More on the Hollywood blockbuster

This is a well thought out article, especially for a show biz outsider. I especially like the chart that illustrates the dominance of big budgeted franchises and sequels now. When I worked as a movie production vp at Disney (85–92), we filled out the release calendar with modestly budgeted pictures like Ruthless People, Down and Out in Beverly Hills, Beaches, Dumbo Drop, etc., which nestled under the tent-pole in the slower months. We were happy to hit “singles” and “doubles”, and every once in a while we’d make an in the park home run like Splash, or Good Morning, Vietnam. Home video, Blockbuster (remember them? they were disruptive, until they got disrupted by Netflix) had a hungry maw that had to be fed. You wanted pictures on the new releases shelves. Quantity mattered.

Today your tent pole movies cost upward of 500 million — yes, half a billion dollars (Avatar, John Carter of Mars). For perspective, half a billion dollars is larger than the GDP of most countries in the world. A few misses in a row could cripple a studio. This is why Disney/ABC, NBC/Universal, Sony and Fox are in a strong position: movies are not their only media businesses, nor is the movie business the conglomerate’s largest and most lucrative. Disney just shrugged off the combined billion dollar loss of Pearl Harbor, Zorro, and John Carter. They produce the Pirates of the Caribbean movies, which made up for those losses and more, much more. And Disney’s not done with Pirates yet, either.

Within a studio, the tent pole becomes a bigger and bigger focus. They are much, much better for theater owners in the US and abroad. This accelerates the trend toward bigger productions of known franchises like Spider Man. Insightful insiders like Steven Speilberg predict that this model is unsustainable. I would predict the opposite. The Asian market is finally consuming western cultural products at scale. Consumers have instant digital access to the product. The blockbuster now makes the most economic sense. At some point American hegemony will be challenged. Tastes change, and the studios will pivot, just like they’ve always done. Speilberg is the most acclaimed and prolific filmmaker of our time. He is not an economist.

Studios have not stopped making smaller pictures altogether, but there are so few screens for them, the most important distribution platform is Amazon or Netflix. There is still room for teen comedies like The Hangover where the stars and/or director and/or producer are a trusted source. The economics of these is still good, though there are fewer and fewer screens for them, and comedies do poorly overseas. Still these movies can turn into home-grown franchises. That’s the other way studios to hit the jackpot. A modestly produced 10 million dollar talking dog movie with no stars like Incredible Journey can make upwards of 100 million dollars, and launch half a dozen sequels which combine for another quarter of a billion dollars of profit, becoming a franchise itself. Not quite the return a venture capitalist gets on a Facebook IPO, but a pretty nice business nonetheless.

Written by

AR/VR Consultant, Columnist, Author of the AR-enabled books “Metaverse, A Guide to VR & AR” (2018) & “Convergence” (2019).

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