Film Fund-amentals: What They Pay For, and What We Get

Dennis Toth’s thought-provoking musings on film-finance led The Spectrum’s blog editor to ask him some questions that have been on her mind around Oscar time…

Q: How does film financing most directly affect what we see or don’t see in local cinemas? What kinds of things are we probably missing (or being spared) because of the way productions are typically funded?
A: Obviously, the first effect is that a lack of financing means that you are not going to see much at the cinema (though the video game machines will keep running). The real effect is based on the weight of the budget. The more money behind the film, the more of everything else that is attached to it. A $200 million dollar “tent pole” movie may be a total brain-dead stinker, but the sheer brute size of its budget means it will open at 1,000-plus screens with maximum PR push, no matter what. The smaller the budget, the less pull the film is going to have. So the screening venue for small budget films have become fewer and fewer while the major elephants dominate the room. In some ways, the situation resembles an intense Darwinian state of survival, though the game is largely rigged in favor of a bloated state of inflated spectacle. It could be argued that we are at least spared needless exposure to a surplus of weak and pretty clichéd independent movies. We are also “spared” much access to much of anything, period. Likewise, the current direction of the major companies is to give us a lot of tent poles without a tent.

Q: One of your constant themes is the legendary cluelessness of Hollywood producers when it comes to working out the winning formula for movies. Does the movie industry in other countries fare any better?
A: Cluelessness has no international boundaries, and the situation in other countries largely varies according to each nation’s own unique situation. Film-making in India and Hong Kong has its own commercial tradition that is highly developed and has successfully rivaled Hollywood within the context of the Asian market. The European scene is heavily divided between the French brand of latent commercial rejection of Hollywood dominance and the German habit of passive/aggressive behavior on the same issue. The key question is how to run a national cinema in an international market place. The traditional American model has been based largely upon overwhelming financial dominance. As that begins to crumble (and it is), one is mostly struck by the complete lack of any viable new models.

Q: Once in Hong Kong I ran into the producer/director Johnny Mak at a midnight opening of one of his films. He wanted to see how many young women were turning up, as he saw the “date movie” aspect as a gauge of a film’s likely financial success (in spite of his specialization in violent gangster films). Are there Hollywood producers and directors who employ similar first-hand research, or do they leave it all to professional marketers?
A: Heck, Hollywood companies research until they’re blue. I personally feel that the problem isn’t with the amount of audience research that is done, but with the perceptions brought into the research. A stunning amount of the research done in Hollywood is based upon finding out what will appeal to males between the ages of 13 and 25. That is because film companies are totally convinced that young males have more money than they know what to do with and dominate the movie-going audience. This is half-true, but only by half. The problem is not with the research (nor with the various and many companies employed in doing the research) but with the very basis of what they think they are researching. Basically, too much time is spent conducting research designed at confirming the pre-determined concepts they already have in their heads.

Q: How does film financing carry over into other sectors? In your reading or discussions with others, do you notice some of the same business interests applying some of the same wrong-headed or canny decision-making processes in other areas?
A: Yes and no. There are a lot of Hollywood executives who devote more creative energy to deal making than they do to film making. In that regard, they are already an extremely canny bunch. Unfortunately, most of the deals are devoted to shifting large funds around in an increasingly creative manner in order to keep the money flowing. It doesn’t actually generate profit, it just keeps the money flowing. It is a system that has kept many key executives and shareholders happy, but has not necessarily generated much for many of the people involved in the business. In this regard, they are like every other major business in the country. Yes, it is all smoke and mirrors with some inventive accounting on the side to keep the illusion rolling. This is why Hollywood likes tent pole movies, because it allows a lot of room to play havoc with moving lots of money around. Unfortunately, this is also why the day of the tent pole movie is numbered — the money really isn’t there any more and film companies are going to have to revamp to a tighter (and more responsible) financial model. The current wave in Hollywood of gutting the units involved in making small-budget films is a misguided attempt to focus the remaining money on the bloated corpse of big-budget productions. As we all know, this simply doesn’t work. But the corporate mindset is pretty much formed through social inbreeding, a misguided sense of self-interest, an underlining sense of contempt for the consumer, and a tunnel vision massive enough to perplex a dozen opticians. That is why even the smartest studio executives are bound to stumble, and stumble badly, in the decisions they are about to make.