COM 208: Hollywood blockbusters

Source of photo: ChinaSMACK

Avatar: Hollywood’s Manhattan Project

• Cost
• Criticism of plot
• Technology
• Impact on movie industry

Before Avatar. Star Wars.

• Young people were the driving force behind Star Wars’ huge success in 1977
• The first five Star Wars movies generated $9 billion in merchandising
• That was far above the world box-office revenues of $3.4 billion

Star Wars marked Hollywood’s new approach. Key elements included:

• merchandising tie-ins
• high potential for international distribution
• new technologies (digital animation, special effects, computer-based film-editing).

What turns a movie into a blockbuster?
Keys to success include:

• Star power
• Quality of the film
• Buzz factor
• Controversy
• Timing
• Marketing
• Luck
• Talent of the director

And America has known plenty of talented directors. A new wave of these directors connected particularly well with the post-war Baby Boom generation

• Francis Ford Coppola (The Godfather)
• Brian De Palma (Carrie)
• William Friedkin (The Exorcist)
• George Lucas (Star Wars)
• Martin Scorsese (Taxi Driver; Raging Bull)
• Steven Spielberg (Jaws; Raiders of the Lost Arc)

Source of photo: Hollywood.com

Megahits of the 1970s

• Star Wars (1977)
• Jaws (1975)
• The Exorcist (1973)
• Rocky (1976)
• The Godfather (1972)

Star Wars and Jaws were the first to gross more than $100 million at the box office

The biggest players in Hollywood

• Warner Brothers
• Paramount
• Twentieth Century Fox
• Universal
• Columbia Pictures
• Disney

Except for Disney, all six major American studios are owned by a large parent conglomerate. The six account for more than 90 percent of the revenue generated by commercial films. They also control more than half the movie market in Asia and Europe.
Despite the major studios’ money and clout, some independent films have been successful.

• Sex, Lies and Videotape (1989)
• El Mariachi (1993)
• The Full Monty (1997)
• The Blair Witch Project (1999)
• Hustle & Flow (2005)

Most successful independent film in history?

The Passion of the Christ. Hollywood rejected the movie. Studios said it would appeal to only a small Christian niche audience. It became a blockbuster in 2004, earning more than $370 million in domestic box-office revenues

Still, traditional blockbusters dominate Hollywood
Discuss: All Time Top Movies?

Making movies is expensive and risky
Movie costs have soared. The average movie costs $4.2 million to distribute and nearly $35 million just to advertise

Anatomy of Gone in 60 Seconds
Disney said it had global box-office revenue of $242 million. So it was a success, right? Let’s take a look at costs:

• The theaters’ share: $139.8 million
• Prints, insurance, taxes, customs clearance: More than $20 million.
• Advertising: More than $70 million.
• Residual fees: $12.6 million in residual fees.
• Overhead: $17.2 million.
• Debt service: $41.8 million for debt service.

Total costs: More than $301.4 million. Revenue was $242 million. So, on paper, it appears that the movie lost $59.4 million.

How did Disney make up for that? It sold the rights to the intellectual property that it created. That allowed Disney to make money from video sales; a deal with HBO; a deal with TNT; and local TV stations and foreign TV markets.

Movies don’t have to be good to make money

• Hit-or-miss dynamic
• Some movies disappear from the theaters even if they debut at No. 1
• Why? Bad reviews, word-of-mouth

Winner takes all: 544 titles screened in 2005, but only a few dominated. It’s like shooting craps in Vegas, according to Arthur De Vany, author of “Hollywood Economics: How Extreme Uncertainty Shapes the Film Industry”

Hit movies help pay for the rest

• The top 10 movies accounted for 26 percent of the box office in 2005
• Star Wars: Revenge of the Sith captured 4.5 percent of the box-office gross
• Only a select few movies have mass appeal
• Statistics may show that the average studio movie in 2005 earned $37 million, but this is almost entirely due to a few hit movies.

Studios don’t know how well movies are going to do, De Vany wrote. As screenwriter William Goldman said in 1983, “Nobody knows anything.”

All Time Top Stars at the Box Office, according to Mojo Box Office

Who’s Number One?

Here are numbers two through five

• Samuel L. Jackson, 73 movies, $4 billion
• Tom Hanks, 40 movies, $3.8 billion
• Eddie Murphy, 33 movies, $3.4 billion
• Harrison Ford, 35 movies, $3.3 billion

Who’s No. 1 ??
Frank Welker

• The world’s most famous voice actor
• His 90 movies have earned $4.99 billion
• More than 1,200 voices, including Scooby Doo, Curious George, the Transformers’ Megatron, the Martians in Mars Attacks! and many more

Despite all the dough, movie studios are in a squeeze, so they stick it to the consumer.

• Concession stand prices have soared
• Cost of a 46-ounce popcorn up by a third since 2000
• Will moviegoers pay $20 for a Snickers?
• Already, less than 10 percent of moviegoers buy from the concession stand

Another thing theaters are doing…

Ever notice that movies never seem to start on time? These movie-going politicians have proposed laws to force theaters to start on time:

• New York City Councilwoman Gail Brewer
• Connecticut state legislator Andrew Fleischmann
• Illinois state representative Jack Franks

The scoop on movie pre-shows

• Ads last 10 to 20 minutes
• Volume as high as possible
• General Cinemas, then the largest chain, vowed to never show ads in 1986.
• It broke that promise in 1999

Rising ticket prices

• Average ticket price in the United States was just over $6 in 2005. (It’s now $6.50-plus)
• At an average wage of $15.20 per hour it takes 23.9 minutes to pay for one ticket, according to the Cinema Index survey

Global ticket price average: It takes just under 57 minutes to earn enough to buy a movie ticket

• Better off in India: 16.6 minutes (tickets cost just 19 cents)
• China: 25.7 minutes
• Just be glad you don’t live in Tokyo. Tickets are 1,800 yen ($16.78 U.S.)

Why theaters charge so much

• Studios demand a large share of the box office (50-50 splits are common, but deals vary widely with some theaters claiming the studios sometimes get 90 percent or more)
• Theaters are under pressure to increase profits
• As some see it: Movie theaters are more like restaurants that happen to show movies

Role of movie theaters today
…the movie theater has become a launching platform, a place where (studios) try to establish their movie so it is engrained in the public mind, so that the audience wants to see the movie on cable, DVD, video and pay-per-view

– Edward Jay Epstein, author of The Big Picture

Tail wagging the Dog

• Hollywood studios only make 13 percent or 14 percent of their profits from movie ticket sales
• The rest of the studios revenue comes from other sources, including DVDs, merchandise and licensing

The economics of Hollywood

The economic model of the film business is broken”
– Oscar-winning director Steven Soderbergh

Movie making expenses are rising

• A-list stars routinely demand compensation packages of $25 million
• The cost of shooting and editing films is up
• Illegal downloads are cutting into profits

Don’t feel too sorry for Hollywood

• Movie studios stand to earn big money from consumers who will pay to download movies from their libraries
• The issue: how to make money on downloads without hurting movie ticket sales and DVD sales

Hollywood’s Transformation
From Big Screen to smaller (TV) screen to portable screen