Sleepless in Hollywood: Tales From the New Abnormal in the Movie Business

by Lynda Obst

  • Rule 3: Dramas that explore, glorify or otherwise delve into our national history bore everyone but us.

  They like their local and national history, not union-organizing stories, Green Beret movies, America in Iraq, name-the-country-where-we-triumph-in-sports-or-war stories, or Lincoln stories (with or without a vampire).

  • Rule 4: Minimal awareness is insufficient—for example, second-tier caped crusaders such as Green Lantern and Green Hornet. Maybe green things don’t work.

  Universal just canceled Clue (which my late, great partner Debra Hill already made once for Uni in the eighties; I was her exec—we flew to Parker Bros. in England to get the rights. Everything old is new again), as well as a number of other movies based on Hasbro games (for instance, Magic: The Gathering). Ouija went from a tentpole to a tadpole with a budget under $5 million, to be made by the producer of Paranormal Activity, the abnormally successful faux-found-footage horror series about a couple who move into a haunted house; the first in the Paranormal franchise was made in 2009 for $15 million and grossed $193 million worldwide. Likewise, movies based on video games have an iffy track record (just as video games based on movies often fail). The two businesses don’t yet understand each other. One reason is that movie people don’t give their game rights to the best game developers, but instead to in-house lackeys. Great game developers who try to work with the studios or savvy filmmakers don’t get access to the film process early enough to make the games cool. When it works well. But video games are not board games, which may be “Old Empire.” Mere awareness may not be sufficient. Awareness means games like Mortal Kombat, World of Warcraft, Tomb Raider, etc. We all have to be completely internationally aware, like Jell-O or Kleenex, if Kleenex were a video game being played by thirteen-to seventeen-year-old fan boys all over the world.

  • Rule 5: Mixed genres don’t work. Maybe if you’re too many things, you’re nothing at all.

  Cowboys & Aliens. Abraham Lincoln: Vampire Hunter. Wash-up ideas that look good on paper, but ridiculous on-screen. All in all, after a rare bidding war for the latter property among studios, the “winner,” Fox, ultimately eked out $101 million worldwide on the picture, with domestic earning less than the movie’s $66 million production budget.

  • Rule 6: No cowboys, no hats, no horses, no cattle, and no dust are allowed. With aliens or without.

  • New Rule: Apparently the above works with Tarantino only, or there’s a new black/cowboy genre. Guessing Tarantino.

  BROADS ABROAD

  With Sandra Bullock, we’re in very good shape. Meryl Streep, mon Dieu, mais oui. Jennifer Lawrence, due to the magic combo of franchise (The Hunger Games) and Oscar. Angelina is huge. She has big international gazoogies. And the more she sticks her right leg out at the Oscars, the bigger they get. They love our movie stars; they’ve always loved our movie stars, from the silent movies to Marilyn Monroe. Big stars = big bucks. They are a beat behind (one of my international sales-agent pals told me, “We love the stars of the immediate past!”), so the hot young things that the domestic audience loves won’t sell. This makes casting hard, as Sandy and Meryl can make only so many movies, and Julia and Angelina have a lot of babies.

  It should be pointed out that one of Sandy’s points of adoration abroad, besides constantly batting her hits out of the ballpark, is that she is fluent in German, does an occasional ad campaign in Germany and does all of her press junkets in perfect German. Her numbers there are astronomical. (Her mom was a German opera singer and spoke German in the house.) So too with Jodie Foster, whose numbers are great internationally, along with her acting choices, which favor action. She is fluent in French, does an occasional advertising campaign in France, does her junkets in witty, jaunty French and lives in Paris part-time. Penélope Cruz and Javier Bardem both score high numbers in Spain. Milla Jovovich, not surprisingly, is big in Russia. A little cosmopolitanism goes a long way these days.

  Our romantic comedies have often performed well in Europe, particularly in Germany, and also, interestingly, in Japan, despite the studios’ lack of interest in the international market when making them. Gianopulos would say that the successes in this genre are typically star-dependent, and on average this seems true—thus Sandy Bullock’s huge numbers abroad. The success of our syndicated television shows in France, Germany, England, Scandinavia, Australia and elsewhere has made our customs and stars familiar to many territories, and therefore our mating rituals are somewhat adorable. But there is doing well ($110 to $120 million) and there is doing great ($600 million to $1 billion), and the billion-dollar payday the studios are looking for doesn’t reside in success in “Old Europe,” as the studios say with almost equal disdain as Donald Rumsfeld did. The business there is too small to impress them.

  More ominously, Sanford Panitch, of Fox’s new international production division Fox International Productions (FIP), tells me that indigenous romantic comedies are the new rage; they are now being made based on local romantic customs in local languages with local talent for a lesser price. They no longer need our rom-coms for style, trends, etc.—movies have been replaced by the Net as cultural carrier pigeon. Without our biggest brand-name stars, our movies will be dinosaurs, replaced by local ones. This makes sense. As Gianopulos says, you can make a $5 to $10 million romantic comedy in any country in the world, in the local idiom, with local stars. But because of our technical prowess and the enormous costs involved, you can only make Avatar, Transformers, Inception and The Dark Knight in America.

  YOUR MOVIES? WE CAN MAKE THEM! WITH YOU!

  We are great imperialists. We are also the best distributors. So call us the running dog of imperialist distributors.

  Movies are a vital, critical and growing U.S. export. But increasingly, most countries want a larger share of their own movies to be released locally. Many countries, such as India (which has the most successful indigenous movie industry in the world), Australia, England, Japan, Korea, France, Hong Kong, Mexico, Russia and Spain, have bustling and historic film communities that severely limit imports. One idea to remedy this loss of income is to participate in local production in some way. What way? Finance and distribute! Each studio has distribution offices in each territory for its own releases, and some of these headquarters are becoming financing sources for local production and/or offering new opportunities for wide-ranging international distribution for local products. Capitalism at work!

  Fox is enjoying fast success in indigenous production with its new Fox International Productions (FIP) banner under Sanford Panitch, which as of the date of writing has made more than $300 million in local-language box office. They are not remaking Fox properties.

  One of their most recent hits is My Name is Khan, about an Indian man with a unique point of view and his great but ultimately ill-fated love for a single mother, which became one of the biggest-ever Bollywood films outside of India. According to Gianopulos, who along with Panitch gave birth to the division, during one weekend in February 2012 Fox International Productions had the biggest movie in China, the most populous country in the world, and the biggest movie in India, the second most populous country in the world. Now Panitch and FIP have planned, made and cofinanced European, Indian, Chinese, Japanese, Indonesian and Korean indigenous productions all around the world. What does he offer that they don’t have? Global reach.

  Panitch explained why it worked. “What you’d normally hear is, ‘We don’t need you, we have our own stories, we have money, we can get our films distributed, we’ve managed to do fine without you.’ Bollywood is a perfect example of that. They don’t need anybody. So why do we need you? The only reason we do need you is to get us into the United States and beyond our borders. Well, the answer is usually no, because your movies don’t usually go from India to China. My Name is Khan is a love story about an Indian man with a tragicomic way of looking at the world who moves to San Francisco and meets a vivacious single mother. It played around the world. We proved it can work. We provide that.”

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bsp; They also had an executive with a producerlike mentality who thought up the division and let him run with it. He had a philosophy that worked.

  “Let’s study the market, just like you would as a producer,” Panitch explained. He had grown out of the Fox culture before he ran minimajor New Regency Enterprises at Fox. I had known him for years, before he ran the world, when we worked together in the Old Abnormal when he was just starting. He was recommended to me by my great friend Dawn Steel.

  Even back then he was the world’s greatest information gatherer; he was the first person I know who kept compulsive files on a computer. It was in the eighties, and I had no idea what he was doing. And now, in a world where information is king, he reigns. “Other companies have tried and failed,” he said as we chatted about the quick success of his division.

  I noted that Disney tried, with High School Musical; it worked everywhere else in the world, so they made a Chinese version. But it only did $110,000 at the box office. “Why?” I asked him.

  “You could say it’s a strangely imperialistic point of view. Exactly the opposite of what we are trying to do. We are trying to figure out what would work in China; for example, what’s the bestselling novel there?”

  More and more, U.S. film companies are becoming global financiers and distributors, with coproduction and tax rebate deals (which incentivize local production through tax credits) commingling our limited cash resources and creating genuinely international product. We have built theaters to play our movies and the movies we finance with local filmmakers. If there is product, we should distribute it. Fox has long been doing this in Germany and Russia. Now it is doing it almost everywhere.

  I cannot understate the advantage that Fox had with an infrastructure already in place with pay TV (cable and satellite) all over the world. They had offices with well-connected locals all over Asia, the Middle East, China and Latin America who could hit the ground running and knew who was who in the local movie community. This is invaluable, as connections are vital in any business, especially a preciously gate-guarded one like the movie business.

  Panitch told me one of the things he had learned in Bollywood. When we were developing movies together, one of the organizing principles of development was tamping down wild tone changes. In Bollywood they require wild tone changes: In their crime and action movies, they want dancing and singing, and in their romances they want action, guns and death!

  I was agog. And then I remembered how I adored Slumdog Millionaire—Danny Boyle’s Oscar-winning movie about a Mumbai teen who grew up in the slums and becomes the winner of Who Wants to Be a Millionaire—and its torture-romance-dancing hybrid, and I suddenly knew just what he meant. (SM, by the way, performed less well in India than anywhere else, but they realized their movies could win Oscars!) It’s all getting to know you, and Panitch is FIP’s master of the local meet and greet, globalize and monetize.

  If there is an indigenous market to support, we will help finance it, then distribute the product and make money out of it. If there is money out there in a global movie industry, the studios need it. Dwindling cash means that any income is crucial.

  WHAT WORKS BETTER THERE THAN HERE?

  3D: The Great Conundrum

  At first 3D was thought to be the savior of the business, the technological breakthrough that would compensate for the DVD disaster. But it was overused, slapped on pictures that weren’t shot in 3D. Some insiders were investors, which complicated matters so much that at one point a famous mogul-investor suggested to Paramount and Scorsese that they release The Departed in 3D.

  It was such the rage that every movie that was being made in the wake of Avatar and Alice in Wonderland, the medium’s first two blockbusters, was going to be in 3D. But the onslaught of lousy conversions gave the process a black eye and exhausted the sophisticated young audience in the United States, and many very young kids in the domestic family audience rejected it as well.

  But in emerging markets, 3D is another story. In China and Russia, they Just Can’t Get Enough. The studios soon faced a puzzle in the wildly divergent appetites for 3D domestically and internationally. In the United States the appetite is diminishing from over-saturation; in the critical international audience, it is crack. Now it is necessary to make two versions of films, both 3D and 2D, so the 3D doesn’t keep the U.S. audience away.

  Then, in February 2012, something huge happened. The future president of China, Xi Jinping, ended his first trip to America in Los Angeles with a meeting with Vice President Biden and the MPAA’a chief lobbyist, former senator Chris Dodd. It’s not where you start a trip, it’s where you end a trip that counts; it’s like The Last Dance. The fact that the meeting included Biden and was Xi’s last stop indicated the importance of our industry’s trade for both China and the United States. The subjects were our movie quota for Hollywood releases in China—twenty-one per year—and the revenue ceiling for American movies, now 13 to 17 percent. In a groundbreaking deal, which was not all of what everyone wanted but a great start, Xi raised the profit ceiling to 25 percent and added fourteen more American movies to the quota over the next five years. There is one restriction: Each has to be 3D or IMAX. “I think, overall, people feel like it’s important to get movement here and then go back to the drawing board and push for more openers,” said Dodd.

  The fact that nothing but 3D and IMAX is allowed into China will critically affect what we as an industry will produce as China pushes itself to become the number-one movie market in the world over the next five years. They want fantasy and action, and they will get fantasy and action. Line up those tentpoles and fire.

  ALL ROADS LEAD TO CHINA

  With its 1.5 billion newly minted capitalists, China is the dream girl of every dashing entrepreneur’s business plan. But it has had no more ardent suitor than the entertainment business. Rupert Murdoch was an early trailblazer in the march on China, investing heavily in a satellite system, but left without the partnership he was aching for. Many less formidable suitors followed, to be greeted by opaque rules and customs and many layers of bureaucracy to penetrate.

  My image is Hollywood as the Road Runner, bashing his head on the Great Wall until he could finally leap over to see who or what would greet him. Then he’d get the slow kind of runaround. And we courted China, even as it continued to be our most virulent pirate of DVDs. But gigantic progress has been made, especially in 2011 (though not so much on the piracy front). Even with the old quotas and caps on revenues in place, China’s box office profits surged 64 percent to $1.5 billion in 2011, and are projected to be $5 billion in the next five years. You can see what all the road running has been about.

  DEALZ, DEALZ, DEALZ

  Last year some major American companies made early coproduction deals with Chinese entrepreneurs as partners, and that made big headlines in the industry trades. Things are moving so fast that this year Chinese moguls have come a-courting to us and look like our new white knights. China’s Dalian Wanda Group bought AMC Entertainment in a deal that is worth $2.6 billion, so they are now American distributors. There is a new deal and a new partnership announced monthly. So vast is this new market that everyone wants a piece of this trade deal. It will be the focus of a large part of the studios’ efforts.

  A Chinese media mogul named Bruno Wu, educated in America and married to a gorgeous media star in her own right known as “the Chinese Oprah,” is bringing $800 million of financing money to the United States to buy companies, finance filmmakers and get into the content business for both the United States and China. He made a play to buy Summit Entertainment (Twilight franchise), at the time the only studio on the block, but Summit chose instead to merge with the more familiar Lionsgate Studios, like itself a minimajor (as we call studios without lots). Wu is advised by the Creative Artists Agency (CAA; one of Hollywood’s top movie agencies) at their Beijing headquarters, and is said to be looking at many different avenues into the U.S. market. Until I read the announcement, I didn’t even know that CAA had a
Chinese headquarters. Things are getting seriously global around here.

  Among the big production companies that got into the China game last year was Legendary Pictures. Its CEO, Thomas Tull, has invested in the Dark Knight franchise, Inception, and the Hangover movies, so we expect his decision-making to be refined, despite the first choice for his venture, an epic about the building of the Great Wall. I take this as a getting-to-know-you kind of gesture. It will be directed by Ed Zwick, but is currently on hold. I don’t know how these historical-epic coproductions go, but I have my doubts.

  Ryan Kavanaugh of Relativity Media has a penchant for trouble (two alleged DUIs and many angry ex-financiers), which was extended to China early in his first coproduction there, 21 & Over. Their central location turned out to be in a verboten city, Linyi, where famous human rights defender Chen Guangcheng, a blind self-taught lawyer, had been detained since 2005. Worse, unbeknown to Relativity, they had become partners with the local party secretary who was responsible for his repression. Human rights activists went ballistic, and Relativity came under fire in the press—just what Kavanaugh didn’t need. When you’re working with the government, and by extension the party, you don’t always know with whom you are dancing.

  These clashes and confusions happen because the cultures couldn’t be more dissimilar. The only similarities are capitalism and our mutual love for dumplings, and the Chinese seem to be better capitalists than we are. They are great at picking our products as they choose, like from a dim sum menu, while keeping two-thirds of the profits. Those capitalists in China who want to get their money out and who now have the new coproduction deals have to depend on Hong Kong’s transparent financial market to get paid.

  In the meantime, they are reaping all the benefits of the infrastructure and technology we offer them and using them to distribute their own created content as well as limited international fare.