The Blockbuster Movie Model That Ate Hollywood

Backlot Model Killed Hollywood

Sony retrenchment shows that studios’ blueprints are committed to scale over substance

The cutbacks and other contortions disclosed by Sony a week ago underscored a bigger question no one wants to pose: Are movie studios an anachronism?

The studio of the future, some CEOs predict, will embody a streamlined distribution and marketing mechanism leveraging a limited flow of features through global revenue streams. The conceit of developing scripts and nurturing filmmaking talent will be history; the notion of shooting movies on the “backlot” is already fading.

The signals dropped by Sony chief Michael Lynton last week at an investors’ meeting all seem to hint at that direction: fewer releases … tighter budgets … severe penalties for overages.

Sony says it now wants to build “an innovative entrepreneurial culture.” Does that translate into more “Spider-Man” sequels but no “Social Networks?” Lynton acknowledges it will mean greater resources will be allocated to television and less to film (some $250 million in overhead and other cuts already are being implemented).

Hollywood insiders see an element of irony in the fact that the Lynton-Amy Pascal team would be centerstage in an era of retrenchment. Pascal, quirky and idiosyncratic, is a throwback to the passionate hands-on studio chiefs of former years, and some filmmakers wonder how long she will last under pressures from investors. Lynton, an enormously wealthy man and a major Obama bundler, has been rumored for an ambassadorship.

Despite their solid long-term track records, both execs have taken the heat for a disastrous summer with costly money-losers like “White House Down” and “After Earth.” The studio posted an operating loss of $181 million for the second fiscal quarter. Earlier this year, hedge fund activist Daniel Loeb, one of Sony’s largest shareholders, blasted the studio’s financial performance. Moody’s Investor Service warned it would review Sony’s overall credit rating and possibly downgrade its stock to junk status. (Loeb’s Third Point is a minority stakeholder in Variety Media, along with majority owner Penske Media Corporation.)

The bankers look covetously at the economic model of a Lionsgate, which, with no physical studio to support and a more modest overhead than the majors, can register enormous grosses with a franchise like “Hunger Games.” A modest distribution-production entity like Film District also has attracted attention; with virtually no development and small overhead, Film District released some 16 pictures in its three-year history, registering roughly $600 million in grosses (the company recently was devoured by Universal).

The dilemma, of course, is that investors are looking for bigger blockbusters at the same time they yearn for reduced costs. In her new book, titled “Blockbusters: Hit-making, Risk-taking and the Big Business of Entertainment,” Anita Elberse of the Harvard Business School points out the growing mythology of the “long tail” — that a winner-take-all dynamic has built a dependence on superstars and franchises. The belief that blockbusters alone represent a sound investment strategy is in itself driving up the cost of blockbusters as well as superstars. While business strategists traditionally have argued for diversification, the new mandate is to avoid niche product because the niches are getting narrower.

How do the studios of the future structure themselves in this contradictory environment? Certainly the continued evolution of Sony will drop hints about these accommodations. With all their flaws and excesses, the studios over the generations have provided the backbone of the Hollywood economy and brought forth a viable (and occasionally inspired) flow of product.

As they become anachronistic, both the town and its creative community had better start searching for alternative economic structures.

Filed Under:

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 25

Leave a Reply


Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

  1. TheBigBangOf20thCenturyPopCulture says:

    The Frank Capra one man one movie concept is what made Hollywood when creative virtual moguls ran poverty row studios from the director’s chair. Today, movies are made by corporate commitee, filtered to appeal to ADD/OCD ticket buyers, dumbed down by ageist special interest focus groups, cast by PC bean counters and released in lock step with an Orwellian zeitgeist. The drama of modern times what with climate change, etc. is a reality that millennial dream factory surrealists can’t compete with in terms of vision, talent or a more inclusive, democratic representation of moviemaking humanity.

  2. Chris says:

    We need to acknowledge some truths. You can’t predict a hit – no one. Niches are not narrowing, leadership is too diverged from the base. This is an unprecedented time, with untapped talent and potential. Those who are unable to adjust to the third and forth wave will be consolidated for nastagia and PP&E’s sake alone.

    Story and catharsis are inherently human.

    • TheBigBangOf20thCenturyPopCulture says:

      No, this is a time when most movies suck and we’re too far away from the good old days for it to matter. When all your actors look like Sears clothes horse dummies with high cheek bones and pixie noses, the effect is to miscast perfectionist artifice in an imperfect world. And if you’re trying to sell dystopian conflict, you need flawed folks and your cast can’t look like they all stepped out of a Disneyland ad. This isn’t believable entertainment. It’s bean count robot culture out of a 50s Twilight Zone TV episode.

  3. Dave Rand says:

    There are hardly any co authored best sellers, and virtually none authored by three or more authors. Why is then we “author” our films with layers and layers of creative hierarchies flung around the planet chasing subsides and other bad ideas that ruin the product? There’s a lesson to be learned from basic story telling, our roots, real human interaction under one roof with singularity of direction, we’ve lost that. We depend on the committees connected by wires far too much. It’s diluted, mechanical, and stale.

    I wrote An Open Letter to the DGA a while back, expounding on this based on my 20 yrs in working on blockbusters. Take a look.

  4. glenn cady says:

    The answer lies in the one word missing from this article and the industry in general. The word? Story!

  5. TheBigBangOf20thCentruyPopCulture says:

    Modern Hollywood is dominated by dystopian movies populated by dept. store mannequin actors with no charisma or soul. The result is flat action movies with no star power to attract audience and no old soul wiser creative talents who can see beyond formulaic scripts, worn out cliches and cherub faces. In short, the millennial dream factory lacks enough good writers and actors to pull off remaking the past.

  6. The death of the tentpole as a strategy happened a couple of years ago… but studios are adjusting.

  7. Drew Suppa says:

    Studios aren’t dying… their business model is.

    This trend began in the 1960’s with the onslaught of new directors and the end of contracted crew and was exemplified in the mid 1990’s when executives failed to take risks like their predecessors had. Now the industry is run by number-crunchers as opposed to storytellers… and overall content output has reflected this.

    Granted, some of the best films of all time have come out in the past 20 years, but when compared to the number of releases, it’s a sad affair. Board members, many of whom have no experience other than growing their own wealth, are put in charge of creativity. Someone — somewhere — will need to realize that audiences do adhere to certain paint-by-numbers tales… but they are also interested in new original content.

  8. Jack West says:

    The reference to Lionsgate as the model to emulate reminds me years ago when they said the same thing about United Artists in the 60s. No sound stages, rented their space elsewhere, had hits esp. with Bond. Then came Heaven’s Gate.

  9. Mr. Average says:

    Emphasis on TV? I don’t watch TV and haven’t had TV reception for at least 10 years.

    • RoyJones says:

      Wow you don’t watch TV. I guess that means no one else does.

    • I think “TV” refers to series on networks like HBO, Cinemax, Showtime, Netflix, A&E, History Channel and so on, not so much ABC/NBC, though they also are coming up with competitive series. Of course you’ll need a cable company or dish to get “reception.” But in general these 6 to 12 episode series are equivalent to 6 to 12 hour movies with budgets to match. And the production value is wonderful. Though they seem to cut costs on talent since most huge names stay away from “TV.”

  10. John Shea says:

    Predictions of studio’s deaths are greatly exaggerated. Mark Twain did die eventually, but he wasn’t a corporation. I love big movies and I think scale has a substance all of its own, even if that is paraphrasing Stalin about tanks.

  11. MarcD says:

    Fewer releases, tighter budgets, and severe penalties for overages is the model that Paramount is already operating under and has been operating in this mode for a long time now. If Sony is following suit that probably means the other bigs will summarily fall in line.

  12. DavidM says:

    Elberse’s book is a must read. The book explains how the blockbuster mentality came to dominate for film but also for TV, music, sports, and more. The data are there to prove it.

  13. LOL says:

    For better or worse, Sony’s costly failures this year were sort of admirable disasters. White House Down was commissioned to continue its filmmaker-friendly association with Roland Emmerich, and After Earth was bankrolled in order to preserve its lucrative talent connection with Will Smith. They may have taken a hit on both projects but that just seems an awkward blip which may be reversed with future endeavours.

    The notion that Sony’s salvation lies with Spider-Man flicks is depressing. One has always admired its continued passion for contemporary grownup fare like Social Network, Zero Dark Thirty and American Hustle. They even pre-bought international distribution on Django Unchained. I don’t mind them making crap but would like that they maintain some kind of prestige slate.

    Very good article, Mr Bart.

    • Frank W says:

      My wife insisted we see both White House Down and After Earth, so there are people who want to see the product, though bad reviews convinced me to wait on DVD for After Earth, we did see WHD and enjoyed it and got the DVD, so they got $50 gross out of us

  14. a long time ago, whilst still being a news(sic)junkie, I was still being educated on Chicago sun times and the Chicago tribune newspaper copy, especially in the business section. and before taking Joe Pudlo’s accounting class (at the behest of a friend, BRIAN MICHAEL FRANCIS MCCORMACK AGUINA, lest I be a bio-physical tissue animator, in the E.R.A. of COMPUTER ANIMATION PROCESSES), I received most of my education with respect to the federal reserve board through the news-papers, with concern with respect to the e.c.o.n.o.m.y… the news-papers, quoting the doctors of philosophy in the speculative world of economics, stated that most economists think that the ECONOMY [] goes in cycles, that is we will experience great depressions, (BOOM)times of prosperity, and C/Y/C/L/I/C/A/L/ recessions {[which can be caused by American p.s.y.c.o.l.o.g.i.c.a.l. cannestering}] and /ECONOMIC/ “babbling brook times” of leisurely articulative investment. Nowadays the acidic-newspaper-tree-pulp-yellowing-paper-dailys, are too busy focusing on micro-economic-climate of the “This Old House: bob villa and NORM ABRAHAMS/this old yankee workshop/” single family home, condominium posessors, outer suburban large scale mansion ECONOMICclimate, too comment toomuch on large cyclical gains………

    • disgruntled viewer says:

      Sorry Jeffrey, it’s apparent you are FOS!

    • Frank W says:

      …and this is about Sony how?

      • sorry if I’m convoluted, I guess the are “articles of agreement” in respect to peole who go on the comment BULLITEN board, but, just the same, it’s a delight when other individuals out there in ‘al gores’ information super highway’ the i.n.t.e.r.n.e.t.’ comment, at all on my POSTINGS,. it can get a little lonely IF I never hear feedback on about 905 (ninety percent) of my, >INTE><T< (mid-western sector*ite) wordings.

  15. FTCS says:

    The problem, plain and simple, was Sony had a bad quarter and lost money. In order to recoup that money someone or something must take the fall and bite an economic bullet. However, this must be ramped up into some corporate cultural change embracing the future in order to protect all those at the top who greenlit and endorsed the recent flops.

    If Sony had a KILLER quarter and year with great prospects laid out for the next few years, this story would be entirely different…probably analyzing the creative progressive management at Sony and how they did so well.

    • The corporate mentality (or is it mentally) to make management decisions anytime something like this happens, regardless of whether making any decision is warranted or not, is what you’d call reactionary, which sounds opposite to business conservatism. And yet it is politically the same thing, which is maybe why it’s a mentality. There are programs that deal with these afflictions. But admission is the first step.

  16. Frank W says:

    Isn’t Disney still a studio in the old fashion “Studio-System” style–developing talent through it’s cable shows and into music and films and ABC? That seems to be a monopolistic model that is still working. Now Comcast owns NBC UNIVERSAL and has plenty of venues to showcase its produced product.

More Biz News from Variety