Discuss: After 'Project X,' 'Chronicle' & Universal's $5 Million Retool Of 'Ouija' Is Low-Budget The New Mega-Budget?

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by Oliver Lyttelton
March 7, 2012 2:58 PM
3 Comments
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After a brutal year at the box office in 2011, with many seemingly sure-fire mvoies underperforming, the studios have been breathing a sigh of relief in 2012 so far. For each of the nine weekends of 2012, takings at U.S. theaters have been significantly higher than the equivalent weekends in previous years, and two movies -- "The Vow" and "Safe House" -- have already crossed the psychologically vital $100 million barrier, with "Dr. Seuss' The Lorax" a dead cert to join them by the end of next weekend.

Even the arrival of tentpole question mark "John Carter" this weekend is unlikely to curb the upswing -- even assuming it opens at the lowest end of estimates, around $25 million, that would still be more than "Limitless," the winner of the equivalent weekend last year. But it's a mark of the current climate that it's the $250 million Disney tentpole that everyone's worried about, whereas low-budget teen comedy "Project X" gets a sequel commissioned four days after it opens.

One of the things that's had Hollywood so delighted with the box office receipts so far is that the movies haven't just been successful, they've also been highly profitable. As of today, "The Vow" is the top-grossing film of 2012, with a $112 million total from a budget around $30 million. Mark Wahlberg thriller "Contraband" currently stands at $78 million worldwide (with many territories still to open), on a $25 million budget.

But those films are positively extravagant compared to found-footage pics "Chronicle" and "Project X," which took the form that's proven so successful in the horror genre and applied it to the superhero flick and the teen comedy. Each was made for about $12 million, and each opened to close to double that. "Chronicle" currently stands at over $100 million worldwide, and "Project X" should come close (it's likely to perform stronger domestically, but may not match the foreign total, due to comedy traditionally performing less well internationally). A more old-fashioned picture, Hammer horror "The Woman In Black," cost about the same figure, and has currently taken $89 million worldwide.

But all pale in comparison in profitability to "The Devil Inside." The exorcism horror flick might have scored a rare F Cinemascore and had poisonous word of mouth (it failed to even double its impressive $33 million opening weekend), but Paramount could have given a shit by that point: the film, the first from their Insurge low-budget label, cost a mere $1 million, meaning by the time it closed out its U.S. domestic run, it had returned fifty-three times its production budget.

Of course, there's more to it than this. Movie studios don't take every dime of a theatrical gross, generally averaging out to a 60/40 split with the theaters (although a front-loaded hit like "The Devil Inside" is almost the ideal, with the studios generally taking 80% of opening weekend box office). And most of these film will have had a hefty marketing spend. The average P&A cost of a movie is somewhere around the $36 million mark. That number's likely inflated by the $100 million+ ad costs for tentpoles, but in most of the cases above, the studios likely spent almost as much as the film's budget, if not more, on the ads. So the movies remain massively profitable, but perhaps less so than it might initially appear.  

But still, where once the low-budget genre hit was the realm of mini-majors like Artisan and Lionsgate, who had super-profitable hits with "The Blair Witch Project" and "Saw," it's clear that studios big and small are hungry to get in on the action. Paramount has already embraced and kicked off the new paradigm with the "Paranormal Activity" franchise, while "Insidious" was a similarly styled hit last year for indie house FilmDistrict. And while The Weinstein Company dipped their toes in the pool with "Apollo 18" and failed, the trifecta of first quarter cheapie hits in 2012 has made studios sit up and take notice all over again.

Thus, it's no surprise that Warner Bros. are following in their rival's footsteps, announcing yesterday the formation of Primal Pictures, a micro-budget label of Vertigo Entertainment ("The Ring," "The Departed"). The new company has a number of projects in the works: horrors "Hidden," "The Cure," "The Vatican" (from 'Devil Inside' director Wililam Brent Bell), "Viral" and "Tape 4," plus action/sci-fi "Rise," which promises to be a low-budget take on a war between man and robot. 

But perhaps the best indicator of what's going on is "Ouija." That film, a collaboration between Universal and Hasbro, was originally announced as a $100 million four-quadrant tentpole adventure to be directed by McG, but the greenlight never came. Instead, the studio announced on Monday that the property had been retooled as a low-budget horror-thriller with a budget earmarked to be around the $5 million mark. Before, the profitability of the film was highly in question. Now, the studio could release a film that literally doesn't have an ending (as Paramount did with "The Devil Inside"), and still get an enormous return on their investment.

So is this the way that things are heading? Will Steven Spielberg be forced to shoot "Robopocalypse" with a Canon 5D and sets made in a garage? No. Of course not. Of the twenty international top grossers of 2011, only three -- "Rio," "The Hangover Part II" and "Alvin and the Chipmunks: Chipwrecked" -- cost less than $100 million, and they weren't much below: $90, $80 and $75 million, respectively. Domestically, there were some bigger budget/gross gaps -- "The Help" and "Bridesmaids" each took $170 million on budgets of $25 and $32 million, respectively.

But those films are outliers: if you want a big return, you have to spend. Profit is more important than profitability, and studios would rather spend $200 million to get $1.1 billion back, as with "Transformers: Dark of the Moon," than spend $1 million and get $66m back. Particularly as micro-budget found-footage is far from a sure-fire thing: "The Virginity Hit" took a mere $636,706 at the box office in 2010, one of the worst-ever wide-opening studio releases of all time; the names of Adam McKay and Will Ferrell attached as producers didn't even help.

So what does this all mean? Well, ultimately, it means fewer risks on big projects. Assuming "John Carter" is the box-office damp squib that most are expecting, it's a gamble that didn't pay off, like last year's "Cowboys & Aliens." And what that means is more sequels and franchise continuations, as sixteen of last year's twenty top grossers were. But it also means that budgets are going to be trimmed.

Sure, Christopher Nolan and James Cameron will still get blank checks from studios, but if there's a cheaper way to make most other things, they'll go for that. After all, this weekend's massive opener, "The Lorax," was made for about the same as Illumination Entertainment's previous, "Despicable Me" -- about $70 million. Why should Pixar or DreamWorks spend $150-200 million on an animated film when they can spend as little as a third of that and get the same returns? In an era where people like Josh Trank, Gareth Edwards and Neill Blomkamp are able to make small budgets looks massive (though the latter is dropping $200 million on his upcoming "Elysium"), what's the point in spending more than you have to? It's clear that this is already underway: most studios have scrapped at least one high-profile big-budget project of late, with Warner Bros. tabling "Paradise Lost," "Arthur and Lancelot" and "Akira" in the last few months.

We'd like to think that the risk and cost-cutting will be made up for at the other end of the scale, with more invention on this new micro-budget end of the scale. But we suspect that won't be the case. Studios aren't about to give Ti West a major marketing budget for an original horror film when they can hire a music video helmer for yet another faux documentary about an exorcism, or kids filming each other trying to pop their cherries. But maybe we're wrong. Do you think that Hollywood's new thriftiness will mark the start of a new era of ingenuity? Or are we going to get the same shit with cheaper production values? Weigh in below.

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3 Comments

  • matt | March 10, 2012 3:49 PMReply

    Elysiums budget is around 40million and then an extra 100 or so million for advertising etc... so its still a low budget film like district 9.

  • dayvan | March 7, 2012 6:05 PMReply

    ELYSIUM's budget is nowhere near $200mil

  • LeonRaymond | March 7, 2012 5:10 PMReply

    It's about time budgets came back down to earth and the entire Hollywood system should follow cause that puts us all on a even playing field. Now for that $ 225 Million dollars for 1 film, we real talents can do about 40 films and still have some left over and make them all awesome high quality and return profits back to the investors Real stores featuring real woman, with real lives, living in real cities, with a real reflection of urban America!

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