It is night in a small town just north of San Francisco. A ballet of chrome, rubber and neon lights paint the roads. Teenagers cruise up and down main street in their cars trying to pull themselves out of the cocoon of childhood into a beckoning adulthood. The year is 1962, the Beatles have not arrived yet, a doomed John F. Kennedy leads America in its last days of innocence, the Nation unaware of the tumult it was about to face. I was 13 when I saw these true images splashed across the big screen at the Towne cinema. For me it was and still is the truest portrayal of what it was like to be both American and young.
The film is American Graffiti. Directed by George Lucas, whose previous film THX 1138 died a quick death at the hands of Warner Brothers, was produced by Francis Ford Coppola, photography supervised by the amazing Haskell Wexler and edited by the mother of the Hollywood Blockbuster, Verna Fields. It was a movie made by a dream team who would define movie going well into the future.
The budget of the film, including all talent, studio overhead, and $250,000 worth of music rights came to $777,000. The film would later gross $140 million globally. In short the film returned a 8909% return on the negative, that is the money it takes to produce a product. By anyone’s standards that’s one heck of a bit of business. It is a great example of a free market that embraced a movie and based on its merits sought and gained a dynamic audience.
In comparison, the top grossing film of all time, Avatar, had expenditures that many industry analysts claim were between $300 to $500 million dollars. It is generally thought that the profit for Avatar was 34%. Now in terms of dollars, Avatar certainly brought in substantial dollars, but if you adjust the box office by making all ticket prices even, then Avatar losses its top ranking and falls to a respectable 15th place. Adjusted for ticket price, the top 3 films are Gone With The Wind, Star Wars, and The Sound Of Music.
From an investor perspective, I certainly would much rather have my money in American Graffiti than I would Avatar. Because of the nature of the film industry right now, there is a severely reduced ability for a smaller film like American Graffiti to break through, define its own market, and produce great income. It is imperative for the health of the industry that lower negative cost films can find a market. They provide an entry point into the industry, provide diversity and excitement for exhibitors, and help shape the business by the infusion of free enterprises.
In the American theatrical marketplace here are the top twenty pictures ranked by the percentage return they provided as opposed to their negative cost.
In comparison, the top grossing film of all time Avatar , had expenditures that many industry analysts claim was between $300 to $500 million dollars inclusive of marketing. It is generally thought that the profit for Avatar was 34%. Now in terms of dollars, Avatar certainly brought in substantial dollars. But if you adjust the box office by making all ticket prices even, then Avatar losses it’s top ranking and falls to a respectable 15th place. Adjusted for ticket price, the top 3 films are Gone With The Wind, Star Wars and The Sound Of Music.
In the American theatrical marketplace here are the top twenty pictures ranked by the percentage return they provided as opposed to their negative cost or their cost of production.
1. Paranormal Activity (Budget: $15,000; Revenue: $193 million): 645,801.51%
2. Tarnation (Budget: $218; Revenue: $1.1 million): 266,416.97%
3. Mad Max (Budget: $200,000; Revenue $99.7 million): 24,837.50%
4. Super Size Me (Budget: $65,000; Revenue: $29,529,368): 22,614.90%
5. The Blair Witch Project (Budget: $600,000; Revenue: $248 million): 20,591.67%
6. Night of the Living Dead (Budget:$114,000; Revenue: $30 million): 13,057.89%
7. Rocky (Budget: $1 million; Revenue: $225 million): 11,150.00%
8. Halloween (Budget: $325,000; Revenue: $70 million): 10,669.23%
9. American Graffiti: (Budget: $777,000; Revenue: $140 million): 8,909.01%
10. Once (Budget: $150,000; Revenue: $18 million): 6,232.39%
11. The Stewardesses (Budget: $200,000; Revenue: $25 million): 6,150.00%
12. Napoleon Dynamite (Budget: $400,000; Revenue: $46 million): 5,667.62%
13. Friday the 13th (Budget: $550,000; Revenue: $59,7 million): 5,332.24%
14. Open Water (Budget: $500,000; Revenue: $52,100,882): 5,110.09%
15. Gone with the Wind (Budget: $3.9 million; Revenue: $390 million): 4,906.73%
16. The Birth of a Nation (Budget: $110,000; Revenue: $11,000,000): 4,900.00%
17. The Big Parade (Budget: $245,000; Revenue: $22 million): 4,389.80%
18. Saw (Budget: $1.2 million; Revenue: $103 million): 4,195.68%
19. Primer (Budget: $7,000; Revenue: $565,846): 3,941.76%
20. The Evil Dead (Budget: $375,000; Revenue: $29,400,000): 3,820.00%
These films and the markets that they found are clear examples of smaller films meeting a hungry free enterprise based economy. It’s the American film economy at its best.
These films and the markets that they found are clear examples of smaller films meeting a hungry free enterprise based economy. It’s the American film economy at its best.
The key to the sustained growth of a healthy film exhibition economy is diversity and the ability to attract new audience and as well to generate excitement about going to the movies. Much of the excitement has been hijacked by the cable TV masters who govern the majority of the studios, they want people to run to see the new Game of Thrones or watch the pioneering series, The Sopranos, instead of going to the movies. Cable has taken many pages of the Hollywood’s book of tricks and applied it to their digital infrastructure. They can warrant the expenditure of time and resources to properly promote a $200 million dollar plus film, but they really no longer have a grasp of the market that is smaller, independent pictures.
It is time that space be made for smaller pictures and smaller distributors. It is time that the concept of a true free enterprise be re-instilled in this business.
One of the problems though, is that true free enterprises is stifled by focusing solely on this outlet. While I understand that many of these companies must fill the pipeline they have built, they are suppressing the ability of the general population to define success and failure of a film. They are denying the ability of a free market to define the future of the cinematic art form. It is time that exhibitors embrace aggressively the smaller film and take more responsibility for the marketing of this product.
Last week, I saw the sequel to My Big Fat Greek Wedding. The first “My Big Fat Greek Wedding” became a sleeper hit and grew steadily from its limited release. Despite never hitting the number one spot and being an independent film with a $5 million budget, it ended up grossed over $368.7 million worldwide, becoming one of the top romantic films of the 21st century . It was the fifth highest-grossing film of 2002 in the United States and Canada, with USD$241,438,208, and the highest-grossing romantic comedy in history. The film is among the most profitable of all time, with a 6150% return on a (inflation adjusted) cost of $5 million to produce. It was distributed by New York based IFC Films.
The sequel was budgeted at $18 million and to date has grossed $33 million. From a story and production perspective, I think it is one of those rare sequels that actually is a better movie than the original, but given the movie economy, shift of release patterns, emphasis on a truly odious words “tent pole” along with Marvel and DC, this film will not have the support or the proper perspective to truly make it the success it deserves. Unfortunately,Universal who is now the film’s distributor does not have either the disposition or skill set to give this film the success it deserves. This cheats both the audience, the theatre owner who desperately needs a diversification of audiences and it cheats the filmmakers themselves.
As various foreign theatrical film markets have shown, the use of the infusion of smaller films, coupled with the removal of the digital tariff that is the VPF structure leads to a massively increased box office. We also have to admit that maybe the studios no longer possess the ability to distribute smaller films.
I love the idea of truly free enterprise, an unfettered movie business without the intrusion of overbearing government regulation and at the same time freedom from monopolistic business practices of the major studios. I am enough of a realist to know that in terms of combating monopolistic practices, government intervention may at times be a necessary evil. There is no doubt that the motion picture industry is beset by these monopolies and I hope that there will come a time when a move is taken against them. If not by the government then by the exhibitors themselves.
It’s time.
