Lesson 2. Production• Refers to the making of the film:

• Finding the idea• Writing the script• Pitching it to a studio• Setting a budget• Casting stars and employing a crew• Filming• Editing

Production – Investors

• For a film to go into production it needs investors to provide the necessary funding.

• Box office success is never certain and so investors try to reduce the risk of losing their money by becoming involved in important decisions

Production – Investors

• Key questions that they will ask are:

• Is the film’s storyline similar to other films that have made money recently?• Does it offer easy selling points?• Are there obvious marketing spin offs to give added publicity?• Is the star popular?• Had the director had previous successes?

Production – Risks :

If the answer to any of theses questions is no then changes will be made to the “package” (the details of the film) to make sure all the answers are yes! Otherwise the investors will take their money else where.

The big studios• In recent years the big studios – Sony, Paramount, 20th Century Fox,

Warner Brothers, Universal Comcast and Disney have dramatically cut the number of films they make (up to 50% less).

• At the same time they are increasing budgets to the $150-$200 million range.

Budget Problems• On the release of each film they will spend at least $100 million to

promote a blockbuster around the world.

• Only half of box-office goes to the Film Studios (rest to cinema owners).

• Therefore a total budget of $250 million has to have a box office above $500 million to make a profit.

19 Blockbusters!• In 2013 there are a large number of blockbusters (19) which is far

more than ever before.

• In the past a maximum of nine blockbusters have done well in any one year.

Figures for 2013.• Because it still makes financial sense for the Film Studios.

• The top ten most successful films are blockbusters.

• “Man of Steel” cost $225 million. First two weeks box office = $400 million.

• “Fast and Furious” cost $160 million. Box office =$666 million.

•What does the production of a film mean?•Why are investors important and what is done to keep

them happy?•Who are the Big Six?•What do they mostly produce and why give a specific

example?

QUESTIONS

Is Hollywood Blockbuster Model Broken?• In 2013, 26 films costing more than $100m (£61m) each were

released by the major Hollywood studios - more than ever before.

• They are likely made a box office profit of billions of dollars. The record was $35bn (£21.5bn) achieved in 2012.

Is Hollywood Blockbuster Model Broken?• Some films did badly – “The Lone Ranger”, starring Johnny Depp,

barely made back the $250m it cost to make.• The hits outweighed the flops: “Iron Man 3 “took $1.2bn in box office

receipts around the world, topping the charts and making it the fifth highest-grossing film of all time.• However, there are concerns that blockbuster budgets are getting

dangerously high.

Is Hollywood Blockbuster Model Broken?• Steven Spielberg believes, "There's eventually going to be an

implosion, or a big meltdown with half a dozen films crashing".

• It has happened before. In 1980, “Heaven's Gate” effectively bankrupted United Artists., The film bombed, and the studio was forced into a takeover by MGM.

Is Hollywood Blockbuster Model Broken?• The irony is that Spielberg almost invented the blockbuster genre.

• “Jaws” ( 1975) showed that making a few big-budget films a year that appealed to the masses was more profitable than making dozens of smaller ones.

Is Hollywood Blockbuster Model Broken?• HIGHEST-GROSSING FILMS OF 2013 WORLDWIDE• Iron Man 3 (Walt Disney) - $1.2bn• Despicable Me 2 (Universal) - $919m• Fast & Furious 6 (Universal) - $789m• Monsters University (Walt Disney) - $744m• The Hunger Games: Catching Fire (Lionsgate) - $730m• Man of Steel (Warner Brothers) - $663m• Gravity (Warner Brothers) - $642m• Thor: The Dark World (Walt Disney) - $620m• The Croods (20th Century Fox) - $587m• World War Z (Paramount) - $540m• Source: Box Office Mojo

Is Hollywood Blockbuster Model Broken?• Hollywood watchers say it's a statistical certainty that another bomb to rival

“Heaven's Gate” is around the corner.

• But the difference is that the big six studios are now parts of massive media conglomerates and have found ways to maximise profit and cope with loss.

• From 1990 to 1995 New Hollywood turned into a conglomerate Hollywood and the “Big Six”. With the exception of Disney, all of these so-called major studios are essentially based on the model not of the classic Big Five, but of the old United Artists: that is, they are primarily backer-distributors (and physical studio leasers) rather than actual production companies.

Is Hollywood Blockbuster Model Broken?• "[Studios] are ruthlessly good at getting returns from their

investments," Prof Sedgwick says. "Hollywood has got better and better at it. The more you spend, the more you get back. It seems to me to be an extraordinarily successful model.“

• In the late 80s just 50% of major studio films turned a profit. In 2009 it was 90%. Flops have become rare.

• How have the studios achieved this?

Things that can cause a flop• Bad word of mouth - With the growth of the Internet during the 1990s, chat rooms and

websites enabled negative word of mouth to spread rapidly.• A troubled production history is sometimes also the case. Heaven's Gate, famously went

three months over schedule and saw its budget mushroom from $7.5 million to $36 million. Journalists and critics were refused access to the film's set by director Michael Cimino, and upon its release was abhorred by the American press

• Competition - Films may attract low ticket sales if they are released against heavy competition from other movies also in theaters at the same time. • E.g., Blade Runner. It has become one of the most influential science fiction movies ever

made, however, in the summer of 1982 it was considered just another sci-fi flick. Theaters were saturated with iconic genre movies such as Star Trek II: The Wrath of Khan, The Thing, and, most importantly, E.T. the Extra-Terrestrial, which was the highest-grossing movie of the year. Blade Runner only took in $6.5 million during its opening weekend. Budget: $28 million Box Office: $27.5 million

• Recovery - Films which are initially viewed as "flops" may recover income elsewhere. Several films have under-performed in the largest market (USA) but been sufficiently successful internationally to recoup losses or even become financial successes. • Films may also recover money through international distribution, sales to

television syndication, and distribution outside of cinemas (download, DVD, pay-per-view). Other films have succeeded long after cinema release, becoming cult films or being re-evaluated over time. High profile films including Blade Runner and The Shawshank Redemption lost money at the box office, but have since become highly popular.

IMDB rates Shawshank as best movie of all time

Is Hollywood Blockbuster Model Broken?• In 1971 176 million tickets sold.

• 2015 Phil Clap (C.E.O. of Cinema Exhibitors Association) says we look to beat that this year.

• Why? Blockbusters – James Bond “Spectre”, “Star Wars” (original cast return), “Jurassic World” (Speilberg)

Is Hollywood Blockbuster Model Broken?• Studios often spread the risk by getting dozens of smaller production

companies to invest alongside them, reducing their exposure to a potential flop.

Is Hollywood Blockbuster Model Broken?The first step has been to generate new revenue streams. In the early days of Hollywood, 100% of revenues came from ticket sales. Now it's just 20%.

The rest of the money comes from:

1. Television / Downloads (Netflix etc) licensing, 2. DVD sales, 3. Merchandising and other commercial deals.

"Blockbuster films are not really films," says Charles Acland, a professor of communication studies at Concordia University in Montreal, and author of the book Screen Traffic. "They are in fact very elaborate 'tent-pole' business models that connect all sorts of different commodities in all sorts of different industries." In motion pictures, a tent-pole or tentpole is

a program or movie that supports the financial performance of a movie studio. A tent-pole movie may be expected to support the sale of tie-in merchandise.

Is Hollywood Blockbuster Model Broken?• The second step has been to look beyond the domestic US market,

where cinema audiences aren't really growing, and look overseas to developing markets such as China

Is Hollywood Blockbuster Model Broken?• Iron Man 3 earned two-thirds of its revenues outside of the US. The

Chinese version of the film even had four extra minutes of footage, featuring Chinese actors and half a dozen Chinese product placements.

• Finally, the studios don’t take risks in terms of the types of films they produce. Instead of taking a chance on new directors and original ideas, they produce tried-and-tested franchises, remakes and book adaptations.

• What fears are starting to surround the Blockbuster? Who is saying what and give examples of what has already happened.

• What does a conglomerate Hollywood mean?• Professor Sedgewicj states…..• How can studios avoid a flop? What do they need to be aware of?

• How do studios spread and limit the risk of financial flops?

QUESTIONS

China – Targeting Audiences• In 2012 China overtook Japan to become biggest movie market after

America. • In 2014 box-office revenues shot up by 36% to $3.6 billion.• 2000 cinema screens built in China Jan-March ‘12 alone.• By 2020 China will be biggest film market in world. NB China regulates

the number of foreign films released (currently 34).

Targeting Media Audiences• US Films now dominate Chinese Box Office for the first time.

• June 2014 – ‘Godzilla’, ‘Malificent’, ‘Edge of Tomorrow’, ‘ X Men -Days of Future Past’ and ‘Grace of Monaco’ took top five Box Office spots.

Targeting Media Audiences• ‘Skyfall’ added Chinese locations

• ‘ X Men -Days of Future Past’ – had 30 minutes of action in Hong Kong with Chinese film star and Chinese boy band added to the film.

• Will the importance of Chinese market force big Hollywood studios to ‘censor’ output?

China• The Chinese are also investing far more in American Cinema.

• September ‘12 the Dalian Wanda Group bought ACM Entertainment – America’s second largest cinema chain for $2.6 million.

Chinese Market – the implications.• In addition the actor Wang Xueqi was included alongside Robert

Downey Junior in the advertising the film everywhere.

“21 and Over”• This American film (from writers of “The Hangover”) has been

significantly re-worked for the Chinese market.

• For America it is about three College students (including a Chinese student) who bond over ‘boozing’ and ‘bonking’.

“21 and Over”• For the Chinese market it has been re-edited.

• Chinese audiences will see a moralistic film about the dangers of the fun loving west and the need to embrace one’s roots!

• The market for Films in Russia and Brazil is growing fast too!

China’s population 1.3 billion

USA’s population 318 million

Brazil’s population200 Million

Russia’s population144 million

UK’s population64 Million

Is Hollywood Blockbuster Model Broken?• Hollywood faces challenges. Collapse in DVD sales with growth in

online streaming services such as Netflix. • The major conglomerates that control the studios are seeing profits

rise faster at their television arms than in the film industry, and are cutting costs.• But perhaps the more worrying long-term problem is what Charles

Acland calls "aesthetic bankruptcy". The blockbuster business model necessarily leads to making bad movies.

Genres were being over used. A change was needed and what

was produced was hybrids

Is Hollywood Blockbuster Model Broken?• The perception that Hollywood peddles lowest common denominator crowd-

pleasers at the expense of "serious" cinema means screenwriting talent is increasingly moving over to television. This year director Steven Soderbergh threatened to quit altogether.

• This won’t change while Blockbusters make such big profits

• "If you want a shared communal experience of the film that everybody's talking about right now, then you go to the movie theatre," Prof Acland says. "The blockbuster is very stable in Hollywood. It's not going to go away any time soon."

Problems Small Independent Films have.• While Blockbusters dominate, it is an uphill struggle to get British

films made and exhibited in Britain.

• Hollywood is dominant and the main cinema chains are owned by American companies who operate a ‘cartel’ by mainly showing American films.

Problems Small Independent Films have.• Britain cannot compete with the money spent on ‘stars’, special

effects and marketing.

• When American money does make a ‘British Film’ it is usually a costume drama such as “The Duchess” or part of a worldwide franchise such as “Harry Potter”.

• Neither type of film addresses issues in contemporary Britain unlike France where 40% of films shown in cinemas have to be French films.

Tax Breaks and ‘Expertise’ makes Britain the new Hollywood?

• More American Studios are leaving Hollywood for London.• In 2015 Warner Brothers is building 3 extra sound stages in Watford

(where it made ‘Harry Potter’).• In 2015 Pinewood, home of James Bond films, will expand across a

100 acre M25 Landfill site + a new studio in Wales.• Elstree Studios filming again!

Blockbuster Overload• The ‘Big Six’ American Film Companies are reducing the number of

films released each year but increasing the amount spent on making and distributing films.

• They are relying on successful Blockbusters to maximise profits.

Limited Choice• Other key issues surrounding the reliance on Blockbuster Action films

in addition to limited choice are:

• Reliance on sequels• Over reliance on 16-24 audience demographic.• The ‘baby boomers’ / ‘grey pound’ 60+ demographic could be

alienated.