Thursday, October 05, 2006

The Secret to the Future is Quantity...

But don't take my word for it.

Read this.

Then we'll DISCuss it.


Matt Davids said...

I love the idea of companies making more movies for less money, but there will always be a market for big budget spectacles. Also, if you can make a profit on a film that costs $200 million why stop making them?

Matt Davids

marc bernardin said...

it's great that George Lucas is thinking this way. But the last thing I want to see are 75 tiny George Lucas movies. Or even George Lucas-endorsed movies. They'll all be like little episodes of Radioland Murders.

Cunningham said...

Marc - Lucasfilm is getting into television (which they've already done with CLONE WARS and YOUNG INDIANA JONES).

Then we have the fact that CGI work is getting easier and cheaper to do all of the time. Especially if its done in-house (which is what CSI and CSI: Miami has found).

And George's tiny movies include THX 1138 and AMERICAN GRAFFITI...not too shabby if you ask me.

The point is he's cultivating a long term audience. Lucas can do that (and quite well) with his brand. He can bring a bit of spectacle down to everyone and make it an ongoing event.

Remember when MIAMI VICE first came out? Remember how everyone had to get home early or turn the bar TV over to NBC to watch?

Lucas can do that. You watch.

Jeff O'Brien said...

"We've moved away from the feature film thing because it's too expensive and it's too risky."

No wonder the aud is turning away from going to the movies - you don't just have crap like the last Star Wars films, yes I hated them on every level but I'm not naive to the success they had.

Huge budgets and CGI are an instant turn off for me and I can't remember the last time I got my money's worth. And yes, I'm a fantasy hater so I'd have to be tortured into watching a Peter Jackson film and I might not be one to talk here. I'd rather see the little experimental indie stuff on the big screen - the exact opposite of that Lucas pinches off in the morning...

I'm talking through my hat I know, but that's my ill thought out, gut reaction to Lucas comments.

deepstructure said...

there's no way to intelligently discuss this argument without appropriate data - meaning, is the risk factor lower for lower budgeted films?

making a film is a risk investment-wise, regardless of the size of the budget. multiplying that risk with more iterations is taking more risk, not less.

if you invest $200M and only make 3/4 of your budget - you've lost $50M. but if you make 50 $4M films and the majority of them lose money (as most films do), then at a certain point you haven't mitigated your risk.

for example: if 75% of those 50 films lose about $1M (only make back 3/4 of their budget), you've lost $37.5M.

the $12.5M difference is chump change to a studio willing to gamble $200M. and overhead on 1 $200M film is a lot less than 50 $4M films.

until we have real data that shows the average returns on various types of films (high/low budget, genre typres, adaptations/remakes/sequels vs orginals, etc.), all this talk isn't worth the paper it's written on.

i don't know enough about lucas to know if he's just conjecturing or he has hard data to back his ideas up. is he just discovering the long tail?

Cunningham said...

DS - your logic is slightly flawed here:

1. Under the current system of theatrical distribution - a $200M film needs to make back 2.5 X its budget before it breaks even. That's really tough to do.

2. The more smaller films you make - yes, you risk - but the potential to gain is greater percentage-wise because the odds are in your favor. You have MORE CHANCES to gain and even surpass your budget to cover any losses. An analogy might be you're betting on the odds or the evens instead of Double-zero.

With that big $200M - you get one shot, period. Double zero.

It's a much smaller bullseye to hit.

deepstructure said...

again, we need data. i don't believe you can empirically back this statement up:

"The more smaller films you make - yes, you risk - but the potential to gain is greater percentage-wise because the odds are in your favor."

what odds are these?

the 00 example is flawed. you're equating the price of the picture with the odds of it's success - as if the dice were being rolled simply on that one factor: budget.

and it's not like warner bros only has one shot...

obviously there's roi ceilings, which makes discussions about $200M films a bit extreme - but there's a big difference between $200M and $4M for a picture. i personally wouldn't bet on a $10M picture making more profit than a $100M one.

Cunningham said...

The odds are in your favor to make your money back because a $4M film doesn't have to go through the theatrical whirlpool.

A $4m film can go straight to DVD and cable and be instantly profitable - a $200M HAS TO go through the theatre circuits in order to make its money back. It needs the $100M marketing campaign and release to advertise for the DVD.

If you want to look at the empirical evidence look at Lionsgate's releases over the past three years. Lower budgeted movies for the most part. The higher budgeted ones LG partnered with someone (2929 Ent., etc...).

Lionsgate even does television and they are IN THE BLACK BEFORE THE SERIES EVEN SHOOTS THE FIRST SHOT.

They are the company to beat in terms of profitability in the big studio game. That's because they make more movies with smaller budgets and don't roll the dice on super $200M blockbusters.

They play it safe and they play it profitably:

wcmartell said...

Lucas is right that it's all about quality... wish he knew what quality was. Problem is - his last 3 STAR WARS films sucked... and he thought they were good.

I think the studios shifting to tentpoles is a smart move for the studios. They are all about making big films that play on big screens. Lucas is talking about small screens - nothing wrong with that at all... but it's a different medium with different rules and different requirements.

One thing about those big tentpole films is... merchandising. Somthing Lucas knows about. The difference between an Oscar nominated drama and some monster like PIRATES or STAR WARS is that success isn't just at the box office - it's in toy stores and McDonalds tie ins and sheets and pillowcases and verical blinds and clothes and... well, just about anything you can imagine can have the characters or art on them and sell. Probably 10 times the money (or more) made on all of the other stuff. And studios know this. So they are focusing on the types of films that can be hits on more than just the screen.

Where would Lucas' TV shows be if there had been no STAR WARS?

- Bill (from London)

marc bernardin said...

I'm not doubting Lucas' ability to brand. Hell, I've got Star Wars in three different video formats that proves his skill there.

But he hasn't been a good filmmaker since the first Star Wars, and the only filmmaker he's guided to goodness is Spielberg (who didn't really need the guidance), so my confidence in his ability to make a bunch of short films that I'd care about isn't very high.

Cunningham said...

Marc -

First off they are smaller films not short films. They will be feature length.

Secondly, you'll see that he is getting primarily into television, gearing up his people's skill sets and tight-budget controls, THEN launching into a bunch of smaller budgeted features.

This is the same process by which Hitchcock gave us one of his best (if not THE best) movies, PSYCHO.

Lucas is an okay director - but he's a GREAT producer: The previously mentioned INDY movies, WILLOW, TUCKER, LABYRINTH, THE INDY TV SERIES...

and the people who went on from those shows are people who are well-respected in the industry: Ron Howard, Frank Darabont, etc...

What Lucas is doing is building a library of content that he can leverage. How did Lionsgate become the powerhouse that it is? They purchased Artisan's library of titles that they could license and re-license worldwide, generating tons of cashflow. Especially in this time of flux where we have new distribution models (internet downloads) coming into the picture.

And to be honest? Building a library of works is exactly what has made Roger Corman as successful as he has been. Whenever a new medium comes out, Roger has a library of content waiting.

Side note: Media sales people like libraries for the simple fact that it's just as easy for all sides to license a package of movies as it is for one movie. The paperwork is the same. The money however, isn't.

Lucas is building a diverse library of content he owns outright - television and movies - and he is going to leverage all of that across multiple platforms. If he were creating just one movie it wouldn't be as effective and it would be far riskier.

marc bernardin said... mentioned "Willow" and "great" in the same sentence.

Cunningham said...

Dude - Val Kilmer and Joanne Whalley rocked that movie.

It was a fun flick!

deepstructure said...

aha - good point bill about films not going to theatrical release, but that does change the original equation quite a bit.

and i completely agree with the library point. mike medavoy was very clear in his book that orion's catalog was a huge part of that company's success.

lionsgate is a fantastic example of a successful company - but notice the first thing they say about their success:

"If we have a film of a particular genre at a particular time of year with these stars and this release pattern, we can predict how much revenue we can expect...""

so they're really working the genre-d2dvd market for stability. which makes great business sense, and probably allows them to absorb risk on the theatrical side.

marc bernardin said...

dude. it was Star Wars with swords.

And the little girl was named after a brand of yogurt.

I call bullshit.