Hollywood Math

A while back I watched the movie Kong: Skull Island on the Kodi. It was one of those impulse things. I felt like watching a movie and this one just happened to be easily accessible. Samuel L. Jackson’s angry black guy routine stopped being fun a long time ago, but I figured the movie was going to be mostly about the giant gorilla. As far as modern movies go, it was not too bad. I suspect it was better in a theater with high end sound and the giant screen to make the monsters look more monstrous.

For some reason, I got to wondering what it cost to make, so I looked it up. (I know, I know. I should not be using Wiki, but the Infogalactic page is out of date.) According to the published data, the film cost $185 million to make and generated $586 million in ticket sales. That looks like an amazing success, but movie accounting is a bit weird. The theater gets half the gross, so the distributor got about $285 million. That’s a gross simplification, but a useful one for looking at the mathematics of movie making.

Movies don’t always do so well. King Arthur was a giant flop this summer. It cost $175 million to make and grossed just $140 million. According to people who know these things, the studio lost $150 million on this one film. There were other massive flops this summer like the Aliens movie and the Amy Schumer comedy. The opacity of Hollywood accounting makes it impossible to know the final tally, but people who claim to know suggest that the big studios are posting losses this year as a result of the bombs.

Hollywood can withstand a bad year because of the high cost of making and distributing movies. Getting together $185 million to make a giant gorilla movie is not something you do on Kickstarter. It’s why Hollywood seems to be hooked on films with massive special effects budgets. It’s a niche only they can serve so they are trying to squeeze every penny from it. Dramas and documentaries, in contrast, have small budgets and small margins, so lots of small players can fight for those customers.

A common complaint about Hollywood is that they are not investing in new ideas and original scripts. Instead it is comic book movies, remakes of old films and sequels. The people in the business will counter with the fact that the losses are almost always accounting losses. The actors and directors are all getting paid. Once the accountants do their magic, often taking advantage of tax laws and special deals made with governments to shoot their films on location, the studios are in the black or close to it.

They are probably right in the short term. Hollywood is surely aware of what happened to the pornography business and what is now happening to the news business. Porn used to have a high barrier to entry. If you wanted to sell sex to the public, you had high costs due to a complex thicket of state and local laws to navigate. The Internet obliterated the barriers to entry. First came a wave of video makers who wiped out the skin mag operations. Then a wave of amateurs came through to wipe out the movie industry.

A similar thing is happening with the news and commentary business. First the internet undercut the ad business of newspapers. Why sell your car in the classifieds when you can sell it on eBay? Why advertise your job in the Boston Globe when you can use Monster? The only logical response has been for the newspapers to slowly move from their old distribution model to the internet. But, the cost of putting up a website is near zero now so anyone wishing to compete with the NYTimes can give it a go.

It’s not just the legacy media. Take a look at on-line audio and video. Joe Rogan does a one hour interview show that will get a few million viewers. His production costs are a fraction of what it cost to make the Charlie Rose program. Yet, Rogan reaches ten times the audience. The YouTube comic PewDiePie reaches 55 million people and he is essentially producing his show from his basement. Anthony Cumia was making his show from his basement until his success allowed him to rent a studio in Manhattan.

A similar thing is happening to radio. Podcasts are becoming a popular way to listen to news and commentary, that used to be the domain of radio. Buy a new car and you can sync your phone to the audio system, so you can tote around your own music and podcasts to play on the road. It will not be long before your car radio will let you listen to this stuff off the internet. Again, the low barrier to entry means a wider range of shows so the public can narrow cast to their taste. Old fashioned radio, as a result, is dying.

If you are in the media business, your number one task right now is figuring out how to keep the barrier to entry to high for that army of internet content makers. That’s why Hollywood is fixated on massively expensive super hero movies and film series based on comic books. They spend $100 million building out the infrastructure and then make five versions of Pirates of the Caribbean for $200 million a copy. Mike Cernovich is not competing with that, no matter how many Kickstarter campaigns he starts.

The beauty of this approach is that these sorts of films can easily be sold into foreign markets. The Chinese dudes watching Fast & Furious 19 don’t care about the dialogue or story. They want to see buff white dudes driving cars while shooting at bad guys. Given the level of writing for some of these movies, they may not even have to provide subtitles as no one really cares what’s being said. Hollywood is now in the business of creating giant special effects demonstrations that are viewed in movie theaters.

Whether this is sustainable in the long run is hard to know. Kong: Skull Island made a lot of money so a lot of people must have enjoyed it. I thought it was mostly stupid, but I watched it free at home, so I got my money’s worth. As long as these things keep making money, there’s no reason to think this model will break. It also means that Hollywood will be looking for ways to make these films even dumber. If they can get global audiences habituated to enjoying two hours of explosions, it simplifies their business even further.

57 thoughts on “Hollywood Math

  1. ZMan, you forgot a couple important aspects about film finance. First, investing in Hollywood films is a great way to launder money. Money launderers don’t even need to get all their money back, just enough of it to justify what the market will bear for money laundering services. Hollywood accounting is opaque enough that the studios can probably guarantee money launderers a specific rate of return, then cook the books behind the scenes by shifting costs between movies to make everything even out. Probably most major studio movies involve money laundering to at least a certain extent, you need a big studio’s involvement to shift the costs around and make the books right for everybody involved.

    The second source of financing is propaganda-for-hire. For example, if you are running one of the big Deep State ratlines–sex trafficking, child trafficking, drug trafficking, organ trafficking– and you need to do a limited hangout, hollywood will do the job. Again, making money isn’t the concern, managing the narrative is job #1, and once again opaque Hollywood accounting helps define the risk/reward profile for the client, with hollywood taking the upside risk. “The Whistleblower” is a good example of one of these movies, the idea being to sanitize/cordon off/manage perceptions regarding the exposure of the sex and organ trafficking ratlines in Kosovo. Certain actors and actresses seem to specialize in these movies, like Rachel Weisz or Naomi Watts, which makes them easier to spot in the wild once you know who to start looking for.

  2. I saw the Kong film recently on a flight. I thought it was ghastly, and even though it was free, I could only handle about fifteen minutes of it.

  3. Let me add that the FT figured that TV production far outweighs the movie production in value for big Hollywood studios. Which might make as many as six or seven movies in a year now but ALWAYS have their lots busy with TV, that has a global selling point now with streaming. There is a reason both Amazon and Netflix are investing in billions in content, and almost all of it series TV.

    Traditional TV runs about $3-4 million per episode to film. License fees from networks pick up about $2-3 million per episode, or did a few years ago. Which makes TV less risky — instead of shilling out say $200 million plus or more including marketing; with yes a few partners dumb enough to co-finance but those very hard to find now and once burned never to return — a 22 episode season requires only $44 million max upfront costs, and maybe breaks even during its production run. Even the most underperforming show if it goes more than one season can be sold into the streaming and international market which always needs new content. Heck decades after most of its actors passed away, “The Rifleman,” “Have Gun Will Travel,” and “Maverick” are still earning good money for the studios that own them.

  4. I did a study of when TV flipped from mostly male to mostly female viewing. What I came up with somewhere in the early 1980s. My methodology was to take starting from 1971 through the mid 2000s or so, the Wikipedia entries for the Fall only TV schedule. As the networks best guess at what would sell. I would look at each show and if pressed read the wiki entries and the lead actors to classify them as either female or male oriented. For example Hart to Hart was female oriented as was Remington Steele, while Hunter, the A-Team, and Miami Vice were male. Then I’d add up the hours in each category for each season and graph them. The hours crossed somewhere in the early 1980s. There were many flaws in the methodology but it was good for a rule of thumb.

    All of this is that ads are made to sell to women. Young women are the most desired consumer group; they spend the most and women in aggregate make or influence according to Marketer Dogma 85% of consumer purchases. Most marketing departments are also run by women with mostly women workers; and media buyers are almost entirely young White women.

    White female/Black male couples are very popular among that demo. Black men have a much higher tolerance for fatties and sluts; and much lower aggregate IQs which leads to pimp-like behavior which women crave instead of nerd like behavior which women find repellent. Look at Lena Dumham; her character in her show which she owns and writes ends up having some greasy Pakistani dude’s baby. Sure: Brad Pitt and Prince Harry are the preferred models but substitution of some low IQ hood rat is always on the menu.

    The degeneracy of modern Western culture is a direct function of the young, unmarried, White female marketplace. And the catering that goes on to their fairly incompatible desires with a functioning society.

    • “I did a study of when TV flipped from mostly male to mostly female viewing. What I came up with somewhere in the early 1980s.”

      Back when men were men and women were sex objects, the man of the house controlled what was watched on the television “in his castle”. At some point, his “castle” became her “nest” and she actually believed everybody cared about what she wanted. Plus, high divorce rates, commitment issues and easy sex for men made for a much larger number of single females. Now, that group is catered to because they are viewed as the largest, monolithic audience.

  5. Today’s movies seem to be made by people on drugs for people on drugs. The last movie I watched in a theater was Black Swan. The unsocialized critters in the theater were so loud and rude I’ll probably not go again unless I’m visiting a county like Japan and there are subtitles. TV has become cholesterol for the brain, so I have happily retuned to reading as a pastime.

  6. If you care about movie quality, work backwards. See what Korea or Eastern Europe are trying to get noticed in the US and watch that. Oceans are a pretty good filter.

  7. Sometimes it’s easy to let Hollywood activism ruin a show. Feminist Ghost Busters. Those negro ladies that did all the hard math so that the honkies at Mission Control could put a white man on the moon. Don’t even get me started on the bitchy, unlikeable powerful female characters that crop up in almost every production they make now.

    Kong Island wasn’t too bad, as far as that goes. Hollywood needs to go back to entertainment and give up on the politics and social justice lectures. If that is the crap they are going to make, they deserve to lose money on it. They’ll come around, eventually.

  8. Steve Allen was right – anything put on a screen will attract some type of audience.

    The silliness we see in our society today is what happens when a population does not have a sufficient number of natural predators to keep themselves fit for survival

  9. I enjoyed Kong:Skull Island as a mostly fun popcorn seller, despite it flaws (female lead was a 6 tops, SLJ is now tiresome x infinity, helicopters flying stupidly low), but I’m a kaiju fan who owns dozens of giant monster flicks.

    My enjoyment was probably enhanced by the fact that the last movie I had seen in the theater was Rogue One. Blecch. And as compared to the BORING Godzilla movie with B. Cranston, it was quite entertaining as STUFF HAPPENED.

    I’ll be interested in seeing if Pacific Rim 2 can fix some of the many problems that the first one suffered from (mind-melding BS tops my personal list), though I might just wait for it on cable/Prime/Netflix.

    • “despite it flaws (female lead was a 6 tops”

      I have noticed this in a lot of movies and TV shows over the past few years. It is probably to fight against the Male Patriarchy’s unfair obsession with beautiful females.
      So, to educate the Neanderthals, virtue signaling Hollyweird will display rather drab looking females, since everyone knows that both men and women desire to see unattractive females on screen (sarcasm). It could also be that less beautiful women are less expensive than their attractive counterparts. Of course, it could be because the ((((elite’s)))) daughters want to be in movies, even though they are rather bow wow and papa accommodates them.

  10. The really big innovation for podcasts is a website called Patreon. It sets up automatic credit card payments per podcast released. When hundreds of people are paying you one, two or five dollars per podcast, all of a sudden you are earning a real living.

    • I keep being told I have to do that and other forms of monetization. I’m getting the sense that I’m violating union rules by not taking money.

      • Though Patreon will shut your account if they don’t like your message. Like they just did to Martin Sellner (Defend Europe) and Lauren Southern who were taking donations to fund a ship Defend Europe bought to patrol Mediterranean Sea to help stop flow of Muslim invasion into Europe.

    • I’ve been dripping a few bucks a month to James Corbett for a few years. A couple of thousand like me and he’s set.

  11. I recently moved to a new apt and having had 5 years of free internet at the old address…decided that i wanted to continue to enjoy not paying the outrageous monthly fee for high speed internet.

    i still have a data plan for my phone i can use to keep up on the various blogs i frequent but as far as the massive amounts of movies and youtube i used to consume, i dont miss it.

    i used to convince myself that i wasnt wasting time because i was watching lectures and analysis on youtube, not tv, but it’s self deception.

    Now i’ve breezed through novels i had previously been nursing for months and am keeping up on the housework to boot.

    i figure i have the entire western canon to keep me busy in lieu of the internet.

  12. One thing that Hollywood can do that independents on the internet can’t (yet) is provide effective propaganda for the masses. When you can dress up a degenerate behavior or group of people you can make them more palatable to the non-thinking populace. This is why for years television and movies have all promoted gays. By giving them an appealing face and explaining that their behavior is innate, you can sell the narrative that they are just like everybody else and their “love” is as legitimate as anyone else’s. Anyone that opposes this is just “evil”. This also explains the need to insert minorities into areas they never would be or could be, like the King Arthur bomb. I actually wonder if there isn’t a financial quid pro quo for television shows and movies that promote gay, transgender, minority “contributions”, pro-immigration, and self-destructive policies and behaviors. This would subsidize movies that contain a “sanctified” theme but will bomb at the box office. When you can also trash the White Male ‘patriarchy’, you serve a valuable function for our rulers.

    • The decay of commercial TV will be interesting. People get most of their agit-prop from commercials. Look at all the ads selling miscegenation. Ad makers are, by definition, propagandists. Their most effective work is in video. Cord cutting and fragmentation make it hard to proselytize this way.

      • it turns out a good sized majority of people are actually repulsed by images of mixed race couples, so all those advertisers are creating an aversion to their products.

  13. One can hope that the democratization of art (in the broadest sense of that word) will lead to a new appreciation of it — if anyone can do it, then only the best will get audiences. But I suspect we’ll see the same thing that happened to other “democratic” art forms like prose and poetry — since anyone can do them, eggheads had to invent all kinds of credentials to award themselves. There should be a zillion people out there writing great poetry, since the cost of entry is zero, but the academic-industrial complex got ahold of it, and now the only poetry that’s written is heavily subsidized incomprehensible junk (e.g. “poet laureate” is just another make-work Diversity job).

    • Just finished a lecture on WWI, and he made a similar comment that poetry was the one art form you could do in a trench, thus all the great soldier poetry of the era. Im sure there was junk too, but the literacy of the time is amazing. Civil War too, i suppose.

      • Even the “junk” rhymed, scanned, and made sense, which is more than even the “best” modern stuff. “In Flanders Fields,” for instance, was barely above Hallmark Card stuff… but no modern “poet” could get anywhere close. It doesn’t have to be apolitical — Siegfried Sassoon wrote the most bitterly political poetry around — but it can’t be *just* politics. All our modern stuff is.

        • I call much of the modern art, music, and dance simple posturing. No training, talent, or skill involved, just a simple “look at me, ain’t I sumpthin”.

    • Why would there be a zillion people out there writing great poetry? Does anybody read poetry in the first place? How many poetry books get sold? In many things in life – the cost of entry is zero – because the interest is zero or damn close to it.

  14. You mentioned the distribution bar removed by the Internet, and while correct, I see a an artificial one in the making with digital content being reformatted to become exclusive. A proliferation of unique and non-standard file formats that will play on the provider’s platform. The varetity of video and sound files seems to keep growing, and create a business to make the consumer to constantly update their software to play them.

  15. I don’t know enough about technology to speculate on whether or not an internet “kill switch” (not just selective restrictions, as in China) is already a reality or just something Alex Jones rants about. I do think that if enough of us small people cut into enough of the profits and power of the big people, they won’t stand for it (I think Google and other search engines manipulate search results to control discourse and what content can be seen, which is a soft version of this control).

    As for Hollywood, the problem is simple. William Goldman, whose credits include “Butch Cassidy and the Sundance Kid” and “The Princess Bride”, once said that “Nobody knows anything.” That’s doubly true in Hollywood. You can assemble the highest grossing screenwriter, highest grossing actor, hottest director, and still end up with a steaming pile after post-production. Take “Last Action Hero” with Arnold Schwarzenegger. The studio was so convinced of the film’s success that they even paid for an ad on the fuselage of an unmanned NASA rocket for $500,000. What demographic were they trying to reach? Martians? The movie bombed. Meanwhile the Coens made a movie in Minnesota’s barren winter for a measly 7 million about a pregnant cop whose husband paints postage stamps, and it became a huge hit and cultural phenomenon.

    There’s nothing wrong with not knowing what’s going to be a hit or what isn’t, but the people involved on the money side of the thing have too much ego to cede even a little control, even when they’re going bankrupt (as happened to RKO and several other studios and will happen again). They’re also morally bankrupt. Google “Don Simpson,” Jerry Bruckheimer’s partner on a lot of mega-hits in the 80s. He had a $100,000 a month hooker and coke habit until his heart stopped. It’s just the imperial hubris of greasy cokeheads in LA who have contempt for the American people and shove shit down our throats. Even people of average intelligence know when they’re being insulted. “The Godfather” films are slow, long, and challenging, for instance, but they’re great and quality sells, and, more importantly, endures.

      • The only unrealistic part of that episode was that the producer aliens wanted to screw other Jew aliens. Those kinds of producers go for the “Shiksa” blond types. They like to defile blonde goyim women as revenge. Stanley Kubrick married the niece of Veit Harlan, who made a bunch of Nazi propaganda films.

  16. I’ve always been puzzled by the tendency of decade, or older, special effects to look ridiculous/cheesy in retrospect. Why did it not look silly at the time of release? It’s almost as is if the films were retroactively edited to add suspension wires to the spaceships, or the rubber masks were made to look cheaper and more ill-fitting. Perhaps it’s the perception of novelty/innovation during the initial viewing that blinds us to the imperfections, similar to how clunky iPhone 1.0 looks today.

    • It’s simply a matter of what your used to. I tried watching sport on non-HD the other day, it looked like it was being played on a 1970s CRT set with a dodgy aerial.

  17. Nice to hear you are enjoying Kodi. 🙂 I will never pay to watch a movie in the theater again. I completely agree with you – “Kong” and the “Mummy” were horrible. If you like creepy movies, “A Cure for Wellness” is pretty good if you liked “Shutter Island”.

    You might try some European movies now and then even if you have to read subtitles – these are a bit old now, but still very watchable; “Unsere Mütter, unsere Väter: retitled “Generation War” is a WW2 movie focusing on five friends and how the war affects them. “Frantz” is a very good drama about a French soldier who seeks out the German family of the soldier he killed in WW1. The 2013 Russian film “Stalingrad” is also very good and the CGI is excellent.

    One thing you will begin to realize after watching European movies is they are not written to have happy endings like American movies.

  18. Of course Charlie Rose ain’t cheap to produce. Do you know how much a skilled team of propagandist writers and editors costs? And then there is Charlie’s bar tab to deal with.

  19. “If they can get global audiences habituated to enjoying two hours of explosions, it simplifies their business even further”

    Maybe this is why Hollywood types are so eager to get as much foreign aid to Africa as possible. They want those projected 4 billion natives to be able to afford movie tickets. And no, I’m not joking.

    • True,the Global market is the cash cow that allows Hollywood to reap huge profits while pissing on the natives. The endless remakes and dearth of original ideas are evidence. Sad part is,the native population is what made Hollywood King of the World.

    • Might be a bad idea. Blacks are really good bootleggers, and they don’t have any compunctions about which movies they illegally film and distribute. Seriously, some guy tried to hawk me a pirated “Passion of the Christ” at a swap meet.

  20. As a species, we evolved as elite problem solvers. We are descended from the survivors who overcame extreme and diverse hardships, routine existential threats, and the worse sort of calamities that the ancient environment could throw at us (including ice ages). The primordial urge to face and overcome this gauntlet is endemic and will scream from our subconscious when the present world becomes too soft and tame to requite this need. Everyday reality isn’t bad-ass enough, so Hollywood and video games are the substitute.

  21. We’re not too far from “Ow, My Balls” becoming an actual Hollywood production.

    • I tried watching the latest Mummy with Tom Cruise. I was having a few beers and looking for a dumb movie to watch. I would have preferred two hours of “Ow, My Balls” over what i got. I made it about 30 minutes and realized I could not drink enough, fast enough to enjoy that movie.

      • The best “Mummy” was the one Hammer did in the sixties, the Peter Cushing version. Ann Coulter confessed that she just watched AMC and TMC to see white people. Watching old movies you really see how prole drift and the toxicity of lower-class black culture have turned us all to crap, from the way we talk, eat, to the way we dress. Even watching a movie from the 80s (like “Pretty in Pink” or “Back to the Future”) I’m shocked at how much we’ve devolved and how rapidly Europeans are being culturally displaced.

        • The John Hughes movies are the chronicle of my ’70s high school days. “Breakfast Club” especially nails it. The kids are mostly white, not particularly intelligent, fairly innocent, and spend the movies carving out a life for themselves in the middle of the broader American white middle class cultural chaos of the day.

          There is another thing in those movies. The kids occasionally bump up a bit into racial situations, the occasional gay thing, and a lot of male-female social interactions. They are often awkwardly handled, and many times the interactions are completely inappropriate by current standards. But the kids all generally just roll over them and carry on. Not at all what happens now, where the world stops spinning on its axis, and everyone argues about what it all means and whose feelings were violated, every time something marginally inappropriate takes place.

          • have you seen the movie “Dazed and Confused” directed by Richard Linklater”?

          • Oh yeah, booze and pot everywhere, go up into the hills away from everyone to party. My high school was “white trashy middle class”.

          • That movie – although it’s supposed to take place somewhere in Texas, (and I was in MA) VERY closely resembles my high school experience in the late 70’s / early 80’s. The got the clothes pretty close, the way kids interacted was close, the cars they drove was right on – and the general “feeling” of what it was like to be in HS back then was really good. That’s probably the best movie I’ve ever seen that captured what it was like to be in HS back then.

          • I’ve come to think we’re going through a Chinese-style Cultural Revolution. In those years it focused on driving out the ‘four Olds’ as dictated by the CCP, and in its ferocity it burned itself out after 9 years. Its was unsustainable due to its irrationality. The West is experiencing something similar but here it’s a perfect storm of many changes happening simultaneously. True in china it was instigated by one old man’s insatiable need to hang on to power, but it took on a momentum. Don’t underestimate either the multiple deranged social revolutions unfolding now in the Muslim world. The West may end up the least worst of the lot. Though frankly it’s hard to see Europe surviving.

    • President Dwayne Elizondo Mountain Dew Herbert Camacho got the Nobel Peace prize and served two terms. I’d say we’re already there. Seriously, Mike Judge is great. He made a movie about HBD and dysgenics and snuck it in under Hollywood’s radar.

      • The studio/distro did catch on and spent roughly $0.00 on marketing and released it at about the worst possible time to ensure it did poorly.

        Still, Idiocracy was prophetic and a warning. Sad that others read it as a plan for action.

        • I’d heard the reason for the lack of a push from the studio was simpler, that because Judge had slandered so many corporations that Fox didn’t want to offend (from Carl’s Jr. to Costco), they decided to let Idiocracy die. The deeper implications of the film might have given them the heebie jeebies too, though.

          • Possible, but what I heard was, King of the Hill was successful, and Judge wanted more money.
            The deal Fox made was ”no raise, but we’ll make your movie”, he took it. They gave it a small budget ($5-10 mil. est.) and then limited release.
            A great meme, but not that great a movie, I’ve seen it, it has a distinct ‘made for TV’ look to it. Not as funny as you might think either.

    • “Ow, My Balls!” has been a tv show since the late 80s – “America’s Funniest Home Videos.” I’m just now appreciating how ahead of the curve that show was. It’s Zuckerborg’s entire business model — get your audience to provide their own content, and they entertain themselves while you reap all the profit. Whoever came up with that show was a genius.

Comments are closed.