by Ben Fritz
In 1988, Rain Man was the number one movie in America. It’s worth pausing to consider that fact because today, Rain Man would almost certainly never get made. No sane studio executive would bet $50 million (in inflation-adjusted dollars) on an original screenplay and a couple of movie stars because even if it was as good as Rain Man—a big “if” before you start production—plummeting home-video sales and the growing importance of international markets mean it would be very difficult to make a profit. Better to spend time and money on the safer bet, sequels to Batman and Mission: Impossible. Today, anything that’s not a big-budget franchise film or a low-cost, ultra-low-risk comedy or horror movie is an endangered species at Hollywood’s six major studios.
And as much as some of us may roll our eyes when we walk by a theater marquee filled with superhero spinoffs and sigh when someone has to explain to us what the hell a reboot is, there’s no question the studios are acting rationally. Of the top fifty movies at the global box office between 2012 and 2016, forty-three were sequels, spinoffs, or adaptations of popular comic books and young-adult novels (five of the remaining seven were family animation, the sole genre in which originality still consistently works).
Sure, every year a live-action movie without a brand name, like Gravity or La La Land, becomes a major hit. But those are as rare as a joke in a Christopher Nolan film—no sane company would build a business around them. The studios that made “too many” original films for adults in recent years, like Sony and Paramount Pictures, are not coincidentally the ones that have struggled the most financially.
Any movie can make a profit and every type does, but all the major studios are now owned by huge conglomerates like Sony, AT&T, and Disney, and for them, only mega-profits—the hundreds of millions of dollars created by a global blockbuster like Jurassic World or Deadpool or The Hunger Games—are relevant. These companies also want to tell Wall Street investors that they will deliver profits with the highest possible degree of predictability, another argument for franchise-driven sequels over risky original productions.
Most important, big media conglomerates want movies that generate long-term value. Despicable Me, in 2010, wasn’t just a hit—it also launched many millions of dollars in merchandise and video-game sales, along with a string of highly profitable sequels and spinoffs for Universal and its corporate parent, Comcast, with more still to come. Compare that to the one-time profits of La La Land, and there’s no question what type of movies the major studios should invest in.
In reality, even franchises are becoming yesterday’s news. Pumping out a new sequel every two or three years is no longer evidence of overly cynical corporate thinking, but rather a lack of imagination. The most important trend in the movie business today is the “cinematic universe.”
Pioneered by Disney-owned Marvel Studios, cinematic universes feature overarching narratives that connect two or three movies per year, allowing story lines and characters to weave in and out of them all. Plot points that begin in an Iron Man movie can continue in Thor and Captain America and be resolved in The Avengers. Ant-Man follows up his first solo film with an appearance in Captain America’s third, where he also gets his first glimpse of Spider-Man. And fans flock to see them all.
It’s quite likely a trend you’ve noticed and quite possibly one you don’t like. Perhaps you’ve found yourself asking something along the lines of what I’m regularly asked when people find out what I do for a living: Why is there nothing to see at movie theaters for people like me, who are interested in more than sequels and superheroes? What the hell happened to Hollywood?
As a reporter covering the movie business first for Variety, then the Los Angeles Times, and now the Wall Street Journal, I’ve seen up close what happened to Hollywood. In reporting on the hits and the flops, I’ve come to know the real people behind those pictures and the forces that motivate them. If you love film, TV, and business as much as I do, it’s a fascinating and fantastic job. My task isn’t just to see movies, but to understand why we get the movies that we do and then try to explain that to the world.
For years, I’ve wanted to step back and tell a big story (say, the length of a book) about the new Hollywood—one in which franchises and brands dominate, original ideas and stars are marginalized, and TV and film have swapped places in our culture and our economy. And then I wanted to look forward and explain how new players from Silicon Valley and countries on the other side of the world are reshaping Hollywood and creating a very different future for the movie business. Amazon, Netflix, and would-be media moguls in China are simultaneously a threat to Hollywood as we know it and, perhaps, a savior for the types of films that studios here don’t make anymore.
A book made up of my pontifications on those topics would, however, be pretty boring. I really wanted to start by bringing readers into a studio, to give them a close look at how executives develop, produce, and release movies in this new era. But what studio executives in their right mind would invite a reporter to hang out on the lot, with access to every meeting and every memo, for a year or two?
The Way Inside a Studio
Then, in November 2014, came the Sony hack. The cyber-takedown of a Hollywood studio was news worldwide, and like many other reporters in Hollywood, I lived and breathed the twists and turns for two months. Once this died down, though, I began to look through the tens of thousands of e-mails and documents, many of which no journalist had yet examined because there were simply so many, and discovered a trove of material that vividly brought to life the trends I wanted to explore and explain. This was, I realized, a way to embed myself inside a studio, a once-in-a-lifetime opportunity to examine the reality of the modern movie business as seen from its central nervous system: a major studio’s executive suites.
Fortuitously, Sony Pictures makes for an excellent case study of the franchise age of films. Observing a team led by Pascal, a big personality who thrived in the days of stars and original scripts but struggled to adapt to global audiences and cinematic universes, is an ideal way to see how the industry has changed. The story of Sony Pictures is the story of the movie business over the past few years and an excellent starter course for comprehending the trends that have transformed what we see on the big screen. This book uses material from the Sony hack and dozens of interviews with key Hollywood players to explore what the hell happened to the movie business, where it’s going, and what hope there is for cinema to change course in the future.
The first section takes Sony Pictures as a focal point to explain how we got to where we are. We’ll get to know Lynton and Pascal and their surprisingly successful relationship, which made the studio successful for nearly a decade, until economic forces sent Sony spiraling down a hole it’s still trying to climb out of.
The big-picture business trends that damaged Sony are the reason why certain types of movies are being produced more than ever before. Most significant is the superhero movie, which started with Spider-Man at Sony and then revolutionized Hollywood, culminating in the rise and rapidly achieved dominance of the most successful movie studio of this century: Marvel.
As superheroes came into ascendancy, movie stars were suffering. That’s particularly true of the Sony favorites Adam Sandler and Will Smith. A close look at them shows how much power A-listers used to have and how they lost it, and why these two actors now make movies for the newest power player in Hollywood: Netflix.
Sony once led the industry in making the smart, mid-budget dramas that are now an endangered species. To see why that happened, we’ll closely examine one such film, a biopic of Steve Jobs that would have easily gotten made ten years ago. Sony, however, couldn’t find a way to greenlight it in the new Hollywood reality. We’ll also take a look at why, desperate to release the film regardless of the odds against it, Pascal turned to a wealthy Silicon Valley heiress who has become a go-to savior for many in Hollywood who are struggling to make sophisticated films for adults.
Sony Pictures also provides a window into the conflicts
between motion pictures and television as the latter prospered and the former suffered. You can’t fully understand the challenges facing film production and the narrowing of the types of movies studios are willing to make. The second section of the book leaves Sony behind, along with Hollywood’s past, to look at companies, trends, and people that reveal where the movie business is going. It starts with Disney, which, with its obsessive focus on franchises to the exclusion of everything else, has become the studio the rest of Hollywood is striving to emulate. To understand what the American movie business is aiming at, take a look at Disney. And if you hope studios will keep bringing us quirky small movies alongside big-budget franchise blockbusters, prepare to be chilled.
The landscape for filmmakers has changed dramatically in the franchise age, and the filmmakers who thrive now differ from their predecessors in many ways. Directors have become less influential, and producers, including writer-producers, who guide major franchises are now more important. We’ll take a look at three of them who are trying, in different ways, to build and guide cinematic universes while still making their own creative imprint.
There is some hope for independent art-house films, but it comes from a surprising source. Amazon is building what could be the biggest and most culturally meaningful independent movie business of this century. We’ll discover how this company is working with a set of rules and goals entirely different from those of the Hollywood studios.
No peek at the future of the movie business would be complete without a stop in China. Its consumers increasingly dictate the types of movies that get made, and its money is shaping the way that Hollywood works. Its ultimate effect on filmmaking has yet to be seen, but its impact has already been tremendous.
One other trend could reshape the films Hollywood gives us over the next few years. Studio executives frustrated by corporate mandates that force them to obsess on managing franchises are striking off on their own more and more, using independent money and their decades of experience and connections to try to make the type of interesting mid-budget movies that their former employers have largely abandoned.
At the end, we’ll check back with Sony. As I wrote this book the studio continued to linger at the bottom of the box office, took a $1 billion write-down, and changed its leadership team. After its years of struggle, many in Hollywood are asking whether it’s even possible for Sony Pictures to make a comeback. If a studio doesn’t control great brands, can it find a way to win in the franchise age of filmmaking?
Can it even survive? Rumors have long swirled that Sony might sell its underperforming studio. It seems inevitable that fewer Hollywood studios will exist by the 2020s, since those with big brands that are part of massive conglomerates, like Disney, Comcast-owned Universal, and AT&T-owned Warner Bros., use their power to dominate the franchise film business. Agile digital players like Amazon and Netflix are taking control of the rest.
At the same time, the rise of franchise films and the studios’ abandonment of nearly everything else may lead us to the most fundamental questions about movies: What are they? And how much does it matter?
Some still believe that moving images flickering on a giant silver screen deliver a unique cultural experience that must be honored forever. Yet amid the golden age of TV and the ubiquity of streaming media, many now argue that the only difference between a movie and a TV series is how long each one runs. Each Marvel “movie” is, arguably, best understood as a two-hour episode of an ongoing television show, while one season of Fargo or American Crime Story is, essentially, an eight- or ten-hour film.
Ted Sarandos, the chief content officer of Netflix, has argued that movies are simply stories made of moving images that you consume in one night, whereas TV shows are ones that take several nights. Sure, you can see movies at the multiplex if you so desire, but the size of the screen and the price of the popcorn may no longer be fundamental to the definition of a film.
Ultimately, in the franchise age of filmmaking, perhaps only one thing about movies remains unique: they are home to the biggest, most globally popular brands. If you’re a fan of Marvel or DC or Fast & Furious or the Planet of the Apes, you’ve got to be a fan of the movies. If you’re a fan of the most original, moving, and memorable stories that American pop culture has to offer . . . well, the future is very much up for grabs.
Part 1
How Hollywood Got Here
1
The Odd Couple
Lynton and Pascal’s Glory Days at Sony
It was the tensest time in Michael Lynton and Amy Pascal’s decade of working together.
After many years of success, Sony’s motion picture business was in a slump that just wouldn’t end. While big-budget franchise movies were dominating the box office and the studios that focused on them were raking in profits, Sony continued to be known for its mid-budget dramas, genre movies, and star vehicles. There was a lot of talk about the need for more sequels, reboots, and adaptations of well-known intellectual property, but nothing seemed to be clicking.
Lynton was frustrated. He had long stayed out of Pascal’s business, figuring he could best help with strategic and financial issues while she was better suited to handle the day-to-day drama of picking and making and releasing movies.
But as the studio struggled, Lynton felt increasing pressure from Wall Street and Sony headquarters in Tokyo. He, in turn, began getting repeatedly frustrated at Pascal for the first time in their eleven-year partnership.
“I did not want to be in this situation, but events have overtaken us and so here we are,” he wrote to her in late 2014, not bothering to hide his glumness. “I am only saying this all so you understand the enormous pressure I am under and why I really don’t have much patience at the moment.”
Pascal would never show to her boss anything but optimism and a can-do attitude. But to others, she admitted she was befuddled.
“Somehow I still can’t make sense if what else I have to do to turn the company around,” she told Tom Rothman, a confidant who headed Sony’s TriStar division. “I can’t understand why we are in such a pickle I go over it and over it and all I have is a head ache.”
By the middle of the second decade of the twenty-first century, Sony Pictures had lost its way. What at first seemed like an unlucky series of box-office flops had turned into long-term stagnation, revealing a mismatch between the strategy the studio’s leadership had adopted and the direction the market was heading in.
The movie business had fundamentally morphed, deriving most of its profits from giving global audiences what they want: branded franchise films, including sequels, reboots, or adaptations based on popular comic books and toys.
But Sony hadn’t made that transformation. It was still struggling to shed the strategy that had worked so well for all of Hollywood from the late 1990s through the 2000s: making a diverse slate of films geared first and foremost to domestic audiences, be they fans of comedies, dramas, thrillers, horror, or family fare. In that old-fashioned approach, originality was still considered critical, and branded “event” films were just one part of a successful cinematic recipe.
Because Sony, under Lynton and Pascal, was so good at the old way of doing things and so bad at the new, their story perfectly illustrates what has changed in Hollywood and why the lineup at the multiplex is so full of sequels and reboots and so lacking in fresh ideas.
Hollywood’s Favorite Studio Chief
When Amy Pascal joined Sony Pictures in 1996, the studio was still reeling from the most disastrous acquisition in the history of the movie industry.
The Japanese electronics giant Sony Corporation had bought seventy-year-old Columbia Pictures in 1989. Sony executives dreamed of leveraging a merger of entertainment and technology, which surely were about to converge, enabling their company to dominate the coming age. Those dreams would ultimately bear little fruit because of bureaucratic ineptitude and Sony’s failures in everything from digital music to smartphones to low-cost TVs. But these were not the
only issues that made the purchase such a debacle.
Putting up $5 billion to buy Columbia, Sony had grossly overspent and would by 1994 have to write down the asset by $2.7 billion, essentially admitting that the studio behind Mr. Smith Goes to Washington, Lawrence of Arabia, The Bridge on the River Kwai, Dr. Strangelove, Shampoo, Kramer vs. Kramer, Gandhi, and Ghostbusters was worth less than half of what it had paid.
In addition, the Japanese company spent a total of $1 billion to lock down the management team of Peter Guber and Jon Peters, who proceeded to engage in “the most public screwing in the history of the business,” as a book that chronicled their reign put it. They were eye-poppingly extravagant, blowing money on everything from office renovations to talent deals, got the studio caught in a sex scandal involving the prostitute Heidi Fleiss, and oversaw a string of flops still infamous today, including Bruce Willis’s Hudson Hawk, Arnold Schwarzenegger’s The Last Action Hero, and the director James L. Brooks’s aborted musical I’ll Do Anything.
When first Peters and then Guber were shown the door, they were replaced by John Calley, an éminence grise if Hollywood ever had one. Urbane, intelligent, and as unconcerned with status as any studio chief could be, Calley had been president of Warner Bros. in the 1970s, when it was a beloved home for filmmakers and turned out classics like The Exorcist, Dog Day Afternoon, Superman, All the President’s Men, and Blazing Saddles.
Then, in 1980, Calley quit. Feeling that he had lost himself and was defined primarily by his phone list, the mogul turned down a seven-year contract worth $21 million and moved to Long Island, then rural Connecticut, where he tuned out business and pop culture almost entirely. He resurfaced as a producer in 1989 and then in 1993 became head of MGM’s United Artists division.