Terminator 2 made
headlines for being the
first movie to cost $100 million to produce,
making it the most expensive film ever by a
fairly large margin. Today? T2 doesn’t even
crack a list of the top 200 most expensive
movies ever made. That’s right. Since T2’s
release, more than 200 movies have been
made with reported budgets well north of its
$100 million dollars. Inflation does play a
role in the uptick in budgets, but not a big
role. More like a cameo. Even when you
account for inflation, 45 of the 50 most
expensive movies ever made have all been
released in the last 10 years.
Hollywood film execs are
doubling down on
“spectacle.”
At the same time, technology has
revolutionized the tools used to make
movies. DSLR cameras that can capture
cinema-quality images are available at Best
Buy. A single desktop computer today can
surpass the computing power of all the
rooms of computers used to make the
T-1000 in T2 . Digital workflows have
streamlined the process of filmmaking,
eliminating costly development and
duplication processes.
Many industries have seen costs driven down
by new technologies, and we know
technology has fundamentally altered how
movies are made. So why is the film industry
spending more on film production now than
ever before?
Here are a few reasons:
New technology is a double-edged sword
The first Star Wars , made in the 70s, used
the same 35mm VistaVision cameras as
White Christmas, made in the 50s.
In the digital realm, gear does not have such
longevity. For filmmakers expected to
continually push technology to its limits, the
constant upgrade cycle is a curse. Think it’s
annoying feeling pressure to upgrade your
cell phone every year? Try operating an F/X
house pressured to upgrade every piece of
equipment and every piece of software, every
year.
“It’s people! Soylent Green is People!”
OK, so you’re a filmmaker working on a
romantic comedy with no space battles, no
dinosaurs, and no talking animals or babies.
But your film still costs as much to make as
Terminator 2. What the heck?
The answer is people, and I’m not talking
about the salaries of the stars. The push
towards casting young unknowns to carry
franchises (think Jennifer Lawrence, Shailene
Woodley, Andrew Garfield, etc.) is actually
driving star-related costs down from where
they were a decade ago. Nowadays when you
hear about a film star making tens of
millions of dollars from a single project, it’s
likely the result of a revenue-sharing deal,
not because they got $20 million upfront,
guaranteed, a la Jim Carrey in The Cable
Guy .
Every time you see a film
budget in the news, the
figure is most likely
inflated.
No, I’m talking about the other couple
hundred names you see in the end credits of
a film. On a major Hollywood production,
those hundreds of people will give many
months of their lives to a production, taking
care of everything from catering to
costumes, and they need to be compensated
accordingly. As the costs of living raises, so
do the costs of everyone working on any
given film, and no amount of technology can
make living in Los Angeles (or New York, or
Vancouver) any cheaper.
And when Hollywood productions leave North
America seeking a less expensive workforce
(or a workforce subsidized by foreign tax
incentives), the goal isn’t usually to spend
less money, but to get more bang for the
hundred million bucks they were already
planning to spend. (Sadly, for many of these
films, you get what you pay for, with the end
product reflecting the work of less
experienced craftsman).
It’s getting harder and harder to get people
off their couches
Movies have gotten bigger because TV has
gotten better. So Hollywood film execs are
doubling down on “spectacle,” maximizing
every inch of the screen at your local
multiplex, not to mention releasing more
films in 3D and IMAX.
Globalization is also having a similar affect.
China, for example, used be a tertiary market
for Hollywood films. Now it’s a major market.
Low-budget comedies with distinctly
American sensibilities don’t translate well in
places like China. What does translate well?
Robots, wizards, and super-heroes.
Hollywood economics
Over the course of the last decade, the
number of films produced by the studio
system has been steadily decreasing, while
the average budget of each film has been
increasing. To the gamblers out there, this
might seem counterintuitive. Wouldn’t 10
movies produced at $30 million each have a
better chance at succeeding than two movies
costing $150 million each? Yes, but only if
your idea of “success” is very modest.
When a mid-budget drama hits, it can yield a
decent profit and some awards. When a $100
million movie hits, it can yield a billion
dollars of profit, a theme park ride, and fives
more films in the series. Hollywood is no
longer in the business of hitting singles. They
now swing for the fences almost every time
they step to the plate, even if that means
also getting the occasional, big-time strike
out (see John Carter ).
Hollywood accounting
Want to know a
secret about
Terminator 2’s
$100 million
budget? It was
probably less than
that by several
million dollars.
Still enough to
warrant the “most
expensive movie”
tag, but not by as
much. Every time you see a film budget in
the news (and especially on Wikipedia) the
figure is most likely inflated. Why are the
actual budgets of studio films so hard to nail
down? Because it’s not in the studios’ best
interest to let the real figures get out. In the
case of a misfire, they want to be able to
write-off as much as possible, just like any
other business. Likewise, in the case of a hit,
they’ll want to minimize the profits they have
to share with others. Here’s an extreme
example of studio accounting in action: Back
in the ‘90s, Winston Groom, author of the
original Forrest Gump novel, had a deal with
Paramount for 3 percent of all net profits of
the film adaption of his book. Even after the
film racked up nearly $700 million dollars in
global ticket sales, though, Paramount still
claimed the film hadn’t yet reached
profitability. Groom had to take legal action,
which resulted in an undisclosed settlement
to resolve the matter out-of-court (so the
actual accounting books would never be
made public). The take-away from this?
When making a deal with a studio, never
settle for “net participation” when you can
get gross.
It’s not all bad news
All the above isn’t to say that the last
decade hasn’t been good for filmmakers
interested in intimacy over spectacle. In
many ways, it’s never been better. As big
studios step away from smaller films, they
leave a void that independent producers have
been all-to-happy to fill. And it’s never been
easier to produce and distribute a feature
film completely outside the studio system,
using newer, cheaper technologies that not
only produce great images and sound, but
also help keep crews smaller and more
affordable. Sure, it’s harder than ever to get
a major studio to back your passion project
… but it’s easier than ever to make it
yourself, for the price of a used car. Or les
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