blu-Ray or VHS) for $3 or purchasing three of them for $5. He rents out video games (he even has video games for Nintendo 64 available in his store) for $2 each and has a section for movie purchases for $5 each.

The other source of profit that Nguyen makes is from late fees. Video Town charges three dollars for every day that people do not return their rentals and the store owner notes that even though the town is relatively small, people will go days without returning their rentals.

“I always wait exactly one week before I have to call customers and remind them,” Nguyen said, “and you’d be surprised how many people I actually have to call.”

Still, there is no denying that movie rental shops are now talked about once in a blue moon. There are overwhelming different forms of getting a movie once it has stopped being shown in the movie theatres.

What is even more threatening is the emergence of taking out this fine line between movie theatres, movies at home, and access to the internet. Slowly, it is becoming all intertwined into one big thing.

Televisions are now being turned into Smart TVs, where you can access your cable channels and switch onto Netflix with the click of a button.

But if that is not enough for consumers, particularly to the younger demographic, Microsoft’s newly released Xbox One now has an update coming up later in March that will allow players to watch video, play games and chat with friends all on one screen. Video includes movies which players can purchase and save in their Xbox One hard drive to watch whenever they want.

There has not been any speculation about Comcast going into the video game console industry, but considering the way that this lure into the Internet spectrum is flowing, one can only assume that Comcast is patiently waiting for the appropriate opportunity to do this.

What is important to note is that both big and small stores, and even vending machines are relying on one thing: customers going to those place consume their products; products, which is important to note, that have to be made.

The music industry has been fortunate enough to see a rise in vinyl sales, but can the same be said for the movie industry?

What happens when DVDs and Blu-Rays are no longer being made?

There is already evidence of these products being hurt by those that simply pirate movies and shows from websites. An 11-employee Independent U.S. film distributor, Wolfe Video, an independent American film distributor had its profits halved due to piracy and costs to mitigate damages from piracy in 2013, according to The Wall Street Journal.

DVD sales have not been having the great track record these past couple of years and there were not many releases for Blu-Rays.

Even Netflix is showing a gradual shift away from their once marketing strategy of DVD shipments to the home.

It is all about accessibility and convenience when it comes to consuming movies or shows and having one product to do that. Everything is a bundle and DVD players or Blu Ray players being sold as sole products (not combined with anything) has not been consistent.

There is only a matter of time before the streaming becomes the only form of consumption and neither Best Buys or even exceptions like “Video Town” will be able to hold on.

Hollywood, California: long synonymous with film and television production; the Mecca of the entertainment industry. If you weren’t here, you weren’t anywhere. That said, movies and TV aren’t all about entertainment. To the hand that feeds them, they’re investments, and huge ones at that. Putting together a budget for the production of a film is a complex and intimidating process. That’s where state-based tax incentives come in, easing the financial burden and encouraging productions to stick around the area to generate future economic benefits. However, such incentives have spread to other states and countries, disrupting California’s film business at its core and bringing into question it’s worth.

Dubbed runaway production, it has waged a war of attrition on Hollywood production over the last decade, and if not for the government incentivized projects (represented by black on the graph below, provided by runaway production outreach program FilmWorksLA), 2010 would have been a record low year for Los Angeles productions.

California’s legislation on film production credits was established as a defense system to incentivize production in-state. “The motion picture and television industry is responsible for 191, 146 direct jobs and $17.0 billion in wages” in California, according to the Film Commission of California. In an interview with the Los Angeles Daily News, Louis Friedman, producer of 2013’s Lone Survivor, believes production planning around tax credit is “’the single most important financial decision made” and it “affects both the creative look and financial bottom line from day one.’” This production season is bread and butter for the highly skilled – and highly populated – pool of artists, technicians, and other crew people in the state.

However, that legislation has served as a model for other states’ and regions’ incentive programs to surpass. In California, the program was “crafted with limits, from a $1 million minimum to $75 million maximum [in regards to overall budgets] on feature films, and further restrictions on drama series,” not to mention a lottery system that deals with the high demand. This leaves out a lot of areas of production, as major tentpole films’ budgets soar higher and higher and TV shows take bigger and bigger slices of the market. Sensing this sitting-duck situation, the film lobbies of other regions responded.

Canada was the first big player to encroach on Hollywood’s territory in any serious way, putting into law their first production tax incentive in 1997 (just one year after the “all-time high in 1996” of film productions in Los Angeles, noted by  FilmWorks). For awhile, Variety reports, “it was only lower-budget series for cable that set up shop outside of Southern California…usually in Canada…[b]ut now the network-studio congloms play a kind of incentive sweepstakes” and pit California cuts against out-of-state cuts. As Variety points out, “these days studio chiefs insist that filmmakers…take advantage of out-of-state incentives…[whose] savings are crucial in a franchise-obsessed era when big-budget movies commonly cost north of $200 million to produce.”

States like New York, North Carolina, Louisiana, Michigan, and many others got into the game. Kevin Klowden, director and managing economist at the Milken Institute’s California Center, estimated a total loss of “4500 production jobs…between 2005 and 2012,” compared with the “7900 production jobs the state should have gained during that period.” New York now has a $420 million annual cap on tax credits, compared to California’s $75 million cap, and has begun to offer additional incentives for productions that complete post-production work in New York as well. Stan Spry, founding partner of up-and-coming management and production company The Cartel, knows this reality very well: “Tax incentives and rebates have been a massive part of our financing plan. We’ve been able to finance up to 40% of production budgets due to incentives…why stay in LA when you can save almost half the money somewhere else?”

Another industry professional, Michael Karnow, creator of SyFy’s Alphas, mentions for that show “we shot in Toronto to save money,” but out-of-state locations “could end up being an asset. It can turn out to be very exciting to turn a problem into an opportunity, and not only let the benefits be financial, but creative.” He mentions Breaking Bad as such an example, one of the most groundbreaking shows of the last decade…almost completely shot in New Mexico, and tailored specifically to the state. It’s interesting to note the original pilot of Bad was written to take place in Southern California…until AMC heard those incentives calling.

This competition, though, now faces the same question that California does: what exactly are the economic benefits of these incentive programs? Other states and countries realized Hollywood was a state of mind, and put into action measures to replicate that mindset for cash-desperate filmmakers. At its peak around 2010-2011, 42 states were offering over $1.4 billion combined in tax credits to productions, hoping to reap economic gains. However, it helps to recall that California’s incentives were built to keep productions inside of its already-developed infrastructure, not to lure runaway production away from Michigan or New Mexico. Historically, California remained the center for production because it housed the developed pool of workers, artisans, and talent, aged like fine wine. Other states don’t have that history, and therefore may not have the job force or economy in place that would benefit from film and television productions.

Take Michigan: leading up to 2011, $57 million had been given out annually to productions each year, with high profile movies like Oz, The Ides of March, and Transformers 3 basing their filming in the state. The problem here became that the Michigan Film Office did not have to disclose the true costs/benefits of the program. Responding to fervent state government criticism, who believed the program wasn’t bringing the economic growth its proponents promised, the program was scaled back in 2011, capping total credits at $25 million and changing the classification of the credits from tax breaks to grants. Michigan legislature, led by Gov. Rick Snyder, now “obligates the [Michigan] Film Office to report back on the specific movie projects that it finances; and to openly declare the criteria it uses to award subsidies,” according to the Tax Foundation. Snyder argues this new criteria makes transparent expenditures that were once “hidden in the tax code.” The Tax Foundation analyzed Michigan and other states’ specific programs, and ruled the incentive programs “distort[ed] the allocation of resources, provide[d] only temporary jobs and benefit[ed] special interests at the expense of the taxpayer.” Other states have scaled back recently as well, with only 35 states offering incentive programs currently.

However, there’s still been a huge increase of programs spanning the globe, and California and its competitors face a race to the bottom. New Los Angeles Mayor-elect (and therefore Prime Minister of Hollywoodland) Eric Garcetti is well aware of this possibility. “’We lost feature films. That’s sad. They may come back to some degree, but probably by and large won’t.’” Instead of competing neck and neck for the most generous incentives, Garcetti wants California to stay ahead of the curve, focusing on creating an environment for a wider spectrum of media production. His plan is to remove the $75 million cap, and make incentives a more viable option for premium cable shows, commercials, visual effects, and even videogames. Garcetti admits he’s seen unfavorable studies, projecting the state seven cents on every incentive dollar spent, but believes there is an unseen multiplier in effect due to California’s historical place as the home of production, and that productions spur economic activity up to five times that incentive dollar’s worth.

Garcetti has charmed his way into many meetings in Sacramento already, but he is facing strong opposing arguments from other neglected California groups. A coalition, made up of the MPAA, the Directors Guild, the Teamsters, and the IATSE artisan union, will work to “win over powerful [opposing groups]…such as the California Teachers Assn.” Groups like the teachers believe more Hollywood tax cuts are merely “giveaways to the glitterati,” similar to the arguments that shut down other states’ programs’ momentum. The Tax Foundation rebuffs Garcetti’s and groups like FilmWorks’ arguments about the film and TV’s  key place in states’ economies, believing state legislators should make sure they’re not just lining the pockets of “one particularly vocal and connected industry.” While it is certainly true that the Clooneys and the Spielbergs don’t need much pocket padding, California is a unique economic home of the production worker, and Garcetti wants to make sure it stays their home. An ally, assemblyman Mike Gatto, quoted in Variety, says, “’incentives offer a return on investment that has more to do with individuals’” than studios. “’This is about the regular, workaday people who make a living from production.’”

Despite questions of its long-term economic worth, California undoubtably has a large group of uniquely skilled workers that are facing the possibility of major disruption and possible migration. Garcetti’s planned innovations are important to the future of the state now that Hollywood has proved to not be as stationary as it once appeared.

Interviews with:

Stan Spry, Co-Founder and Head of Production, The Cartel Management & Production, West Hollywood, California

Michael Karnow, writer & creator of SyFy’s Alphas, Venice, California

Other sources:

MPAA, State-by-State Statistics  http://www.mpaa.org/policy/state-by-state

Tax Foundation, http://taxfoundation.org/blog/filmworks-blog-criticizes-tax-foundation-industrys-dependence-film-tax-credits