January 10th, 2008 by Jon Taplin
Last week I wrote that classic supply-demand factors like overproduction were harming the movie business. This week I got a note from a high ranking Fox executive:
“Couldn’t agree with you more. Hopefully you’ve noticed that Fox is
never #1 in market share, and yet has a profitability margin that is
generally close to double of our nearest competitor.”
This is a fact. News Corp (owner of Fox) is better prepared for the coming downturn than any of its major competitors. If the Writer’s Strike goes on, American Idol,up against reruns or new lame game shows on the other networks, will essentially be in a classic Winner Takes All
game for advertising dollars per 30 second spot. Fox has been running a movie business successfully at lower (and more profitable) output levels. And My Space is learning how to monetize eyeballs more efficiently with targeted interactive advertising. In any given era, as long as I’ve been in Hollywood, one CEO and one company assumes the leadership role among the media companies, especially when it comes to labor negotiations. When I arrived with Marty Scorsese and Mean Streetsin 1974, the person was Lew Wasserman and the Company was MCA/Universal. Later it became Terry Semel and Bob Daley of Warners. I think today its Peter Chernin of News Corp. What he decides, on giving up residuals on streaming Internet content, will be decisive. If he and Rupert are in no hurry to settle, the strike could go on for a while.
Since Fox is in so much better shape than the other companies, wouldn’t it make sense for Fox to continue the strike as long as possible to damage them more and make them ripe for take-overs?
That is the point I’m trying to make.
The problem is not that Hollywood makes too many movies. There are now 1000 cable channels needing 24 hour programming and almost nothing original on most of them.
The problem is that Hollywood is spending too much on movies, and making to many of the same kind of movies. All the studios want to be in the same basic movie business, that is blockbuster mainstream films that open at Number One in the box office in their first weekend. These movies generally must feature big stars, simple concepts, and be directed by established (but currently hot) directors. They generally cost 100 million or more. They also generally cost 50 million or more in marketing to have a chance at hitting the number one spot.
There are, clearly, only 52 weeks in a year, and so a maximum of 52 movies a year would have a chance at being number one. And its very difficult to make a profitable film if you are starting with a $150 million dollar investment.
There is, however, a hunger for genre films that is not being fed, or being fed sparingly. Back in the 80′s, Warner Brothers would make two Steven Seagal martial arts films a year, for generally under 20 million, open them in spring and fall, and clean up. They didn’t always come in number one, but they did fairly well and then made a ton of money on video and television.
That was a real business. And it’s a business that could be easily duplicated today. Likewise there are similar openings for targeted 10 million dollar horror, 10 million dollar sexy comedies, 20 million dollar romantic comedies, 4 million dollar dog comedies, etc.
The reason these films don’t get made is because virtually every development exec at a major studio wants to be in the blockbuster business (with some in the hip art film business). No one wants to be in the formula martial arts flick business or the buy the numbers horror film business.
One of my most shocking discoverers early in my writing career was when I talked to several execs at several different studios and asked how films got greenlit. There was no clear answer. What was particularly amazing is that none of the major studios had an overall plan along the lines of: We’re going to make 8 action films, 4 romantic comedies, 4 horror films, etc. There was, and as far as I can figure out there still isn’t today any really planning to assure a variety of films in proven genres are made each year.
Equally amazing, virtually every development exec., from director, to VP, to Senior VP is allowed to develop in many genres at the same time. There isn’t an exec in charge of action films, one in charge of horror films, one in charge of teen comedies. While certainly it is more entertaining for the execs to have their hands in a lot of different types of entertainment, it’s unlike they will understand what makes the best film in each specific genre.
Some of this is being done in the straight to video sides of the business, but that area is treated as a slum that is looked down upon. There is little chance that a well make straight to video film will be given a chance to move up into the big leagues of a theatrical release.
The studios should scale back production of hugely over budgeted films to say 10 a year. They should then make 100 smaller films at lower budgets in proven genres and pick the best 20 or 30 to fill out their theatrical slate. Kind of like a farm league.
The problem is not that Hollywood makes too many movies. There are now 1000 cable channels needing 24 hour programming and almost nothing original on most of them.
The problem is that Hollywood is spending too much on movies, and making too many of the same kind of movies, or movies no one is interested in. All the studios want to be in the same basic movie business, that is blockbuster mainstream films that open at Number One in the box office in their first weekend. These movies generally must feature big stars, simple concepts, and be directed by established (but currently hot) directors. They generally cost 100 million or more. They also generally require 50 million or more in marketing to have a chance at hitting the number one spot.
Since there only 52 weeks in a year, a maximum of 52 movies a year would have a chance at being number one. And its very difficult to make a profitable film if you are starting with a $150 million dollar investment.
There is, however, a hunger for genre films that is not being fed, or being fed sparingly. Back in the 80′s, Warner Brothers would make two Steven Seagal martial arts films a year, for generally under 20 million, open in the spring or fall, and clean up. They didn’t always come in number one, but they did fairly well and then made a ton of money on video and television.
That was a real business. And it’s a business that could be easily duplicated today. Likewise there are similar openings for targeted 10 million dollar horror, 10 million dollar sexy comedies, 20 million dollar romantic comedies, 4 million dollar dog comedies, etc.
The reason these films don’t get made is because virtually every development exec at a major studio wants to be in the blockbuster business (with some wanting to be in the hip art film business). No one wants to be in the formula martial arts flick business or the buy the numbers horror film business.
One of my most shocking discoveries early in my writing career was when I talked to several execs at several different studios and asked how films got greenlit. There was no clear answer. What was particularly amazing is that none of the major studios had an overall plan along the lines of: We’re going to make 8 action films, 4 romantic comedies, 4 horror films, etc. There was, and as far as I can figure out there still isn’t today any really planning to assure a variety of films in proven genres are made each year.
I remember when I talked to one exec and asked what their studio was looking for. He said, “I’m not sure, but it’s got to be completely original. Audiences are bored with with the same old thing.” At the time, Teminator 2 was the number one film in the country. It was the executive, not the audience, that was bored with straight forward action films.
Equally amazing, virtually every development exec., from director, to VP, to Senior VP is allowed to develop in many genres at the same time. In most cases there isn’t an exec in charge of action films, one in charge of horror films, one in charge of teen comedies. While certainly it is more entertaining for the execs to have their hands in a lot of different types of entertainment, it’s unlike they will understand what makes the best film in each specific genre. Likewise, most producers under contract are also allowed to develop in multiple genres at the same time (although the smarter ones carve out a market).
In the straight to video business, genre targeting is virtually required and the straight to video departments at most studios are consistently profitable. In fact, they are required to be. Strangely, that division is treated as a slum to be looked down upon. There is little chance that a well made straight to video film will be given a chance to move up into the big leagues of a theatrical release.
The studios should scale back production of hugely over budgeted films to say 10 a year. They should then make 100 smaller films at lower budgets in proven genres and pick the best 20 or 30 to fill out their theatrical slate. Kind of like a farm league.
The problem is, that would require a lot more thinking, and organization that most studio feature departments want to commit to. The feature divisions of these giant conglomerates are treated as lost leaders by these giant international corporations. The libraries are extremely profitable and allow for a lot of money to be thrown away for the glamour and bragging rights of making huge star driven films and gambling they will be successful.
[...] 20, 2008 · No Comments Last week I wrote that I thought Fox was far better prepared for a strike than the other three big networks. This chart from the New York Times proves the point. Everyone but [...]