Last updated on November 3rd, 2021 at 07:48 am

Big Picture by Ben Fritz Big Picture – Rating: 8/10

Summary

“The stunning metamorphosis of twenty-first-century Hollywood and what lies ahead for the art and commerce of film

In the past decade, Hollywood has endured a cataclysm on a par with the end of silent film and the demise of the studio system. Stars and directors have seen their power dwindle, while writers and producers lift their best techniques from TV, comic books, and the toy biz. The future of Hollywood is being written by powerful corporate brands like Marvel, Amazon, Netflix, and Lego, as well as censors in China.

Ben Fritz chronicles this dramatic shakeup with unmatched skill, bringing equal fluency to both the financial and entertainment aspects of Hollywood. He dives deeply into the fruits of the Sony hack to show how the previous model, long a creative and commercial success, lost its way. And he looks ahead through interviews with dozens of key players at Disney, Marvel, Netflix, Amazon, Imax, and others to discover how they have reinvented the business. He shows us, for instance, how Marvel replaced stars with “universes,” and how Disney remade itself in Apple’s image and reaped enormous profits.

But despite the destruction of the studios’ traditional playbook, Fritz argues that these seismic shifts signal the dawn of a new heyday for film. The Big Picture shows the first glimmers of this new golden age through the eyes of the creative mavericks who are defining what our movies will look like in the new era.”

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The Big Picture – Notes

This change has happened slowly over about a decade in Hollywood, making it hard to appreciate its magnitude. But now it is undeniable that the dawn of the franchise film era is the most meaningful revolution in the movie business since the studio system ended, in the 1950s. That shift ended studios ability to control creative talent. (pg. XV)

It worked until it didn’t. Like a newspaper that made a great print product but never invested in its website, Sony succeeded in the early part of the twenty-first century, but its fortunes took a decided turn for the worse in the 2010s. As audience tastes changed, it had little to offer in the way of big-budget “events” that were part of long-popular, well known franchises. (pg. XVII)

Sony Pictures was coming off a disastrous summer in which its two biggest films, the science-fiction vehicle After Earth, with Will Smith and his son, and the Channing Tatum action dud White House Down, had together lost more than $75 million. Their failure was directly tied to the fact that Sony had almost no popular franchises in its arsenal. To compete with the big summer movies being released. (pg. XVII)

Home to arguably the best content Hollywood has ever produced. In 2016, networks and streaming services produced 454 original scripted series, more than double the number created in 2010. Some were good.

But they used to just be one element of a studios strategy. Tent Poles got that name because they were supposed to hold up a structure that also contained dramas, romantic comedies, adult thrillers, and even totally original ideas. (pg. xix)

Yet amid the golden age of TV and the ubiquity of streaming media, many now argue that the only difference between a movie and a TV series is how long each one runs. Each Marvel “movie” is, arguably, best understood as a two-hour episode of an ongoing television show, while one season of Fargo or American Crime Story is, essentially, an eight or ten hour film.

For most of Pascal’s reign, the job wasn’t easy, but it was simple: it was just a question of putting together the best slate possible and then hoping that the “movie gods” smiled on her studio.

She wasn’t wrong. For a decade starting in the late 1990s, Hollywood experienced one of its flushest moments, thanks to three letters: DVD. Anyone who shopped before 2012 remembers when huge sections of stores like Wal-Mart, Target, and Best Buy were filled with DVDs. The hottest new releases were often priced as low as $13, well below their wholesale cost of $18, in order to lure people into the store. At that price, why not buy a movie and save yourself the trouble of making two trips to Blockbuster Video to rent and return it?

DVD collecting became such an addiction that roughly is percent of the DVDs sold in the mid-2000s were never removed from their shrink-wrap, a studio home-entertainment president once admitted to me, with a mix of glee and shame. With studios earning a profit of about $15 on each disc, it became easier than every to make money in the movie business. All but the biggest flops were profitable. (pg. 17)

Video-on-demand rentals and digital downloads helped a bit as the years went on, but the movie business never fully recovered. Annual home-entertainment revenue, and the studio profits that follow from it, fell by nearly half between 2004 and 2016, from nearly $22 billion to $12 billion.

Even big-budget, star-driven action movies with stellar reviews, like Tom Cruise’s excellent Edge of Tomorrow have struggled. And in the same year, Star Wars: The Force Awakens destroyed box-office records by essentially re-creating a movie from 40 years ago. (pg. 23)

“The truth [is] that we do not have as many franchises as other companies,” she wrote to her friend Doug Belgrad, president of Sony’s motion picture group, in a candid admission of failure. The cornerstones of our slates were Adam Sandler, Will S[mith] and Will F[arrell]. For a long period of time these relationships provided a steady stream of reliable, profitable films. This was an advantage we had vs. other studios, but it was about talent rather than properties…Over time, like any franchise, the freshness wore off. And unlike a property or brand, you can’t reboot a movie star…We stayed too long at the party and got behind as our competitors built their businesses for the future.”

Sony’s highest-grossing movie and the fourth highest in the industry was the Bond sequel, Skyfall, which collected a phenomenal $305 million domestically and $1.1 billion worldwide, a record for 007. Typically, studios make several hundred million dollars in profit on such movies. Sony made only $57 million (measured as an “ultimate” or the expected profit over the next decade, which is standard in the industry).

The reason? Sony didn’t actually own the Bond franchise. Another studio, MGM, did. Executives at Sony pictures had advocated buying MGM, but the company never pulled the trigger. Instead, MGM emerged from a bankruptcy in 2010 as a small independent entity that needed a partner to co-finance and distribute its movies. Sony bent over backward to add one of the industry’s highest profile franchises to its otherwise lackluster slate. It agreed to pay 50 percent of the Bond movie’s costs, but keep only 25 percent of the profit. “Who else is gonna make such a one sided deal with MGM?” Pascal asked, rhetorically but tellingly. (pg. 25)

Men in Black 3, Sony’s third-biggest movie of the year, was even uglier. It grossed $624 million worldwide. But after dishing out $90 million in gross points to talent like Will Smith and Steven Spielberg under deals set in place with the first two MIB movies in 1997 and 2001, the studio earned no profits at all. It broke even.

The Amazing Spider-Man, a reboot of Sony’s most successful franchise, earned about $110 million on $758 million of worldwide ticket sales, a respectable amount. Still, that was less than half the profits of 2007’s Spider Man and one-quarter of the profits of 2002’s original movie about the webslinger. “Even though we were #1 at the box office in 2012,” Pascal would later admit, “it was a shitty year.” (pg. 26)

His time was also taken up by one of the nations hottest tech startups: Snapchat, the app on which messages disappear after a set time. Lynton had gotten to know the founder of Snapchat, Evan Spiegel, after the Sony CEO’s wife noticed their daughters were using it. Lynton emailed the young Stanford dropout, who had attended the elite private school where the Lynton girls were students. Within an hour, Spiegel was at their house and the couple agreed to invest in the startup, among the earliest to make that commitment. Not long after, Michael Lynton joined Snapchat’s board, eventually becoming its chairman.

As Snapchat grew rapidly and eventually had a $24 billion IPO, the Lyntons’ personal stake reached more than $500 million. (pg. 29)

Companies run by Golan spent $2 million developing a Spider-Man film, and in 1989 he held a press conference at the Cannes Film Festival to announce that the picture would soon begin production. But Golan was never able to get the financing together to start the cameras rolling. He did, however, manage to make a mess of the rights, selling the television rights to the media company Viacom, which would later buy Paramount Pictures, and the theatrical rights to Carolco Pictures.

Schlessel didn’t know when, or whether, a Spider-Man movie would actually be made, but he knew he had heard of the character and that name recognition was fast becoming a valuable asset in the movie business. It took him a year to reach a settlement with Golan that would keep the Spider-Man home-video rights at Columbia. And it would take another decade for that bet to pay off.

In the early 1990s, Carolco agreed to pay James Cameron, arguably Hollywood’s hottest writer-director (just coming off 1991’s Terminator 2: Judgment Day), $3 million to adapt Spider-Man. He wrote a forty-seven-page “scriptment,” a mixture of narrative and screenplay-style dialogue, and it was set to become a $50 million blockbuster production (big money at the time). (pg. 41)

It was an audacious proposal, given the power of Icahn and Perelman, but Perlmutter had a unique asset: Avi Arad. A toy designer and fellow Israeli veteran of the Six-Day War who, like his business partner, could converse in Hebrew or accented English, Arad met Perlmutter at Toy Biz and the two became unlikely friends. He was in many ways the Pascal to Perlmutter’s Lynton — he had no interest in the business side of entertainment, but he was creative, he understood the value ° story and characters, and he could charm almost anyone. (pg. 44)

Landau brought the offer back to Calley and the heads of Sony’s motion picture business, a small group of executives that included Amy Pascal. It didn’t take long for them to quickly and decisively respond: no way. “Nobody gives a shit about any of the other Marvel characters, we don’t want to do that deal,” they told Landau, as if he were Jack coming home with a handful of magic beans. Their instructions to Landau, they thought, were quite simple: “Go back and do a deal for only Spider-Man.”

It was the mistake of a lifetime, a deal that could have made Sony bilions of dollars and potentially turned it into the juggernaut that Marvel’s current owner, Disney, is today.

But that’s with the benefit of hindsight. At the time, it was a deal nobody wanted. Who, besides the obviously biased Arad, could have possibly foreseen that as a result of economic forces not yet on the horizon, cinematic universes would take over the movie business and superheroes, no matter how obscure and seemingly absurd, would be the most valuable currency in Hollywood? In 1998, the number three movie was the gross-out comedy There’s Something About Mary, and in 1999 it was Toy Story 2. Nobody at the time — not even anyone working at Marvel, if they were honest — imagined that in 2014 it would be Guardians of the Galaxy, based on a poorly selling Marvel comic featuring a foul-mouthed raccoon and a grunting tree-man. (pg. 46)

In March 1999, the two sides settled. To the outside world, they disclosed only the financial terms, which called for MGM to pay Sony $5 million. Behind the scenes, though, Calley had agreed to give MGM the disputed Bond rights in exchange for MGM giving up its claim to Spider-Man. (pg. 47)

Once DVD, television, merchandise, and all other revenue sources were counted, that one movie alone generated $442 million in profits. Spider-Man is still Sony Pictures’ most profitable film of all time (pg. 49)

Marvel could even cover the costs of the extra staff it would have to hire to oversee and make the movies with the Merrill debt. The comic book company wouldn’t have to spend an extra dollar on payroll.

In addition, for its work producing the movies, Marvel got a 5 percent cut of all revenues. That’s what it got from other studios when they made movies with Marvel characters. But in this case, Marvel got to pay itself 5 percent, ahead of the investors who actually put up the money.

And that was from all the revenue the films made, including on DVD. Typically, so-called participations for actors or licensors like Marvel apply to only one-fifth of the revenue from DVDs, a protection that studios built in to ensure profits for themselves. Maisel kept waiting for the bankers to request just such a provision, to which he would have replied, “OK, you’re right.” But, inexperienced in the ways of Hollywood, they never did. (pg. 59)

It was a typical attitude for a Hollywood producer who thought movies had to be relatable to the average non-geek and understandable for anyone not immersed in the world of comic books. But it also illustrated Maisel’s point — nobody understood Marvel characters better than the people who worked at Marvel.

So when New Line’s option on Iron Man expired in late 2005 and it tried to renew the deal, as it had done before, Marvel pounced. Arad and Maisel refused to extend the agreement, which was within the rights but certainly not standard decorum in Hollywood, where contract renewals are usually little more than a formality. New Line executives were shocked, and mad, but they had no choice.

“It was a great gift,” said Maisel.

It wasn’t the only gift to come Marvel’s way that year. After hemming and hawing about making a sequel to 2003’s Hulk, which grossed a mediocre $245 million at the box office and was panned for director Ang Lee’s overly psychoanalytical approach to the character, Universal agreed to give Marvel back the movie rights to the giant green monster so long as it could release the film instead of Paramount. (pg. 62)

Feige demanded his freedom and Iger granted it, allowing the Marvel chief to report to Disney’s more laid-back movie studio chairman, Alan Horn. Marvel Studios moved to a new home on the Disney lot that was nothing like the dumpy, no-frills offices, with old carpets and bare walls, that Marvel Studios used to operate out of in Manhattan Beach. The new digs were decorated with superhero wallpapers, statues, and props. Feige bragged about the track lighting Disney installed in Feige’s conference rooms, to spotlight marketing concept art that hung on the walls. Perlmutter, who jammed three comic book editors into each office at Marvel’s office in New York, would have never sprung for such an unnecessary feature. Perlmutter remained with Disney, overseeing Marvel television, toys, and comic books, but this change was an undeniable insult.

It was other studios, however, that were most damaged by Feige’s success. Why, their corporate bosses wanted to know, couldn’t they be as successful as Marvel? Of course other studios had hits, but nobody was pumping out two surefire blockbusters per year (soon to be three) like Marvel, with nary a flop in the bunch. (pg. 73)

Between 1992 and 2006, Cruise starred in twelve films that each grossed more than $100 million domestically. He was on an unparalleled streak, with virtually no flops. But in the decade since then, five of Cruise’s nine movies — Knight and Day, Rock of Ages, Oblivion, Edge of Tomorrow, and The Mummy – were box-office disappointments. This was an increasingly common occurrence for A-listers. Will Ferrell and Ben Stiller couldn’t convince anyone to see Zoolander 2. Brad Pitt didn’t attract audiences to Allied. Virtually nobody wanted to see Sandra Bullock in Our Brand Is Crisis.

It’s not that they were being replaced by a new generation of stars. Certainly Jennifer Lawrence and Chris Pratt and Kevin Hart and Melissa McCarthy have risen in popularity in recent years, but outside of major franchises like The Hunger Games and Jurassic World, their box-office records are inconsistent as well.

What happened? Audiences’ loyalties shifted. Not to other stars, but to franchises. Today, no person has the box-office track record that Cruise once did, and it’s hard to imagine that anyone will again. But Marvel Studios does. Harry Potter does. Fast & Furious does. (pg. 85)

Sony’s Da Vinci Code series, based on the best-selling books by Dan Brown about intrigue and corruption in the Catholic church, shows how these changes have unfolded. These movies star Torn Hanks and are directed and produced by the highly compensated A-list team of Ron Howard and Brian Grazer. The original, from 2006, grossed $753 million and made Sony a $179 million profit. To bring the trio back for 2009’s sequel, Angels & Demons, Sony agreed to pay Hanks $20 million, Howard $10 million, and Grazer $2.5 million. But that was just a minimum. The trio also split 25 percent of the first dollar gross. If that worked out to be more than their salaries, then they would make even more. That was what it cost to get A-list talent to work on a movie, particularly a sequel to a successful film, in those days. Stars had the leverage and studios had no choice. But the deal turned out to be a disaster for Sony. Angels & Demons grossed a disappointing $479 million at the box office, and the studio lost $24 million. The talent, meanwhile, made more than $75 million once their quarter of the first dollar gross was totaled.

Under their contract for Angels & Demons, Hanks, Howard, and Grazer were entitled to be paid at least as much on any follow-up. But by 2014, when Sony started work on an adaptation of a third novel by Brown, Inferno, that level of compensation was just not possible.Angels & Demons had lost money, after all, and the economics of the industry had changed, with plummeting DVD sales and the waning box-office power of stars like Hanks.

After four months of negotiations, Sony reached a deal with the trio’s representatives at CAA. They would all take pay cuts: Hanks Sot 15.4 million up front, Howard $7.7 million, and Grazer just under $2 million. More significant, instead of sharing one-quarter of every dollar that came in, Sony gave them 50 percent of the profits after… (pg. 86)

Sony paid both stars handsomely for their consistent success: $20 million against 20 percent of the gross receipts, whichever was higher, was their standard compensation. They also received as much as $5 I million against 5 percent for their production companies, where they employed family and friends. Sony also provided Happy Madison and Overbrook with a generous overhead to cover expenses — worth about 4 million per year. To top it off, Sandler and Smith enjoyed, the perks of the luxe studio life. Flights on a corporate jet Were common, with family members and friends often invited along. On occasion, Smith’s entourage and its belongings necessitated the use of two jets for travel to premieres.

Knowing that Sandler was a huge sports fan, Sony regularly sent him and his pals to the Super Bowl to do publicity. In addition to enjoying the best tickets and accommodations, they had a private basketball court to play on, which the studio rented for them. Back at the Sony lot, the basketball court was named Happy Madison Square Garden in the star’s honor. (pg. 92)

These are exactly the types of movies that people claim they want more of, but they rarely get up off their couches to go and see. And in the age of puny DVD sales, most of these films end up losing tens of millions of dollars. No wonder studios make so few of them. Counterintuitive as it may seem, the mid-budget drama — the inexpensive movies that adults regularly complain have disappeared from cinemas — has become the riskiest category of films for major studios. (pg. 115)

These shows didn’t just arise because TV executives had an epiphany and decided that they should stop producing crap, however. It was, Michael Lynton has astutely observed in interviews, a product of technological change. When a television show could be watched only on the night and at the time a network scheduled it, and only if there was nothing else on that you wanted to watch, it was all but impossible to produce complicated serialized stories. With the exception of soap operas, nearly all shows were made to be enjoyed as a single hour or half-hour, with no context that couldn’t be summarized briefly…(pg. 128)

…in a “previously on.” Procedural series like Law & Order and Murder, She Wrote,in which one crime was solved per episode, ruled in drama, while sitcoms like Home Improvement and Roseanne regularly topped the ratings.

This setup was necessary because it was unreasonable to expect people to watch every episode every week and because shows made most of their money in syndication, the repeats that air at 6 or 11 pm on weekdays or during the day on weekends, when someone flipping the channels might catch a random episode. (pg. 129)

In fact it was low. By 2016, the ultimate profit from Breaking Bad was estimated at more than $400 million. That made it the second-most-profitable piece of entertainment content Sony had made in the twenty-first century, behind only the original Spider-Man. (pg. 136)

It was easy for competitors to snipe that anyone could dominate the movie business when they were releasing the third Captain America, a sequel to Finding Nemo, or the first new Star Wars movie in a generation. But the consistency of Disney’s success, from Frozen to Iron Man 3 to Maleficent to Guardians of the Galaxy to Inside Out, Rogue One, and Beauty and the Beast, is unprecedented in modern movie history. In a single two-month span in 2016, it released three blockbuster hits, the animated Zootopia, the live-action remake of The Jungle Book, and the Marvel superhero blowout Captain America: Civil War. Together they grossed $3.1 billion. That’s more than every Sony release, combined, grossed in 2014, 2015, or 2016.

The financier Legendary Pictures1 booted Lin and his fellow producer, Roy Lee, from the project, alleging they had not done enough work to earn the millions that the duo claimed was rightfully theirs. Lin, who rarely betrayed any strong emotion, particularly anger, felt severely wronged. He and Lee sued Legendary, but the case was in court for two years and the legal bills were substantial.

With his company short on hit films and no TV show on the air yet, Lin had to move his family to a rental house and lay off his top executives in order to stay afloat.

Lin Pictures might have met an ignominious end, if not for The Lego Movie. The project had initially come Lin’s way as a Warner executive, when Roy Lee had pitched him to make a film based on Bionicle, a Lego sub-brand with characters that resembled the Transformers. Lin wasn’t interested, but he met with a Lego executive and ended up discussing a bigger idea. After seeing his young son Miles play with Legos and invent his own worlds, Lin thought he could use the brand to make movie with broader themes about invention and creativity. (pg. 171)

Lin bought an old post ottice in the Filipinotown neighborhood of Los Angeles, which he intends to turn into a creative hub called Ride-back Ranch, named after a cowboy term for riders who support each other. By 2018, it was set to host the offices for Lin Pictures and the Bricksburg Chamber of Commerce, where animators work on the next set of the Lego movies. But it will also have space where writers, directors, and other creative folks are free to work on any idea they want. The producer’s idea is to use the freewheeling and collaborative spirit that brought success to The Lego Movie and Lego Batman to generate new ideas. Some might be one-off films or television shows that when fully developed by the right creative team, would be more likely than an original script written in isolation to get bought by a studio. Others could become the next great franchise. (pg. 185)

As he assembled his team, Hope seemed to be rebuilding an art-house studio from the days when major studios believed in them. To run marketing and distribution he hired Bob Berney, who founded Newmarket, the distributor of Memento and The Passion of the Christ, before running the art-house label Picturehouse for HBO and New line – and then, after it was shut down, struggling like so many other indie executives to find a stable home.

Amazon forced Hope to make only two accomodations for his new venture. One was to accept a boss with a more traditional business background. Jason Ropel. Amazon’s head of global movies, had previously helped license the movies from other studios that the company offered to its Prime subscribers and had launched Prime Video in Europe and Japan. (pg. 195)

And when the company started looking at what people watched most on Amazon Prime, it discovered that a theatrical run first made a big difference. I spoke to Bob Berney about this, in the sleek corporate offices of Amazon Studios in Santa Monica, a beach city adjacent to Los Angeles. Balding and clad in a T-shirt from the famous Alamo Drafthouse Cinema in Austin, Texas, he told me, “Our customers wanted the awareness of the theatrical release to guide them on what to watch.” (pg. 196)

In 2005, the highest-grossing Hollywood movie in China, Harry Potter and the Goblet of Fire, grossed $11.7 million. In 2017, the eighth Fast & Furious film grossed $392 million there. Total box-office sales skyrocketed from $248 million in 2005 to $6.6 billion in 2016. It was already the number two movie market in the world, and experts predicted that sometime before 2020, it would surpass the United States to become number one. (pg. 204)

But Goodman didn’t see Le Vision as a competitor to the major studios; he saw it as a partner. That’s because his new Chinese-backed company lacked one key asset that only Paramount and Universal and their four huge competitors possessed: the infrastructure and resources to market and distribute a movie in all media — theaters, DVDs, digital formats, and television — around the world. Building such a system takes years and hundreds of millions of dollars. Le Vision might get there someday, but for now, Goodman would need to sign deals with major studios to release his films. The exact types of movies that studios weren’t making would actually be back on their slates just financed and produced by somebody else. It was a potentially transformative concept, once you stepped back to think about it. A studio executive could leave the traditional Hollywood system, start his own venture with outside money, and in the process start giving studios exactly the types of movies he couldn’t make while on the inside. For movie fans who wanted more than what the franchise-dominated slates of Universal, Fox, Paramount, Warner Bros., Disney and Sony contained, this was a big deal. Here was a way for studios to start releasing the kinds of movies they weren’t making anymore. Not in a limited number of theaters, and not on digital streaming platforms, but in thousands of theaters, the way “real” movies had come out for decades. (pg. 223)

The Big Picture by Ben Fritz