A Theatrical Last Days of Pompeii
I saw F1 with Brad Pitt this weekend, and it was fantastic. As I watched the final twenty minutes—when all the scenes with Pitt and the other characters leading up to that point begin to pay off—I nearly cried. I realized that this experience—the traditional moviegoing ritual, where I could find relief from the more painful aspects of my early life—was coming to an end. F1 delivered the full theater experience, but that feeling is growing rarer and more fleeting with each passing year.
Variety, the venerable trade publication of the entertainment business, has captured the concerns of those who stand to lose the most—movie theater owners. They agree: the cinematic experience I’ve cherished since my earliest memories is likely to disappear in my lifetime.
When asked “How long do you expect the traditional cinema experience to remain a viable business model?”, roughly 55% of exhibition executives stated that they believed it had less than 20 years, giving other available answers such as “less than five years,” “five to 10 years” or “10 to 20 years.”
Over the years, I’ve had many conversations with theater owners and have learned a great deal about the exhibition business. These enterprises have always operated as a downstream industry, reliant on upstream movie studios to supply the content that draws audiences. The revenue model involved sharing box office receipts and selling overpriced concessions to the same patrons.
Popcorn emerged early on as a significant profit driver due to its low cost, simple preparation, and disposable service. Beverages followed a similar pattern. Nowadays, nearly all theaters offer premium food services. Enhancements like better seating and larger film formats have extended the life and profitability of the theatrical experience.
A seldom-told tale is the origin of 'stadium seating.' The Americans with Disabilities Act (ADA) played a role in prolonging the theater's viability. Wheelchair users were often relegated to the lowest point of a traditional sloped theater, positions that were uncomfortably close to the screen and nearly always at the point where trash and butter would accumulate. Younger audiences might not realize just how filthy theaters used to be. I recall the floors being slick with butter, or whatever they would put on the popcorn.
To address the ADA requirements, designers created a flat area in the middle of the theater by having audiences enter from the sides at mid-level. To establish this flat space, they tilted the entire room upward, effectively solving the ADA compliance issue. This design also lowered the seats in front of audience members, ensuring unobstructed views without having to watch the movie around someone else's head. These types of theaters quickly surpassed the standard 90-foot gently sloped screening rooms. Movie fans would drive right past these theaters to get to the new stadium seating movie palaces. Today, there are very few theaters left that don’t have reclining seats and steep slopes.
It is technology, of course, that is upending business. Streaming services—and bigger, nicer TVs—offer people the exact experience they want at home. As with so many industries, it was COVID‑19—the malignant gift that keeps on taking—that accelerated all these changes.
Among other findings in the poll, nearly 90% of U.S. exhibition executives stated that their revenue has not recovered to pre-COVID levels. An overwhelming majority of them, 81%, also want an exclusive theatrical window on new releases lasting at least six weeks, while 77% believe that day-and-date streaming releases have a negative impact on the theatrical model.
That window of exclusivity once spanned the period after a movie’s theatrical release but before its arrival in home video stores. Now, it has collapsed entirely. Films may debut in theaters and on streaming platforms on the same day, or just days apart. Audiences have been conditioned to wait—they’ll see the movie eventually, and they simply don’t care as much about the theatrical experience.
Many have spent much of their lives staring at six-inch phone screens, socially isolated and entertained by iPhones. They don’t care about sitting among strangers or watching a film on a big screen. They don’t care about this event that defined so many pleasurable hours of my life. They don’t care, they won’t care—and they’re already the majority.
These facts, combined with the glut of sequels, prequels, and reboots—and the lack of original content (at F1, I caught another Superman trailer indistinguishable from countless others)—are driving movie theaters toward extinction. Who would have thought, just 20 years ago, that cinemas would become like Vaudeville: once a cherished art form, now on the verge of disappearing. But it is, and it is not known what will take its place.
Here is Pitt, a real movie star, at work.
The whole story can be read here.
All We Are Saying Is Give War A Chance
I generally refrain from writing much about Trump because there's nothing for me to say. He’s the most examined, both hated and despised, president of my lifetime—and I just have nothing to add.
However, regarding his decisions and their outcomes, I've observed that his results surpass those of his predecessors. The recent operation against Iran offers a prime example. Our military suffered exactly zero casualties, and Iran was deterred. We executed the strike in concert with a strategically astute ally, achieving our objectives—at least in the medium term.
The Times of Israel has an excellent summary:
A major reason things worked out to the advantage of Israel, the US and the West is simple: Trump said to the Iranians they had a final 60 days to work through a peaceful negotiation about their nuclear weapons program. The Iranian leadership refused to co-operate. Netanyahu, with Trump’s blessing, acted on the 61st day. No Syria-style “red lines” that were ignored and that undermined American deterrence. Trump negotiated first, then acted as he said he would.
Wow! Was it really that simple? And if so, why did so many get it wrong? The answer lies in a consistent pattern I observe among even the smartest people: they are poorly educated in basic reasoning. We need to accept a fundamental reality of our modern—or post-modern, or if trends continue, pre‑modern‑post‑modern—world: the so-called expert class is generally wrong, even if they occasionally get the details right.
What so many got wrong in this instance was their assumption that any military action against Iran would spark a broad war engulfing the entire region. They failed to account for deterrence as an indispensable foundation of strategic credibility—and therefore of favorable outcomes. No matter whom you’re negotiating with—or planning against—you need a credible threat, and possibly the willingness to use force, to achieve a successful result. Without that, your only option is to withdraw. The Israelis couldn’t do it, and the Americans wouldn’t.
Again, in the case of Israel:
What, then, accounts for this collective miscalculation?
In part, it reflects the enduring Western habit of seeing the Middle East through three flawed lenses: fear, fatalism and faith. Fear that the region will always spiral towards violence. Fatalism, that the ancient hatreds and alliances are immutable and primed to explode. And faith – not religious, but ideological – in diplomacy, de-escalation and process as panaceas for even the most intractable conflicts.
These lenses distort more than they reveal. Western observers, conditioned by decades of conflict and media shorthand, expect titanic struggles and lopsided outcomes. We see escalations as inevitable. What we don’t often see – or acknowledge – is the role of deliberate restraint, especially by leaders we have grown accustomed to villainising. Indeed, it falls to two of the most polarising figures in global politics – Benjamin Netanyahu and Donald Trump – to have demonstrated what one might call a Churchillian clarity: that strength need not lead to recklessness; and that deterrence, if credible, can be more effective than devastation.
I would challenge the notion that we must always look to Churchill for strategic guidance. Sometimes, it’s wiser—at least temporarily—to step back from a conflict and allow the opposing side to self-destruct. But that’s a separate issue. When it comes to Western experts, it often seems as though they've been shielded from the basic realities of human nature for so long that they've failed to grasp how much of the world truly thinks and behaves.
Exhibit A: John Kerry’s attitude toward the Russians back in 2014—a man who, by all rights, should have known better.
Here is the quote:
“You just don’t in the 21st century behave in 19th century fashion by invading another country on completely trumped up pre-text,” Kerry said. “It is serious in terms of sort of the modern manner with which nations are going to resolve problems. There are all kinds of other options still available to Russia. There still are. President Obama wants to emphasize to the Russians that there are a right set of choices that can still be made to address any concerns they have about Crimea, about their citizens, but you don’t choose to invade a country in order to do that.”
The whole story with the quote is here.
Oh, really? There’s a “right” set of choices? Says who? It amazes me—from my small perch here in Texas—that I can see this while John Kerry can’t: there are no “right” moves in the dance between nations. What a clueless jackass that guy is.
Nations aren’t ‘wounded’ and can’t simply “heal.” I read a lot from public officials who talk about ‘healing’ the community or nation or some such nonsense. This therapeutic language we now apply to public policy—talking of healing, choices, and what’s right—is foolish. Our allies and enemies notice this foolishness too. The Iranians have just learned that President Trump isn’t foolish. The Jews in Israel don’t have the luxury of endless mistakes. Losing wars means invasion and death to their tiny nation—whereas for Americans, safe in our North American fortress, it’s usually just humiliation.
Trump and the Israeli PM are neither fools nor indecisive—and now Iran knows this.
In time, perhaps, this episode will be remembered as a strategic hinge point – the moment deterrence was restored, when the Iranian regime’s aura of invincibility cracked and when the West’s failure to understand the region was once again laid bare. But until then, we would do well to remember the central truth this conflict revealed: in the Middle East – as in Eastern Europe and East Asia – it is not strength that endangers peace but weakness and its accomplice, appeasement.
Occasionally, rightly or wrongly, you must punch someone in the face just to show that you can and will still do it. It is called deterrence, and it works.
I’ve written about defeat here.
Here is a bit about victory over Japan here which we’ll revisit below.
In between victory and defeat is war, of which I wrote here. In this case, the US Civil War, which I maintain was avoidable and catastrophically bad.
What Trump tried first was negotiation, which I wrote about here.
What is best is deterrence, because there, there is no war, victory, defeat, or negotiation. Deterrence is victory without war. This is winning. We want more of it.
Fading Out
Finally—another report on the Great Chinese housing bubble. I covered it here because, while in China, I witnessed entire mountain ranges of unoccupied homes. Others have noticed the same trend: China seems to be following in Japan’s footsteps—a nation that once held great military and economic power, now largely a retirement home economy. Yi Fuxian at Project Syndicate provides the details:
Japan’s housing bubble was preceded by sharply rising ratios of home prices to annual income, with Tokyo’s surging from eight in 1985 to 18 in 1990. This trend was driven by a number of factors, including Japan’s land-tax policy, financial deregulation, and poor coordination of fiscal and monetary policy. But demand from first-time homebuyers – aged 39-43, on average – also made a substantial contribution.
So, in 1985, someone aged 39 would have been born in 1946—making them part of the Japanese Baby Boomer generation. Following World War II, a baby boom occurred almost everywhere—including in the former Axis Powers. However, that surge proved temporary.
Japan’s Boomers worked tirelessly, transforming the nation into an economic powerhouse. I benefited personally from this rise: Sony—then the world’s largest corporation from Japan—purchased Columbia Pictures in 1989. During that early period, I worked for Columbia TriStar Home Video, directly witnessing this Japanese financial wave crash onto American cultural shores.
What followed wasn’t further expansion of Japanese influence, but a withdrawal—the wave receded.
Because homeowners felt wealthier, they consumed more. This drove up the prices of goods, services, and stocks, leading to more jobs and less unemployment. But demand for new housing soon began to fall, and demographic shifts were a key factor. In 1991, as the share of Japan’s population aged 65 and older reached 13%, the number of first-time homebuyers began to decline. Property values plummeted, the stock market collapsed, and Japan fell into a deflationary trap, characterized by falling fertility and rising unemployment.
Policymakers believed that Japan was grappling with yen appreciation as a result of the 1985 Plaza Accord, under which the world’s major economies agreed to devalue the dollar. So, to stem the currency’s rise, they printed money, lowered interest rates, increased the government deficit, and engaged in quantitative easing.
These policies, together with the rebound in the number of new homebuyers that began in 2001, caused home prices to start rising again – and exacerbated the underlying disease. As starting a family became more expensive, young people delayed marriage and had fewer children.
Of course, it’s easy to blame the government, but cultural shifts have also played a significant role. Birth rates began falling across the developed world—and they continue to drop. There’s no perfect explanation for this global change, and many of the policy responses have been costly and—largely—ineffective. Japan has tried many of them:
At that point, then-Prime Minister Abe Shinzō set the goal of lifting the fertility rate to 1.8. But the relevant measures – which sought, for example, to make it easier for women to return to work after giving birth – could not offset the effects of the accommodative monetary policies that were viewed as vital to combat deflation and stimulate economic growth. Home prices continued to soar, marriages declined further, and births plummeted. Last year, Japan’s fertility rate amounted to just 1.15 births per woman.
Behind the bland statistics on birth rates lies a startling reality that many, including myself, have observed: a single child—born to two only‑children—results in a family unit with no siblings, no aunts or uncles, and therefore, no cousins. In just two generations, a sprawling family tree can collapse into a single leaf. Japan has demonstrated this demographic shift vividly. Despite rising from the ashes of World War II—including suffering atomic bombings—to rebuild itself into a global economic powerhouse, it now finds itself on the threshold of demographic extinction.
So, Japan has escaped its deflationary trap only to become ensnared in a long-term inflationary trap, which, by reducing purchasing power and parenting capacity, will reduce fertility further. By fueling a demographic collapse, Japan’s approach to ending its “lost decades” has set the stage for “lost centuries.”
Lost Centuries. Let that phrase resonate for a moment. Lost centuries, for all practical purposes, is just a lost nation—a defeated people destined to vanish like the citizens of Atlantis. In a few decades, it will be as though they were never there.
Hot on their declining heels are the Chinese, on a similar trajectory. They, too, experienced a baby boom in the postwar period—even though their war didn’t end until 1949. In 1980, while Japan was still riding its growth wave and the U.S. languished in a malaise, China enacted the “one-child policy” to stem what it feared would be a tide of children—and resulting hunger. That policy proved to be a colossal blunder: the kind of misstep only an orthodox Communist state would make. Ironically, at the same time, China was liberalizing its economy—yet that very economy could have produced the food needed by the children they never had, or at least never allowed to live.
The crisis that is brewing in China is more severe than the one Japan faced. For starters, China’s housing bubble is much larger. For example, residential investment, as a share of GDP, was about 1.5 times higher in China in 2020 than in Japan in 1990. Property accounted for about 70% of Chinese households’ total assets in 2020, compared to around 50% in Japan in 1990. China’s price-to-income ratio today is more than twice that of Japan in 1990.
Moreover, China’s fertility rate is lower. Whereas Japan experienced a second surge of first-time homebuyers a decade after the first, China can look forward to no such thing. The share of the population over the age of 65 is increasing much faster in China than it did in Japan: it took Japan 28 years to get where China will get between now and 2040. During that period (1997-2025), Japanese GDP growth averaged just 0.6% annually.
Note that 2040 is just 15 years away. By then, Japan will be experiencing the fastest population decline in peacetime history, and China will likely be in even steeper decline.
I’ve written about this and created a population modeling tool that can be found here. Try it yourself.
Japan’s population is already shrinking—estimated at around 123 million in 2024—and projections show it dropping below 100 million by 2048 and nearing 87 million by 2070. Between 2010 and 2040, Japan’s workforce is expected to shrink by roughly 20%, losing around 12 million people.
China is following closely. Already in decline since 2022, population projections indicate a fall of over 100 million people by 2050—and a working-age population drop of more than 100 million by 2040.
These are world‑altering events driven by known and unknown forces. Across technology, culture, demographics, governance, and finance, we’re witnessing transformative shifts—yet existing government structures are struggling to adapt. Is this a harbinger of more freedom and opportunity, or a drifting toward conflict?
Waging war against populous nations like China or Japan will be difficult, given their rapidly shrinking cohorts of military-age men. But demographic collapse hasn’t stopped other nations—like Russia and Ukraine—from entering conflicts, even under similar population pressures.
But perhaps the most ominous portent is that China’s government continues to tout a potential growth rate of 5%, with some prominent figures suggesting that it could achieve rates as high as 8%. To get there, policymakers are pursuing measures with high short-term returns – such as expanding the supply of affordable housing and carrying out quantitative easing – while all but ignoring the economy’s weak fundamentals. As Hegel famously put it, “The only thing we learn from history is that we learn nothing from history.”
The whole thing is here.
Opportunity Zones
Well, these stories were kind of a bummer, so lets go to the guy who cheers me up about the future and makes things make sense; Mark Andreessen. I posted the link to this short interview on the https://tomroushonline.com/great-writing/ links page way back in 2022, and what is was talking about there is coming to pass right now.
Asked about the search for opportunities in tech he said:
We think about it like this: at any given time in the tech industry, there are two primary modes.
One is what we call search mode. You are wandering around through unfamiliar territory, and you’re searching for new hills to climb. You’re searching for new technologies that will work and that will capture the imagination. People will become interested, and new markets will open up.
The second is hill-climbing mode, which is basically when you exploit the new opportunity or market. As you climb the hill, you refine the products and proliferate them to a mass market. Of course, every market has its “S curve” of adoption, but it might take a long time to top out, and the plateau might be really big. Smartphones are plateauing, but they’re plateauing at a run rate of hundreds of millions of units a year and billions of users. That’s turned out to be a really big hill. At any point in time, there are companies in both modes.
So, the searches have gone well, and he notes the three technologies that have been found and now are in the process of being fully built out. There are or will be prominent in our lives soon:
…we think the search has turned up three extremely promising new hills, which, conveniently, line up in the acronym ABC.
Artificial intelligence [AI] is the A. There are all these amazing technologies around deep learning, machine learning, GPT-3 [generative pretrained transformer 3], DALL-E, this new, image-generation thing from open AI, and so forth.
Biotech is the B, with genomics and now the mRNA revolution, and the revolution of bringing together the disciplines of biology and engineering. That’s a big hill to climb.
And the third, the C, is crypto and Web3, which is a revolution around distributed consensus, building trusted networks on the internet, and all the things that follow from that.
It is the smartest engineers and entrepreneurs that will build these companies and not the existing Fortune 500 companies. This is in part why there is so much change. The tech changes, the leaders in tech change, and so the money and market flows, along with the jobs and benefits change, and that deeply effects the culture. Why? Andreessen explains:
The problem that big, classic Fortune 500 companies have is the same problem they had 20 years ago. I thought the problem would shrink over time, but I’m not sure it has. That problem is that the true technologists inside so many big companies are not the primary people at the company. They’re not treated as first-class citizens.
Just look at the org chart. For so long, companies put their technology people in the IT department. The IT department was so famously segregated and isolated that there are entire TV shows, like the great British comedy The IT Crowd, built around the idea of the nerds in the back room. Then, about 20 years ago, big companies got the message that maybe all their technologists should not be in the IT department. So they created what’s typically known as the digital division, typically led by a vice president of digital. The good news is that the programmers run the digital division and are taken seriously there. But it’s still a division. It’s still a unit. That’s a problem.
I’ll give you an example: at Tesla, the engineers working on self-driving cars are the most important people at Tesla. Elon talks about them all the time, he talks to them all the time, and they’re basically the leaders in the company. The people working on that stuff at traditional auto OEMs are not. Maybe they should be, but they’re not.
Not much new here. The incumbent players can’t change fast enough. I was writing about this way back in 2018 when I was watching the TV station where I worked NOT change in the face of tremendous headwinds. The example I was using was Blockbuster Video. That TV station has declined further, and as predicted, changed nothing but its employees who are still not doing anything to build for the future. Fools, all. What am unimpressive lot. Andreessen lays it out even clearer than I could:
The minute tech stocks get hit, a lot of big companies basically say, “Oh, thank God, we don’t have to take this stuff as seriously.” This happened in a huge way after 2000. One of the reasons why Amazon took off is because all of the traditional retailers, after 2000, said, “Oh, thank God, we don’t have to worry about this e-commerce thing anymore.” And they just left the field. Borders famously outsourced their online business to Amazon, which, in retrospect, was maybe not the best idea.
This is already happening in this stock down-draft. So, Netflix stock is down 70 percent, 75 percent, 80 percent, whatever. And whereas before, you had all these stories talking about how Netflix was this permanent new, dominant Hollywood force, even a possible monopoly, now you get all these stories saying, “The Netflix model is broken, it’ll never recover,” with big, classic media companies saying, “Oh, thank God, this streaming thing is not going to be ‘the thing’ after all.”
Big companies tend to come in and out of tech this way, and it disadvantages them over time. They still have such a sense of palpable relief when they think that they don’t have to do this stuff anymore. Which goes to show that no matter what they say, they still aren’t technology companies first and foremost.
So, big companies, just like my old employer, don’t want to change, and they wait until a new company, typically powered by superior technology, eats their lunch. And that’s the great lesson You have to change all the time. It would be great if you could find a way to enjoy it!
The truth is that reality is trying to beat into us the idea that you need to stop being so skeptical and cynical and instead be open to new things. Because you might actually miss the next big thing walking in the door. You experience that a couple of times and it really trains you. “OK,” you say, “I have to open my mind.” I think that keeps the environment here a lot fresher than it might otherwise be.
Music
John Lennon has been gone since he was shot by a crazed fan in 1980, but he had two sons, and the one that looked just like him put out a song called Too Late For Goodbye, which seems appropriate for this incredible period of transition we are entering. Enjoy!