End of a Dream?
Joel Kotkin
The decision by DreamWorks SKG to pull out of the proposed Playa Vista development represents both a setback to Los Angeles and a powerful reminder of the changing dynamics of the entertainment and information industries. From the beginning, the proposed project by its scale and ambition represented a throwback to the glory days of L.A.’s ascendancy, when dreamers not only dreamt big but acted that way, too.
Today, to paraphrase Norma Desmond, the movies have gotten small and, to some extent, so have the people who run them. Although the DreamWorks principals insist it was a “business decision” to pull the plug on Playa Vista, any of the key players David Geffen, Steven Spielberg, newly cash-rich Jeffrey Katzenberg (thanks to his settlement with Disney) or investor Paul Allen could have made up the difference out of petty cash.
The real problem, one suspects, is that the notion of building a mega-studio represents an idea whose time has passed and may never come back again. In the days when the original studios were constructed, land was cheap and the model of production was more Fordist as in Henry Ford than the contemporary ad-hoc-oriented system. Studios kept actors and writers on contracts, retained vast pools of artisans on payroll and generally controlled the means of making movies, much as car companies controlled the manufacture of cars.
Today, even in autos, more and more production is “farmed out” to key suppliers and even designers. In Hollywood, where the vast majority of employment takes place in tiny firms and among individuals, most business is conducted through specialized companies providing everything from production services to catering and accounting. Studios provide distribution and marketing, along with sometime financial support, but try to stay as lean as possible.
In this new system, many studios see little need to invest much in bricks and mortar. There are plenty of independent operators including newcomers like L.A. Center Studios, Hollywood Center Studios, and the new Roy Disney complex in Manhattan Beach to provide state-of-the-art facilities. Some big players, like Warner, are actually contemplating getting rid of some of their facilities.
Given these trends, the DreamWorks project at Playa Vista smacked of old school grandiosity. One former aide to one of the principals even referred to it as reflective of a “Ramses principle” as in the builder of pyramids. The huge rents associated with the project burdened with enormous costs in part because of attempts to mitigate environmental impacts early on chased away potential occupants, such as special-effects house Digital Domain, which chose to stay in funkier, and more affordable, Venice.
It seems likely now that even some of the main players, notably David Geffen, were never totally signed on to the Playa vision. The decision to build the animation complex in Glendale and to place the music division in Beverly Hills suggested at least some preference in the DreamWorks hierarchy for a multi-location strategy.
Changing market conditions from a shortage of entertainment space to what may be closer to a glut also could have led to the conclusion that the ambitious plans were out of whack with reality. Other planned studio-related projects, including one in suburban New Jersey, also have been shelved as the economics of the industry have changed.
As is usually the case, some people will benefit from Playa’s loss. Although the withdrawal of DreamWorks represents a blow to Mayor Richard Riordan’s own agenda, and perhaps a fatal one for the Playa Vista developers, it could provide a win by default for both the San Fernando Valley and for the vast network of small producers who now dominate the industry. The Valley, for one, seems to be a sure winner in that some of DreamWorks’ eventual growth will take place somewhere between North Hollywood and Glendale.
The move away from Playa works also for the industry’s smaller players in two ways. By locating in the Valley closer to the home of most family-oriented “worker bees” it blunts the expensive and inconvenient shift to the Westside, which increasingly can accommodate only the unmarried, the childless and the well-to-do. Secondly, it ends any chance for a full-scale return to studio giant-ism, under which smaller firms and individuals could lose bargaining leverage.
Yet it would be a mistake to see the abandonment of Playa Vista as a win for the city as a whole. In many ways the project, whose public subsidies will now likely evaporate, represented an attempt to build an important piece of “in-fill” that would have kept a large middle- and upper-middle-class population in the city. Playa Vista might have emerged as a kind of safe and sterile haven, as well, for tech-oriented companies for whom the rest of Los Angeles often seems too reality-based to bear.
Finally, the retreat from Playa also reflects the dysfunctional nature of Los Angeles business and political elites. The endless wrangling of the various egomaniacs particularly Katzenberg and original developer Rob Maguire likely did as much to kill the project as the histrionics of the environmentalist frog-people. Right now all we are left with is the scant hope that maybe someday L.A. will find entrepreneurs not only with sharp elbows for cutting, but with the will to make something remarkable happen.
Business Journal columnist Joel Kotkin is a senior fellow with the Pepperdine Institute for Public Policy and a research fellow at the Reason Public Policy Institute.