The costs of H’w’d spending ---- Who benefits when filmmakers raise the tentpole?

Peter Bart speaks again!
Jean-Luc Martin

Who benefits when filmmakers raise the tentpole?

James Cameron was quoted in the Wall Street Journal not long ago arguing that "when a studio goes crazy and spends a lot of money, it's the consumer who benefits."

Translated, that means that if Jim Cameron decides to reinvent the lexicon of filmmaking in a mind-bogglingly expensive movie like "Avatar," the filmgoer will enjoy the thrill ride -- and won't pay more for it. Much more, anyway.

With the world awaiting "Avatar's" release, we shall soon see if Cameron has performed that re-invention. In any case, having poured $300 million into the movie (or $400 million if you run the numbers differently), it's Fox that's waiting nervously to find out whether "the King of the world" again will earn all the ka-ching in the world.

Whatever the outcome, I would argue that the move to ever bigger and more extravagant movies will hurt the filmgoer long-term, not benefit him. Here's why:

Fueled by burgeoning foreign grosses, the studios are intent on making fewer movies at more grandiose budgets and at the same time diminishing their investment in "risky" low and mid-range dramas. The result: A numbing succession of tentpoles that may all but drive indie-style films out of the multiplexes.

Further, the era of the "big spend" will increasingly contaminate the few dramatic movies being made. "Lovely Bones," the Paramount-DreamWorks Christmas release from Peter Jackson, is an intimate film that cost almost $100 million to produce. Will the massive special effects improve or diminish the impact of the basic narrative? One key reason for the setbacks suffered by both Miramax and Paramount's Vantage division was the impulse to pump up spending both in production and marketing.

I remember the off-the-cuff commentary of Mike Nichols some years ago in describing the budget crunch on arguably his best picture, "The Graduate." When a young director finds his budget shrinking, recalled Nichols, he is compelled to not spend more, but invent more. The result often is a better movie.

In an economy where the big companies are under pressure to cut costs, filmmakers paradoxically feel the pressure to amp up their budgets. Audiences overseas want big-canvas action pictures that offer more effects and less dialogue. Simultaneous releases around the world may diminish piracy, but they expand marketing costs. The distributors demand instant gratification and are willing to pay for it.

I hope "Avatar" is a big hit and that the always modest and understated Cameron once again proves his techno-smarts. Even if that happens, however, the average filmgoer will still emerge the long-term loser.

Is Tom Cruise overpaid?

Like most people, I've always been intrigued by Forbes' lists of the "wealthiest" and "most powerful," but I've never figured out quite how they line up with their numbers.

Now, however, Forbes has a list I can relate to -- the most overpaid stars in Hollywood. The individual rankings, Forbes says, are based on a return-on-investment formula involving each star's compensation and each movie's gross. Forbes, of course, believes it has reliable data on star paydays, even though those numbers remain obscure to the rest of us.

The upshot: Will Ferrell, Eddie Murphy, Ewan McGregor and Tom Cruise are on the top of the "overpaid" list. Inclusion of Murphy and Ferrell is understandable, but Cruise apparently is vulnerable due to "Lions for Lambs." As for poor McGregor, he's apparently made too many classy movies like "Trainspotting" and thus represents a bad buy compared with, of all people, Shia LaBeouf, who by Forbes standard is the best buy for the buck among actors. Go figure.

Hollywood rethinks use of A-list actors --- Films are showing that a good concept trumps star power

A producing partner on a film we are working together on (thanks Bill Rogin) brought this article to my attention. Although Condemned (horror) and many other projects don't have the budgets that this article is addressing - the issue still remains .. "talent quotes" and are they really as much a factor as the market requires for a positive ROI? Logic would say .. good script and amazing director and strong actors (focused production team .. lets not forget that FACT). There are so many talented actors out there .. but the market / audience dictates ticket sales! I could go on .... but it is time to get back to work!

 Have a great week everyone!!!

Best,
Jean-Luc 
Producer, Line-Producer, UPM (in no particular order)


Hollywood studios are now thinking twice about splurging on A-list movie stars and costly productions in reaction to the poor economy, but also because of the surprising success of recent films with unknown actors.

After buddy comedy "The Hangover," a movie with a little-known cast, made $459 million at the global boxooffice this past summer, several films have shown that a great concept or story can trump star appeal when it comes to luring fans.

"District 9," a low-budget movie in which the biggest stars were space aliens treated like refugees and the lead actor was South African Sharlto Copley, made $200 million. Thriller "Paranormal Activity," starring Katie Featherston and Micah Sloat, has cash registers ringing to the tune of $100 million.

Next up, on Nov. 20, comes Summit Entertainment's relatively low-budget ($50 million) franchise movie "The Twilight Saga: New Moon," a sequel to 2008 hit vampire romance "Twilight" which made global stars of Robert Pattinson and Kristen Stewart. Online ticket sellers report "New Moon" is one of their highest presale movies of all time, and boxoffice watchers expect the film to have a smash opening.

"Nobody says that a big wonderful movie needs to be expensive, it's just that that's been the trend, and perhaps the trend is misguided," said USC cinema professor Jason Squire.

Last weekend, "Disney's A Christmas Carol," featuring the voice of comic actor Jim Carrey, became the latest celebrity-driven movie to stumble at boxoffices, opening to a lower-than-expected $30 million.

Aside from Carrey and "Carol," which cost at least $175 million, A-listers who suffered boxoffice flops recently have included Bruce Willis ("Surrogates"), Adam Sandler ("Funny People"), Will Ferrell ("Land of the Lost"), Eddie Murphy ("Imagine That") and Julia Roberts ("Duplicity").

"The (major movie) machine didn't fly last summer, if you look at the movies and the names, they were not star-driven movies, they really weren't," said Peter Guber, chairman of Mandalay Entertainment and former head of Sony Pictures.

Hollywood insiders say A-listers are having trouble with salary demands in the $15 million range or participation approaching 20% of gross profits -- deals that were once somewhat common for top talent. Instead, they are being asked to take less money upfront and greater compensation only if a film breaks even.

In "New Moon," Pattinson and Stewart rekindle their romance between an immortal vampire and a high school girl that they brought to silver screens in last year's adaptation from Stephenie Meyer's "Twilight" books.

At the time, Pattinson and Stewart were unknown stars but that did not hurt "Twilight," which made $384 million at global boxoffices and gave Summit a bona fide franchise.

It's not unusual for franchises like the "Harry Potter" movies to begin with unknown actors, but as the films' popularity takes root, production budgets relax and actor, producer and other salaries soar.

But in recent years, Hollywood has been racked by the recession, competition from video games and the Web, declining DVD sales and fewer licensing deals with television networks

This week, Disney chief Bob Iger said in a conference call that the sluggish DVD market is one reason the major studio has altered its moviemaking. "It causes us to really reconsider not only what we're investing in our films, but how we market them and how we distribute them," he said.

For its part, fledgling Summit has positioned "Twilight" as a franchise for the recession era by keeping the pressure on the costs for "New Moon," and Hollywood producers are praising them for it.

"Good for them, they are really keeping the costs down. It is unusual," said Lauren Shuler Donner, a producer on the "X-Men" films and 2008's "The Secret Life of Bees."

Summit, whose executives declined to be interviewed, took a page from the playbook of "The Lord of the Rings" by shooting the second and third films back-to-back this summer.

When director Peter Jackson made his three "Lord of the Rings" films simultaneously 10 years ago, it was a novel idea that reduced costs because actors, sets, costumes, locations and other items only had to be assembled and paid for once.

Similarly, by shooting the next two "Twilight" movies together, Summit kept the cost of the third film, "Eclipse," due June 30, around $60 million, one source said.

"What I like is they didn't have a long window (between films), they went in to make a franchise, they didn't go in to see if they had a franchise," said Warren Zide, producer on the "American Pie" and "Final Destination" movies.
Hollywood rethinks use of A-list actors
Films are showing that a good concept trumps star power

By Alex Dobuzinskis, Reuters

Nov 13, 2009, 09:20 PM ET
Hollywood studios are now thinking twice about splurging on A-list movie stars and costly productions in reaction to the poor economy, but also because of the surprising success of recent films with unknown actors.

After buddy comedy "The Hangover," a movie with a little-known cast, made $459 million at the global boxooffice this past summer, several films have shown that a great concept or story can trump star appeal when it comes to luring fans.

"District 9," a low-budget movie in which the biggest stars were space aliens treated like refugees and the lead actor was South African Sharlto Copley, made $200 million. Thriller "Paranormal Activity," starring Katie Featherston and Micah Sloat, has cash registers ringing to the tune of $100 million.

Next up, on Nov. 20, comes Summit Entertainment's relatively low-budget ($50 million) franchise movie "The Twilight Saga: New Moon," a sequel to 2008 hit vampire romance "Twilight" which made global stars of Robert Pattinson and Kristen Stewart. Online ticket sellers report "New Moon" is one of their highest presale movies of all time, and boxoffice watchers expect the film to have a smash opening.

"Nobody says that a big wonderful movie needs to be expensive, it's just that that's been the trend, and perhaps the trend is misguided," said USC cinema professor Jason Squire.

Last weekend, "Disney's A Christmas Carol," featuring the voice of comic actor Jim Carrey, became the latest celebrity-driven movie to stumble at boxoffices, opening to a lower-than-expected $30 million.

Aside from Carrey and "Carol," which cost at least $175 million, A-listers who suffered boxoffice flops recently have included Bruce Willis ("Surrogates"), Adam Sandler ("Funny People"), Will Ferrell ("Land of the Lost"), Eddie Murphy ("Imagine That") and Julia Roberts ("Duplicity").

"The (major movie) machine didn't fly last summer, if you look at the movies and the names, they were not star-driven movies, they really weren't," said Peter Guber, chairman of Mandalay Entertainment and former head of Sony Pictures.

Hollywood insiders say A-listers are having trouble with salary demands in the $15 million range or participation approaching 20% of gross profits -- deals that were once somewhat common for top talent. Instead, they are being asked to take less money upfront and greater compensation only if a film breaks even.

In "New Moon," Pattinson and Stewart rekindle their romance between an immortal vampire and a high school girl that they brought to silver screens in last year's adaptation from Stephenie Meyer's "Twilight" books.

At the time, Pattinson and Stewart were unknown stars but that did not hurt "Twilight," which made $384 million at global boxoffices and gave Summit a bona fide franchise.

It's not unusual for franchises like the "Harry Potter" movies to begin with unknown actors, but as the films' popularity takes root, production budgets relax and actor, producer and other salaries soar.

But in recent years, Hollywood has been racked by the recession, competition from video games and the Web, declining DVD sales and fewer licensing deals with television networks

This week, Disney chief Bob Iger said in a conference call that the sluggish DVD market is one reason the major studio has altered its moviemaking. "It causes us to really reconsider not only what we're investing in our films, but how we market them and how we distribute them," he said.

For its part, fledgling Summit has positioned "Twilight" as a franchise for the recession era by keeping the pressure on the costs for "New Moon," and Hollywood producers are praising them for it.

"Good for them, they are really keeping the costs down. It is unusual," said Lauren Shuler Donner, a producer on the "X-Men" films and 2008's "The Secret Life of Bees."

Summit, whose executives declined to be interviewed, took a page from the playbook of "The Lord of the Rings" by shooting the second and third films back-to-back this summer.

When director Peter Jackson made his three "Lord of the Rings" films simultaneously 10 years ago, it was a novel idea that reduced costs because actors, sets, costumes, locations and other items only had to be assembled and paid for once.

Similarly, by shooting the next two "Twilight" movies together, Summit kept the cost of the third film, "Eclipse," due June 30, around $60 million, one source said.

"What I like is they didn't have a long window (between films), they went in to make a franchise, they didn't go in to see if they had a franchise," said Warren Zide, producer on the "American Pie" and "Final Destination" movies.

AFM News 2009: Better buzz on film funding: Lending universe will expand for industry

Hello All,

I have been keeping up with AFM and after reading several articles and speaking with more than a few distributors, I truly believe that our market will get better and so will the material. Investors in general are playing more of an active role in understanding their ROI.

Have a great week!

Jean-Luc Martin


While Hollywood's prospects for foreign financing is downbeat, the situation should slowly brighten, according to film biz honchos at the American Film Market on Friday.

"A year ago, lenders were sitting on their hands," said Jason Sklar, VP of the entertainment industries group at J.P. Morgan. "The lender universe will expand in the next year or two." But, he admitted, "It's going to take some time. There are other opportunities for investors that have a higher yield for less work."

Sklar made the remarks as part of a panel at the Fairmont Hotel on financial markets and liquidity issues, sources of equity investment, tax incentives and foreign investment. About 800 attended the session, sponsored by KPMG and moderated by KPMG managing director Benson R. Berro.

His fellow panelists said the $825 million investment by India's Reliance into DreamWorks is a strong signal of the direction of investments into the U.S. film business.

"For the time being, the equity will come from emerging markets," said Emmanuel (Manny) Nunez, motion picture agent at CAA.

Nunez also noted it's unlikely that any hedge fund money will return to Hollywood any time soon, pointing out that the "perfect storm" that attracted the funds -- huge amounts of money looking for investments in an industry hungry for funds -- won't take place again.

Instead, foreign investors will have far more strategic goals, according to Adam Leipzig, president of National Geographic Films. "Non-U.S. investment is smart money, not dumb money, that's looking for companies that have a track record," he added.

Hyde Park Entertainment topper Ashok Amritraj -- who signed a $250 million deal with Abu Dhabi's production banner Imagenation last year to develop and distrib up 20 feature films over seven years -- noted that Hollywood has a poor image in terms of how it treats investors. He urged attendees to be more attentive to those bringing the funding.

"If the first one works out, that's so important, because then there's more to come," Amritraj added.

Nunez also warned that more consolidation will likely come among the Hollywood majors, pointing to declines in DVD revenues. "That's a lot of dollars that have been taken away from the bottom line," he added.

The panelists agreed that use of government incentives remains essential in financing, with Leipzig saying that's the key reason he's shot only three of his 28 films in the Los Angeles area.

Amritraj noted that incentives in Louisiana, Michigan and North Carolina were a key reason why recent Hyde Park pics have been shot in those states. And he asserted that despite budgetary pressures on governments, it's unlikely incentive programs will disappear.

Industry slowly embracing new media --- Promising gizmos banking on being biz's next killer app

Hello all!
The Digital Revolution that is changing our landscape as producers.

Jean-Luc Martin



Hollywood seems stuck in first gear when it comes to the race to embrace the Digital Revolution.

After more than a decade of dithering over how to release film and TV content over the Internet and other new-media platforms -- and how aggressively to do so -- the industry remains tentative in its approach to digital distribution.

"Studios are feeling their way through," says Rick Bolton, CEO of digital downloads company Film Fresh. "On the one hand, they have the cautionary tale of the music industry before them, and on the other, they have the relatively positive example of the TV side's relationship with iTunes. But the consumer is going to decide where this all is going, not the corporate side."

With that in mind, the brave few continue to pop up with bright ideas they hope will capture public fancy and studio support.

Take Digiboo, a business startup by home entertainment veteran Richard Cohen. Digiboo would place digital touch-screen kiosks in airports and other heavily trafficked public spaces where consumers can plug in a flash drive and instantly download movies and other content.

Discussions are under way with studios and retailers ahead of a proposed market-by-market rollout nationwide. The concept's premise is simple: Downloading movies would be more popular if the downloads didn't take so long.

Digiboo gets around that problem by storing films onsite, so the transmission is almost instantaneous.

"Digiboo's technology has taken portability and convenience to another level entirely," Cohen says. "We think this is exactly what the consumer wants and exactly what's been missing from other models."

Indeed, horror stories abound of inordinate wait times on many film downloads, and the download time for season sets of TV series can be measured in days, not hours. Meanwhile, wireless remains the key means for connecting computers to television screens when viewing downloaded content, but studios remain squeamish about security concerns.

The combination of business challenges and wary consumers has exacerbated studio executives' natural hesitancy about pushing too hard for digital schemes that could undermine traditional distribution and existing revenue models.

"Digital sucks," one industryite says. "Of all the companies doing digital distribution, only Apple is making money. The volume of business is too low, and the main reason for it is that the consumer experience is so bad."

Consumers demand lower pricing on digital content, so studios make significantly less profit per consumer transaction despite higher cost efficiencies compared with packaged-goods releasing. "So whenever I switch to digital, I better get twice the volume to stay even," the digital skeptic says.

Bolton's Film Fresh shares the downloads terrain with Apple's iTunes and CinemaNow. Film Fresh uses a DivX, iTunes a proprietary player and CinemaNow the WindowsMedia platform, with a possible addition of DivX capabilities in the offing.

Then there is digital streaming.

Essentially the digital equivalent of traditional home entertainment's rental market, there are two approaches to offering films and TV shows online: subscription- and fee-based models offered by Blockbuster, Netflix, Vudu and others, and ad-supported sites including Hulu and YouTube. YouTube still offers mostly clips of films and shows but has been negotiating for a possible move into feature content.

"There are all sorts of buzz about digital and downloading and all these things, but it's still in reality a small portion of the overall business," says Bruce Anderson, the Los Angeles-based GM of Blockbuster On Demand, which incorporates the former Movielink service acquired by the DVD-rentals giant in 2007. "From our perspective, that's a great thing. It tells us there is a great opportunity for business growth."

Digital entertainment in all forms contributes $2 billion in industry revenue, according to consensus estimates. That compares with an estimated $22 billion in rental and sales revenue of DVDs and Blu-ray Discs.

A download-vs.-streaming debate has raged for years among content companies seeking a revenue sweet spot in the digital space. But a shakeout of optimum business applications for the two approaches continues.

How's this for an experimental gambit: Mobile entertainment startup mSpot has begun streaming movies through several cell phone carriers. Content deals at launch this fall included pacts with Paramount and the Weinstein Co., and mSpot says an agreement with Universal is "pending."

Underscoring the belief that consumers care about watching more than just clips on tiny phone screens, Showtime recently launched an iPhone application through which the cable network occasionally will offer entire episodes of shows. The move continues a trend in which select episodes and occasionally newly created webisodes are used to promote key TV series.

Qualcomm has introduced a handheld device dubbed a Personal Television that syncs with FLO TV to offer content similar to its offerings via mobile carriers' AT&T and Verizon's respective Mobile Television and V Cast subscription services.

Eventually, studios may give consumers the opportunity to purchase film-viewing rights spanning all home and mobile platforms.

Disney and Sony have launched separate, multi-studio efforts to develop related technology for a possible market rollout during the next couple of years. But it's unclear how studios would price such schemes and thus impossible to know whether mass consumers will be interested.

Meanwhile, the concept of TV pay-per-view seems almost old-school compared with watching movies on computers or TV shows on mobile devices. But PPV via cable and satellite providers, aka VOD, represents another still-evolving area of digital distribution.

Several studios allow their titles to be distributed via VOD simultaneously with release on DVD and Blu-ray. But don't expect the simultaneous release of major movies on VOD and in theaters for years to come as the fear of revenue cannibalization and content piracy have executives clinging to the status quo.

Theatrical revenue is a key consideration, but the packaged-goods side of the home entertainment business is another area where caution is the watchword.

Heck, "Titanic" isn't even available on Blu-ray yet. Executives deem the current installed base of Blu-ray players too small to warrant its HD debut until more consumers embrace the format.

The situation makes it worth recalling: Survivors of the music biz also know a thing or two about the perils of hidden icebergs.

5 Mind Blowing Web Stats:

Hello all ... this writeup today does not have anything to do with the business of making film or TV projects .. or does it. I have very much enjoyed having a web presence and sometimes 300 folks visit my website a day and other times only 15 but every day I try to give out interesting information. Take a read on this article - it is amazing what has happen in 15 years .. ha ha .. do you remember dial-up or floppy disks!

Have a great day ... Jean-Luc Martin

From Anthony (Tony) Tjan is CEO and founder of Cue Ball:

Mind-Blowing Web Stat #1:
40,000-fold increase in the number of websites in 15 short years. If the number of approximately 5000 websites in 1994 is correct and that we are now part of some 200 million plus websites today, then we’ve experienced a stunning 40,000-fold increase in number of websites. How’s that for a growth rate? It also helps explain why Kevin Ham, a Canadian Internet entrepreneur, is minting money from the domain names he owns. Mr. Ham owns some 100,000 domain names worth hundreds of millions and that generate estimated ad revenue of $70 million annually. Great foresight, on Ham’s part, to see that good domain names are like scarce waterfront property. This is the chart copied from Netcraft:

Mind-Blowing Web Stat #2:
It feels like it was only yesterday that Evan Williams coined the term, “blogger” as founder of Blogger.com before taking the head post at Twitter. Today, the blogosphere is doubling between once and twice a year and there are over one million blog posts daily.

Mind-Blowing Web Stat #3:
Speaking of Evan and Twitter, there have now been more than five billion tweets. I admit it: I was a pretty big Twitter skeptic, but now I’m a pretty big Twitter fan. My guess is that Mr. Ham and others are trying to find ways to squat on as many Twitter handles as possible as it will become increasingly difficult to get the twitter alias you want. I stumbled across this “gigatweet” counter on the web. I don’t know the accuracy of the source but this is a pretty cool real-time counter of the numbers of tweets — it is worth clicking through.

Mind-Blowing Web Stat #4:
Not to leave out some of the other obvious big web names of our day, here are two stunning stats on Google and Facebook. Google still owns the search market. Sources estimate that the search goliath receives about two billion queries per day. That said, I think I’m more impressed by InsideFacebook.com’s estimates that the social network is adding 700,000 new users per day.

Mind-Blowing Web Stat # 5:
Okay, this is as much of a predictive statement as a stat. For some time, I have periodically checked which sites are in the top ten, as task made much easier now with the likes of Alexa. What is amazing is that whether you look at the global top ten or US top ten websites, about half of the sites are five- to six-year-old companies (e.g. YouTube, Blogger, and Facebook). The implication is that we’ll continue to see a pretty high-rate of churn amongst the top ten. What other industry do you know where so many in the top ten market share positions are companies that are younger than a first grader? Big names that may be top of the world today are being bombarded by the threat of new Internet start-ups every day. Twitter was born in 2006 and has already hit #13 on Alexa’s top global list and #12 on its U.S. list. How long will it take to break into the top ten? The answer: not long at all. And this is what continues to make life interesting in the world wide web of disruptive change and unpredictable innovation.

Now consider this data and put it into perspective. The web has just begun and the advent of social technology will accelerate growth exponentially.  Are you behind or ahead of why the web is growing?

What do reality TV stars make, anyway?

Hello all,
I knew that our reality starts were making a good living and honestly this does not surprise me: supply and demand!
Jean-Luc

From the (The Frisky) -- After the premiere of VH1's "Sex Rehab," I found myself thinking one thing: How much did folks get paid to be on this show, because I certainly hope it's a whole heck of a lot.

Ask and ye shall receive -- a day later, I have my answer.

Comedian Artie Lange, a former heroin and cocaine addict, has revealed to the NY Post that he was offered $200K to go on "Celebrity Rehab." He turned the offer down. "They said it was about me getting better, but if I relapsed, they're not going to air that?" he said. "My mother knows I've done coke, but she's never seen me do it." Still, that is a lot of dough we're talking about. Let's see how that compares to what others get for starring in reality shows.

* European production company, Eyeworks, has supposedly agreed to pay the 14 children of OctoMom Nadya Suleman $125,000 for 36 days of shooting their forthcoming reality show.

* "American Idol" judge Simon Cowell allegedly banked $36 million last year. And this year he's said to be negotiating for an extensive raise.

* MTV reportedly paid Ozzy and family $5K each per episode for the first season of "The Osbournes." For the second, they each got a ginormous raise to $5 million per episode. Aw, I miss that show!

The Frisky: 10 celebrities and their cocktails of choice

* Kristin Cavallari supposedly gets $63K per episode of "The Hills." Meanwhile, Heidi Montag denies making $100,000 per episode.

* "The Real Housewives of New York City" stars were reportedly negotiating for six-figure salaries for the upcoming season. That just doesn't seem fair though, because they have all those fabulous New York sample sales that save them money already.

The Frisky: Match these celebs with their party invitations!

* The unit that is composed of Jon and Kate Gosselin earned about $75,000 per episode, for "John and Kate Plus 8," and I guess most of that should go to buying school shoes.

The Frisky: These biracial stars make us want to diversify!

* "Dancing With the Stars" contestant Shawn Johnson got $125,000 for signing on for the show. She seemed to think that the base pay, plus $50K bonuses, was worth her time, unlike Nick Lachey.

The Frisky: Rihanna talks to Glamour about Chris Brown assault

What do you think -- are they all getting what they're worth?