As Studios Lean on Blockbusters, the Flop Looms

[Dread_Pirate_Mel]

Good article about the economics of Hollywood nowadays:

http://www.nytimes.com/2013/05/18/business/as-hollywood-leans-on-blockbusters-the-flop-looms.html

According to Doug Creutz, the senior media and entertainment analyst for Cowen & Company: “Of the expensive action and animated movies, we’ve never had a summer where more than nine did well, and often it’s fewer. This summer you’ve got 17 blockbusters coming out between May and July, 19 if you add August,” which he said is the most crowded release slate in recent memory. “Is this going to be by far the biggest summer box office in history? Maybe, if they’re all great movies, but it’s not likely.”

.... By the prevailing logic in the movie industry, making fewer films, but more expensive blockbusters, is less risky than making more films with modest budgets. Resources can be concentrated on fewer projects, and a $100-plus million marketing budget is big enough to generate the all-important opening weekend traffic, while five $20 million marketing campaigns would get lost. Especially with the rise of 3-D technology, studios want movies with the kind of special effects that will draw people into theaters. However popular, “Silver Linings Playbook” can easily be enjoyed at home. And the ever-growing importance of international audiences means studios want familiar characters, stories and effects that don’t depend on American cultural references and can easily be translated.

But to some like Mr. Soderbergh, this reasoning is flawed. “A certain kind of rodent might be smarter than a studio when it comes to picking projects,” he said in his recent talk. The problem is common to any investment strategy that lacks diversification. It’s great while it works — until it doesn’t. Disney had to write down $200 million, considered the largest loss ever by one movie — after the box-office failure of “John Carter,” a much-anticipated blockbuster last year that is now widely faulted for being too original, among other problems. “I think the idea that if you throw enough money at it, people will show up, even if it’s a bad movie, is just asking to lose money,” Mr. Creutz said.

And the economics for a blockbuster can be daunting. If a film costs $200 million to make and another $200 million to market, it needs to generate $800 million at the box office just to break even, because distributors and theater owners keep roughly half the revenue. Not that many films generate such big numbers. Last year, only seven films had worldwide grosses of more than $750 million, according to Box Office Mojo.....

[CSM]

Just make good films and the $ will follow