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Bad Movies are Bad Business: Lynda Obst on This Summer's Flops & How the Industry Can Recover

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Hollywood’s blockbusters no longer cater towards Americans. That’s fairly old news; overseas markets have ruled the box office since Titanic swept international audiences into movie theaters in record numbers for the time. With the majority of modern moviegoers living abroad — 80% of box office figures, according to veteran producer Lynda Obst — one might think that a more diverse selection of films would emerge as a result. But as some might have noticed by the slate of mega-movies and sequels this summer, just the opposite seems to be happening. Americans and international audiences agree that this summer’s ‘hits’ were mostly misses, producing box office figures that were, in Obst’s words, “pretty catastrophic for the movie business.” Why did it take Hollywood over a billion in losses to realize what most sentient earthlings could have told them from the script?  Obst describes “the new abnormal in the movie business,” and why it’s bound to change.


While critics and analysts toss around the blame for recent box office figures, Lynda Obst has risen above the din with a rational explanation for all the chaos. She’s been producing successful films in Hollywood for decades, including The SiegeContact, and Sleepless in Seattle. In 1996, she released her first brilliantly named book on the industry, Hello, He Lied: And Other Truths from the Hollywood Trenches. More recently, she spotted the trend of internationally geared, action-packed and substance-starved movies years before her peers — enough time to write a book about the phenomenon while her colleagues produced movies exemplifying it. Obst talks about the trend and the book, Sleepless in Hollywood: Tales from the New Abnormal in the Movie Business, with Studio360‘s Kurt Anderson:

In the interview, Anderson characterizes the summer sequel syndrome as a fear-based formula designed to snatch allowance money from the undiscerning youth of the world. Unfortunately for the studios who “doubled down on blockbusters this summer as never before,” the formula failed: “In the past few months, maybe a billion dollars worth of movie making (The Lone Ranger, After Earth, White House Down, The Wolverine, Pacific Rim, Smurfs 2) totally bombed in America.”

While some tentpoles did turn profits, many fell short of studios’ predictions, and indie breakouts were hard-pressed to get noticed amidst the explosions. Obst explains that in an industry catering to audiences outside of the domestic market, “you wanna give the rest of the world what they want.”

Which brings us to the billion-dollar question: what does the rest of the world want?

Box Office Prophesies

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This interactive graph of the number of cinema screens by country sheds a bit of light on the studios’ focus when faced with this question. Although these numbers should be taken with a grain of salt (I’m pretty sure I personally saw more than three cinema screens in Namibia,) the general trend is clear: outside of the US, China kills it. And regardless of what Chinese audiences want to see coming from the US, only certain movies make the cut. Obst explains:

Russia and China won’t even open our [original, independent] movies — In the quotas from China, they literally will only let in 3D and IMAX movies by law and design.  It’s not that the studios are guessing that that’s all that the big markets want. They’re being told that that’s all the big markets want — [So] we’re not there to exchange cultural nuance. Our movies aren’t there for that. Our movies are there to showcase our fabulous technology.

For a number of reasons (Anderson suggests foreign markets want to “protect their domestic Sleepless in Seattle movies” and Obst suggests “they don’t want the infiltration of our ideas,”) Hollywood is only getting certain movies on the big screen abroad. Hence, studios put their money on mega-movies and special effects this summer — to such an overwhelming extent that “Google Blockbuster” boiled the art of moviemaking down to a science in case anyone missed the trend:

WikipediaTwitter and the real Google have also been recently used to predict box office returns — and I’m pretty sure my 7-year-old cousin made some accurate prophesies this summer as well. Turns out it’s not very hard with the latest releases; explosions, stars and special effects don’t make up for weak plot points in any language.

Luckily, Obst says that the industry is agile, and will learn from its mistakes. “[Hollywood is made up of] a very reactive, bright crew of people.” Next summer’s tentpoles might not change drastically at this point since they’re already in the pipeline, but the industry will adapt in the long term:

lynda obst newyorksocialdiary

“I see in development more originals this year. That, I hope, the studios will see as an opportunity to (instead of making the one marginal tentpole for $250 million…that feels somewhat familiar but everybody kind of thinks ‘Hm this could work in Hong Kong…’) Dump that one and make five smaller movies, and save a little money for development next year to buy a great script.”

“The New Abnormal in the Movie Business”

Obst further explains the changes in the industry over her 30-year career as a producer in her earlier interview on the Leonard Lopate Show.

In the interview, Obst gives a list of the films she made during her career, which she could not currently secure funding to produce if they were in development now. The model has changed as studios set their sights abroad, and the subtleties of a script are no longer center stage.

For starters, she says films are rarely pitched anymore, and the focus of a pitch has entirely changed:

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Pitches are dead. That’s part of the old abnormal. We used to be able to go into a room and pitch a movie, and if it was a great idea and it seemed fresh and it was high concept, we could sell it. Now if you want to pitch an idea, you need a full presentation of a one sheet, a graphic novel or some kind of thing that pretends to be an IP, which is an intellectual property — we used to call those ‘books’ — but now we call them IPs like The Hunger Games or the Twilight Zone — What you would probably do is say ‘I have Liam Neeson attached to that, who is a big international star — I can sell this in China — I have tons of special effects and I have a gigantic automobile that changes into a monster, and then it changes back into a vampire.’

As Obst highlights, pre-awareness (a successful book or celebrity attachment) rules the game like never before. What happened in the past few decades to cause the shift?

Obst explains that when she first entered the industry, the international market made up 20% and the domestic market made up 80% of box office returns — those numbers have now flipped. DVDs comprised half of a film’s profits in the old days, which Obst says “paid for our interstitial movies, our one-offs, our nuanced movies, our movies about writing.” With the collapse of DVD revenues, the international market has come to replace a vital piece of Hollywood’s pie. Studios fell back on foreign quota requirements and tested the limits of the blockbuster market this summer — and we’ve seen the results.

For some films, it works. But as an industry formula, it seems that we’re drastically underestimating international audiences. The ‘emerging markets’ are not devoid of visual subtlety or nuanced scripts (anyone who thinks otherwise should check out India’s Chatrak by Sri Lankan Director , or Wong Kar-wai‘s Chunking Express). Alas, Obst explains that this is just the reason Hollywood studios have backed into the action-extravaganza pigeonhole:

Suddenly movies that were culturally nuanced — dependent on the American sense of humor, on our mating rituals — played less well when we had the emerging markets [as our main audience] than when our international markets were primarily European — [Emerging markets] wanted from their own filmmakers culturally nuanced films that were based on their country’s mores and habits and mating rituals.

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It should be no surprise that emerging market audiences are used to high-quality stories from their own shores. And of course, the proliferation of Hollywood-sized special effects need not accompany the dumbing-down of feature scripts. It should be fully possible for modern mega-movies to capture global audiences in the same way Titanic (or as Obst puts it, “Romeo and Juliet on a ship”) did in the first place.

With “our fabulous technology” alongside a healthy appreciation of audience IQ, mainstream US studios shouldn’t have to sacrifice box office numbers to meet foreign quotas. Unlike special effects mega-movies, the market for well-developed stories is impossible to saturate.

We’ve got a fairly international readership here at NFS; how do those in so-called ‘emerging markets’ feel about Hollywood’s latest tentpoles? Are mainstream US studios underestimating international audiences and paying the price? Or is the “summer movie crisis” a necessary growing pain in the rapidly changing global marketplace?

Images:

[World Map image by Flickr user polasso]

[Lynda Obst image --  New York Social Diary]

['Box office flops' image -- Zap2It]

[Chunking Express image -- Movie Mail]

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  • So basically, Hollywood producers seem like morons.

  • As an Australian, this year at the movies has genuinely been the worst and most disappointing I can ever recall. But I don’t doubt that Obst is right in that there are a wealth of very bright and talented people in Hollywood and so I’m looking forward to the change this should harbour.

    Till then, making my own film… be the change and all that :)

    Thanks for a great blog Laura.

  • The US based films don’t get 80% overseas. Just check any box office related sites. The North American market is still 50% for the US produced films.
    .
    PS. China has the non-CGI films … they’re pirated and sold on street markets. And the Chinese bureaucrats get huge kickbacks for that.

    PPS. Top US 4 US movies this weekend – One Direction, Butler, We’re the Millers, Instructions Not Included, Planes.

  • And the biggest problem is: many of those flops are not flops anymore if you look at the foreign revenue numbers. So nothing’s gonna change.

    Take John Carter: a film that is regarded as a flop because people didn’t see it in the US, but which did fine abroad, and therefore made a decent return (once PPV and DVDs and all the rest are taken into account). Not triple-digit return, but a very decent return.
    http://www.boxofficemojo.com/movies/?id=johncarterofmars.htm

    If you can make one of those every year, and the worse that can happen to you is that you make small but positive returns, well, I envy you.

  • “Bad movies are bad business.” First thing that popped into my head was asylum. Their not doing too bad.

  • In my experience, global audiences can be surprisingly willing to watch a tiny American “indie” film. The feature I directed, Time Expired, was shot in Oklahoma for almost nothing. It’s a dramedy with no special effects, car chases, or anything remotely action-packed. But almost 80% of our 800,000+ views on YouTube have come from outside the US. People are watching it not only in Europe, Canada, and Australia, but also in countries like the Philippines, India, and Saudi Arabia. This is for an English film without subtitles. The strength of global interest in our movie has certainly surprised us and earned us a decent amount of advertising dollars to date.

  • By the way, being an independent non-creative – i.e., a non-writer/actor/director – producer is a tough gig. Even being on the lot is a lot different that it was. Just ask Joel Silver, who was the king of the 80′s and 90′s.

    • marklondon on 09.3.13 @ 2:42PM

      Joel is doing just fine. He shot himself in the foot on a couple of projects, but he’ll be back.
      Nice new office he has too.

      • Silver can bring his own financing to most of the projects he is interested in but, even there, his aims aren’t as grand as they once were. Now, compared to a mere mortal, the dude’s still got it made in the shade.
        .
        PS. Good point on risk spreading. Someone ought to do a decent size piece on Golan-Globus too. Talk about B-films.

    • Don’t you worry, Joel will be back. People forget that he was about to lose his deal with WB right before the first matrix came out and he still has the Sherlock Holmes franchise. Check his imdb page and you will see he is still rocking producing. I think the biggest hit Joel took was when the president of his company married Robert Downey Junior and left in 2010 to work with him. And people think RDJ became a superstar on his own…

      And Joel’s new office does look very nice.

  • marklondon on 09.3.13 @ 2:41PM

    The sky is not falling.
    So ‘The Purge’ and ‘Now You See Me’ don’t count?
    Here’s what the scuttlebutt is currently saying: open your tentpole early (May, not July). If the budget is over $200M make sure it has international appeal, to the point of ‘versioning’. If you’re backing a star (say, Depp) make sure you own the rights to another property that he/she is tied to (spread your risk). ANY profit, no matter how long it takes, is good profit, especially if the top-line number keeps your market-share healthy.
    I love Linda Obst, but like Spielberg, she can sound too much like yesterday’s person. 90% of the cash at risk in a big film is not actually the studios’ money. And there’s literally biliions more where that came from looking for the next property that will spin across multiple industries. The multiple on a win is so great big money is fine with rolling the dice.
    Meanwhile if you want the indie industry to thrive, I exhort you to all buy tickets to ‘Rush’. Its the fat $50M indie pics that grease the pipeline for the 500k+ films.

  • RIPD was a huge flop. Most people were unaware the movie even existed until they were in line at the theater and saw the title on the board. The preview looked pretty good. The special effects looked well done. Someone took a loss on the chin.

  • With all of big studio resources they could produce adaptations of so much great classic and contemporary novels. A bit more original, smarter and interesting sci-fi stories, genre pieces and complex dramas. But let’s forget that and go back to producing Iron Man vs. Man of Steel. Oh yeah mama, easy moneh.

    • The problem is that the classics, for the most part, don’t play well in Peoria. (come on, old timers – y’all must remember that THR headline?). “Anna Karenina” did less than $70M globally. “Much ado about nothing” and “Lovelace” even less.
      .
      Speaking of THR – they have a big article on the this summer failures and everyone is claiming to be clamping down on costs – but not making different movies!

  • Sure, movie studios are producing stuff that they think the world wants, rather than catering to the American audience only.

    However, the reverse – a high-quality all-time box-office hit is not released in its original form but gets an American remake, for reasons beyond comprehension: http://www.theguardian.com/film/2013/mar/01/tom-shadyac-remake-french-untouchable

  • Many years ago, NBC was lagging in the ratings and, during the summer months when everything was in reruns, their promos were, “It’s new to you”. In other words, theirs also was a rerun but, since most people didn’t bother watching the NBC shows when they were aired originally, it was indeed “new to them”.
    .
    As is this movie.

  • First of all, when did “Sleepless in Seattle” start getting treated as some kind of example of high art from Hollywood? And is there some sort of romantic comedy shortage that I’m not aware of? It kind of still seems like there are a lot of them (they aren’t all that expensive to make.

    Anyway, this most of this talk of Hollywood being in trouble is a bunch of silliness. Anyone remember 2005, where every other article on the internet was about the so called “box office slump”? Yeah, that didn’t exactly prove to be as scary as people thought. The year ended up being one of the top three most profitable years in Hollywood history up to that point when all was said and done. The studios are going to be fine.

    • 2013 is the second best summer on record in term of grosses ($4.4B in North America alone) but the costs were way up as well.

  • “Why did it take Hollywood over a billion in losses to realize what most sentient earthlings could have told them from the script?” Hahaha!

  • I’m not sure why Obst is optimistic about a trend toward better films. If China is our film industry’s top export destination, and Chinese customs and/or law prohibits the import of anything other than IMAX & 3D, then what incentive do American studios have to create other films? Add to that, as Obst points out, the fact that international film markets have filled the hole left by DVD losses. Moreover, this summer’s blockbusters tanked in the states, not overseas.

    We may (hopefully) see an influx of better, story-driven films in the future, but Obst’s perspective, as distilled through this blog post, seems to counter that notion.

    • Laura Gamse on 09.5.13 @ 4:32PM

      Aside from returns, I doubt the industry is eager to see a repeat of this season’s reviews. I would again emphasize that there is no need to dumb-down a script to add special effects. IMAX and 3D quotas don’t necessitate sub-par storytelling. Great films can have these components if necessary, no box office losses included (domestic or otherwise).

  • I still don’t get Pixar – well the old Pixar. They made blockbuster films with great scripts and acting. Toy Story, Wall-E, Up – how did Pixar get it so right and no one else did? Simple. Steve Jobs and Co let them do just this – and it paid off.

    Why can’t any other studio learn from them? And now with Disney at the helm – well I digress.

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