Back in 2000, studios were flush with cash and made movies for U.S. audiences first. New Line and MGM were still players. DVDs were new and had yet to turn into Hollywood’s cash cow. Watching a movie online was unrealistic. Brad Grey was still a talent manager. And Pixar was the little toon shop outside San Francisco that made cute movies on its computers.
While digital has changed film distribution forever, the good news is that consumers are watching more movies than ever — and anywhere they want. That includes the megaplex, where moviegoing has proved recession-proof, with attendance up and box office expected to pass $10 billion for the first time this year.
That’s a growing pain studios can get used to.
A foreign affair
If Hollywood had been accused of living in a bubble, that’s not the case anymore. Movies now often earn more of their box office overseas than they do in the U.S., and a film’s performance in Italy or Russia is as important as its New York City numbers. Just look at the $687 million haul of Fox’s “Ice Age: Dawn of the Dinosaurs” around the world (77% of its gross) compared with $197 million domestically. This year, Sony passed the $2 billion mark overseas for the first time ever with pics like “2012” and the Michael Jackson docu “This Is It” appealing to international auds. It was the fourth studio to ever do so, with Warner Bros., Paramount and Fox also reaching that milestone this decade.
Shaking up the majors
Studio chiefs used to be able to weather a bad year; now media congloms have little patience for disappointing returns. Within the past six months, the chieftains of Universal — Marc Shmuger and David Linde — exited, as did Dick Cook from Disney and Harry Sloan from MGM. Those moves underscore the shortening lifespans of studio heads as well as signal the massive changes in the film business. Who would have thought that DreamWorks would begin the decade as a rival to Disney and end it as one of the shingles on the lot? With Comcast poised to take over Universal, and MGM on the auction block, the must-have accessory for the foreseeable future is the parachute.
Other people’s money
Whether it’s boom time or recession, it seems like Hollywood never has to worry about its financial well running dry.
Studios have gotten used to a revolving door of investors. Having long relied on German financing, it watched as that Teuton spigot ran dry, followed by a flurry of dotcom dollars, and money from insurance companies, Canadian hedge funds, U.S. banks and private equity funds. Private investors like Philip Anschutz, Thomas Tull, Mark Cuban and Todd Wagner, Jeff Skoll, Bob Yari and Ryan Kavanaugh opened their wallets to launch companies like Walden, Legendary, 2929 and Participant and become overnight Hollywood heavyweights.
Marvel Entertainment was able to start financing its own supherhero movies, starting with “Iron Man.” Outside money also has backed slates at Lionsgate, launched ventures like Summit Entertainment and given the Weinstein Co. and MGM new leases on life. Even the Germans are back, funding pics from Joel Silver and other producers.
After the mortgage crisis, other sources bubbled up: oil money made by Middle East companies and billions from India. Dollars from Dubai and neighboring Abu Dhabi are funding works at Warner Bros. and tens of millions in first-look deals with producers like Walter Parkes and Laurie MacDonald. India’s Reliance Big Entertainment gave a huge shot of adrenaline to DreamWorks and is providing development dollars to Imagine Entertainment and CAA clients like Brad Pitt, Tom Hanks, George Clooney, Julia Roberts and Jim Carrey. Jerry Bruckheimer has found similar development dollars from Barclays Bank.
The tyranny of the tentpole
Studios turned to the tentpole like never before, filling their slates with superheroes and sci-fi actioners and even a return of “Indiana Jones” and “Die Hard.” As long as they were instantly recognizable, easily marketable and created buzz at Comic-Con, these pics were the closest things to sure bets, with midrange pics starting to fall by the wayside. But as evidenced by Judd Apatow’s comedies, the unexpected success of movies like “The Hangover” or the phenomena of “The Passion of the Christ” and “Paranormal Activity,” every rule was ready to be rewritten. One of the decade’s most unexpected success stories: Torture porn, defined by “Saw” and its sequels and copycats.
The rise and fallof specialty divisions
Studios channeled their serious award contenders into specialty divisions, which congloms seemed to think were more adept at creating award-season buzz than luring mass audiences — though that wisdom was defied by “March of the Penguins,” “Juno” and “Little Miss Sunshine.” But as specialty budgets inevitably inched upward into midrange territory, and the marketplace was flooded with costume dramas and esoteric fare, the majors balked at bearing the cost of prestige pics, and scaled back their labels or shuttered them altogether. Gone are Paramount Vantage and Warner Independent, and Miramax is only a shell of its former self.
Focus, Fox Searchlight and Sony Pictures Classics are the three surviving studio specialty units. Next up: The “microbudget” unit, inspired by the $11,000 it cost to make “Paranormal Activity,” which Paramount plans to launch next year to produce up to 20 pics per year with budgets of less than $100,000 that could be remade as big-budget versions or be released in theaters.
Shrink wrapand shrunk windows
For a time it seemed as if studios were printing money, with an explosion of DVD sales reaching some $24 billion in 2006. Hollywood became linked to mass-market retailers like never before, with big-box stores like Wal-mart suddenly commanding leverage. Then the business started to shrink, with revenue from DVDs down to $21.6 billion last year, and slumping another 13% this year.
With the numbers expected to decline further, and cheap rental services like Redbox eating into profits, the studios are turning to video-on-demand, which holds promise and a new set of tensions, as studios suggest shrinking the window between a movie’s theatrical release and its debut in the home. Exhibitors, not surprisingly, aren’t thrilled by the prospect.
The forgotten female demo
The belief used to be that only 13- 35-year-old men or families bought tickets to studio titles. That thinking long reflected the types of films getting greenlit, with actioners, raunchy comedies, horror and animated fare dominating release schedules.
But women packed theaters for “Sex and the City,” “The Devil Wears Prada,” “Mamma Mia” and, more recently, “The Proposal,” “Julie and Julia,” and the “Twilight” franchise, breaking records and changing the mindset of studio bosses.
Tyler Perry has also proved that African-American women have been underserved, with the demo consistently turning out for his comedies. Disney is now going after that same audience, as well — although younger — with “The Princess and the Frog,” which introduced Tiana as its first African-American princess.
Studios toy with their slates
The 10-year-old boy became the most important person to Hollywood. Movies based on toys became a major obsession, as studios sought to land the rights to everything from G.I. Joe and Transformers to, in the coming years, Barbie, Battleship and He-Man. Inspired by Disney’s ability to mine its theme parks for tentpoles, and the runaway success of “Transformers,” it became big news to find out which studios and agencies were aligned with what toymaker, whether it be Mattel, Hasbro or Lego. At the start of the decade, the idea that there would be a “Monopoly” movie was a punchline; now it’s really in development.
3D is the answer
What once seemed like a pricey proposition for theater owners now looks like a bet worth making.
As exhibitors panicked that an increasing number of ticket buyers were staying home to watch movies on their high-end home theater
systems, Jeffrey Katzenberg, Robert Zemeckis and James Cameron tubthumped 3D as the next big thing to bring moviegoers back to the megaplex. Disney has been the format’s biggest backer, having released more 3D movies than any other studio.
It seems apparent that 3D’s cheerleaders were right. In 2008, 3D movies grossed $307 million at the domestic box office. This year, that number swelled to $1.3 billion — and that’s before Fox unspooled Cameron’s “Avatar.” Higher ticket prices are helping drum up a lot of those dollars. But steeper fees aren’t dissuading moviegoers — in fact, attendance is more than double for a 3D version of a movie.
While that’s been great for everyone’s bottom line, converting theaters to 3D still comes with a hefty pricetag that cash-strapped exhibitors still want studios to help pay for. More 3D screens are coming online with every major tentpole, however. While “Christmas Carol” went out in roughly 1,800 3D theaters domestically in November, Cameron’s “Avatar” will be the widest 3D release yet, opening in more than 2,000 3D theaters in the U.S. and 5,000 playdates internationally.