Anthony Stokes thinks that Hollywood’s current business model could be unsustainable…
Hollywood seems to be getting greedier and greedier with each year. There appears to be an endless amount of 3D animated movies, 3D re-releases, unnecessary remakes, and feature length commercials (feature length commercials are movies that are lacking in story or character development, but make up for it in product placement, like Transformers, G.I. Joe, Battleship, or any Adam Sandler movie).
What movie buffs realize that Hollywood doesn’t – or maybe does, hence all the remakes – is that the way Hollywood is running is unsustainable. In the year 2012 there were eight movies that had a reported budget of over $170m. That’s four times as many as the year 2010. Granted 2012 had many more event films than 2010, which was a relatively quiet year. The Avengers and The Dark Knight Rises both came out to name a few, but there were also many others.
However, even with all these event films coming out – and inflation – 2012 only beat 2010 by less than $30m at the United States box office. That may not seem like a lot, but it means that if one more movie had come out in 2010, it would more than likely have been been a better year than 2012. To add insult to injury, 2012 had 144 more movies than the year 2010, according to BoxOfficeMojo.
The reason I keep using 2010 as a point of reference is that even at the time it was considered a very slow year. The summer of 2010’s only real mega hit was Inception and that was far from what you’d think as a sure fire hit. Where 2010 prospered was in the area of smaller budgets ($10-$50m). Black Swan and The King’s Speech, two major Oscar winners, both made over $300m on budgets of $9m and $15m respectively. This was before the Oscars were announced, and they made only slightly less than Tron: Legacy, which had a significantly higher budget. Scott Pilgrim vs. the World, the major flop of the year, made its meek production budget of $45m back, and only posted a loss because of the marketing expenditure.
Another reason Hollywood is slowly inching towards doom is that even if you make a billion dollars the studios are not even seeing half of that money. Take Iron Man 3, which while I’m writing this article is on its way to a billion. At present, it has an “A” on CinemaScore.com and 78 percent fresh on Rotten Tomatoes, so it’s a triple threat success with critics, audiences, and the box office. Marvel Studios spent $200m to make it, not including marketing which could’ve been anywhere from $100m to $200m (on YouTube.com I went to watch a trailer for Iron Man 3, but before I could watch it I had to sit through another trailer for Iron Man 3, so it’s probably closer to the latter). With the exhibitor split, which is probably around 45-55% of the revenue generated by ticket sales, along with back end deals (over $50 million, in Robert Downey Jr.’s case).. that’s over half of the intake that the studio won’t even see.
Now Iron Man 3 isn’t done at the box office by any stretch and it also has tie-ins and merchandising, and even some subtle and not so subtle moments of product placement, but another movie such as Battleship or especially John Carter is not going to make a significant amount of money back outside of the cinema. And what’s happening more and more is that movies perform poorly in the U.S., but are being saved by international gross. Battleship made its budget back overseas and then got destroyed at the domestic box office, effectively making the international market a safety net.
Studios need to stop putting all their chips in one basket. Spread them out on smaller, smarter movies so that if the big risk doesn’t pay off it’s not the end of the world. I’d go one step further and say that studios everywhere should really evaluate the number of movies they put out, and their entire business model. Focus on making really good, well-made movies with mass appeal. Start with something new and then eventually build up to a $150m dollar budget. Jaws, arguably the quintessential blockbuster, only cost $8m dollars to make (around $35m in today’s money), and launched an entire franchise.
But Hollywood doesn’t need to look at its past successes. Take Marvel, for example. It’s on it’s way to having the highest grossing movie franchise in the world and that’s because it focuses on the fans, making its movies appeal to mass audiences, with good filmmaking. Studios need to stop looking for massive lucrative short term investments and really think about the long term, or they will continue to shoot themselves in the foot.