Gruber on How Hollywood Gambles
For those of us critics who wonder why Hollywood can be so superficial film producer Peter Guber has some riveting insights with this interview from the Web 2.0 Summit. He first talks about the disconnect between young movie goers and the folks who work at studios — and then the fact that each film represents a new business venture because the studio itself doesn’t have a brand (although back in the good old days it did).
But Gruber gets even more interesting when he starts crunching the numbers: For example the average film costs $76 million dollars to make, but then you have to add another $140 million in advertising. So with over $200 million at risk you may still get blown away by a low budget film — and everything rides on a single opening day. So if you get crushed that first Friday you’re $200 million investment is toast by Monday.
Based on this you can see why Hollywood invests the money but never takes any chances: Because there’s too much risk involved. In fact the level of investment also acts like an insurance policy. Hearing stuff like this makes me wish for the good old days of the 90s and indie film making when low budget creative films had a place in the market. There’s still a bit of that today, but much less so than in years past.