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Downsizing: Hollywood Goes on a Permanent Diet

by Anne Thompson
October 26, 2009 9:40 AM
8 Comments
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Thompson on Hollywood

The studio glory days are over, and everyone knows it. Diminishing expectations and returns are the new normal. (Here's Disney chief Robert Iger's gloomy take.) Palpable anxiety is everywhere as the game of corporate musical chairs keeps removing one chair after another. Folks are scrambling to hang on to the good jobs, knowing there will be fewer of them.

Warners' exec Kevin McCormick's departure is not going to be the last as the studios exec ranks start thinning. They can't afford these high salaries, especially when they aren't making that many movies. I like this quote from ex-Hollywood exec Roger Smith, now executive editor of Global Media Intelligence, in Michael Cieply's NYT story on Hollywood downsizing: “Someone with ‘vice’ in his title should be fairly nervous."

Look at Gourmet Magazine. Conde Nast's bastion of quality and authority folded because it was above the fray, too big and expensive and not competitive with the other magazines in its sector. The new order requires adaptation, communication, engagement. It's no longer about imposing authority from the top down. (Vanity Fair's Graydon Carter left town as his staff layoffs went through.)

The studios could learn from this. Browbeating consumers into coming to their movies is not the way to win the game. Hectoring them about piracy isn't either. Direct communication and engagement, learning who they are and what they want, is key. What Paramount did with Paranormal Activity is a significant wake-up call. When the $15,000 movie finally went into wide release on its fifth weekend, with only $10-million spent on ads, it beat the thinly-sliced Saw VI---handily. (A Paranomal Activity sequel is in the works.)

The industry could make a welcome return to the 70s, when the studios, recognizing that their usual playbook was no longer working, experimented outside the box, yielding a decade of fabulous filmmaking. Why not push some boundaries with low-budget fare and online viral marketing experiments? Unfortunately, with evidence pointing to massive-budget movies earning the lion's share of profits, the studios aren't going to give up on their pursuit of pricey brands and franchises. But there's still room in their slates for some low-cost risk-taking and grabbing an opportunity for creativity and innovation.

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More: Hollywood, Moguls, Studios, Players

8 Comments

  • Anne Thompson | October 28, 2009 7:19 AMReply

    All of the above, though I don't have much confidence that the studios will recognize the need to think outside the box. Reducing overhead and marketing costs will be key. The studios will continue to contract. They will develop less, buy less, make less and focus more on brands they can sell. They will look for outside financing partners and will acquire projects funded independently, with P & A attached. I think we'll see at the AFM that many of the projects the studios won't back anymore are still seeking financing through pre-sales. It's tougher, but it's still the main alternative for filmmakers who can package their projects with stars and raise foreign coin that way.

  • Brian | October 27, 2009 4:26 AMReply

    On another board, there's a discussion of the early '80s and someone pointed out how low-budget indie grindhouse genre films like 1990: THE BRONX WARRIORS, LONE WOLF MCQUADE and the 3-D TREASURE OF THE FOUR CROWNS shared the boxoffice charts with big-studio prestige films like THE VERDICT, SOPHIE'S CHOICE, GANDHI and TOOTSIE. And someone made this point:
    "When the big studios actually thought certain types of films were beneath them, it opened up the door to Corman, Cannon and Manson International to find their niche. Everybody wins!"

    When the big studios started making big-budget grindhouse films, it pushed the ones who actually know how to make these kinds of films out of business.

  • Rick Allen | October 27, 2009 2:55 AMReply

    Anne, I agree that the bigger issue is what's happening in the overall studio system, rather than individual firings or film releases. And if senior production management is being eliminated because of the high costs that tenure has earned, what does that mean for the way the studios approach new content? It seems as though there are two main paths: the studio production structure can become more efficient, and run by younger execs no longer held down by their predecessors ... or it could mean that studios will actually be doing less production, and move more into a marketing focus, letting indie financing sources take more of the front-end risk of development and production, and coming to the studios later in the process. One can argue that the latter was becoming a trend when outside financing was easy (from hedge funds and the like), and only stalled when the overall financing market disappeared - something most commentators have said is temporary.
    What do you think?

  • Anne Thompson | October 27, 2009 2:05 AMReply

    Well, Peter Rice hasn't been gone that long, so he got out ahead of a string of clunkers, which means the current regime should not be blamed. They opened Amelia--whether it sinks like a stone from here is another question. Whip It was a pretty good movie that needed to build in a different way. People were turned off by the roller derby subject. Searchlight went too wide. But they must not have had confidence in a platform approach. (Two other Searchlight/Atomic developed pics, I Love You Beth Cooper and Jennifer's Body, went out through big Fox. The first was a dud but I bet Searchlight would have marketed Jennifer's Body better.)

  • Morgan | October 27, 2009 2:04 AMReply

    Paranormal Activity isn't the great example here - it was cheap as hell to make but hardly the cream of the creative standard to which we should be aspiring. Better to mention movies like District 9 - not just for its $30 M budget but for its lack of highly paid superstars. Isn't that the elephant in the room - the outrageous amounts of money that certain stars and directors are being paid, regardless of the performance of their last film? How long can THAT go on?

  • Joe Valdez | October 27, 2009 1:50 AMReply

    Your comparison of the '10s to the '70s is right on the money, Anne. The next decade has the potential to be a creative renaissance in American film. How many more remakes, comic books or toys are left to be made into tentpoles?

  • mary | October 27, 2009 1:49 AMReply

    The success of "Paranormal Activity" may be a bad news for studio's specialty divisions..... If a studio itself can do much better job on releasing a small indie film, why the studio need a specialty division?

    BTW, it looks like Fox Searchlight would has three wide-release bombs in row: POST GRAD, WHIP IT and AMELIA..... It is a bad sign for them....

  • ag | October 26, 2009 12:35 PMReply

    i hope david p doesn't read this. he's on a tear against anyone who suggests hwood is in trouble.

    okay. i admit it. i'm not sure, not exactly, what he's ranting about. i read that thing twice and still... hmm...

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