The Answer To The $200 Million Movie Question

from the there-is-no-$200-million-movie dept

Last month, at the CATO Institute conference on copyrights, someone from NBC Universal asked both Professor David Levine and me how NBC could keep making $200 million movies like King Kong without super strong copyright regulations. We each gave our answers that didn't satisfy some. However, as I noted in the recap to the event, the guy from NBC Universal was asking the wrong question. It's like going back to the early days of the PC and asking how IBM would keep making mainframes. The point is that $200 million movies may mostly be a thing of the past. The near immediate response from NBC Universal and other stronger copyright supporters is that this is a "loss" to society -- since we want these movies. However, that shows a misunderstanding of the answer. No one is saying to make worse movies -- but to recognize that it should no longer cost so much to make a movie. The same economics professor, David Levine, who was asked the question is now highlighting exactly this point on his blog. Last week there was a lot of publicity around a group of Finns who created a Star Trek spoof and are trying to help others make and promote inexpensive, high quality movies as well. Levine notes that the quality of the spoof movie is astounding -- not all that far off from what you'd expect from a huge blockbuster sci-fi picture, but was done with almost no budget at all. Given the advances in technology, the quality is only going to improve. So, again, it would appear that a big part of the answer to the $200 million movie question is simply that anyone spending $200 million on a movie these days is doing an awful job containing costs.


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  1.  
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    mthorn, May 15th, 2006 @ 4:12am

    Budget

    Serenity (http://www.serenitymovie.com/), a recent Sci-fi feature was made for a mere $39 Million. It looks good, and the overall quality of the film is better than many budget Goliaths. Still way more than what Star Wreck was probably done for. However, if you read the Star Wreck website, it took them 7 years to make. Getting the same thing done in a year is likely to cost more. Especially if you have a Sci-fi film set in the future where using location as they did in Star Wreck wont work because the location doesn't exist.

     

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    seth, May 15th, 2006 @ 6:01am

    It's not the effects...

    it's the actors that drive up the cost of movies. When studios realize that it isn't worth $20 million to have someone work for a few months on a movie, maybe the price will come down

     

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    Louis, May 15th, 2006 @ 6:11am

    RE: It's not the effects... by seth

    Totally agree with you.

    Most of the tech industry by now knows the benefit of cutting the deadwood and that nobody is irreplaceable. It`ll probably take the Film industry a few more decades before they realize this.

     

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    ctyankee, May 15th, 2006 @ 6:18am

    "it's the actors that drive up the cost of movies. When studios realize that it isn't worth $20 million to have someone work for a few months on a movie, maybe the price will come down"

    Certainly the expense of high priced talent is a factor. But as Poseidon versus MI-3 is showing, top talent may translate to the bottom line. But your point is taken.

    But you're way off on the cost of special effects. This is big business and a expensive one. It was reported that the new X-Men will be over 200 million much of it to special effects and the new Superman more than that and the next Spiderman around 260 million dollars. So please, don't tell us about paying some guy 15 million dollars (very few get over that) that is driving this expense.

     

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    Gabriel Tane (profile), May 15th, 2006 @ 6:28am

    Quality vs. Cost

    It seems in the movie industry, there has been an unnecessary emphasis placed on how much the movie cost to make. The 'big boys' are always heralded based on the insanely large cost involved. As if the only merit of a movie is it's price tag. While yes, some of them really didn't go over that well, others were good on their own merit. But, unfortunatly, of all of the adjectives used in describing a blockbuster over the last few years, how many are remembered as easily as the cost?

    I'd be interested to see if this kind of shift-of-thought leads to reminding Hollywood that we're not interested in the cost but in the quality of the movie. It dosn't have to be expensive, just... well... good.

    While the etymology of "blockbuster" may be linked to WWII bombs that could destroy whole blocks, that doesn't mean that HW should "bust the block" by dropping a big sack of money on it.

     

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    chris (profile), May 15th, 2006 @ 6:53am

    half the cost of a film is promoting it

    i have seen the mi3 and the davinci code trailers not less than a million times in the last two weeks. it doesn't matter what network (history/discovery ran them both, as did comedy central and MTV).

    all this hype has to cost a lot of money. from all the promotion of "over the hedge" at restaurants, stores, and on television networks, to the "placement" of davinci code programming on tv channels that are supposed to be for "intelligent" consumers, to "talk shows" which are really just platforms for hollywood to hawk it's stupid movies from, all of this hype has to have a significant dollar value. if you ask me, quit hyping movies to death so that they can't possibly live up to their promotion value and you could save quite a bit.

    also, the film industry is full of corruption. you have agents and managers taking 10-40% off the top of everyone's earnings, mafia run unions that do all the work on sets, and the actors/directors themselves who need multiple millions (10% of which goes to an agent) to work on a film. if you ask me, all the money could be better spent on something else... like decent writing.

    it's a vicious circle: films cost so much to make that you have to solicit big ticket talent and a formulaic story so you can get the funding you need to make the movie, then you have to promote the hell out of it so the market is saturated with the message that "film X is the greatest film ever made in history of human civilization" and thanks to the formulaic story and over the top acting of the "big ticket talent" you get a lousy movie that couldn't possibly live up to it's hype. so it doesn't break even until after 2 years of DVD sales. whihc means that you need to be even more formulaic to get funding for your next picture.

     

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    ConceptJunkie (profile), May 15th, 2006 @ 7:08am

    Re: Budget

    From what I understand, Star Wrek was done for orderS of magnitude less money.

    $39 million is still a huge budget (regardless of the quality of the movie, which I'm sure was good in this case, haven't seen it).

    Granted, I don't expect producers to have to make a movie with two popsicle sticks, a shoe-string and a buck ninety-three, but I would consider even $39 million huge given what you can do with technology... or, and this is a radical idea that most bigtime filmmakers don't want to consider, just making a good story.

    Star Wreck has effects that would have been revolutionary just a few years ago... in fact, probably not even possible when they started it. Now that kind of stuff could be done with a few workstations and some really clever people. Perhaps we'll see a huge boom in garage movies, much like we are seeing garage bands, now that anyone can produce and sell music with an investment in equipment that can be afforded by average people.

     

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  8.  
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    Anonymous Coward, May 15th, 2006 @ 7:39am

    "...it's the actors that drive up the cost of movies."

    The problem is, most people won't go to entertainment with totally unknown factors. This is why there's such a prevalence of remakes; the audience knows the story, and those who like like it will likely buy tickets, so your marketing can be less because a certain audience is built in. But unless you want to be condemned to a world of endless remakes, actors are the other vector to build in an audience. Even with an unknown story, the actor in effect, vouches for the movie. Therefore as long as the movie business is based on blockbusters, it may well make perfect sense to pay an actor $20 mil, if their on screen presence is going to generate $20 mil + $1 in revenue.

    And never mind that the one constant of indy and art house films is uniformly bad acting. God bless the erstwhile waitresses and car parkers that over emote and have their naughty bits immortalized in all the black and white, story critical glory they can muster, but the vast majority of them suck as actors. While there are a lot of hacks that make a fabulous living in the movies, there are also some really good actors, which is a rarer talent than most people credit.

     

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    greedy actor, May 15th, 2006 @ 7:41am

    PAY ME!

    The reason these movies end up in the red is because they pay four or five actors 10+ million to "star" in a crappy movie. Quit paying the spoiled talent so much. I don't care if the leading role is played by some big name hot shot. Just make sure the guy who replaces him can act as well

     

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    mmrtnt (profile), May 15th, 2006 @ 7:44am

    Wait for It


    Won't be long before the oil industry will be complaining about not being able to sell $5/Gal gas because of all these energy "pirates" using their Mr. Fusions to run their cars.

    Don't you just hate it when technology makes things easier/cheaper/better?

    MjM

     

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  11.  
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    Rob M, May 15th, 2006 @ 8:00am

    Film costs

    You guys are over simplfying these costs.

    There are many big ticket costs, that are not part of the special effects.

    1. Actors and Actresses (as mentioned)
    2. Marketing
    3. Production Crews
    4. Writers
    5. Directors. If its a big movie, and its got big actors, chances are there is a big money director as well
    6. Costs associated with shooting in various locations (housing production crews, food, etc etc).
    7. All the time in editing
    8. And of course any special effects, especially if it is CG.

    I can see how some of these "big boy" movies crawl up in costs.... I can see how any movie can easily pass 36 mil mark.

     

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    Howard, May 15th, 2006 @ 8:03am

    The whole thing is a nonstarter for me...

    In my case, the market has worked. The movie makers don't get much money at all from me. I get to the theater to watch a movie maybe once a year, but I may skip it altogether this year. I rent a video about 3 or 4 times a year, but it's been a while for that, too. Currently, 6 full-length movies that I may or may not ever watch are spinning idly around on the disk in my DVR that I got during a 30-day promo for DirecTV (after which I dropped all of the extra-cost options). The main reason isn't even the cost, it's the fact that precious little of what is coming out of Hollywood is worth my time to watch.

    Sunday's Dallas Morning News had a feature story on four relatively new series that are being cancelled -- and I have not seen a single episode of any of them. Maybe I'm out of the mainstream, but about the only things I watch anymore are the occasional British comedies on NPR (The Thin Blue Line, mostly), and some science and DIY shows. Commercial TV, like the current offal from Hollywood, has become mostly a vast electronic wasteland. I stopped watching TV news about 20 years ago, when I read that it was probably the biggest factor affecting depression. (Why do I even have a TV? Well, it was my wife's idea...)

    --
    Violins and Accessories

     

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    dorpus, May 15th, 2006 @ 8:29am

    $200 Million of Scrap Metal

    Can you fill your house with $200 million of scrap metal? This guy did, and local priests held ceremonies to exorcise evil spirits as the stuff got removed.

    Watch jubilant neighbors on the video clip.

     

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    mthorn, May 15th, 2006 @ 8:36am

    Re: Re: Budget

    It looks to me like Star Wreck was done probono by the people involved. No actors paid, no directors paid, no crew paid. The only money spent seems to be on the cost of tangibles like computers and video equipment. Hardware is the cheap.

    When you start paying the hundreds of people involved in a film a decent hourly wage for their work (I'm not talking $20 million a film), money adds up fast.

    Universal gave the makers (Joss Whedon, etc) or Serenity a relativley low budget of $39 million. Whedon considered this more than needed but put the extra money back into the movie.

     

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    hexjones, May 15th, 2006 @ 9:12am

    Re: The whole thing is a nonstarter for me...

    So why are you commenting here? How does any of this relate to your wonderfully sequestered life away from the brain-rotting influences of pop culture?

    By the way, you are missing out on some wonderful thought provoking entertainment. The works, and medium, of Shakespeare were once considered chaff for the riff-raff.

     

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  16.  
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    Drew, May 15th, 2006 @ 9:15am

    Actors: A Counterpoint

    Ok, I'm generally VERY much against "big industry" content production companies, but I keep coming back to one thing that I have to say.

    There is no way, on God's Green Earth, that I would go to see Snakes on a Plane, if Samuel L. Jackson were not in it.

    And that bothers me. Because I also hate when huge-name actors get huge money. But without Samuel, this movie would have a hard time making it as a Sci Fi Original Movie... With him... bigger than Titanic (that's my prediction (read: hope), at least).

     

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  17.  
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    flan4u, May 15th, 2006 @ 9:45am

    What ever happened to Value?

    Wouldn't they make more money if they lowered ticket costs? Aside from the recent closing a a local drive in, I haven't been to a movie theater in years.

    I don't care what it cost to make the movie, I only care about the quality, and allot can be done for $40 million or less.

    I refuse to spend $16.00 to $20.00 + for two to view a movie one time in a theater, when I can buy the movie on DVD for that price and watch it as often as I want and with as many people as I choose. But over the past few years, their have been few movies even worth buying or even renting the DVD.

    Lack of quality, value, ridiculously overpaid actors and poor budget management is what will kill the movie industry, not the lack of copy protection regulations or DRM.

     

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  18.  
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    ben, May 15th, 2006 @ 10:05am

    Confusion about costs

    Lots of good points made here. However, 7 years and free labor converted over to actually paying people and you've got at least $200 million in budget. BTW, 7 years = cancelled movie.

    I'm not sure that new technology has made it much cheaper to make movies, maybe a little bit. New technology allows us to make films that look more like what we think they should look like, but it's still very expensive, and technology is still just a tool, which means someone actually has to craft the film and all the effects. Nobody yet has invented the "Make cool movie with computer graphics" button on the keyboard. :)

     

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  19.  
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    Mike (profile), May 15th, 2006 @ 11:07am

    Re: Re: Re: Budget

    It looks to me like Star Wreck was done probono by the people involved. No actors paid, no directors paid, no crew paid. The only money spent seems to be on the cost of tangibles like computers and video equipment. Hardware is the cheap.

    When you start paying the hundreds of people involved in a film a decent hourly wage for their work (I'm not talking $20 million a film), money adds up fast.


    No one's saying movies should all be made for free. The point is that they can be made for much less...

     

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  20.  
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    Howard, May 15th, 2006 @ 11:43am

    Re: Re: The whole thing is a nonstarter for me...

    By the way, you are missing out on some wonderful thought provoking entertainment. The works, and medium, of Shakespeare were once considered chaff for the riff-raff.

    Somehow, I doubt that there is anything currently showing on TV that is in the same league as Shakespeare (or Bacon, depending on how you regard the controvery of Shakespeare's authorship). And, I found that once I quit watching TV news, I was generally better-informed about events from local to international than most of the folks I work with, which led me to conclude that TV (at least the news part) is an information sink, not an information source. The last few times I've happened to see TV news, it struck me as odd how talking heads, having absolutely nothing useful to say, will say it over and over and over... OTOH, I have found the DIY.net programs on woodworking and musical instruments to be quite entertaining and even somewhat informative.

    I found Star Wreck to be quite funny (I did watch a lot of Star Trek and Babylon Five back when they were on, but the last decent SciFi I have seen on TV was Farscape). So I agree with the jist of the story at the top that indy films are the future of movies, and large-budget films are going the way of the dinosaur.

     

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  21.  
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    trancient, May 15th, 2006 @ 12:02pm

    About King Kong

    What's absolutely astounding about the $200M remake of King Kong is that it's in US dollars. One reason for making movies in NZ is that the cost is much cheaper for labor and the exchange rate is highly advantageous.
    This is the same team that came up with a trilogy of movies for $400M five years ago. Peter Jackson and his team developed quality studios and effects shops from the making of LOTR. However they could need that much money for one film is bewildering and mind-boggling.

     

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  22.  
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    -robin, May 15th, 2006 @ 1:13pm

    budget

    Many of the best movies ever made have cost less than a million dollars. Most of the movies that cost more than that did not spend the money on script or writers, and suffered accordingly. Who wants to watch that?

    If what you really want is movies with great special effects, no point, and a happy, unlikely ending, then you should just head down to your local theater. They'll have just what you want.

    If you want a good movie, you better wait for someone like Whit Stillman or Hal Hartley, because the big studios aren't going to give you one of those. Note that neither of these gentleman spend more than a few hundred thousand bringing you a performance. Movies that cost more than that tend to be a very mixed bag, as you would expect from people who can't even manage their movie-making team.

    Movies that are made by their writers are often the best, and rarely cost more than a pitance to make, Peter Jackson's being the exception.

     

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  23.  
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    mmrtnt (profile), May 15th, 2006 @ 1:42pm

    On a Related Note...


    There are thousands of culturally significant symphonies that will be never be written because there's just no money to be made from classical music concerts. For some reason (piracy?) the buying public's just not interested and there's so much competing (free) content out there.

    You know, I used to make these fantastic paper airplanes and sell them. I got better and better and the planes got more complex (and didn't fly as well) and then, suddenly, other people figured out how to make them and the bottom fell out of the market.

    I tried to get Congress to pass laws banning people from copying my designs, but they laughed at me.

    MjM

     

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  24.  
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    Anonymous Coward, May 15th, 2006 @ 6:41pm

    Re: Re: Re: The whole thing is a nonstarter for me

    Somehow, I doubt that there is anything currently showing on TV that is in the same league as Shakespeare [...]

    I don't know about that. I reckon Aaron Sorkin, Alan Ball and David Mamet are in the same league. Their shows (The West Wing (sadly, Sorkin isn't involved any more), Six Feet Under and The Unit respectively) seem to be extrememly well-written. (Disclaimer: I haven't seen The Unit myself, but there seems to be a consensus of sorts on this.)

    And, of course, that's only three examples from US television.

     

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  25.  
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    Pradd Bit, May 15th, 2006 @ 9:49pm

    It is the actors...

    When people say "quality", do they mean the visual quality of the movie? If so, I agree.

    However, it is the acting quality that makes a show suck or not.

    The original star trek had aweful effects, but the actors more than made up for it.

    In The Pirkinning was cool, but the actors really do need some more acting lessongs...but good for them! keep it up!

     

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  26.  
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    charle, May 31st, 2006 @ 12:00pm

    Re: half the cost of a film is promoting it

    VERY WELL SAID! I JUST WALKED BY THE 260 MILLION DOLLAR FILM LOCATION OF SPIDERMAN ,THEY WERE RIGGING UP A CABLE FOR A SHOT OF SPIDERMAN FLYING FROM ONE BUILDING TO ANOTHER.BESIDES THE DANGER OF THE SHOT ,IT COULD HAVE BEEN DONE ON A COMPUTER,THE GRIP SAID WITH ALL THE MONEY THEY HAVE ,THEY WANT IT TO BE REALISTIC.THE POINT IS THEY HAVE THE MONEY TO SPEND BECAUSE THEY KNOW WHOSE POCKETS THEY REACH IN TO GET IT BACK,THE CONSUMER PAYS FOR EVERYTHING AT THE END OF THE DAY,BE IT IN THE FORM OF TAXES OR TICKETS..HOLLYWOOD KNOWS IT AND SO DOES WASHINGTON.BOTH ARE CORRUPT AND OUT OF TOUCH WITH THE PEOPLE THEY LIVE OFF OF....

     

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  27.  
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    Wizard Prang, Aug 24th, 2006 @ 6:28am

    Factors or Actors?

    "The problem is, most people won't go to entertainment with totally unknown (f)actors"

    So the Lord of the Rings trilogy was a flop?

    Yes, there were some big-name actors, but they were hearly the main attraction.

    I want to see a good story well told. Not the latest Star Vehicle.

    But maybe that's just me.

     

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  28.  
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    Wizard Prang, Aug 24th, 2006 @ 9:07am

    Well said

    "The last few times I've happened to see TV news, it struck me as odd how talking heads, having absolutely nothing useful to say, will say it over and over and over."

    I often find myself asking aloud "what have we learned here - anything new?" All too often the answer is "no".

     

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  29.  
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    RJ, Sep 15th, 2006 @ 7:29pm

    I don't know what you expect out of Hollywood, but let me put it into perspective:

    HW makes entertainment - not art. When it comes to movies, the studios try to churn one new blockbuster out a week. It always has to be something with mass appeal. It is consumed, for the most part, in a single weekend and then is gone forever.

    Yeah, there's ancillary markets, but a flick's success in those markets depends on opening weekend.

    Maybe due to the HW promotion engine, movies have become a big target? The nail that sticks up? Why don't you write General Mills complaining about their crappy cereals?

     

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  30.  
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    Jenn, Feb 22nd, 2007 @ 7:04pm

    actors

    Take a look at Natalie Portman. I'm sure she got a big pay check to star in Star Wars. probably along the lines of 20 mil plus. And it's amazing how most of you say it's about big names that studios cast. She was not a big star when she did the professional. She was an unknown. So why did the studio allow an uknown fresh from nowhere to star in such a significant role? I think studios take their chances on unknowns but are wary when doing so. It's all about what an actor has to show. If an uknown can do the job as good as an A-lister they're gonna get work. And yes rightly so most actors deserve the high salaries and pay increases. They've established credibility and deserve to be paid what they're worth. But I don't think exceeding 25 mil is reasonable. But the majority of the big budget is actors and special effects. it's two key factors in how the movie is gonna work. Names or unknowns doesn't matter if the performance sucks. You can put Brad Pitt and an uknown together. The audience is gonna notice both. In fact it might bring the spotlight to the uknown. I think everyone should realize all these actors were once nobody. Studios took chances and that is the truth no matter what anyone says. And they take big risks with big budget. There's been big names that have made flops. poor writing or poor performances. Big names doesn't guarantee success. Also all you need is a name actor in a lead role. The other roles it doesn't matter. People care more about the main character and the antagonist.

     

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  31.  
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    Anonymous Coward, Mar 26th, 2007 @ 6:39am

    hhhh

     

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  32.  
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    Derek, Apr 19th, 2007 @ 10:23am

    cost

    why cant i find out how much it cost to make the movie Airplane, no website has it????

     

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  33.  
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    Anonymous Coward, May 1st, 2007 @ 10:57pm

    yea when you make billions of dollars it has to go somewhere

     

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  34.  
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    Shag, Dec 3rd, 2007 @ 12:31pm

    Re: Quality vs. Cost

    I think its a form of advertising.

    Bunch of really bad movies made up to or close to breaking even.

    Waterworld was one. Everyone went to see it, simply because they spent so much, and they all wanted to know where it went.

    Bragging rights play a big part of it. I think actors are paid what they are worth.

    The crews that put their time and lives into it, have to make a viable space for the actors. Look at Pulp-Fiction. We see all these great actors working together and we believe it. I don't think that if there was anyone else in the movie it would be as good.

     

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  35.  
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    Random Comment, Jun 14th, 2009 @ 1:01am

    > HW makes entertainment

    This needs to be repeated, if only because HW doesn't realize it. It's the proverbial "Are we in the buggy whip business, or the transportation business?" People don't watch $200 million dollar movies. They want the experience (remember scarce goods?) associated with the $200 million dollar movie People want to be entertained.

    And when you think about entertainment, you can more easily slap on the $0 price tag. Television? The internet? Books? It's all part of the entertainment pie, and those of us who don't want to pay high ticket prices already know that.

    Now, you'll excuse me while I retire to my home entertainment system with the plasma television and pop in a DVD. Need that movie experience, ya know.

     

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  36.  
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    MIT C HELL, Feb 25th, 2010 @ 2:15am

    mes fr Joss W.

    Im new at this have a new story for u must see in person 3339d Old Garvey Colvill WA, 99114 USA ....S.o.S..need help I have some 50 or more hand drawn space craft eyes only.

     

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  37.  
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    ced1106 (profile), Jan 25th, 2012 @ 11:16pm

    The question isn't even how we can make an entertaining movie that's inexpensive. The question isn't even how can we make *entertainment* itself inexpensive. The question is how can we make content that people want that is cheap and even free.

    Well, you're looking at it. The *real* threat to the entertainment industry is user-generated content which is often *free*. You're not paying (directly) to read TechDirt. I'm not paying to post. But this is how we wish to spend our time and it is *free*.

    If you want a movie with glitzy special effects, or if you want to watch something with a big-name actor, then, sure, you're going to pay for it. It's no different than if you insist on watching a $20 DVD on a $2000 home entertainment system. If you want something tha costs money to make, you should pay for it.

    But entertainment is *not* a necessity. You do *not* have to watch Snakes on a Plane. If you do, sure, pay for it. But if you can find other ways to spend your time that don't cost money, you don't have to watch *that* particular movie.

     

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