discussion
At the Crossroads of Business and Art
OBJECTIVES
After reading this chapter, you should be able to:
n identify the Hollywood majors
a describe how a film's box office success is
measured
explain why box office gross is a misleading
indicator of a film's economic performance
n identify the ancillary markets and explain their significance
describe the box office performance of U.S. films in world markets
n explain how the U.S. film industry facilitates the marketing of its product
u describe three key forms of Hollywood's
stylistic influence on world cinema
u explain how contemporary filmmaking
operates within an integrated market
define blockbuster production
u define product tie-ins and product
placement
describe the international marketing of
Jurassic Park
n explain how Hollywood absorbs and
transforms foreign film style 363
364 CHAPTER 10 At the Crossroads of Business and Art
Previous chapters have examined the
aesthetics of cinema in terms of
the medium's expres-
sive, structural elements. These include
light, color, sound, editing,
and so forth. It would be
naive, though, to claim that cinema's
expressive components exist in a pure state or that film-
makers can work with complete freedom
to pursue their visions. The aesthetics of
cinema are
bound up with technological, social and
economic factors, and an introductory
understand-
ing of movies and meaning would be incomplete
if it focused only on cinema aesthetics in
isolation from these other factors.
The art of cinema resides at a crossroads,
where technology, industry, and society inter-
sect. Movies are a business as well as an art,
and cinema is a global phenomenon.
This chapter examines the business of film
art, the economic context in which filmmakers
work and that shapes the medium's artistic
possibilities. The inscription on the famous MGM
studio logo was "ars gratia artis" or "Art for art's
sake." But few studios or funding agencies
underwrite a production solely for the sake of art.
Cinema aesthetics resides at the crossroads,
where technology meets industry in a social context.
FROM LARGE SCREENS TO SMALL
A convenient way to illustrate the relationship of technology, business, and aesthetics
is to consider changes in the size of cinema's image and in how and where viewers en-
counter the medium. For more than a century, the experience of cinema was a theatri-
cal experience. Moviegoers left their homes and viewed large-screen images projected
ori celluloid film in theaters dedicated to that purpose.
The Hollywood studio system from the 1920s into the1950s was star-driven, and
the special iconic power of a film star lay substantially in the pleasure viewers derived
from seeing stars projected to giant proportions on a large theater screen. It was their
on-screen charisma that distinguished movie stars, charisma that the large screen
magnified rather than diminished. Not all screen performers were successful in this
regard—a star had to command the large screen and not get lost or be overwhelmed by
its size.
Theaters, too, were big, especially during the 1920s which became the era of
"movie palaces." Expensively furnished, ornate, flamboyantly decorated, and above
all huge, movie palaces transported viewers to another domain, a heightened, intensi-
fied screen world distinct from that of a viewer's everyday life. It was distinct because
it was glamorous, exciting, and because story conflicts on film reached emotionally
satisfying conclusions, unlike life. But it was distinct also because viewers had to leave
their homes to experience it, to physically take leave of their everyday surroundings
and enter a theatrical world of big-screen projection.
Moviegoing became a cultural ritual with massive appeal. Eighty million
Americans went to the movies weekly in 1930, representing 65 percent of the national
population. In 1946, 90 million people attended movies weekly. By comparison,
in 2000, 27 million attended weekly. By 2010, moviegoers went out to theaters on
average six times per year.
Theatrical screenings—the established venue for seeing movies—profoundly
shaped cinema aesthetics. Because viewers saw big images, filmmakers generally kept
their cameras at a comfortable distance from the actors on set or on location, covering
much of a scene's action in full shot or medium shot framings and reserving close-ups
for dramatic moments. Shots ran longer than they do today; cuts between shots did
From Large Screens to Small 365
For most of its history, cin- ema has been a big-screen medium, Audiences left their homes to view films in large theatres, and in the 1920s and 1930s these were luxurious and elaborately decorated. Virginia's Lyric Theater, pictured here, opened in 1930, during the Great Depression, and was one of the first theatres to show sound pictures. Listed in the National Register of Historic Places, the theater operates today as a nonprofit, offering screenings of foreign and independent films.
For most of its history, cinema was a film-based medium, with images captured on strips of celluloid. Theaters required large projectors with high-intensity lamps to throw a bright, huge image upon the screen. The Lyric's projector, pictured here, is a Simplex X-L, a model first marketed in 1949 and based on the original Simplex designed in 1908. Co- designed by Edwin S. Porter (director of The Great Train Robbery, 1903), the Simplex was widely adopted by theaters and became one of the industry's great workhorses. Today most viewers do not experience cinema primarily as a celluloid image projected upon a large screen. (The silver reel visible above the project on the right belongs to a smaller, 16mm projector that stands next to the Simplex.)
366 CHAPTER 10 At the Crossroads of Business and Art
Celluloid film is a bulky medium, and theaters traditionally operated two 35mm projectors (known as a two-reel system), switching be- tween them at the start and end of a reel of film to maintain continuous projection, A platter system, shown here, requires only one projec- tor. The entire film is as- sembled on a single reel and then placed on a set of horizontal tables, providing a continuous feed to the projector and automatic take-up of the film as it exits the projector, eliminating the need for rewinding.
not occur as frequently or quickly. Thus for contemporary viewers, older movies
seem
to have a slower pace, but viewed on a large screen, the compositions and
editing are
powerful. This way of framing a scene's action enabled
actors to perform with their whole
bodies, whereas today it is mainly their faces. Blocking of scene action was comp ex
and required actors to move 611 set with their bodies in ways that the camera would
see. The frame became a unit of design—scene action was choreographed within the
frame to be meaningful and centered, and a considerable amount of story material
might unfold within a single, extended shot. Films made before 1960 have an aver-
age shot length of 8—11 seconds, whereas contemporary movies average 4—6 seconds
or less. Whereas rapid cutting today serves to hold a viewer's attention,
in the earlier
period screen size commanded audience attention, along with the special luminous
power of film itself. Celluloid film contains bits of silver halide, visible as image grain,
suspended in a gelatin coyering adhering to a strip of plastic that runs through camera
and projector. Silver halide in an unexposed film negative reacts to light, and the film
image is captured by this reaction and in these grains. But the grain structure of every
frame on a strip of film is relatively unique; the distribution of silver halides includes
a degree of randomness that gives life to cinema's film image. Every frame is different
from every other, and when projected, the luminous film image pulses with life; each
image is both similar and randomly different from every other. Twenty-four times
a second—the projection rate of celluloid film—the screen image is renewed, but it
also offers viewers a unique visual experience 24 times a second, making film live in
a glowing, pulsating way that video does not duplicate. The hypnotic power that film
commanded during this ritual period of high, sustained consumption by audiences
largely derived from its special, luminous qualities and from its unchallenged place
in popular entertainment. No other moving image media with the popular appeal Of
cinema competed with it.
From Large Screens to Small 367
CASABLANCA (WARNER BROS., 1942) The special luminous power of film, projected onto a large theater screen, gave cinema the extraordinary appeal that the medium enjoyed in earlier decades. The grain structure of celluloid film helped create glowing images of cinema stars,such as Ingrid Bergman (pictured here). Film grain—bits of silver suspended in theemulsion on celluloid—made the screen image glitter. And because the distributionof silver halides changed from frame to frame, film came alive in a way that wasunique to the medium. Frame enlargement.
With the marketing of television in the late 1940s, however, cinema began to lose its unique and unchallenged hold on the popular audience. This process acceler- ated with the advent of home video in the 1980s. The appeal of watching movies at home on VHS videotapes began to shift the medium away from its theatrical mode and toward alternative modes of consumption. DVD, brought to market in 1997, and Blu-ray in 2006, drove the low-resolution VHS medium into extinction. The avail- ability of movies on tape and disk inaugurated an era of personal ownership that was
quite unique in film history. Before this, movies were screened in theaters and then
disappeared; in the television era, they might be broadcast for the small screen after a
theatrical run, but in each case, viewers randomly encountered a given film and never
owned it outright (except illegally by 35mm or 16mm collectors). Home video gave
birth to the cultural notion that film ownership by consumers was not only a preroga-
tive but a right. Beginning in the mid-1980s, people saw
movies more often on home video than
they did in theaters, and cinema began a kind of reverse journey into
various minia-
turized forms. It was a reverse journey because the move toward
smaller-screen view-
ing challenged the iconic and ritual power the medium had
assumed to this point and
challenged, too, its aesthetic design.
368 | CHAPTER 10 At the Crossroads of Business and Art
The move to small screens, over time, led filmmakers to rely more on close-ups
and fast cutting to hold viewer attention. Cutting rates increased, as did overall
pacing, and as close-in framings became increasingly privileged, actors more often
were called on to "stand and deliver," to stand still and deliver dialogue filmed
at close range, rather than jnovc in fu114igure framings and in complexly choreo-
graphed camera set-ups as in earlier decades. Shallow focus compositions explicitly
directed a viewer's attention and worked well on small-screen viewing devices.
Depth of field did not, nor did long shots or lengthy shots. The great cinema directors of earlier periods—lngmar Bergman, Akira Kurosawa,
Jean Renoir, Chaplin, Keaton, John Ford—made films for the large screen and for a
medium that was unique and unlike any other. A filmmaker today makes a movie for a theatrical screening as well as for home video and for streaming video to a variety of
small viewing devices. The great large-scale epics from the theatrical era—Abel Gance's Napoleon (1927), Akira Kurosawa's Seven Samurai (1954), David Lean's Lawrence of Arabia (1962), Stanley Kubrick's 2001: A Space Odyssey (1968)—are incompatible with cinema viewed on an iPhone or YouTube. They are not shot or edited for these viewing venues, and in this regard they challenge the emerging, contemporary idea that cincma is whcrcvcr onc finds it, on large screens or small. They are designed for large- image venues, and their long running times require the special kind of immersion that large-screen imagery provides. Thus it is essential that students developing a special- ized, introductory understanding of the medium sec that bow a film is viewed influ- ences and often determines what a filmmaker has designed (because filmmakers work with an ideal end-viewer in mind) and how that movie is experienced.
For more than a century, the theatrical venue defined cinema, its aesthetics, and its special appeal for viewers. In contrast, video streaming to small viewing devices is a pro- liferating form of cinema today. The extraordinary profitability of such devices for their manufacturers is helping to drive the new markets for small-screen viewing. Apple, for
2001: A SPACE ODYSSEY (MGM, '1968) Stanley Kubrick intended for his epic science fiction film to provide viewers witha grand, spectacular visual experience. Large-screen viewing was essential for thisexperience to work. The content and composition of his shots, and the pacing andrhythm of the editing, are calibrated for the big screen. Cinema aesthetics developed,historically, in close relationship with the medium's traditional theatrical venue. Frame
'o
00000
Today 2001: A Space Odyssey can be viewed as streaming video on an iPhone or on a com- parable portable con- sumer electronic device. The iPhone provides a miniaturized cinema experience. It fits easily on a bookshelf as pic- tured here. Because the device is portable, and the streaming images are instantly accessible wherever one goes, cin- ema becomes a place- less experience as well as a miniature one.
example, drew more than $330 million in profit from the first three days of iPhone sales,
and half of its $25 billion revenue in 2011 derived from iPhones and related products.
Streaming video can be viewed on YouTube or other Internet sites or can be
sent directly from companies such as Netflix to one's laptop computer, Ipad, or cell
phone. The move to streaming video and video-on-demand is changing the era of
movie ownership that has flourished since the 1980s. If many films are available for
instant viewing, why buy them? Moreover, video streaming enables studios to retain
control over their films in a way that the sale of physical media, such as a DVD, does
not. Ownership and physical media are interrelated; moving from physical media can mean moving away from ownership and from the special connoisureship that building a permanent collection of movies tends to inspire. It also involves a shift toward lower resolution image and sound. As cinema becomes more portable and instantly acces- sible, overall image and sound quality declines.
For young cinema viewers today, the medium is not distinct or unique, and it is not rooted in a history of celluloid film or theaters. Cinema now is wherever a moving image narrative happens to be encountered. It has lost its medium-distinctiveness as electronic media have proliferated. Cinema today is everywhere and nowhere.
Viewing cinema often is not a ritual experience as in decades past. To many readers of this textbook, it does not matter how or where a movie is encountered or experienced. A YouTube viewing seems as legitimate to many young consumers as a big-screen experience. But small-screen viewing tends to accompany multitasking. The darkened theater auditorium is a jealous lover that tolerates no distractions or inter- ruptions. It invites sustained interaction with a film. Movie viewing at home or on small electronic screens typically occurs in environments where others things are going on and laying claim to one's attention.
As cinema proliferates across these formats, it risks losing a defining aesthetic Profile and becoming immersed in a vast sea of moving-image media. Movies devel- Oped especially for iPhones or iPads need not display the subtleties of composition or lighting or performing found on the large screen since miniaturized viewing devices
370 CHAPTER 10 At the Crossroads of Business and Art
tend to neutralize such things; they don't play as well on a small screen. Abel Gance,s Napoleon, Kurosawa's Seven Samurai, and David Leans's Lawrence of Arabia Jose their allure in shrunken formats. But as cinema becomes miniaturized, it is also mov_ ing toward high-resolution home media, along contrary paths of development. Blu-ray offers viewers the opportunity to view great-looking cinema images at home and only works Ineaningfully on relatively large-screen devices. Cinema thus moves in two di- rections-—toward high-resolution home viewing and large-screen formats and toward Ininiaturized devices that can be carried wherever one goes and which make cinema a placeless experience in that it is not tied to a particular viewing environment.
THE ART FILM ERA The ernergence of widespread public recognition that cinema is an art form occurred during the period when theatrical exhibition was the dominant form of movie watching, when cinema was a singular medium displayed on large screens, a time when moving im- age media were not as extensive and common as they are today.
The Venice Film Festival, the world's oldest, was established in Italy in 1932 to provide "an international exhibition of cinematographic art," and the Cannes Film Festival began in France in 1946. International distribution of foreign film enabled the
THE GRAND ILLUSION (RAC, 1937) Jean Renoir's enduring classic portrays French officers and enlisted men in a Germanprisoner of war camp during World War l. Distributed internationally to great acclaim,the film won numerous prizes. The conjunction of film festivals with theatrical distribu tionof foreign film helped to inaugurate the art film era. Frame enlargement.
The Art Film Era 371
UCETSU MONOCATARI (DAIEI, 1953)
The discovery by overseas audiences of national cinemas was an exciting part of the art film era. Works by Japanese filmmakers were screened widely for international audiences following the success of Kurosawa's Rashomon (1950) at the Venice Film Festival. Ugetsu Monogatari, a ghost story set amid the turmoil of Japan's medieval samurai wars, has a poetic visual beauty sustained by Mizoguchi's ability to compose action for the moving camera and in lengthy, unbroken shots. Frame enlargement.
"art film" to proliferate. These were films made by directors who aimed to express ambitious themes by way of strikingly original and creative cinematic styles.
Numerous, enduring film classics emerged during this period of international film distribution. Jean Renoir's Grand Illusion (1937) became the first foreign language film nominated for an Academy Award for Best Picture, and it won a prize at Venice in 1938. Renoir followed it with The Rules of the Game (1939), confirming his repu- tation as one of cinema's greatest directors and this pair of films as among the finest works produced in French cinema. Roberto Rossellini's Open City (1945) won the Grand Prize at Cannes in 1946 and premiered that year in the U.S. Numerous classics of Italian neo-realism followed in its wake.
When Akira Kurosawa's Rashomon won the Golden Lion for best film at Venice, it launched Japanese cinema into world distribution. Kurosawa went on to make such landmark films as Ikiru, Seven Samurai, and Throne of Blood, and other directors found acclaim overseas. Kenji Mizoguchi's Ugetsu Monogatari (1953), for example, won a Silver Lion at Venice for Best Direction in 1953 and is today regarded as an enduring classic.
10 At the Cro t,sroad! of Puginesg and Art
0
L'AVVENTURA (PCE, 1960) International film distribution enhanced the cultural prestige of directors whose films were embraced by domestic and overseas audiences. These included Michelangelo Antonioni, whose films about anxiety and alienation were honored as bold statements about the modern condition. In L'Avventura, Sandro (Gabriele Ferzetti) and Claudia (Monica Vitti) are unable to console one another as they search for a missing friend. Frame enlargement.
Ingmar Bergman's severe psychological portraits of religious and emotional anguish were essential viewing for anyone who claimed to know cinema. These included The Seventh Seal (1957), Wild Strawberries (1957), and Persona (1966), and Bergman was a frequent prize winner at international festivals. Michelangelo Antonioni's L'Avventura (1960) won a special jury award at Cannes for the beauty of its images and for its novel stylistic design. Antonioni's great theme was psychological alienation in the modern world, and his drifting, de-centered compositions offered precise visual statements of this condition. He followed L'Avventura with two similar films, La Notte (1960) and L'eclisse (1962).
Luis Bunuel (Belle de Jour, 1967; The Discrete Charm of the Bourgeoisie, 1972) and Federico Fellini (La Dolce Vita, 1960; 8h, 1963) were other major figures in this period and were joined by the filmmakers of the French New Wave (Francois Truffaut, Jean-Luc Godard, Agnes Varda) and the New German Cinema (Rainer Werner Fassbinder, Werner Herzog).
International cinema culture continues to thrive today, but the era of theatrical distribution for films from overseas has largely ended and been replaced by distribu- tion in nontheatrical venues such as home video. Films from throughout the world are more accessible today on video than they were during the art film era, but cinema today exists on a crowded media landscape where it competes for a viewer's atten- tion with other media devices and software delivery systems. Moreover, interna- tional film confronts an elephant in the roojn, and that is the global dominance of Hollywood cinema.
The Global Dominance of Hollywood 373
THE GLOBAL DOMINANCE OF HOLLYWOOD
The Majors The Hollywood industry is composed of the majors (large studio—distributors that fund film production and distribute films internationally) and a number of small, in- depcndent production companies and distributors. The Hollywood majors are Sony pictures Entertainment/Columbia Pictures (Spider-Man 3 (2007), The Da Vinci Code (2005)), Bewitched (2005)); Warner Bros. (Inception (2010), Batman Begins (2005), The polar Express (2004), Ocean's Twelve (2004)); Disney (Toy Story 3 (2010), Pirates of the Caribbean: On Stranger Tides (2011)); 20th Century Fox (Avatar (2009), Die Hard 4 (2007), X-Men 3 (2006)); Universal (The Bourne Ultimatum (2007), King Kong (2005)); and Paramount (True Grit (2010), Iron Man (2008)). MGM (The Pink Panther (2005)), Legally Blonde 2 (2003)) at one time was a major but is no longer. Each year the majors fund 10 to 15 productions and distribute an ad- ditional 10 to 12 films produced by other companies, usually the independents.
The soaring costs of film production prevent the majors from expanding their production activities beyond this relatively modest number of films. At the same time, however, some low-budget independent films (The American (2010), The Waitress (2007), Memento (2001 ), The Blair Witch Project (1999)) have performed well at the box office, and this makes the independent market attractive to the majors. Accordingly, they look for promising independent films to put into distribution.
The two markets are quite different in size and scale. Production costs are much lower for independent films, as are publicity costs, because the films are not distributed as widely or promoted as aggressively. A Lord of the Rings will saturate theaters nationwide; a Memento will be released only in selected regions of the country. Thus the industry re- fers to independent film distribution as the limited-release market.
MAJOR STUDIOS Motion Picture Producer/Distributors
Sony Pictures Entertainment/ Columbia Pictures—Tri-Star
Disney (Buena Vista) Paramount
20th Century Fox Warner Bros. Universal
OWNED BY
Sony (Japan)
Walt Disney Co. Viacom
News Corp. (Australia) Time Warner
General Electric
FIGURE 10.1 The Hollywood
majors.
374 CHAPTER 10 At the Crossroads of Business and Art
THE LORD OF THE RINGS: THE RETURN OF THE KING (NEW LINE, 2004)
The size of the global film market is staggering, especially so if one adds the revenue
from related product merchandising. The Lord of the Rings trilogy has grossed more than
$4 billion from global box office, home video and television sales, and merchandising.
Frame enlargement.
CLERKS (MIRAMAX, 1994)
Because of their low production costs, independent films don't have to be blockbusters to perform well at the box office. Shot in grainy black and white, Clerks found a sizable audience. The relative popularity of pictures like Clerks has attracted the majors to the independent market, most of whom now distribute such pictures through their own sub- sidiaries. Miramax, the distributor of Clerks, had been unaffiliated with the majors for most of its operating history. Disney now owns it. Frame enlargement.
Partly because of limited publicity and distribution, independent films typically earn far less at the box office than the majors' productions. Memento's total box of- fice earnings were $25 million, which is extremely high for the limited-release mar- ket. More typical are pictures like Winter's Bone (2010) with $8 million worldwide. Many independent films do not gross over $1 million. By contrast, Spider-Man 3
The Global Dominance of Hollywood 375
SHREK FOREVER AFTER (DREAMWORKS, 2010)
computer-animated characters, voiced by Hollywood stars such as Cameron Diaz, Eddie Murphy, and Mike Myers, can be a key ingredient in the success of a blockbuster. Most blockbusters are showcases for visual effects, and the blend of CGI and warm, witty characters made the Shrek films into huge hits in the global film market, where they
grossed over $900 million. Frame enlargement.
earned $151 million in its first three days of national release. Independent films do
occasionally become box office hits. My Big Fat Greek Wedding (2002) grossed
over $200 million, and The Blair Witch Project (1999) over $100 million, but most
have modest earnings that match their modest budgets.
JUNO (FOX SEARCHLIGHT, 2007)
This appealing film about a young woman's unplanned
pregnancy was produced on a
small budget of $7 million and grossed nearly $230 million
in worldwide markets. This
level of success is extremely unusual for independent films,
most of which struggle to find
distribution and an audience. Frame enlargement.
376 CHAPTER 10 At the Crossroads of Business and Art
For the majors, the domestic theatrical market (United States and Canada) is but a small part of their total box office earnings. The world cinema market is huge, and overseas revenue can be enormous. Hollywood films produced by the majors dominate this market. In 2010, Harry Potter and the Deathly Hallows: Part I earned Ävice as much overseas as it did in the United States and Canada. Of the top 125 films worldwide in 2001, only four were foreign pictures unreleased in the United States. In other words, American film production/distribution accounted for 99.9 percent of the world's top-earning films that year. Harry Potter and the Deathly Hallows is not unique. Many films earn more overseas than domestically. With its release spanning
2003—2004, The Lord of the Rings: The Return of the King grossed $742 million over- seas compared with $377 million domestically. The world market for these pictures is more important in terms of box-office revenue than the domestic U.S. market. The highest-earning picture in world markets is Avatar (2009), with a global gross of $2.8 billion. The U.S. market generated only 27 percent of this total.
The overseas market is a vital source of revenue for Hollywood because the cost of producing and marketing a film has exploded in the last two decades. Costs hover upwards of SIOO million. In 2007, for e.xample, the average production cost was $71 million, plus S36 million for advertising. The industry no longer publicizes the aver- age cost, perhaps because it has gotten so high.
THE FALLINC Box OFFICE In reality, only a handful of films earn the fantastic reve- nues just cited. And all films today, even these blockbusters, have to earn their box office in a very short span of time. Box office revenue falls off almost instantly, with most films earning a substantial chunk on their opening weekend. Spider-Man 3 had the biggest opening weekend box office of 2007---$151 million—and its
THE BLAIR WITCH PROJECT (ARTISAN, 1999)
Because of its extremely low production cost and huge box-office earn. ings, this independent film has been called the most profitable film in history. Frame enlargement.
The Global Dominance of Hollywood
ox-office earnings fell 62 percent on the following weekend. Harry Potter and Deathly Hallows fell 61 perccnt in its second week, and from there fell another
; 5 percent its third week. Virtually all films today show these steep declines after heir opening weekend. This creates tremendous pressure on the industry to create ligh-profilc films that can scoop up money quickly and get out of town fast if they
to. Avatar bucked this trend because people felt very strongly that they needed to see
it on the big screen. Its earnings declined a mere two percent in the second week. In week five they rose eight percent„ and in weeks 9—10 rose another 29 percent, behav- ior that is virtually unheard of.
Box-office revenues have remained flat for many years. In 2010, the industry an- nounced U.S. market revenues of $10.6 billion, exactly what it had been the previous year. This helps to explain one reason the industry is so excited about 3D movies. They generated 21 percent of US/Canada box office. Annual ticket sales, rather than box-office gross, provide a better measure of the industry's performance. Annual ticket sales have remained relatively flat for many years, hovering around 1.3 billion. This suggests that the motion picture audience is not a growth market.
These patterns cause great uncertainty in the executive offices of the studios, as the industry finds it harder to connect with a public.
Movies at the theater now must compete with video games, online activities, and home video viewing, and the industry's greatest fear is that theatrical film may be de- clining relative to these other outlets. A 2005 nationwide poll by the Associated Press and AOL News was unsettling. It found that three-quarters of adults preferred watch- ing movies at home.
A weakening box office makes the overseas markets ever more important. In 2010, 67 percent of industry revenue came from overseas markets. The larger problem that
the industry faces is that it is very hard to make money from film production. How can
this be, the reader justifiably wonders, given the millions earned by top-grossing films?
Nevertheless, profits are hard to find, and this essential fact explains much about how
the industry presently operates and is organized.
Splitting the Box-Office Dollar Where does the money go? The popular media report box-office grosses, but these are
distinct from the rentals, which are the revenues returned to the studio distributor and
from which profit arises after expenses. Information about gross earnings, taken out of
context, is nearly meaningless. In its first month of release, Iron Man (2008) grossed
$353 million in world markets, but it cost $186 million to make. By contrast 300
(2007) cost $60 million to make and grossed $456 million worldwide, a better
cost-to-earnings ratio. The Blair Witch Project (1999), which only cost $35,000 to
produce, grossed over $120 million, leading many to describe it as the most profitable
film in history. Gross earnings must be evaluated in relation to a film's production cost, which,
in the industry's vocabulary, is known as its negative cost. This is the expense the
production has incurred, which includes the salaries for everyone from stars to the
production crew, the costs of printing the film in the lab, and all the resources in-
volved in the production (set design, costuming, special effecte, etc.). Expensive star
salaries will drive up negative costs. For The Matrix (1999), which had a negative cost
Of $60 million and grossed $350 million worldwide, Keanu Reeves earned 10 percent
378 CHAPTER 10
FIGURE 10.2 Where the box office dollar goes.
Source: Adapted from Harold L. Vogel, Entertainment
Industry Economics, 6th ed. (New York: Cambridge University Press, 2004).
At the Crossroads of Business and Art
Advertising & publicity
20%
Distributor—expenses
25%
Theater—profit
10%
Rental return
Profit participants
Theater—expenses
10%
of the film's gross, which likely earned him in excess of $30 million. That is money
the studio distributor will never see. Box office earnings are diverted at multiple points by individuals and groups that
have a claim on those moneys. To illustrate this, let's consider where your money goes
when you buy a ticket. Of every dollar, the theater keeps 10 percent (10 cents) for its
operating expenses and an additional 10 percent for its profit. The distributor keeps
25 percent to cover its operating expenses (studio distributors operate worldwide or-
ganizations). Advertising and publicity for a film will consume 20 percent of the box
office-dollar. Profit participants who receive a cut of the gross may take anywhere
from 10 to 30 percent. Subtracting all these deductions from the gross revenue leaves
around 20 percent as the rental revenue for the studio, which must cover the nega-
tive cost and then (if possible) begin to generate profit. However, with negative costs now at an average of $64 million, 20 cents on the dollar hardly begins to cover these expenses.
Powerful stars, directors, and producers will take a percentage of a film's gross. This practice, known as taking points, greatly reduces the revenue avail- able to the production company and distributor. The amount of money that can be involved is breathtaking. On Meet the Fockers (2004), 28 percent of its $514 million worldwide gross went to director Jay Roach and stars Ben Stiller and Robert De Niro. On Catch Me If You Can (2002), 35 percent of the gross ($351 million worldwide) went to director Steven Spielberg and actors Tom Hanks and Leonardo DiCaprio. Director Peter Jackson saw 20 percent of the gross on King Kong (2005).
Stars and directors who take points are profit participants because they share in a film's revenue along with the studio. Another category of profit participants consists of the outside investors who help to finance the cost of a production. These profit participants will be paid before a studio sees its profit. Fifty percent of the gross was promised to participants on Terminator 3 (2003)! That fact, plus the film's huge pro- duction cost—$200 million—virtually guarantee that this film will never earn a profit.
The paradox, therefore, is resolved—despite the industry's seemingly impressive yearly earnings, the high cost of producing and promoting films leaves little profit from theatrical revenues. For this reason, Hollywood relies heavily on earnings from ancillary markets.
379
The Global Dominance of Hollywood
HARRY POITER AND THE DEATHLY HALLOWS PART I (WARNER BROS., 201 0)
One of the biggest box office films of 2010, it earned nearly $1 billion in global movie
revenue also
by the end of its wave
theatrical of merchandizing
release. And based that's
around just box
the office
popular revenue.
characters. The
Author J. K. drove a global
Rowling created those characters, but Time Warner now owns the copyright, enabling it
to generate profits in multiple media markets. For the film industry, this is the key element
of a blockbuster—its ability to drive consumer spending on a wave of related products in
the ancillary markets. Frame enlargement.
Ancillary Markets
These are all the nontheatrical markets in which viewers watch movies or from which
studios derive revenues. Warner Bros.' Batman (1989) earned money as a motion pic-
ture, a comic book character, a soundtrack album, a book about the making of the
film,
a Saturday morning cartoon series, and a wide range of toys, games, clothing, and
other
associated products carrying the Batman logo. Revenue earned by the Batman charac-
ter from these products, both domestically and overseas, returns to Time Warner,
the
parent corporation that owns the rights to the character and that controls the media in
which the Caped Crusader is marketed.
Ancillary markets include broadcast and pay cable television (both domestically
and worldwide), home video royalties realized through rental and sale of DVDs and
Blu-ray, digital distribution (video on demand), and the licensing of film characters
and logos to merchandisers and retailers.
Beginning in the mid-1980s, revenue from home video surpassed box-office earnings.
Since that time, the majors earned more from sales of films to video and cable markets
than from ticket sales in the nation's theaters. Shrek (2001), for example, grossed $268
million at the domestic box office but earned $470 million in VHS/DVD sales and rentals.
The DVD market in particular had generated huge revenues. Spider-Man sold $145 mil-
lion of DVDs in its first week of home video release.
DVD had been a fabulously successful source of revenue for the studios. DVD sales
and rentals in 2004, for example, totaled $21 billion, compared with a $7 billion box
Office. But now that golden goose has stopped laying its eggs. DVD sales and rentals
reached a high of $20 billion in 2006 and have fallen steadily since then, reaching a low
of $14 billion in 2010. Revenue from Blu-ray and video-on-demand is rising, but these
markets presently are very small in comparison to DVD.
380 CHAPTER 10 At the Crossroads of Business and Art
It seems likely that the boom years for the DVD market are over, and many people in the industry regard Blu-ray as the last form of packaged media that movies will assume. Digital distribution—movies available as downloads-to-own or as video viewing on demand—is seen as the future of home entertainment.
While big screen theaters once were the traditional venue for movies, the growth of home entertainment and the push to digital distribution demonstrates that the mar_ kets for motion picture entertainmcnt arc integrated—the theatrical market exists in conjunction with the ancillaries—and corporate survival depends on the control of these markets. This environment creates a distinct rationale for blockbuster production. The blockbuster film, especially franchise series featuring Spider-Man, Harry potter, Lord of the Rings, and Star Wars, has enormous audience appeal that spreads across a variety of media categories. These films do a huge business in the theatrical
markeg
which, in turn, generates big revenues in ancillary markets. But to create blockbusters
and to market them across the ancillaries requires that a film studio be diversified, with its business activities spread across a range of products, media, and associated markets.
Diversification positions a film studio to compete within the integrated entertainment market, enables it to perform in overseas markets, and facilitates the marketing of
blockbuster films.
Film and Product Merchandising Film-based product merchandising is a direct function of diversification into multiple media markets. Blockbuster films—Harry Potter, Lord of the Rings, Spider-Man— often feature mechanical or fantasy characters that lend themselves to manufacture and merchandising as diverse products. There is a direct correlation between these mechanical characters and the imperatives of product merchandising. As the licensing director of Amblin Entertainment (the production company responsible for Gremlins) remarked, "Whenever you have a nonhuman type of character, it lends itself to
THE LORD OF THE RINGS: THE RETURN OF THE KING (NEW LINE, 2004)Parent company Time Warner had a very good year with its subsidiary New Line Cinema.Lord of the Rings: The Return of the King grossed $1.1 billion worldwide. Although the filmwas funded and distributed by New Line, its revenue stayed in-house at Time Warner. Theglobal media market is ruled by a relative handful of giant companies like Time Warner.
381
The Global Dominance of Hollywood
Ill erchandising.
duct placement.
" Film-based merchandising takes two forms: the product tie-in and
With their skyrocketing box office gross, Steven Spielberg's JawsPRODUCT TIE-INS
d George Lucas's Star Wars in the
of mid-seventies Jaws in the summer
announced
of 1975
the onset
was intensified of the block-The phenomenal impact era.
Ipusrer enormous range of product tie-ins marketed around the relcase of the film. rhe
These products included T-shirts, plastic tumblers, the soundtrack album, a paper-
hack shark about
costumes, the making
hosiery,
of the
hobby
movie,
kits, beach
inflatable
towels, bike
sharks, bags,
iron-on
blankets, transfers,
costume games,
jew-
el ry,
CLOSE-UP
High-Definition DVD
For movie lovers, the most exciting ancillary market is
now unquestionably high-definition DVD. It offers un- precedented clarity, sharpness, and color reproduction,
as well as audio formats that are superior to what con-
ventional film theaters can offer (see High-Definition
Audio in Chapter 6). When displayed on a high-
definition widescreen set of even modest size, a hi-def
DVD is markedly superior to standard DVD. When projected onto a large screen, the differences are even
more striking. Detail and texture pop off the screen in
images that look far more like film than like video. Standard DVD offers 480 lines of picture
information that are interlaced in the fashion
of conventional television as alternating fields,
each containing only 50 percent of the picture information. High-definition DVD, by contrast, offers 1080 lines that are progressively displayed, producing a much smoother and sharper picture
without the artifacts, such as jagged lines, associ-
ated with an interlaced signal.
Blu-ray emerged as the standard format for
high-definition DVD after a short war with the com-
peting HD-DVD format. This struggle dated back
to 2002 and the rivalry between Sony (promoting
Blu-ray) and Toshiba (pushing HD-DVD). Both for-
mats offered equivalent picture quality, but Blu-ray
proved better at handling the numerous different
audio formats carried on high-definition DVD.
The format war ended in 2008 when Warner Bros., which controlled nearly a quarter of the home video market, announced it would back Blu-ray ex- clusively, and similar announcements followed from
the mail-order video rental firm Netflix and the big-
box discounter Best Buy. Along with Sony, Warner
has placed the most titles onto Blu-ray.
Presently, hundreds of films are available on Blu-
ray, with most, predictably, being recent box-office
successes. But an increasing number of older films
have found their way to high definition, such as The
Longest Day (1 962), Butch Cassidy and the Sundance
Kid (1969), Dirty Harry (1971), Bullitt (1 968), and
several films by Stanley Kubrick. 2001: A Space
Odyssey (1968), for example, looks fabulous in this
format. Classic silent films have also been released
on Blu-ray, offering home viewers an unprecedented
opportunity to see them in their cinematic glory.
Buster Keaton's The Genera/ (1926), F. W. Murnau's
Nosferatu (1922) and City Girl (1930), and Douglas
Fairbank's The Black Pirate (1926) are among the best.
While many viewers would probably say that
standard DVD is "good enough," high-definition
DVD is a tremendous step forward toward a high-
quality, in-home cinema experience. As more titles
appear on high definition and more viewers invest
in the necessary playback equipment, it is conceiv- able that high definition will replace standard DVD as the preferred medium of viewing choice. And high-quality home theaters will begin to cut into the business of conventional movie theaters, becom- ing, in effect, the first-run cinemas of the future. Alternatively, if low-resolution streaming formats kill packaged media, as many in the industry hope, Blu- ray may be the last hard media format to showcase the special beauty of cinema.
(continued)
382 CHAPTER 10 At the Crossroads or Business and Art
High definition creates a film-like viewing experience because of its ability
to capture small
details and render them in crisp resolution. In There Wi// Be Blood, Daniel
Day-Lewis plays an
obsessive, driven oil baron, and the high-definition image presents the detailing
on his face
with exceptional clarity. Frame enlargement.
Case study TIME WARNER
Warner Bros. belongs to parent company Time Warner,
which is the largest media and entertainment company
in the world, a vast media empire with holdings in film, book publishing, and music recording. Time Warner's revenue in 2010 was $27 billion, a huge figure that provides some idea of the size of this corporation. Hollywood film is only one of many entertainment me- dia controlled by Time Warner, which are grouped in
three segments: cable television networks, filmed enter-
tainment, and publishing. Filmed Entertainment provided 40 percent of Time
Warner's earnings in 2010. Several companies operate here, providing film and television revenue. Warner Bros. Pictures is the film studio, producing hits like Inception (2010), Clash of the Titans (201 0), and the Harry Potter films. New Line Cinema Corp. also pro- duces films, often specializing in independent films, and had a giant hit with the Lord of the Rings series. New Lines revenues dropped in subsequent years, however, and Time Warner dissolved the company as a separate subsidiary and absorbed its operation.
Warner Home Video controls 20 percent of the video sales and rental market in the United States. For
ten years, it has been the market leader in home video
sales and rentals. It offers titles drawn from Warn er's
library of 6,000 theatrical films and 54,000 television
titles. The Lord of the Rings and Harry Potter series have
been huge sellers on home video, as have boxed sets
of television shows, including Sex and the City and
The Sopranos. In the early days of DVD, Warner Home Video was the most aggressive champion of the for- mat among all the Hollywood majors. By 2002, it had released nearly 900 titles on DVD.
Warner Bros. Television Group produces program- ming for network and cable and had more program- ming on the air during the 2004—2005 season than any other studio. Its shows include Sma//vi//e, The West Wing, and Cold Case.
Networks also include companies that deliver cable television programming—Turner Broadcasting System (TBS, TNT, CNN, the Cartoon Network), Home BoxOffice (HBO and Cinemax). TNT reaches 1 00 million households, and HBO is the number one pay cablenetwork. HBO also produces a large amount of filmand television programming, including Deadwood, TheSopranos, and Empire Fa//s.
The Global Dominance of Hollywood 383
SPIDER-MAN 3 (Sony Pictures, 2007); PIRATES OF THE CARIBBEAN:AT WORLD'S END (Buena Vista, 2007) Because of high negative costs, studios look for properties that can generate revenueacross several installments. Such films are called "franchises" because the property orbrand is appealing enough to audiences to motivate several productions. Spider-Man 3'snegative cost was $258 million, but it was the year's highest-grossing movie. As long as afranchise's earnings potential lasts, studios are reluctant to abandon the format. Pirates ofthe Caribbean: At World's End, for example, concludes with action that sets up the sequel, On Stranger Tides (2010). Frame enlargement.
The core area of publishing consists of magazines and books. Time, Inc., publishes 90 magazines glob- ally, including Time, People, Entertainment Weekly, and
Sports Illustrated. But with the decline of print media, this area contributes only 14 percent of company
revenues.
Time IVarner used to operate a huge cable hard-
ware business and had also partnered with AOL to
offer Internet access and services. It got out of these businesses and now looks to the future with Warner Bros. Digital Distribution, a division of Warner Home Video. It licenses films and television programs for distribution via cable, satellite, the Internet, ard PCs, laptops, and cell phones. Nokia, Samsung, and Dell cell phones and PCs come pre-loaded with Warner films to
be marketed to consumers.
(continued)
384 CHAPTER 10 At the Crossroads of Business and Art
As this brief profile indicates, Time Warner creates media programming and seeks to influence or control the distribution systems (the Internet, theaters, video, cable and broadcast TV) needed to get that program- ming to its audience. What are the advantages of such diversification? One advantage is that Time Warner can offset the loss accruing to any one area of business operations from profits associated with others. The major advantage, however, is that Time Warner keeps in-house all revenues from the performance of its prod- ucts across a wide range of media markets.
Creative artists, however, may construe this as a disadvantage, arguing that a vertically integrated com- pany's incentive to keep revenue streams in-house may cause it to pass up higher bids from outside companies for DVD or publishing rights. This is exactly what di- rector Peter Jackson argued in a suit he filed in 2005 against New Line, whose divisions handled home video, merchandising, and television rights for The Lord of the Rings. Jackson claimed that outside companies would have made higher bids for these rights and that New Line's "self-dealing" harmed the resulting revenues.
The financial health of the industry, however, de-
pends on these kinds of self-dealings. The Harry Potter
films have been among the biggest box-office films in
the world, and Time Warner owns the
trademarks and
copyrights to the characters. Thus it can
market Harry
as a movie, a soundtrack album, a DVD,
and videocas-
sette and receive revenue from the tidal
wave of Harry
Potter merchandise.
Similarly, Batman has been a hugely
successful
comic book, movie, video, record,
and line of toys. The
Batman character originated in D.C.
Comics, which
Time Warner owns and publishes. The
Batman films are
produced by Warner Bros., books about the
making
of the Batman movies are published
by Warner Books,
the soundtrack albums have appeared
on Warner Bros.
Records, and revenue from the release of
the films to
the home video market is generated
through Warner
Home Video.
Thus, regardless of how the Harry Potter
or Batman
characters appear—as a movie,
record album, book,
video viewed in the home, comic strip, or toy
model or
board game—Time Warner is assured a steady stream
of money. Revenues from the theatrical market are in-
sufficient to cover today's high cost of film production.
As a result, the Hollywood majors are held by larger
firms that operate in multiple media markets. This is the
only way that expensive film production can be a win-
ning game for the industry.
posters, sharks' teeth necklaces, sleepwear, children's sweaters, swimsuits, ties, and
water pistols. The majors derive huge revenues from licensing movie characters and props to
merchandisers. Hollywood's product licensing revenues totaled $70 billion in 2001, and the contemporary blockbuster is designed to maximize this revenue.
This kind of marketing is now a standard feature of film distribution. The Star Wars movies have grossed more than $1 billion at the U.S. box office, but merchan- dising related to the films has generated more than four times as much money! The James Bond adventure Die Another Day (2002) carried $120 million worth of adver- tising by 20 brands, a promotional windfall for the film's distributor, MGM, which spent $30 million to promote the film. All the extra advertising was a virtual freebiefor MGM.
PRODUCT PLACEMENT A second category of film merchandising illustrates the deepconnection between modern film and the consumer economy. Product placement is aform of product advertising that appears inside a motion picture. Today, if Will Smithor Cameron Diaz drinks a can of beer in a movie, it is not going to be a generic ficti-tious label such as Ajax beer. It will be a popular, commercially available beer suchas Budweiser or Michelob. Famous brand labels don't appear accidentally on screen. They are there because manufacturers paid a placement fee to studios to guarantee their labels a visible spot on screen. The size of the fee depends on how prominently
385 The Global Dominance of Hollywood
JAWS (UNIVERSAL, 1975) While Jaws terrified summer audiences, it was accompanied by a marketing blitzkrieg pushing shark products. Blockbuster films are huge engines driving the leisure-time economy. They stimulate massive cycles of consumer purchasing. Their economic impact sometimes is more significant than the artistic merits they may possess. Jaws, however, is
a superbly made film by a brilliant director (Steven Spielberg). Frame enlargement.
the product is displayed. Studios count on income from product placements to offset
expensive production costs, which accounts for the growing frequency of product
placements. In 1990, the Center for the Study of Commercialism, based in
Washington, D.C.,
conducted a study to determine the pervasiveness of product placement. It found that
CAST AWAY (20TH CENTURY FOX, 2000)
This scene from cast Away shows especially
blatant product placement. In terms of the
composition, the Wilson volley ball is visually
more important than the film's main char-
acter, played by Tom Hanks. "Wilson,"
the ball, even becomes a character
in the film.
Note how the product's positioning ensures
high visibility for the brand label.
Frame
enlargement.
386 CHAPTER To At the crossroads or Business and Art
the year's top-grossing film, Paramount Pictures's Ghost, contained 23 referencesto 16 different brand-name products. The second highcst-grossing film that year,
Disney's Pretty Woman, contained 20 references to 18 brand names. Tota/ Recall, the
sixth highest-grossing film that year, was the champion. It contained
55 referencesto 28 brand-named products including Flcinz ketchup, U.S.A. Today, Ocean Sprayjuices, the Hilton Hotel, Pepsi, Fuji Film, Hostess snacks, Panasonic TV, Nike
shoes, Coca-Cola, Kodak film, Sony television, Beck's Beer, Campbell's soup, NorthwestAirlines, Killian Red Beer, Miller Light Beer, Miller Genuine Draft Beer, Gordon'sLiquor,
Jack-in-the-Box restaurants, ESPN, and Evian water.Given the emphasis on product placement in today's Hollywood, obvious is-sues of creative control arise. Do paid advertisements within the context of a filmnarrative
subtly alter the shape and focus of that narrative? At least with certainfilms, the answer is an unqualified "yes." Total Recall is a science fiction thriller inwhich the villains are ruthless futuristic corporations in league with gangsters run-ning a brutal mining operation on Mars. The film's satire and criticism of corpo-rate control are compromised by its massive reliance on product placements. Theserender the film's anticorporate satire less than coherent. At a minimum, productplacements will tend to bias the social perspective of a film toward an unquestion-ing or unexamined acceptance of the contemporary consumer economy with itsengineered leisure-time markets and products. This subverts the effort by a filmsuch as Total Recall to satirize a future world overtaken by for-profit leisure-timeindustries. Its massive reliance on product placement makes Total Recall into the
Pizza
WAYNE'S WORLD
(PARAMOUNT, 1992)
10
'8
Product placement
became so prominent and endu•ring a
of film
that Wayne and Garth could not resist making fun of it. In this scene, while pretending
complain about big stars who "sell out," they happily push products by Coke, Pizza Hut,
TOTAL RECALL (TRI-STAR PICTURES, 1990) Total Recall, starring Arnold Schwarzenegger, featured more product placements than any other film of 1990. The film's satirical content suffered from the constant on-screen product advertising. Frame enlargement.
Economic Significance of the Blockbuster Film Besides being superprofitable, blockbuster films have two additional characteristics. Their stories frequently depend on fantasy or visual effects (this is the magic that Spielberg referred to), and their characters are often superhuman or mechanical and nonhuman (the shark in Jaws, the robots in Star Wars, the alien in E.T., the robots in Terminator 2 or Transformers, and the dinosaurs in Jurassic Park). Visual effects promise to provide audiences with visions of things never before photographed, and
this is a big part of the allure of blockbusters. Furthermore, as we have seen, mechani-
cal characters lend themselves quite well to reproduction across diverse product lines.
(Not all blockbusters have each of these elements. Forrest Gump (1994), Home Alone
(1990), and Beverly Hills Cop (1984), for example, are not dependent on mechani-
cal or nonhuman characters. Gump, though, is a visual-effects showcase, whereas
Home Alone and Beverly Hills Cop boast cartoonlike plots with ultra-powerful he-
roes (played by Macaulay Culkin and Eddie Murphy) at their center.) Blockbuster
filmmaking crosses a wide range of media sources and merchandise lines. As such,
the shark frenzy generated by Jaws in 1975, the dinosaur craze created by Jurassic
Park, and the wave of Phantom Menace toys that swept retailers in 1999 represented
cultural phenomena far greater than the films themselves. The shark and dinosaur
and Star Wars markets extended well beyond the revenues created by motion picture
ticket sales.
Here lies the most important principle represented by blockbuster production. The
blockbuster motion picture is merely the hub of a giant wheel of interconnected services
and products. The film provides the stimulus for a huge array of merchandising and mar-
keting in the nation's and the world's restaurants, toy stores, and other retail outlets, and
it creates audience interest that sustains revenues in the cable and home video markets.
388 CHAPTER 10 At the Crossroads of Business and Art
case study THE PHANTOM MENACE AND JURASSIC PAR K
Sometimes, an aggressive product-licensing campaign
can have an unintended effect. Even with a big box-
office hit, efforts to license products can fail if the
merchandise and the film provide a poor fit. Star Wars
Fpisode l: The Phantom Menace (1999) sold more than
$2 billion of merchandise worldwide, but many millions
of unsold toys and products remained on retailers'
shelves, leaving retailers feeling burned and believ-
ing that the film had been oversold and overhyped.
Accordingly, Lucasfilm acknowledged its mistake and
reduced the number of product tie-ins for Episode Il:
Attack of the Clones, concentrating on core items such
as action figures, video games, and books and eliminat-
ing fringe items such as the Anakin Skywalker inflatable
chair and the Obi-Wan Kenobi clip-on hair braids.
The performance of Jurassic Park, the number one
film in world markets in 1 993, offers a more success-
ful example of product licensing. Products associated
with Jurassic Park included ice cream, frozen pizza,
cakes, juices, cookies, key rings, chairs, sneakers, and,
of course, toy dinosaurs. Video and computer games
were a huge chunk of the product merchandising con-
ducted with the film. Ocean Software paid $2 million
as an advance royalty in exchange for worldwide rights
to all Jurassic Park video games. It was a good deal.
In
France, the film opened on October 20, and by
the
end of December, Ocean Software had already sold
250,000 video games there, So stunning was the
early
performance of Jurassic Park—themed computer games,
food, clothing, books, and toys that the vice
president
of international merchandising for MCA/Universal,
the
studio conglomerate that produced the film, predicted
that international sales of Jurassic Park—licensed prod-
ucts would outperform domestic U.S. sales.
Long-term planning before the film's release
helped to ensure the successful marketing of the
film
and its associated products. The previous international
box office champion was another Spielberg film,
1 982's E.T.: The Extra-Terrestria/. Studio marketing ex-
ecutives believed they had fumbled the ball with E.T.
more than a decade ago. Because the main character
in E.T. is an ungainly little alien, the executives under-
estimated the market potential for product tie-ins, and
they actually had difficulty finding manufacturers who
were interested in bringing out E.T.-themed lines of
merchandise.
THE PHANTOM MENACE (20TH CENTURY FOX, 1999)
Although this film was a major hit worldwide, many of its product tie-ins failed to move
off of store shelves. Phantom Menace merchandise oversaturated the market, and many
of the items for sale—clip-on hair braids, for example—were poor fits with the film.
Lucasfilm scaled down its merchandising efforts with the next installment in the series.
Frame enlargement.
Marketing executives Were determined not to re- peat this mistake with Jurassic Park. Accordingly, two years before the film's premiere, the studio put teams of licensing, promotional, and manufacturing person- nel to work preparing for the film's global launch. A major component of the marketing strategy was the limited disclosure of information about the film. Spielberg did not want to reveal too much about the film in early trailers and publicity. The secrecy was designed to keep the audience in suspense about the mysterious film prior to its release. Marketing pro- grams were drawn up in countries throughout the world using only one graphic illustration from the film, an image showing the head of a dinosaur tipping over a park vehicle.
As the film's premiere drew closer, minimal, teasing information gave way to full media blitzes. For example, the film premiered September 3 in Sweden, Finland, and Norway and two weeks later in Denmark. Television was the major media form pro- moting the picture in these Scandinavian countries. Massive advertising campaigns saturated television viewers with promos for the film. In Norway, 97 commercials were presented in the nine days before the film's premiere. Heavy television advertising also whet viewers' appetites in Sweden, Denmark, and Finland. As a result, from the less than 24 million people inhabiting these countries, the film grossed $15 million.
The Dominance of H00Y%V00d 389
E.T. (Universal Studios, 1982)
Despite Its tong-time position as champ before boinq
(jothronecj by /orossic Purv and then
ritonic, E. r never realized its full "Otential as a catalyst for product marketinq. In comparison with thp early 19805, tho film industry today heavily depends on product place- ment and marketing for additional revenue streams. Throughout the
19805, the industry carefully reor- ganized itself to capitalize as much
as possible on the profit potential of
diverse leisure-time markets. 'Frame
enlargement.
Spielberg's Assessment
Surveying the extraordinary performance of his
film in global markets, Spielberg likened its appeal
to the magic of a compelling story told around a
campfire. In earlier times, communities would sit by
the campfire and listen attentively as a storyteller
cast a spell with tales of magic and fantasy. Today,
Spielberg pointed out, the gathering around the
campfire is the entire world. From Europe to Asia to Central and South America, people gather in multiplex theaters. He stated that the success of the film was due to good storytelling and not to the economic dominance in global markets of American cinema.
Spielberg's feeling of satisfaction was deserved. He has made some of the most popular pictures of all time, and even his serious, adult-themed films (Schindler's List, Saving Private Ryan) have reached wide audiences. But more than the magic of good storytelling was at work in the global performance of Jurassic Park. Without American corporate control of a global media industry and control of revenue from interlocking media formats (movies, books, records, home video, and retail merchandising), the Jurassic Park phenomenon could not have existed. The global reach of U.S. media industries is fundamental 'to the success of blockbuster films. Despite what Spielberg has said, this economic framework cannot be easily dismissed. u
390 CHAPTER 10 At the Crossroads of Business and Art
MEN IN BLACK (COLUMBIA TRISTAR, 1997)
Blockbuster films typically showcase state-of-the-art visual effects and fantasy narratives
populated by eccentric or mechanical characters. Men in Black portrayed an Earth overrun
by aliens, including the giant, and mean-spirited, Edgar bug. Frame enlargement.
Blockbuster filmmaking, therefore, is about more than just the making of a single film.
Successful blockbuster production stimulates the creation of a huge network of associated
products and productions. This is why the integrated market is so important. Because the
appeal of blockbuster film characters crosses media classes and product lines, parent cor-
porations who own the film studios that produce those characters must also control all of
the other markets in which the film and its characters will appear.
This is accomplished by controlling the multiple ways that consumers will encoun-
ter the film and/or its characters. Whether consumers view it as a theatrical motion
picture, as a video on home television, or by way of pay cable, whether they listen to
the film's music on a soundtrack album, or read a paperback book about the making of
the movie, or buy dolls, games, or clothing tied into the film's characters, the revenue
streams generated by these media markets stay in-house. By licensing the use of the
blockbuster characters to other manufacturers, the potentially huge revenue stream gen- erated by product tie-ins throughout the world helps enlarge corporate earnings.
In its truest sense, then, blockbuster filmmaking is about the production and manufacture of commodities on a national and global scale. Film is only a means toward this pattern of global production. Blockbuster films are the engines that drive the global entertainment markets. Understood in economic terms, the blockbuster film's importance is measured only in its ability to stimulate a huge wave of con- sumption of film-themed leisure-time products and services. With their blockbuster productions and aggressive promotional campaigns, U.S. film studios have made the world their marketplace. The danger in this is that global film production becomes increasingly homogenized, increasingly the same from country to country, given overto special-effects-driven fantasy narratives or violent action spectacles featuring super-human heroes.
FILMMAKER SPOTLIGHT
Steven Spielberg
Judged by box-office receipts, Steven Spielberg
has been the most popular filmmaker in the
world. Jurassic Park (1993) broke world box office
records, and the top-grossing film it displaced was
E.T. (1 982), another Spielberg creation. His other
hits—jaws (1 975), Raiders of the Lost Ark (1 981 ),
and Indiana Jones and the Last Crusade (1 989)—
are among the highest-grossing films of all time.
But unlike Spielberg's public, until recently critics
have remained divided over the merits of his
work.
During the 1970s and early 1 980s, critics dis-
missed him as a maker of popcorn movies, built
around visual effects and strong emotions. The
mechanical shark, the spacecraft and aliens of Close
Encounters of the Third Kind (1977), and E. T—critics
disparaged these as movies that evoked a range of
uncomplicated feelings, mainly awe and wonder,
issuing from unexpected encounters with fantasy
creatures. But popular audiences responded enthusi-
astically to the energy of Spielberg's storytelling and
the power of his images.
As a filmmaker, Spielberg was a genuine boy
wonder. Unlike his contemporaries, he did not at-
tend film school but went straight into the industry.
Born in Cincinnati in 1947, he was just 21 when
hired as a television director by Universal Studios,
where he was in charge of episodes of Night Gallery,
Marcus We/by, and Columbo. His first feature film,
Duel (1 971), made for television, was a gripping
thriller of a traveling salesman menaced on the
road by a mysterious, anonymous truck driver.
At the age of 26, Spielberg began filming a simi-
lar story about a confrontation between ordinary
people and the unknown, but this time with an aquatic setting. Jaws (1 975), the work of a hungry young filmmaker eager to prove himself, caused a sensation the summer of its release. People were afraid to go in the water, just as they had been afraid to take showers when Hitchcock had finished with them in Psycho (1960) a decade and a half earlier. A ferocious thrill machine, Jaws evoked a primitive terror in its audience that Spielberg never again
attempted to duplicate, He quickly turned to spir- ited evocations of childlike wonder and adolescent adventure: Close Encounters of the Third Kind (1 977),
Raiders of the Lost Ark (1 981 E.T. (1982), and
Incliana Jones and the Temple of Doom (1984). Their
spectacular success obliterated his only early career
misfire, 1941 (1 979), an overblown and unfunny at-
tempt at a World War Il slapstick comedy.
But Spielberg was more ambitious than critics at
the time recognized. He began to expand his range
with more mature subjects. With The Color Purple
(1 985), he adapted Alice Walker's novel about an
African-American woman's experiences with an abu-
sive husband. Empire of the Sun (1 987), another World
War Il film, and Always (1 989), a remake of a classic
1943 Hollywood film, were critical and commercial
disappointments, but in both cases Spielberg con-
spicuously stepped away from popcorn moviemaking.
Moreover, they demonstrated something that was
hard to see at the time, that World War Il had special
resonance for Spielberg and that he would become
one of its most important cinematic chroniclers.
He next broke through the digital threshold
with Jurassic Park (1 993), providing not the first
but the most spectacular demonstration of next- generation computer-based effects. It was Schindler's
List, though, released the same year, that earned Spielberg the critical respect that had, until then, eluded him. This grim black-and-white film por- trays the horrors of the Nazi extermination camps in Poland with a depth of emotional feeling and an adult sensibility that Spielberg had never before demonstrated in his work. Moreover, he extended his historical and moral sense of obligation by helping launch a vast project documenting and recording the oral histories of Holocaust survivors, accounts that will be digitized and become part of the world's histori- cal record. He felt a special urgency in carrying out this project because many of the survivors were quite elderly.
Beginning with Schindler's List, Spielberg came into his own as a filmmaker of considerable artistic
and moral ambition. Fashioning brilliant images,
(cortinued)
392 CHAPTER 10 At the Crossroads of Business and Art
RAIDERS OF THE LOST ARK (PARAMOUNT PICTURES, 1981); MINORITY
REPORT (DREAMWORKS, 2002)
During the 1 980s, Speilberg was box-office gold, crafting popular hits like Raiders of the Lost
Ark, an homage to old Hollywood serial adventures. In the 1990s and after, he often turned
to dark-themed material, such as Minority Report, a frightening portrait of an authoritarian
future where the state has access to people's thoughts and the power to arrest them for
thought crimes. On these later films, Spielberg collaborated with cinematographer Janusz
Kaminski to design cold and grainy images that rejected the glossy surfaces of more audience-
friendly films. Frame enlargements.
he now used film to examine issues of human evil
and moral redemption. Amistad (1997) graphically
showed the horrors of slavery in its portrait of a his-
toric rebellion of African slaves in Colonial America.
Saving Private Ryan (1998) showed the D-Day
invasion of the Normandy beaches in a way that
caught the savagery of the combat with a ferocity
unprecedented in commercial cinema. Intended to dramatize the heroism of that generation of U.S. sol- diers, the film aroused tremendous interest in their example and public respect for their sacrifice.
Spielberg's somber historical dramas are his most artistically ambitious films; most encouraging in this respect, they have performed solidly at the box