[Marxism] [Pen-l] McMahon: Is Hollywood becoming a risk-free business?

Jeffrey Masko j.alan.masko at gmail.com
Sat May 18 10:02:41 MDT 2013


The history of the blockbuster started with *Jaws* after the industry
declined in the wake of "epics" like *The 10 Commandments* and
*Cleopatra*failed along with the inability of Hollywood to keep up
with social
changes. This allowed the emergence (among other things), of a search for
new formulas that gave  rise of more daring films in the late sixties and
early seventies like* Easy Rider*. Film scholars have been predicting
another (near) collapse when the Blockbuster cycle fails (think *Heaven's
Gate*), yet McMahon has proposed, perhaps the industry has found a way to
insulate itself from such a recurrence. This would be better supported had
he looked further into the academic work done on synergy within the
industry as they no longer rely solely on ticket sales, with DVD and online
distribution becoming more important as well as commercial product ties
such as toys, etc. Furthermore it lacks an international perspective as
China for instance is now a major player with releases now being tailored
to their audiences. *Django* and *Die Hard* being some current examples.
Interestingly, while Hollywood seeks larger entry in to the Chinese market
by co-productions with China, their incentive to work with Hollywood is as
a way of studying and replicating the industry in order to keep film
profits within the country. Having more film industry scholars like Janet
Wasko would have made the paper much stronger and inclusive, but again this
is my opinion as someone who studies film and communications.


On Sat, May 18, 2013 at 11:30 AM, Louis Proyect <lnp3 at panix.com> wrote:

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> On 5/15/13 4:30 PM, Jonathan Nitzan wrote:
>
>> McMahon, James. 2013. "The Rise of a Confident Hollywood: Risk and the
>> Capitalization of Cinema". Review of Capital as Power 1 (1): 23-40.
>>
>> ABSTRACT: This paper investigates the historical development of risk in
>> the Hollywood film business. Using opening theatres as a proxy for
>> future expectations, the paper demonstrates how, from 1981 to 2011,
>> Hollywood has improved its ability to predict the financial rankings of
>> its films. More specifically, the Hollywood film business has become
>> better at predicting which films will earn a greater-than average share
>> of all US box-office gross revenues through a wide release strategy.
>> This greater predictability suggests that confidence in film earnings
>> projections has increased.
>>
>> FULL TEXT: http://bnarchives.yorku.ca/**362/<http://bnarchives.yorku.ca/362/>
>>
>>
>
> NY Times May 17, 2013
> The Flop Looms as Studios Lean on Blockbusters
> By JAMES B. STEWART
>
> For the big Hollywood film studios, this summer could turn out to be
> “Apocalypse the Day after Tomorrow: Clash of the Blockbusters.” Or maybe
> “Armageddon 2 — Revenge of the Critics.”
>
> With a record number of big-budget action- and special-effect-laden
> blockbusters opening between the beginning of this month and the end of
> August, competition for the spectacle-craving young male and surging
> international audience has never been more intense.
>
> Steven Soderbergh, the much-admired filmmaker, delivered a blistering
> critique of the phenomenon at the San Francisco International Film Festival
> a few weeks ago, bemoaning studio executives’ lack of imagination and their
> fixation on big-budget franchise films. “Cinema as I define it, and as
> something that inspired me, is under assault by the studios,” he said. He
> likened the big studios to “Detroit before the bailout” and worried that
> the hegemony of the blockbuster is “a trajectory that I think is pretty
> difficult to reverse.”
>
> But his warning may have come too late for this summer, when the studios
> seem to be headed over a blockbuster cliff. The numbers are pretty stark.
> 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.”
>
> Studios have been shifting their resources toward what are variously
> called blockbuster, event, or tent pole movies for years — the big-budget
> movies intended to help studios make up for their less profitable films. By
> and large, the strategy seems to have paid off. “We haven’t seen many tent
> poles blow up,” Michael Nathanson, a media analyst and managing director at
> Nomura. “But this summer could be the breaking point. There may be some big
> write-offs on some of these films.”
>
> The dominance of the blockbuster may have many directors, writers and
> producers wringing their hands, but it has been warmly welcomed by
> moviegoing audiences and Wall Street. Of the 15 movies that have grossed
> more than $1 billion, all were big-budget and all but three (“Avatar,”
> “Titanic” and “Alice in Wonderland”) were franchise films. And only
> “Avatar” could be considered original material. Disney’s “Iron Man 3,” the
> quintessential franchise blockbuster, opened two weeks ago and on Thursday
> joined the billion-dollar ranks.
>
> (Curiously, once the figures are adjusted for inflation, none of the Top
> 10 grossing films of all time were part of a franchise, though all were
> big-budget event films at the time. The top grossing movie, adjusted for
> inflation, is “Gone with the Wind.”)
>
> Mr. Soderbergh readily conceded that blockbuster films, despite often
> scathing reviews from critics, seem to have “the full support of the
> audience.” While waiting at Kennedy Airport, he said, he saw “a guy on the
> other side of the aisle in front of me and he pulls out his iPad to start
> watching stuff.” Mr. Soderbergh went on: “I’m curious to see what he’s
> going to watch — he’s a white guy in his mid-30s. And I begin to realize
> what he’s done is he’s loaded in half a dozen action sort of extravaganzas
> and he’s watching each of the action sequences. He’s skipping over all the
> dialogue and the narrative. This guy’s flight is going to be five and a
> half hours of just mayhem porn.”
>
> The blockbuster phenomenon is also pleasing Wall Street and investors
> because it means that the big studios are making fewer movies, yet
> commanding a larger share of total box-office revenue. “It’s been a smart
> strategy,” Mr. Nathanson said. “They’re making fewer films and controlling
> costs and they’ve stabilized the industry. This is appealing to Wall
> Street. It’s a coherent strategy that can be articulated to investors. The
> studios may not be growing much, but they’re not the declining problem
> children they were after the DVD bubble popped.”
>
> Time Warner’s Warner Brothers studio is widely credited with inventing the
> approach (and its “Harry Potter” films are some of the most successful in
> the genre), but Disney under the current chief executive, Robert Iger, is
> seen today as its most zealous and successful practitioner. With its
> acquisitions of Pixar, Marvel and, last year, Lucasfilm, Disney has spent
> billions to acquire others’ intellectual property, and what Disney hopes
> will be the foundation of generations of future blockbusters. Whether this
> bold bet ultimately pays off remains to be seen, but Marvel under Disney
> has gotten off to a strong start. “Disney is basically 100 percent
> blockbusters,” Mr. Creutz said, not counting films it distributes for
> others, like DreamWorks Studios. “There are a few exceptions, but when
> they’ve invested in the big event movies, they’ve come out pretty well.”
>
> Last year, Disney’s operating income from studio entertainment (which also
> includes its Broadway productions) rose 17 percent, to $722 million from
> $618 million, largely on the strength of “The Avengers.” Disney shares have
> doubled in the last year and a half (although studio earnings make up a
> relatively small percentage of total income).
>
> For Disney, 2015 will be a crucial test of the strategy. That year the
> studio is planning another “Star Wars” film, a sequel to “Avengers,” a
> “Pirates of the Caribbean 5” and a sequel to Pixar’s “Finding Nemo.”
>
> 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.
>
> Not everyone in Hollywood is despairing. “A blockbuster is just another
> name for a movie a lot of people want to see,” Nina Jacobson, who helped
> start the “Pirates of the Caribbean” franchise while head of Disney’s
> studio, and has since produced the wildly successful “The Hunger Games,”
> told me this week. “A movie like ‘Life of Pi’ is big, visual and
> international but not remotely cynical or safe. ‘Silver Linings Playbook,’
> ‘Django Unchained,’ ‘Argo’ and ‘Ted’ are not typical blockbusters but were
> still very profitable. No one ignores those kinds of successes because we
> all aspire to them.” She suggested that targeted, lower-cost marketing
> campaigns might be a way to persuade studios to make more smaller domestic
> movies.
>
> Even though it’s only May, “Iron Man 3,” “The Great Gatsby” and “Star Trek
> Into Darkness” have already opened, and “The Hangover Part III” and “Fast &
> Furious 6” will go head-to-head Memorial Day weekend. Among the many
> action- and special effect-filled blockbusters still to come, Mr. Creutz
> predicted that “World War Z” (Paramount Pictures), “After Earth” (Sony
> Pictures) and “R.I.P.D.” (Universal Pictures) could end up as box-office
> casualties, and Disney’s “The Lone Ranger” depends on whether Johnny Depp
> as Tonto can pull off another creative and box-office coup.
>
> “All the studios have decided that big-event movies are a better
> business,” Mr. Creutz said. “When everyone decides that, it’s a problem.
> Look at the history of motion pictures. There have been time periods when
> certain strategies worked, and, temporarily, the economics got better. Then
> the profits got competed away. So here we are again. There’s a glut.”
>
>
>
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-- 
J.A. Masko
College of Communications
Penn State University
State College, Pa 16801



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