Studios, seeing profits shrink as box-office flattens and DVD sales
decline, are trying to dump the long-held economic system in Hollywood that led
to stars earning paychecks north of $20 million.
"Studios see things are slowing down and they can no longer afford
to make big movies" and agree to lucrative deals for actors where, in some
cases, "the star makes more than the studio at the end of the day," said media
analyst Harold Vogel.
I think studios are tired of shelling out $200 million to make a movie that probably brings them only about $20 million or so after they give the celeb gets their front-end cut. Also the studio have to shell out for marketing costs that don't get counted in the actual making of the movie. So the studios not only have to worry about the movie bombing but also about the movie coming in below expectations. You shell out $200 million and you are forcing the movie to break records at the box office or you end up making hardly anything for all that invested capital.
So I think studios will start bankrolling more movies like Sideways or backing more stars like Tyler Perry. These are things they can pay about $16-$20 million for and have the potential to make $100 million or more. Even if they bomb the studio isn't out too much money.
One interesting side effect of this would be that the studios can afford to take risks again. You can't mess up when you have $200 million on the line but you can make a few mistakes when you have only $20 million or so on the line. Thus, they might be able to bankroll more experimental stuff or decent movies that aren't studded with high priced celebs. So scripts would not have to be dumbed down because you won't need millions of people in the audience to make back your initial outlay.
That means you will see a lot more horror movies done on the cheap like Saw or book adaptions with only one big star in them like Devil Wears Prada. Devil was made for only about $35 million according to this and raked in $120 million so far. That is a nice profit margin when you compare it with movies like Miami Vice and even Superman Returns. These movies froze up $135-$270 million+ of capital and had a far lower profit margin. Devil was a 3 bagger while Vice will probably barely break even and Superman might barely be a 1 bagger.
There might come a day when the only $100 million+ movies that some studios will make would be animated CGI types from proven money makers like Pixar. I mean Cars cost $120 million to make and has already doubled its money with a $385 million. It will be a sure blockbuster on DVD and all of the toys and stuff will push it into the stratosphere. This it is really likely to be a 5 bagger or even better.
It will be sad to see the Blockbuster Summer season go into movie history. What we will get in return is many smaller budget movies that might end up being far better then the $200 million shlock and TV remakes that we are getting today.
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