Spielberg and Lucas on the state of modern cinema

krudler

So apparently Steven Spielberg and George Lucas think the film industry is heading for a meltdown:

http://www.empireonline.com/news/story.asp?NID=37811

Steven Spielberg and George Lucas, helping to open the University of Southern California’s new Interactive Media Building, offered a rather bleak prognosis of the future of cinema. Revealing that Lincoln was "this close" to appearing on HBO, Spielberg predicted that a few high-profile blockbuster flops will spark a radical overhaul of the Hollywood business model.

"The big danger is that there’s eventually going to be a big meltdown", Spielberg said, "where three or four, maybe even a half a dozen of these mega-budgeted movies are going to go crashing into the ground. That’s going to change the paradigm again."

"You're at the point right now where a studio would rather invest $250 million in one film for a real shot at the brass ring", he added, "than make a whole bunch of really interesting, deeply personal projects that may get lost in the shuffle."

The pair's big worries - of fragmenting distribution channels, the vast choice open to audiences and a breakdown of the narrative form – add up to a world in which their own passion projects, Lincoln and Red Tails, struggled for distribution.

Do they have a point? or is this a pretty ironical statement given the involvement by both of them in some of the biggest film franchises and blockbusters of all time?
I definitely agree that too much of Hollywood filmmaking centres around mega budget tentpole summer movies, but it's been like that since..well both these two started making films like that.

I see why studios bankroll enormous budget films, especially ones that are sequels or remakes of existing popular properties, the profits from those often bankroll smaller passion projects, it is a business after all, but there have been some very successful, both critically and commercially, smaller movies recently. Argo and Zero Dark Thirty spring to mind, neither was exactly typical fluffy Hollywood fare (even though Argo is hilariously funny in places) that didn't cost $250+ million dollars to make and market.
So is Hollywood on the verge of a change? Will we see a return to smaller, more intimate and more importantly, original films? Channels such as Netflix, Hulu and iTunes will become the youtube and spotify for smaller budget films, giving them an audience previously unheard of. Or will budgets just keep getting bigger? No studio can afford to have too many John Carter size flops on their books before they have to start looking at their approach to films.