The Blockbuster Standard

While it may seem like the major studios are making heavy profits, moviemaking today is a much riskier, less profitable enterprise than it was in the studio system era. The massive budgets required for the global marketing of a film are huge financial gambles. In fact, most movies cost the studios much more to market and produce—upward of $100 million—than their box-office returns ever generate. With such high stakes, studios have come to rely on the handful of blockbuster films that keep them afloat (New World Encyclopedia), movies like Titanic, Pirates of the Caribbean, and Avatar (New World Encyclopedia). The blockbuster film becomes a touchstone, not only for production values and story lines, but also for moviegoers’ expectations. Because studios know they can rely on certain predictable elements to draw audiences, they tend to invest the majority of their budgets on movies that fit the blockbuster mold. Remakes, movies with sequel setups, or films based on best-selling novels or comic books are safer bets than original screenplays or movies with experimental or edgy themes.

James Cameron’s Titanic (1997), the second highest grossing movie of all time, saw such success largely because it was based on a well-known story, contained predictable plot elements, and was designed to appeal to the widest possible range of audience demographics with romance, action, expensive special effects, and an epic scope—meeting the blockbuster standard on several levels. The film’s astronomical $200 million production cost was a gamble indeed, requiring the backing of two studios, Paramount and 20th Century Fox (Hansen & Garcia-Meyers). However, the rash of high-budget, and high-grossing, films that have appeared since—Harry Potter and the Sorcerer’s Stone and its sequels (2002–2011), Avatar (2009), Alice in Wonderland (2010), The Lord of the Rings films (2001–2003), The Dark Knight (2008), and others—are an indication that, for the time being, the blockbuster standard will drive Hollywood production.

The Role of Independent Films

While the blockbuster still drives the industry, the formulaic nature of most Hollywood films of the 1980s, 1990s, and into the 2000s has opened a door for independent films to make their mark on the industry. Audiences have welcomed movies like Fight Club (1999), Lost in Translation (2003), and Juno (2007) as a change from standard Hollywood blockbusters. Few independent films reached the mainstream audience during the 1980s, but a number of developments in that decade paved the way for their increased popularity in the coming years. The Sundance Film Festival (originally the U.S. Film Festival) began in Park City, Utah, in 1980 as a way for independent filmmakers to showcase their work. Since then, the festival has grown to garner more public attention, and now often represents an opportunity for independents to find market backing by larger studios. In 1989, Steven Soderbergh’s sex, lies, and videotape, released by Miramax, was the first independent to break out of the art-house circuit and find its way into the multiplexes.

In the 1990s and 2000s, independent directors like the Coen brothers, Wes Anderson, Sofia Coppola, and Quentin Tarantino made significant contributions to contemporary cinema. Tarantino’s 1994 film, Pulp Fiction, garnered attention for its experimental narrative structure, witty dialogue, and nonchalant approach to violence. It was the first independent film to break $100 million at the box office, proving that there is still room in the market for movies produced outside of the big six studios (Bergan, 2006).

The Role of Foreign Films

English-born Michael Apted, former president of the Director’s Guild of America, once said, “Europeans gave me the inspiration to make movies…but it was the Americans who showed me how to do it (Apted, 2007).” Major Hollywood studio films have dominated the movie industry worldwide since Hollywood’s golden age, yet American films have always been in a relationship of mutual influence with films from foreign markets. From the 1940s through the 1960s, for example, American filmmakers admired and were influenced by the work of overseas auteurs—directors like Ingmar Bergman (Sweden), Federico Fellini (Italy), François Truffaut (France), and Akira Kurosawa (Japan), whose personal, creative visions were reflected in their work (Pells, 2006). The concept of the auteur was particularly important in France in the late 1950s and early 1960s when French filmmaking underwent a rebirth in the form of the New Wave movement. The French New Wave was characterized by an independent production style that showcased the personal authorship of its young directors (Bergan). The influence of the New Wave was, and continues to be, felt in the United States. The generation of young, film school-educated directors that became prominent in American cinema in the late 1960s and early 1970s owe a good deal of their stylistic techniques to the work of French New Wave directors.

Figure 8.8 The French New Wave movement of the 1950s and 1960s showed that films could be both artistically and commercially successful. Jean-Luc Godard’s Breathless is well known for its improvisatory techniques and use of jump cuts. Vintage Breathless Movie Poster Detail – CC BY 2.0.

Rising Costs and Big Budget Movies

In the days of the vertically integrated studio system, filmmaking was a streamlined process, neither as risky nor as expensive as it is today. When producers, directors, screenwriters, art directors, actors, cinematographers, and other technical staff were all under contract with one studio, turnaround time for the casting and production of a film was often as little as 3 to 4 months. Beginning in the 1970s, after the decline of the studio system, the production costs for films increased dramatically, forcing the studios to invest more of their budgets in marketing efforts that could generate presales—that is, sales of distribution rights for a film in different sectors before the movie’s release (Hansen & Garcia-Meyers). This is still true of filmmaking today. With contracts that must be negotiated with actors, directors, and screenwriters, and with extended production times, costs are exponentially higher than they were in the 1930s—when a film could be made for around $300,000 (Schaefer, 1999). By contrast, today’s average production budget, not including marketing expenses, is close to $65 million today (Nash Information Services).

Consider James Cameron’s Avatar, released in 2009, which cost close to $340 million, making it one of the most expensive films of all time. Where does such an astronomical budget go? When weighing the total costs of producing and releasing a film, about half of the money goes to advertising. In the case of Avatar, the film cost $190 million to make and around $150 million to market (Sherkat-Massoom, 2010; Keegan, 2009). Of that $190 million production budget, part goes toward above-the-line costs, those that are negotiated before filming begins, and part to below-the-line costs, those that are generally fixed. Above-the-line costs include screenplay rights; salaries for the writer, producer, director, and leading actors; and salaries for directors’, actors’, and producers’ assistants. Below-the-line costs include the salaries for nonstarring cast members and technical crew, use of technical equipment, travel, locations, studio rental, and catering (Tirelli). For Avatar, the reported $190 million doesn’t include money for research and development of 3-D filming and computer-modeling technologies required to put the film together. If these costs are factored in, the total movie budget may be closer to $500 million (Keegan). Fortunately for 20th Century Fox, Avatar made a profit over these expenses in box-office sales alone, raking in $750 million domestically (to make it the highest-grossing movie of all time) in the first 6 months after its release (Box Office Mojo, 2010). However, one thing you should keep in mind is that Avatar was released in both 2-D and 3-D. Because 3-D ticket prices are more expensive than traditional 2-D theaters, the box-office returns are inflated.

The Big Budget Flop

However, for every expensive film that has made out well at the box office, there are a handful of others that have tanked. Back in 1980, when United Artists (UA) was a major Hollywood studio, its epic western Heaven’s Gate cost nearly six times its original budget: $44 million instead of the proposed $7.6 million. The movie, which bombed at the box office, was the largest failure in film history at the time, losing at least $40 million, and forcing the studio to be bought out by MGM (Hall & Neale, 2010). Since then, Heaven’s Gate has become synonymous with commercial failure in the film industry (Dirks).

More recently, the 2005 movie Sahara lost $78 million, making it one of the biggest financial flops in film history. The film’s initial production budget of $80 million eventually doubled to $160 million, due to complications with filming in Morocco and to numerous problems with the script (Bunting, 2007).