Are Blockbusters Reshaping Hollywood?

     A little birdie seems to have foreseen the Hollywood film studio system caving in on itself. That little birdie is academy award winning director, StevenSpielberg. Mr. Spielberg believes that continuous financial mishaps of huge blockbuster films may alter the face of Hollywood for the worse.

Nowadays, it is becoming increasingly difficult for filmmakers to get their movies into movie cinemas. We are in the age whereby financial profits are top on the priority list of movie making, leaving little to no room for movies that comprise of aesthetics, and the potential to succeed. Hollywood studio executives are more anxious about the movies they choose to produce and distribute.

       This year a number of blockbusters films have suffered from this ongoing trend in the movie industry, perhaps the most notable is The Lone Ranger, a movie produced by one of Hollywood’s finest Jerry Bruckhemeimer. The Lone Ranger, which stars Johnny Depp, was produced with a budget of $225 million; however, it only managed to gross over $196.3 million at the box office. This records a loss of  $28.7 million in revenue for Walt Disney Studios and their production partners. A loss that is bound to raise more skepticism in the minds of studios executives, and further narrow opportunities for filmmakers looking to screen their films in movie theatres for broader audiences all over the world. 

       Furthermore, some of these movie flops have been caused by a combination of bad reviews, high ticket prices, online piracy, and of course the continuous growth of the television industry. In support of this claim, here is a direct quote from The Economist.

“Hollywood executives have long been paranoid and insecure. Now they have cause to be. “The business model within film is broken,” says Amir Malin of Qualia Capital, a private-equity firm. Between 2007 and 2011, pre-tax profits of the five studios controlled by large media conglomerates (Disney, Universal, Paramount, Twentieth Century Fox and Warner Bros) fell by around 40%, says Benjamin Swinburne of Morgan Stanley. He reckons the studios account for less than 10% of their parent companies’ profits today, and by 2020 their share will decline to only around 5%. That is because the “big six” studios (the other is Sony Pictures, owned by the eponymous electronics maker) are growing more slowly than TV. In 2012 Time Warner grossed $12 billion from film, up 20% from 2002. That compares with a more than 84% rise in the company’s TV-network revenues during the period, to $14.2 billion.”

       In a recent interview, Mr. Spielberg complained about some obstacles he faced during the release of his critically acclaimed, Lincoln. He recalls a situation whereby the movie almost ended up as a Television release instead of on the silver screen. Lincoln was not perceived as a potential moneymaker by studio executives, which enhanced skepticism in regards to financial backing of the movie. Eventually they caved in and the movie went on to gross over $275 millions dollars at the box office. Steven Spielberg is one of the most respected names in the film business with a resume consisting of movies such as: Jaws, Saving Private Ryan, and the Indiana Jonesfranchise. His ability to generate revenue at the box office is beyond reasonable doubt, but even he is very much is part of this ubiquitous struggle in the film business. This shows the direction in which the film industry is headed.