Independent film-makers need to find original material that distinguishes their product from studio fare or face extinction, Pandemonium CEO Bill Mechanic has told producers.

In a diverse keynote speech at the annual Independent Film & Television Alliance Production Conference in Santa Monica this week [29], Mechanic, the former Fox Filmed Entertainment chairman and CEO, also predicted that two of the US majors would be sold or consolidated within the next five or six years and shed light on his tenure at Fox.

“Nine years ago, I was a healthy and occasionally happy studio executive,” Mechanic told attendees. “I had taken Fox over a seven-year period from a doormat to the number one studio and before that had spent nine years at Disney building a then-dormant minor player into a muscular and, for the first time in its history, real force in the studio world.

“I had fought with Rupert Murdoch over my desire to create a business for Fox in the world of animation,” Mechanic said, referring to the head of Fox Filmed Entertainment’s parent company News Corp. “He felt no one could compete with Disney. Nevertheless I started up Fox Animation. Anastasia was a start; it made money. Titan A.E. a mis-step, and lost.  Even though that is the nature of the business, that not everything works, he didn’t want to wait for Ice Ageto finish production. I didn’t have a foot out of the door before Fox tried to sell off the film. Luckily for them, they couldn’t get a deal done.

“At the same time, Peter Chernin [Murdoch’s former News Corp president and COO] thought I was taking too much of a chance with X-Men. He called it my $70m art film, since everyone knew that not only were comic book movies dead, but you certainly couldn’t start one in a concentration camp.

Turning to the troubled independent sector, Mechanic said the mistake many non-studio producers made was trying to copy studio films at lower cost.

“The exception to the rule is District 9, which didn’t try to compete with the majors with special effects or stars or plot.  Instead of feeling recycled, it was fresh and is now one of the year’s best and most successful pictures.”

Mechanic said core audiences were being lured away from cinema by alternative forms of entertainment, adding that there had been a 21% drop in admissions among the under-25’s and a 24% drop in 25-39-year-olds. Box office growth, he said, had merely been “inflationary”.

“From the low water mark of 1990, there has been a 50% increase in the number of pictures and even since 2000, nearly a 25% increase,” he said. “And most of the influx came from non-majors, rising from 150 in 1990 to 450 in 2008. That, my friends, is insanity.”

The Pandemonium chief reiterated the oft cited challenges that faced Hollywood, such as the depressed advertising market, flattening DVD business, and a glut of product.

“If it’s any consolation, it will be harder on the studios than the independents. Not only is it harder for big companies to change, to adapt, but there are legacy issues in terms of personnel. And within the next few years, their big market advantage, the bricks and mortar of their distribution operations, will become a disadvantage in the democratic age of digital. I would assume at least two of the majors to be sold or consolidated by the middle of the decade.”

Mechanic ended on a positive note. “[A] lot of waste is going to be cleared from the marketplace. Excess product will go away, the people who don’t take the business seriously will go away. Hopefully those who make crummy movies will also go away, but that may just be a personal wish.