I recently found a New York Times article about how Hollywood was rethinking its business model. The writer stated that “the movie industry … is now facing a scenario very much like one it experienced a decade ago, when a similar sense of euphoria — and some would acknowledge, greed — led to a sharp increase in productions and, ultimately, an epidemic of big-budget flops that created huge losses.” This probably isn’t new information to you, since there have been numerous similar articles in various publications following this summer’s run of megabombs. What you may find interesting is that the piece I quoted was written in 1981, after the release of Heaven’s Gate. The reason why we’ve been reading the same article for decades is the continuing focus on the wrong problem — that big-budget movies are too risky — and not the two more self-destructive diseases plaguing nearly every movie studios make: waste and inefficiency.
Other businesses have encountered similar obstacles and found ways around them. The auto industry eventually figured it out: Ford and GM are making fuckloads of cash in large part because they brought down the costs of making their cars by following the path laid out by more efficient Japanese carmakers. The major Hollywood studios have a similarly more efficient business model right in front of them that they could use as a guide: independent film.
Yes, studios make movies of wildly differing scales, and making a giant CGI spectacle like Pacific Rim is going to be more expensive and complex than making the kind of relationship drama that you’d see in indie cinema. But all sizes of films are proportionately overpriced when made with the studio mentality, which always adds costs without adding quality. If a studio spends $700 million on 25 movies and 25 percent of that money is wasted, it is the same as if they spend that same amount on six movies with a similar percentage of budget bloat. Size doesn’t matter, efficiency does. As for the inflated salaries that get paid out for big stars and directors: You only need to overpay people to do mediocre crap.
To give you a better idea of what I’m talking about, I acquired the budgets of two films of a similar genre that, although tonally different, look to the average moviegoer as if they were made on the same scale. Each had two star lead actors and a cast of secondary players who were well known. Both contained significant action sequences, and they were filmed in the same state under the same incentive program. But the studio film cost about $85 million and the independent film came in at $10 million. Here are the major categories found in their budgets and their strikingly different costs:
Though the leads in both movies were certainly stars and the veterans of many hits, the two in the indie movie (which I’ll call “I”) are actually hotter than the stars of the studio movie (“S”). Yet the stars of “I” were paid a collective $325,000, while the stars of “S” made a combined $22.5 million. The supporting cast for “S” was also pricey: The next two leads were paid $750,000 and $500,000. But the third and fourth highest paid actors on “I” were only paid scale (the mandated union minimum), amounting to about $5,000 per week. And just like the leads, I’d say the supporting two on “I” were hotter than those for “S.”
2. Directors, Writers and Producers
“S” was directed by a big, well-known director, who commanded $5 million for his services. The director for “I,” though not as experienced, is certainly sought after. He has been offered studio films and would get a significant bump in pay if he accepted one. But his choice to make this film outside the studio system resulted in a salary of $450,000. That’s upfront; I assume he and the actors had significant profit participation in the movie.
While the much-honored producers of “S” made a predictable $1.7 million, I did not expect to see that the producers of “I” made the relatively generous $750,000. For an indie of that budget, this fee is actually quite high, especially when you consider the relative importance of the stars, who took such a huge pay-cut to do this project.
Possibly the craziest disparity can be seen in the relative costs of writing each movie. “S” had a huge gaggle of writers, brought in for many rewrites, and some of them are at the top of the earning curve; this is common practice on studio movies these days. The total for all of these writers’ work was $6.25 million. Conversely, the writing on “I” totaled a meager but appropriate $300,000. Without the resources to hire various “script doctors,” indies usually stick with the original writers all the way through the process, something that more often maintains the quality of a film rather than undermines it.
I have written before on how expensive star perquisites can be, and “S” was no exception. The budget is polluted with items that never make it on the screen, like:
• trailers for the producer, director, and key cast at about $100,000 each
• $160,000 for private jet travel for one actor and one of the producers, who didn’t live in the state where the movie was filmed. There were direct flights between their home city and the location, with very nice first-class seats, but that proved to be insufficient
• exclusive hair and makeup artists for the leads at around $7,500 per week per person, plus their travel costs and per diems
• everyone’s private assistants at between $800 to $1,200 per week each, plus travel
• personal drivers at $3,400 per week, plus another $1,200 to rent each luxury car for each bigwig
• a couple of chefs at $1,500 per week for the two leads
• a trainer at $8,000 per week
• at least one personal security person at $3,500 per week
Keep in mind all of these people needed to be fed, and have their taxes and insurance paid for them. And many have additional expenses, like supplies, gas, yoga mats, Keurig machines, etc., that get reimbursed by the production. I would be amazed if the total for perqs on “S” didn’t equal at least 20 percent of the total production budget for “I.”
Predictably, “I” had little in the way of perqs. There was one actor who had his own hair and makeup team, but they were paid scale (about $380 per day). Also, one actor got a gym membership and personal trainer for a couple of months, at less than the cost of a week of the personal training for one star on “S.” Airfares were business class or coach, instead of first or private on the other movie. Per diem was given out at a much lower rate and hotel rooms were about a quarter or third the cost per day on “S.” The stars split a double trailer. The director drove himself to the set in a rental car.
This refers to the production personnel who aren’t actors, producers, writers, or directors. The size of a studio film’s crew is always bigger because they always have more equipment on hand, and thus keep the personnel around who work it, even if it mostly goes unused. Most of this crew’s compensation is determined by union contracts, though some can command above scale. Of those above-scale earners, the stunt coordinator on “I” made scale, or around $1,000 a day, while the same position on “S” made $1,600 a day; the director of photography made $6,000 per week on “I” and $25,000 per week on “S”; the production designer on “I” received about $3,500 per week, and the guy on “S” made $11,000 per week.
Even the strictly delineated union salaries were lower on “I” than on “S,” because their overall budget size afforded them lower pre-negotiated rates. For example, the key grip (the person who supervises the movement and setup of equipment on the set) made $42.50 an hour on “S,” while the key grip on “I” brought home $30.45 an hour. These kinds of reductions, spread over the entire crew and multiplied by the number of days worked is quite significant and can only be obtained by movies with lower budgets: something you can’t do when you’re spending $160,000 on private planes.
After the cost of paying for individual people, the biggest differential in the price of most movies comes from how long it takes to make them. Obviously, the content of each movie affects how long it will take to shoot (for example, complicated action and visual effects will unavoidably add weeks to a production). But having done small independents and big studio films myself, I know that one rule comes into play regardless of how big or small scale a production is: People fill the time that they’re given. With longer schedules, actors can take more time to get ready or just hang in their luxury trailers complaining to their agents (using their movie-provided cell phones) that their trailer isn’t luxurious enough; cinematographers can take more time to light; and directors can change their minds or show up with less of a plan for what they are going to film. With our two movies, “S” shot for 65 days and “I” for only 47. I’m sure the producers of “S” could make an argument for why their film took longer to shoot than "I,” but I doubt you will find many experienced people who won’t agree that there is more time spent waiting and fucking around on a studio picture than on most indies. I can’t remember a situation on a lower budget independent movie where we had a problem getting an actor to the set on time and I can’t remember many studio films where we didn’t.
And after a film is shot, the clock keeps ticking. I’ve done movies where people spend twelve hours a day in the editing room trying to make a schedule, and others where they hold to a leisurely eight hours, with longer breaks for lunch and cappuccino. “S” took 22 weeks to cut together and “I” just 16, meaning the postproduction staff and all of the equipment rentals were paid for, at higher rates, for six extra weeks on “S.”
There is no secret technology or system that can make a production more efficient. It is really about having the will to get the movie made at the lowest cost possible without compromising quality. I don’t think that anyone who saw both White House Down and Olympus Has Fallen, which were quite similar in story, would think that the former was of far superior production value, even though its budget was double that of its more successful doppelgänger.
When studios decide whether to make a movie, they calculate projections for its domestic and international revenue, and then decide if the budget makes the investment worth it. If not, they see whether they can lower the budget. But if they were to start with the question, “What is the lowest budget number possible for this movie?” and then look at projections, it would result in huge savings spread across a slate of releases. Even if they think a movie will have enormous revenue — and trust me, Disney assumed that both The Lone Ranger and John Carter would — there is no reason to make a movie for more than the absolute minimum necessary to ensure quality. That would make the big hits more profitable and the big losers less unprofitable. They’d have to start by saying they were going to limit all star, director, and producer salaries, and instead give transparent profit participations so huge payouts would come through in success and not in failure. Making most compensation profit-based would also incentivize producers and directors to limit shooting schedules and to push for better deals on everything that goes into the creation of a film.
Studio execs will say that if they stopped paying big upfront fees, stars and star directors would go elsewhere. That may be true in many cases, but experience has shown that talented people will work on good projects, regardless of what you pay them upfront, as was the case with “I.” You only have to pay a director or actor a gigantic salary to get him or her to do a mediocre remake of a TV show or a sequel — not a great original script. It just takes one studio to replace their current culture with more of an indie paradigm: Lose a few projects that are made the old way; keep the rest, but only spend the minimum necessary without sacrificing quality; push people to do things faster and without the decadent add-ons that do nothing to make the film better. Once one studio has done this, the resulting increase in profitability would cause the others to follow and we’d have a healthier business.
Unfortunately, businesses don’t radically change their cultures until they are faced with destruction, as was the case with the American auto industry. So we’ll probably be reading the same “will big-budget bombs change the industry?” articles in summers to come. Until, of course, a perfect storm of awful and expensive films finally does sink the studio ship, which is inevitable. After all, GM had a long run before bankruptcy.