Blinded By the Dollar Sign: The Problem with Hollywood’s Ballooning Budgets

The process of excitement for us filmgoers is normally the same. We hear about a film in development that appeals to us, especially if it’s the next entry in a popular franchise, and then we patiently wait for, or perhaps anxiously anticipate all that comes next: director, screenwriter and casting announcements, set photos and promotional artwork, a release date and the highly revered trailer. We think about so many factors leading into a film’s production, exponentially raising our level of enthusiasm for something that has yet to be released. One thing we don’t think about as much as we should, however, is how much the film costs to make.

We know that movies aren’t cheap for the studios, but perhaps we don’t think about total cost as much because things like trailers, or prior knowledge of a franchise, give us something of an approximation that will tell us, “Yes, that film cost a hefty sum to produce, and ‘x’ is about how much.” We, and perhaps even the studios, take for granted how much these movies cost, especially the franchise films. Big box office smashes have become the norm every blockbuster summer and Oscar season, and we’re losing sight of the fact that for some films, it’s taking more and more just to make a profit.

Spectre, the 24^th entry in the James Bond franchise that was released this weekend, has gotten off to a fast start already accruing nearly $290 million worldwide as of writing this passage. But even with those impressive numbers, it’s still a ways off from being called a financial success. According to a recent article in Variety, “industry executives predict that the picture will have to do $650 million to break even.” To just break even, this seems like a staggering amount, and it’s all thanks to a production budget upwards of $250 million, and “more than $100 million in marketing and promotion costs.”

While Spectre is an expected cash cow sure to make its money back, it highlights one of the biggest flaws of Hollywood films today. Perhaps the expense isn’t too high for studios yet, but all it takes is one misfire before the whole system is in question. Budgets for big Hollywood films are seemingly becoming more and more inflated, in spite of the fact that, “Fewer than 90 films have ever achieved [$650 million] globally.” These ballooning budgets point to a couple of problems with the culture of business in Hollywood: the flawed assumption that successive films in a franchise need to be bigger, and therefore ‘better’ than their predecessors, and a Hollywood studio model overly reliant on foreign markets to stay afloat.

Now, before I get into my argument, I want to make a couple of things clear. First of all, I understand that sometimes raising the production budget between films is only practical. For example, if the second, or next film introduces new characters to the narrative, then it makes sense that the budget will marginally increase. The real issue is the unnecessarily bloated budgets that are a byproduct of a flawed studio mentality.

Secondly, I recognize that excessive budgets have been a large part of studio culture throughout Hollywood’s vast history. Once upon a time, musicals reigned in Tinseltown and their seemingly eternal popularity and success was often justification enough for studios to give them high budgets. While extravagant musicals were once the norm in Old Hollywood, their popularity began to fade during the 1960s in spite of big commercial successes like West Side Story, Mary Poppins and The Sound of Music, just to name a few. By the latter half of the decade, the surprising failures of big-budget endeavors like Hello Dolly!, Doctor Doolittle and Sweet Charity – a film notorious for nearly putting Universal on the slab – all but spelled the end of musicals’ popularity and contributed to the downfall of the studio system, effectively ushering in a New Hollywood of auteurist filmmakers who valued style and substance over how much dough studios could cough up to fund their efforts.

One of the greatest delusions in Hollywood is that bigger inherently means better. Apparently the dominant rationale among production companies is that if the original was successful, then in order to make a successful sequel, you take that film’s scope and amplify everything about it. However much more money is tacked onto a sequel, the expectation is that you will make a proportionate sum back. But the truth is, just because studios spend more money for a film’s sequel, or a successive film in a franchise, does not necessarily mean that there is more money to be made.

Of course there are plenty of sequels that have financially surpassed the originals or their predecessors. Just this past summer, Jurassic World best encapsulated the idea that, sometimes, spending more leads to making more. The budget for World was the highest of any entry in the franchise; a whopping $150 million price tag nearly two and a half times the cost of the original. But as we all know, the film went on a warpath through the summer box office to handily make back its money, and then some. Domestically, the film made well over $650 million, all but guaranteeing that the studios made their money back with the addition of marketing and promotion costs, and without the aid of the foreign markets.

It is possible, however, to see World as a special case. It was the first film in an equally loved and maligned franchise since 2001, and because a fourth film had been stuck in development hell for nearly a decade, the anticipation was high not only for those who were fans of the franchise, but for the new generation, as well. After the debacles that were The Lost World and III, the Jurassic franchise was desperately in need of a rebranding in order to be properly introduced to this new generation, and the film is built as such a rebranding. The long wait and anticipation are partially responsible for making World a hit, but not every sequel is afforded the same luxury.

Take Sony’s Spider-Man franchise, for instance. The respective budgets for each successive film in the Sam Raimi trilogy were $139 million, $200 million, and $258 million. Their respective domestic box office numbers did not follow suit, decreasing from just over $400 million, to just over $370 million, to just under $340 million. But, after domestic audiences had clearly gotten a little tired of the franchise, it was awarded a rebranding and was back five years later. With a $230 million budget in tow, The Amazing Spider-Man made just over $262 million, and nearly two years later, its sequel became the lowest earning entry of the franchise, making only a little over $202 million domestically with a $200 million budget. Overexposure and lofty studio expectations, among other things, have effectively run the Spider-Man franchise into the ground.

Now, no one can objectively say that any of the films listed above were financial failures. Some may still regard The Amazing Spider-Man 2 as the final nail in Spidey’s coffin, partially because of its poor domestic box office performance, but it grossed over $700 million worldwide, still making it far and away a profitable venture. Therein lies the problem, however. The only reason the Andrew Garfield-led sequel wasn’t a bomb was due to the over $500 million it pulled internationally, making up more than 70 percent of its worldwide gross. The ‘bigger means better’ mentality is clearly problematic, but it’s only a relatively minor issue. The problem lies with a Hollywood studio model overly reliant on the foreign markets to ensure that films turn a profit.

In his State of Cinema keynote address at the 56^th San Francisco International Film Festival two years ago, Steven Soderbergh reminded us that one of the first things studios have to consider when making a movie is the foreign market. Studios have to consider those films that “travel best,” or in other words the big budget spectacles so customary to today’s mid-to-late springs, summers and autumns. Obviously, the foreign market is a large one, and “the bigger the budget, the more people this thing is going to have to appeal to, the more homogenized it’s got to be, the more simplified it’s got to be.” So, it’s reasonable to say that the bigger the budget, the bigger the gamble studios are taking. As we’ve learned, even with a subgenre as popular as superhero films, not every throw of the dice will end with a successful payoff (ahem, Green Lantern).

Sure, a lot of those gambles do pay off, but why make the gamble in the first place, especially when studios don’t need to? As we have seen from Sam Raimi’s Spider-Man and Jurassic World, these potential box office blockbusters do not need to cost overly exorbitant amounts of money in order to achieve what those two films clearly have. These films already appealed to a broad spectrum of people around the globe. Instead of taking so many high-risk gambles, studios should focus on giving films production budgets that are reasonably high enough to accomplish the requirements every blockbuster needs to succeed with the public, while still remaining small enough so that the domestic market can sustain the film on its own.

Finding that happy medium is absolutely necessary, and to use an extreme example, I’ll head back to Mr. Soderbergh. He says, “$10 million movie, 60 million to promote it, that’s 70, so you’ve got to gross 140 to get out. Now you’ve got $100 million movie, you’re going to spend 60 to promote it. You’ve got to get 320 to get out. How many $10 million movies make $140 million? Not many. How many $100 million movies make 320? A pretty good number.”

Obviously, no intended blockbuster will ever cost only $10 million or some other similarly small fee to make, but it is imperative that the budgets remain reasonable, because I don’t know about you, but if your movie is a big budget spectacle, $320 million seems a lot easier to make than $650 million. And I realize that not every reasonably priced film is going to result in a successful payoff (ahem, this year’s Fantastic Four), but if you make a good film that resonates with the public, then the chances of recouping your losses are much greater than if your film cost, say, $258 million.

But, how do we make this possible? How do studios start deciding not to spend more and more inordinate amounts of money for every sequel, every new entry in a franchise? Perhaps the first step to solving that problem is a little unclear, but a good start is for us to communicate to the studios that we no longer buy the idea that bigger means better. How we even do that might be a little unclear, so like Mr. Soderbergh, I concede that maybe I’m wrong, that nothing with this system is wrong because studios and audiences alike are happy, and the wheel keeps turning as it always has, with little to no bugs in the software. Hollywood is an industry willing to take more than a few calculated gambles.

But then again, I still can’t wrap my head around the idea of a film needing $650 million, a mark less than 90 have met in history, just to break even.