Continued from Part II
III. Movies
This commonplace entertainment for the masses?is actually very heterogeneous in its nature.? Cinema is a chimera: part visual crafts, part performance art, part continuous technological advancements.??
Since pre-historic times artists tried to capture the movements of their subjects.? The best?painters can make you feel as if the sea foam is?forming right there on?the canvas.? But it's just your imagination.? And so, since?3200 B.C., innovators applied mechanics, optics, and chemistry to?images?in order to?imitate the magic of natural motion.?
The fathers of?cinema, the Lumiere brothers, viewed it as nothing more than?a natural transition from still photography.? Their perforated film and the cinematograph gave birth to?a huge industrial machine?that to this day?generates products?in multiple copies deliverable to millions of consumers.
The newly found ability to record real life?and?chronicle historical events has revolutionized the?planet's infosphere, continuously providing us with?documents of great achievements and horrendous atrocities.? However, entrepreneurs of moving images have immediately recognized an opportunity to use the new medium as a portal for escaping the reality for a short while and introduced the performance arts into the mix.? Why not film actors in dramatic or comedic situations?? Why not?utilize the camera's mobility - take them off the stage and place?them into natural settings; bring the actions into a?garden, on the street,?on the beach?
(Aside:? Movie theaters still provide?the most affordable route of escape.? They get you out of work and home?surroundings, hide you in?the darkness, bring you into?the places you may never visit, and show?you lives of people?you will never meet.? Yet, you don't need to go very far or pay?too much money for the adventure.? That's why the experience of going to the movies persists no?matter how advance home and handheld entertainment?media get.)
Before long, the makers of moving pictures realized that the technology at their hands could also be used as a dramatic tool.? To this day, phrases like "cut for emotion" signify how the mechanical process of editing (cutting and gluing of the film) has a potential of creating unforgettable, heart-stopping moments, which elicit deep emotions in the viewing audience.?
Thus, imagery, performance, and technology?were merged together by people standing behind the camera and shouting commands at everyone.? Sergei Eisenstein (Battleship Potemkin, Alexander Nevsky, Ivan the Terrible) was immortalized as one of the first innovative film directors precisely because of his great talent of telling powerful stories by combining panoramic shots that make you feel threatened with close-ups that fill your soul with sadness.? In fact, European theorists call him the "Father of Montage."? ?
It goes without saying - filmmaking is a director's art (for many, the word "craft" is more appropriate).??The director's job is to?take a story and?make it alive on the screen.? To achieve this miracle,?he or she, akin Dr. Frankenstein,?need to combine different?elements and put them through multiple processing steps.? It's an intricate creative process, but?it is also?a tedious?organizational?endeavor, not much different from a?job of a?manufacturing general manager.??
Each main element of filmmaking has multiple subdivisions.? Performance arts: story development, screenwriting, casting, performance directing, acting, stunts,?music, sound, wardrobe design, makeup.? Image-making: lighting, cinematography, visual effects, production design, set decoration, art direction.? Technology: special effects, props,?production management, animation,?editing, etc. Each of these larger functions are further divided into subgroups, sectors,?tasks...? It doesn't matter whether all these duties are performed by 10 people or by a crew of 2,435 (The Avengers - the longest credit roll I've ever witnessed) -?it's up to the director to make sure that all the parts work together and everything congeals into the final product.
Nowadays, the advancement of digital applications blurs the lines between the visual and technological aspects of filmmaking. The development of computer-generated images (CGI) has become?its prominent property. We even have famous directors (James Cameron, George Lucas), who are involved first-hand in scientific innovations of moving-image technology.
Thanks to CGI, creators can conjure any situation born out of their imagination. Now, intergalactic spaceships and aliens look real; characters can turn into monsters right in front of your eyes; they fly through the sky and?jump out of airplanes.? Frequently people go to the movies just to see the spectacle at its maximum potential - in 3D, on IMAX screen, with surround sound.? Who cares what the movie is about?? I cannot wait for the time, when at the entrance instead of glasses you'll be handed a helmet.? Then right?from your seat?you will be?transported onto some planet, where hoofed creatures with striped tails and dragonfly eyes will take you by the hand...? What plot???
That said, with?a?humongous moviemaking machine?remaining unseen (and largely unknown),?at the end of the day, cinema is all about the actors on the screen.??They are the bait that lures?the majority of moviegoers?into spending their money.??Yeah, the trailer looks?good, and maybe the effects will blow your mind (literally), and the?story will?knock you out cold, but people cannot be sure of it until the movie is over.?
On the other hand,?everyone knows in advance?that?Anthony Hopkins can transform himself into anybody, Harrison Ford at 70?is still enticing,?Kristen Wiig is batshit funny,?Megan Fox looks fucking awesome in high-cut shorts, and Daniel Craig makes the most outrages 007 shenanigans believable.? Even picky (some say snooty) cenophiles like me, who?are concerned?with?the subtext, depth,?dialogue and directorial?mastery,?will excuse sub par filmmaking for the sake of watching an actor creating magic on the screen?(the late Heath Ledger would be a good example?for me).???
Besides my personal?endless fascination with?the cinema,?there is a?legitimate reason?for?going into?the?extended discussion of its?components in the context of?the financial enumeration.??The proportions of elements used in?manufacturing movies?not?only yield?distinctly different types of?products, they also?drive its financial aspects.
On a general level, a movie's Income Statement is fairly straightforward.? We've got tickets, DVDs, TV rights, etc. revenues on one side, and the cost of ingredients required for making the product on the other.? The total amount spent on a project is customarily called a "budget," regardless of whether it was set in advance or just?accumulated to be a certain sum.? This is a very important industry indicator, which is frequently made public.???
The budget elements?may?have?multi-million price tags or cost nothing at all, and anything in between.? Any "name" (i.e. famous) ingredient will cost a lot of money.??Any unknown, trying to break in, component can be obtained for free.? This is literally true about everything that goes into?the pressure cooker of?filmmaking.? I would have to?write another book just to go over every single line of?the various movie?budgets, but let me provide a few guidelines.?
It is safe to say that, as of right now, abundant CGI and megastars are the most expensive ingredients in the movie-making cupboard.? The high-tech companies specializing in movie magic charge by the man-hour.? And it's not like the rates are outrageous (the computer nerds make similarly decent salaries everywhere), but the processes are extremely time-consuming.? So, if "the vision" calls for a team of 200 people working for 12 weeks, a moderate average of $150 per hour will set you back by nearly $14.5 million.? For a team of 1000 people, multiply that by five, and so on.
Actors?in high demand (Will Smith, Tom Cruise, Robert Downy Jr., Tom Hanks, Jude Law,?etc.)?have compensation structure that includes a?salary base plus commissions.? The latter can be defined as gross participation, backend, box office bonuses, or residuals.? If the up front salary is $15 million?but?the movie returns several?times over the?invested budget, the total take could be around $50-$70 million.??
My favorite, even though outdated,?example of the?stars' budgetary impact is?the?1992 mega hit and critics' favorite A Few Good Men.? The three top-billing?actors, Tom Cruise, Jack Nicholson, and Demi Moore (in that order) had?the respective base salaries of?$12 million,?$5 million, and $3 million.? The total of $20 million took up 50% of the $40 million budget.
The movie's director, Rob Reiner, whose?company Castle Rock Entertainment also produced the film for Columbia Pictures, took the base?salary of $4 million, plus?a share of?residuals.??Just like with the actors, this is a common structure for directors.? The bases vary, of course.? Steven Spielberg's base for directing War Horse was $20 million; Martin Scorcese's base salary for Hugo?- $10 million; Guy Ritchie's for the Sherlock Holmes?sequel - $7.5 million (25% up from what he got?for the original).?
The directors, who, like Rob Reiner, produce their movies, tend to take smaller?salaries in order to maximize their back-end returns.??It works especially well if you've got a real blockbuster on your hands. ?One of the biggest earners in Hollywood,?the incredible James Cameron (Lightstorm Entertainment is his production company), so far?personally earned?$350 million on his uber-hit creation,?Avatar. But it's all good, since the movie has collected 12 times of its original $237 million budget ($2.8 billion) in worldwide box-office sales.
Mr. Cameron is an auteur - he writes, directs, produces, and frequently edits his movies.? His $115 million?Titanic's earnings, for example,?break down?like this: $600,000?for the screenplay, $8 million for directing, the rest - production residuals.?
These numbers?reflect?the monetary treatment of creative talent in Hollywood with an uncanny precision.? Comparatively speaking, the writers don't really make that much money.? Especially the ones who write original screenplays based on?their own ideas (aka specs) as opposed to the ones who take studio assignments.? Of course, the writers who?have the?knack for?consistently delivering tent poles (i.e. movies that support studios' lavish existence) can get themselves into seven digits, but even the record-high?screenwriting?salaries do not exceed $4 million.
The rest of the filmmaking functions (supporting cast, extras, cinematographers, line producers, designers, editors, etc., etc.) are performed by skilled professionals?whose minimum wage rates are protected by their respective unions and the maximum?depends on their?track record and their individual level of demand.? If someone's rate is $200?per day and?he?manages to?contract?himself for two 10-week engagements in a course of one year, the resulting earnings?will be $20K.??You are doing better with? $800 per day rate and a higher demand.? If you become a sought after specialist with a proven delivery of high quality work,?your?compensation most likely will be switched to a flat weekly rate, or maybe even per-engagement compensation.? It is rumored that Rodrigo Prieto, the cinematographer whose?impressive portfolio includes such visual gems as 25th Hour, Brokeback Mountain, Babel and?Lust, Caution, has received $250,000 for the 10-week shooting of Argo.? Relatively speaking, this is quite impressive.? However,?he shoots on average two movies a year - you do the math.? ????????
From the executive producers' point of you,?Mr. Prieto is?a pretty fat budget line, but?the "look" he creates is a big contribution into that "Oscar buzz" they vie for.? And it's true about everything - locations, sets,?costumes, cars, stunts, quality of light, even?the food catered to the cast and crew.? You want a good soundtrack with famous, recognizable songs, then you have to pay large licensing fees to both the?owners of the music and the publishers who released the particular recording.??You want Alexandre Desplat to write the original score...? Well, that's a man in extremely high demand!??He's been?scoring on average?5-6?movies?a year for over 20 years now; 11 (!!!) last year alone.??So, his per-film prices are?definitely in seven figures.
On the other side of the spectrum are the beginners, who will and do work for free just to get their names out there.? Not just writers/directors/producers, but also?actors, composers, camera and sound specialists, editors,?techies - there are plenty of aspiring people, who are not even members of any unions yet.?
Ok, here how the movie mixology works.??An aspiring filmmaker writes, directs,?shoots, and?edits a?movie with?her school friends and family members?covering all the basic functions, including second-camera work,?light set-up, boom holding, etc.??There is a minimal cast?of non-union actors,?who?are grateful to?receive $100?per day pay.?? The?action takes place in one apartment generously provided by a friend and the shooting?is done in three days.??She?uses her own HD camera, but hires a?freelance sound engineer?with his equipment at a rate of $80 per hour.? And here you have a microbudget (a few thousand dollars) film that?can?be sent out to festivals and garner some screenings.
You can have three friends writing a screenplay, one of them directs the movie,?another one stars in?it - none of them get paid.? Practically everyone?on the production crew?is?a first-timer.??Most of?the action takes place?in one?apartment.??The $60,000 budget is primarily spent on renting equipment, light, sound, and minimal wages paid to some of the 60?members of the cast and crew.? Over 100 benefactors donate either money or services.? The result - Darren Aronofsky's cult masterpiece Pi, which goes to win nine international awards, including Sundance,?and?makes $3.2 million in the US alone.
In another recipe, based on a?dramatic play, adapted by the playwright himself (his first feature, so he is not asking too much), the filmmaking can still be fairly simple, almost as austere as the theatrical version itself: no CGI; mostly inside a studio with a few Manhattan, London, and British seaside shots; four protagonists and?only 16 extras; basic crew.? Essentially, this movie could've been made for less than $1 million.? But it's a?psychological drama and?the studio that acquired?the successful play hires a?daring director who's been?dissecting human dynamics for?40 years ?($8 million).? He, in his turn, picks the four actors that he believes at the moment (2004) to be the best match for the main characters (one of them reprises his stage performance) -?an?actress with a record-high salaries?($20 million), an A-list actor ($9.5 million), a?painfully beautiful 23-year-old actress?on her 12th movie (two of them were new Star Wars installments)?($1 million), and a?prominent British actor on his way to become a major Hollywood player (salary not reported).??These five people?pretty much make the entire?$40 million budget of Michael Nichols's Closer.
Now, mix together a hot international star?playing an iconic character for the third time?($12.8 million); a highly respected director?who won an Oscar for a movie that became an instant classic ($5 million);?a team of Hollywood writers?specializing in high-octane action blockbusters ($2 million); a cinematographer who shot, among others, every single of the Coen brothers' movies ($600 thousand); a supporting cast of 50, including a knighted actress, a Spanish superstar, and Ralph fucking Fiennes; hundreds of extras; a theme song by a pop star who broke all records with?her album sales and Grammies; a score by?a composer nominated for 10 Oscars; an Oscar-winning production designer; an Oscar nominated editor;?filming in London, Scotland, Shanghai, and Istanbul;?Smithfield Market car chase and?helicopter shots;?CGI that makes jumping out of the air into a fast-moving train look real and took 389 visual and special effects professionals to design; a stunt staff of 72 - and you got yourself an MGM tent pole with?a $200 million budget, i.e. Skyfall.?
You've got the?principle, right?? You can do it yourself - pick any movie, break it down into cost items,?and estimate the budget.? Making movies is an expensive business.?????????????
The funding for these?cinematic?cocktails?may come from various single or multiple resources: family and friends,?high personal wealth individuals with interest in arts (Michael Bloomberg, for?example, has been investing in movies for decades),?firms specializing in?film financing (such as Future Films), financial institutions, strong production companies with sufficient capital, and, of course, studios.? It's up to the producers, whether it's the beginning filmmaker himself or a?Hollywood power player, to pull together the sufficient funding to cover the movie's budget.?
Theoretically,?all projects?financed by any means other than a?big studio's funds are considered?to be "independent" movies.??Not too long ago we believed that?the?positive side of not having big bucks from the Big?Bad?Wolves?was?a filmmaker's ability to avoid the market-demand concerns.??Those were the good old days...???
Like with?any other form of arts and entertainment, there are two?distinct?types of "success"?for movies: the inexact, flawed, and unfairly subjective?artistic achievement (measured in festival wins, awards, critical praises, and cult-like fan following) and simple, solid, and undeniable commercial success (measured in?dollars and cents).? Most of the movies achieve one or another, rarely - both.
Of all branches of entertainment, the motion pictures industry scores the largest audiences.? Miranda July's Me and You and Everyone We Know, commercially speaking, is a small movie - it was made on a $2 million budget and grossed $3.9 million in the box office (it also won 17 international awards, among them four in Cannes, including the Camera d'Or).? However, this means that 300,000 people went to see the movie - 39 times more than those who bought Miranda July's collection of stories No One Belongs Here More Than You.? If a music album achieved a number like this it would be certified as a triple platinum.?
Now, think about really big hits - Harry Potter and the Deathly Hallows, part II made $169 million in its opening weekend in the US ($1.33 billion worldwide gross to date).? This means that in the first three days of its release here, over 12 million people went to see this film. ? ? ?
The theaters showing the movies pay either a bidding fixed amount or a percentage of the box office for the right to show the movie; the balance is remitted to the distribution company (the same pattern applies to DVD sales and TV rights).? The distribution company that picked up the movie for sale from a studio or a production company also takes either fixed fees (leasing model) or 10-50% of the net profit (profit-sharing model).? Whatever is left comes to the producing entities.? Hopefully this remainder covers the budget (pays back the investors) and leaves the room for the residuals. ?
Clearly, the business of making movies is a high-stake financial gamble.? The funds are invested into making a product of frequently unpredictable quality and then you wait and see what happens.? No matter how much money studios spend on the market research, no matter how?strong the producers' sixth sense is, you just never fucking know.? Who could possibly predict that a first feature written and directed by a 26-year-old Steven Soderbergh, Sex Lies and Videotape, will not only multiply its 1.2 million budget by 20 in the box office, but will make the filmmaker the youngest person in history to win Cannes top prize - Palme D'Or.
Essentially,?every single movie project is a start-up business.? I will let my readers to go on IMdB and count how many businesses the?Hollywood powerhouses, like the Weinstein brothers or Scott Rudin, originated and?brought to a full success.
???
Source: http://thefrustratedcfo.typepad.com/the-frustrated-cfo/2012/10/arts-entertainment-by-the-numbers-part-iii-movies.html
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It's almost Halloween, which means that all of your grown up friends with kids will be crowding up your Facebook News Feed with ridiculous photos of 2-year-olds dressed as the Incredible Hulk. It also means that the inner-geek in all of us come out. Yes, it's a fun holiday, and we love it because it brings out our creativity. I mean, did you not see the 
