Feb 26, 2022 • 10M

THB #88: Studios Wouldn't Make THAT

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David Poland
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We live in an era when how we feel about any given subject seems to stand in for truth.

Don’t get me wrong. I love opinions. I love discussing and debating opinions. But somehow, it seems like all of us have forgotten that facts exist, no matter how inconvenient.

We, on the left, like to think that this quirk of sanity belongs to the right. Certainly, our previous president of lies defined the issue for years. Some of us on the far left (as on the far right) are perfectly comfortable accusing those who are not as far set in our ideological posture of also being factually disconnected.


On the movie front, I had a conversation a group of people I meet with on the regular this morning and the endlessly repeated “they would never make that movie today” saw came up. This tends to be like wagging a red cape in front of me.

Why? Not because I have a vested interest. But because I know this to simply be a false notion. After a year of movie theaters mostly being closed, then 6 months of hopping along on one leg, then the last 5 months of it trying to shake its bonds, the facts seem to be lost on people who feel - as all of us who age tend to - that they don’t make ‘em like they used to.

I offered up the facts of what happened in the early 00s, as DVD made it near impossible to lose money. One big piece was that movies that should have been made for $30 million to $40 million were being made for $60 million to $90 million… not exaggerating. This is also the period when advertising spends sky-rocketed.

So when that ended in the late 00s, the market for everything except big, worldwide release movies shrunk like a large man hitting a cold pool of water. But while it felt (and feels) like massive and quite personal shrinkage, it was really just the market finding its way back to sanity.

Enter Netflix Originals and a massive new pool of funding opens with a very different set of expectations for the work being output and thus, falsely, looks like streaming replacing theatrical in all things other than “tentpole” movies.

So let me just offer a few actual statistics before I stop typing and boring you…

I am using stats from Box Office Mojo, which has made itself almost impossible to navigate for research in their reboot a couple years ago. But I soldier on…

In 2019, the last remotely normal year for theatrical box office, there were 57 movies with a significant (more than a few %) domestic presence with a worldwide gross over $100 million. Slicing broadly, I see 32 of those 57 that are “tentpole” movies, meaning $100m+ budgets or major sequels or major reboots. So I am including both Avengers: Endgame and Dora and the Lost City of Gold. I’m not being clever or strict.

The only movies I so qualify in 2019 that didn’t manage $100m domestic were Rambo: Last Blood and Charlie’s Angels.

Those 32 big movies grossed $20.3 billion dollars. A little more than half the total worldwide gross.

But here is the part that people are pushing away. Twenty-five $100m worldwide grossers with a legit domestic footprint grossed $4.7 billion. And yeah, that’s not 20. But it’s not chicken-scratch either.

Further, as you get below the $100m ceiling, 68 non-tentpoles grossed another $3.3 billion worldwide. So now, the movies no one allegedly makes add up to an $8 billion gross.

So those 93 movies that “no studio would make” brought in $8 billion or so in 2019.

Say that’s $4 billion in rentals, actually paid to distributors. That’s more than any streaming company’s annual net has been so far.

International films that have no American footprint or a tiny one (mostly under 2%, none as high as 10%) account for another $7.1 billion. (Mojo is short about $5 billion overall… sorry… presume most is international… not banging my head against that wall for sport today.)

Now, of course, if streaming companies, born of streaming and built out of legacy companies, are willing to essentially pay back-end upfront for however many titles that would make up that roughly 100 films “that studios no longer make” each year, there will be fewer of those films made by studios (sometimes in the same company) that want to use the windows that generate these kind of revenues in the first window. This is not an argument.

Did it make sense for Lionsgate to pony up $250 million each for the next 2 sequels to Knives Out? Of course not. If the $311 million worldwide gross of the first film was replicated or surpassed by both sequels, yes, they would hit breakeven… maybe make a couple extra bucks… a few. But it’s a hell of a bet for them. For Netflix, it’s a chance to own a franchise that people not only will watch, but actually like. It’s maybe $100 million more than they would have liked to have spent… but their priority is having impact titles and they have been few and far between on the “movie” side of the company.

Anyway… Lionsgate distributed Knives Out. They left themselves exposed to the sequels going elsewhere. (Oy.) And Lionsgate will make and distribute more movies in that price and quality range.

Sony paid for a $100m Tarantino drama… and Little Women… and Escape Room… and Universal paid for a very expensive war movie without stars in the leads with 1917… and released Yesterday and US and A Dog’s Journey. Warner Bros had the worst of it, commercially, but released The Kitchen and The Goldfinch and Motherless Brooklyn and The Good Liar and Richard Jewell and more.

None of these movies “could get made,” but they all got made.

And they accounted for about a third of the revenue from Hollywood output for the year.

COVID didn’t change this fact. It has put us through a lot of paces and sometimes change that starts as temporary becomes permanent… that is, again, a legitimate argument.

But it doesn’t change the facts.

One last fact…

Bob Zemeckis made the Back To The Future films, reportedly, for $40 million a pop. His 2 films after BTTF3, Death Becomes Her and Forrest Gump, $55m each. His next 3 films - Contact, What Lies Beneath, Cast Away - each over $90m. The Polar Express, $165m (allegedly). Beowulf, $150m. A Christmas Carol, $200m.

Next 2 films as a director… Flight ($31m) and The Walk ($35m).

What’s my point?

The market changes. What is make-able for what price changes.

Would a studio make Contact, What Lies Beneath or Castaway for over $90 million today? Absolutely not. But not because “they are out of that business.” $90 million is too much, given the way things are valued.

A streamer would spend the money for any of those movies - with stars of those levels - in a minute. But remember, that would include (for more like $150 million) all upside and back-end. Those 3 movies made $900 million in theatrical and given those times for physical media, not less than another $600 million with a return of more like 80% than 55% for theatrical. So about a billion dollars returns on those 3 titles. Probably more. And the streamer paid you less than half of that. No risk. But it cost the producing entities and participants at least a couple hundred million.

What streamers offer, for now, is a lot of risk avoidance. And there’s nothing wrong with that.

It doesn’t mean the math changed magically overnight. It means that a new player (multiple) with a different set of options and a lot of loose cash came to town. And they are hungry. And that’s great.

But believe you me - or just believe Netflix and their deal for Knives Out - they want they lowest risk and the greatest reward, just like every legacy, OG, no-class, stuck-in-the-past studio you want to make fun of and kick to the curb.

We have always got trouble here in River City. And just because Harold Hill is selling a fantasy doesn’t mean we shouldn’t buy those instruments and uniforms. But facts help us remember that just because we fancy a marching band doesn’t mean the church choir is a worthless relic of the past. Facts help keep us from simply replacing one illusion with a new one, over and over and over again.

Change is good. But not just because it is change.

Until tomorrow…