Film Fund-amentals: The End of Everything (Again)

Oh my, it was busy last week. Just glancing at the news reports it would seem that within a mere seven days we witnessed the end of civility in politics, the death of the star system, and the impending collapse of Hollywood. And that was even before the start of the weekend.

We will not discuss the end of civility in American political life, simply because it is news to me that we ever had any. OK, maybe some basic politeness, but it has always been pretty thin and largely based on a power mentality that quietly told everyone else to shut up. But those days are gone (and the rent really is too damn high).

However, more pertinent to our immediate concern is the amazing discovery by Forbes magazine that a lot of high-priced Hollywood stars are incapable of producing significant income at the box office. Good grief, imagine that! OK, over a year ago this column imagined just that when I ran some basic figures through the mill and determined that big name stars generate more magazine covers than they do income. It is always nice to have a few names on the marquee that people recognize, but it doesn’t mean much at the ticket counter.

Heck, the only reason stars get such big sums is because folks in Hollywood are willing to pay them big checks based on a stubborn sense of superstition. Ages ago, Paul Newman explained that he only asked for a big salary when it was a movie he didn’t want to do. Since it never works well to say no in Hollywood, he figured that if they couldn’t afford the pay demand, he was off the hook. If they were crazy enough to pay him that amount, then at least he had a reason for doing the lousy film. This pretty much explains the whole star system as it now operates.

So the question is not: Are these stars worth it? Of course they’re not. But the real question is: Why is any one willing (heck, they’re often begging) to pay them this much money? Unfortunately, the answer to that question is tricky. I was recently stuck in an increasingly unpleasant meeting with a big whoopee-do financial guy. First, he went tearing into the concept of the star system and insisted that he wouldn’t put money into a movie just because of some big name in it. I told him that I agreed with his thinking and that is why we were looking to do small-budget movies with lesser-known people. That’s when he tore loose about how he couldn’t put money into a cheap film with no names in the cast. Go figure! These idiots can’t help themselves. They are slaves to the very system they created.

So why shouldn’t someone like Will Ferrell collect some easy money while he still has a chance? His ride on the gravy train might not last much longer and he will want to sock something away for the lean years ahead. So if people want to give him that kind of money, don’t expect him to say no. Heck, I just want to know how to get in on this racket.

The end of Hollywood itself was the provocative subject of a blog piece in the British newspaper The Telegraph. Written by Adrian Hon, founder and Chief Creative Officer of the online game company Six to Start, the opinion piece could be viewed as the film industry’s worse nightmare. Yep, a guy who is the perfect embodiment of their ideal demographic model is telling them they’re old fossils ready for the landfill. I bet he doesn’t pay money to watch big name stars either.

Hon is half right on many of his points, even though his presentation leaves gaps big enough for both trucks and Will Ferrell’s paycheck. He is correct in noting that one problem with modern major movie releases is an astronomical increase in advertising cost. Currently, a film that has a production budget of around $150 million can expect to spend another $100 million in PR. Ironically, this is another one of those deals in which the high production cost forces (in Hollywood’s thinking) the outrageously high promotion cost. Like so many other forms of out-of-control spending, it’s a team effort.

Likewise, Hon is right about the inevitable rise to dominance of Internet streaming and digital distribution. It isn’t even the future. It’s more like now and the effects are already being felt within the industry (so I hope Will Ferrell has done a good job stashing his loot). A good (and optimistic) presentation on this issue was done last week by Nelson Carvajal in a blog piece called Exclusivity is OUT. Connectivity is IN!. Written to promote the launch of, the piece also does a fine job of summing up the rapidly emerging world of the new business model. To be honest, the title of the piece sums it all up in just six words.

In many respects, we are just waiting for the first major success story to emerge from the digital realm. Admittedly, the profit aspect of the new model is still an open question (as in, when will anyone make a profit). But it will eventually happen, much like the first clap of thunder from a summer storm. Besides, the promotion cost is a lot cheaper (as was amply demonstrated by the original Paranormal Activity).

And Hon is right about another thing. The price of popcorn is too damn high!