The Grand Experiment: Quality vs. Opening Weekend

Studios, and especially young studio executives, don't realize this, but they actually don't care about the quality of the films they make.

This is not to say that each individual involved in a production isn't doing the best job possible. They are. You don't rise to the top of a business as competitive as the film industry without skills. No one at a studio would say, "we don't care if the movie's any good or not, we just want a big opening weekend," but they will say, "we want a big opening weekend."

After the opening weekend, there are a handful of people in the business who will pay attention to drop off. That is, the difference between the first weekend and those that follow. Funny thing is, they call it a "drop off." They expect the second weekend to be lower than the first. Young executives will say, "but it always is."

No, it's not.

Step over here into indie film world for a second. Let's look at two movies that came out about the same time. One a tent pole, and the other an indie film.

This is the weekly box office chart for 2001's movie PEARL HARBOR, as reported on IMDBpro. That's a classic drop off.

This is the same chart for 2002's MY BIG FAT GREEK WEDDING. Sixteen weeks into its run, it was making more money than when it opened. This is a classic build.

What does all of this have to do with the quality of the movies? Everything.

On opening weekend no one knows if the film is any good or not. It's marketing's job to convince people to get off their butts and into the theatre. We should all tip our hats to those people, they do a great job. The quality of the film is not responsible for a successful opening weekend, since no one knows if the movie is any good or not. All the general audience knows is what they get from trailers, and possibly a few advanced quotes that the marketing executives have wined & dined from critics.

Young studio executives will tell you that word-of-mouth is the most important form of advertising, and in the same breath use the term "drop off." They will say that a small drop off is due to good word of mouth.

No. Good word of mouth would create a build, like GREEK WEDDING.

The business's obsession with big opening weekends, and the belief that drop-offs are normal, has become like the housing bubble was before the recession. "Housing prices only go up." Really? How's that working for you?

"Movies always drop off in the second weekend." It ain't necessarily so.

Indie films have no big marketing machine behind them. They don't have the clout to get advanced quotes. The only thing they have to rely on to pull in an audience is the quality of the movie. "My best friend said this movie is great! You have to go." The indie filmmaker is under much greater pressure to tell a good story well, where the studio filmmaker is under pressure to sell a story well – if it's a good story, that just happens to make it easier and more fun.

Think about this experiment. What if I were to pitch a movie to studios using nothing but stars who were attached. "Bruce Willis is on board as the hard ball detective, with Julia Roberts as the femme fatale, and the kids from Twilight are the white-collar gangsters, and it's nothing but action, romance and more action." If I actually had those stars attached, the project would get funded, right?

But... this experimental movie is nothing but trailer beats. "One man, stands between her and happiness..." No actual plot. No story. Just a collection of ads for a movie that never gets made. Except, we make the movie and marketing sells it. Pretty soon you're watching a preview of Willis saying cool, tough things to Roberts, who is looking smoking hot and sexy surrounded by the Twilight kids. "That looks good," you tell your date, and plan to come see it.

Think the drop off for that would be any worse than Pearl Harbor?

Let's Talk Business, Indie Film Business, Part Two

Like so many indie filmmakers, a few years ago, I sat down to write a business proposal for a movie I wanted to get financed. Like so many filmmakers, I knew nothing about writing a business proposal, so I got all the books, read all the blogs, and taught myself.

One of the first things I learned, which will come as no surprise, is the practice of presenting comps – short for complimentary films. These are movies like the one you want to make that are already on the market. You use their performance as an example of what your film might do. Typically, a business proposal would have three comps: a highly profitable, a mid-level, and a not-so-successful.

Really? Just three?

Most of the research I'd done on the subject talked of the difficulty of finding financial information on movies. That makes sense, IMDB Pro was new, so it probably wasn't around when these books were written.

So I decided to bring the digital revolution to the business plan. First, I e-mailed IMDB Pro to find out where they got their numbers. They said they are a compilation of information provided by the production companies and the trade magazine reports. Fair enough. The textbooks all said contact the production companies to get what information they are willing to share, and then dig into the trades. For $13 a month, IMDB did the work for me.

So, I did a search for all films with budgets between one and ten million dollars released between 1999 and 2006. [NOTE: I attempted to update these numbers for 2010, but IMDB is revamping their Home Video/DVD numbers, so they are no longer available. Given the change in distribution and viewing habits, that data is vital, so my old numbers have to do for now].

Many of these lower budget movies show no income whatsoever. These films either have no distribution – which is important, more on that later, or were direct-to-video which make for difficult calculations. I removed titles with no income data.

So, my statistical set becomes all movies with budgets between $1-10 million, that have reported theatrical income.

Instead of three comp titles to work with, I now had 260. I loaded all of them into Excel and got to work.

On the income side, we have two fields: Box Office and Home Video. Box Office was required for this exercise, Home Video was not. In many cases there was no HV income reported on titles that we all know are available, like: But I'm a Cheerleader, Jesus' Son, etc. Fifty-five titles in all had no Home Video reported, so that skews my income numbers in a conservative fashion.

Box Office is only domestic, so again my numbers are extremely conservative as foreign box office creeps up to equal domestic. I have no TV numbers, domestic or international - so, again, my income numbers are well below what might be expected.

In other words, the final report will be worse than real life. That's a good thing as far as investors are concerned.

Expenses include:
Budget
Distributor Fees = 50% Box Office
Prints & Ads = 3K plus 33% of box office (more on that calculation below)
Home Video costs = 40% of Home Video
Guild Obligations = 12% of Home Video.

For studio films the calculation for Prints & Ads can be as much as three times the budget. This is another reason tent pole movies have such a slim profit margin, if any, in the theatres. My calculation is based on a rolling open. Smaller distributors may only have a handful of prints to send to theatres, so they will open in select cities to get reviews for the DVD. The movie will stay in theatres as long as it makes money, but there isn't a huge advertising budget. To open a movie in New York, theatres require proof of $100,000 in advertising. My calculation figures on a three city open at $100,000 each, plus one third of the box office which might be churned into more prints and ads. It's not a perfect calculation, but it's more accurate than the studio model, and errs on the conservative side.

Given all of these calculations, what did I conclude?

116 movies showed a profit. That's 45%. Of those, the average return was 80%.

So if you give a filmmaker a million dollars to make a movie, you have basically a 50-50 shot at a profit. If you do make a profit, chances are, you'll walk away with 1.8 million off of your million dollar investment – and that's before international box office, international home video, pay TV, free TV, International Pay TV, International Free TV, and now, Video On Demand.

Of course, it's still a high risk investment. Remember those movies that showed no income. But as the high risk world goes, I'd say the film industry, if done smartly, is safer than most people think.

Let's Talk Business, Indie Film Business, Part One

During one of the panels at this year's Dances With Films festival, our guests pointed out that the most recent WGA strike ended with a horrible deal for top-tier writers. I asked if these people were seeing any participations (a.k.a. "backend") money. I got the reaction I expected from people used to working with studio films, laughter.

One of my many day jobs in the studio system was working in the Participations Department for both Universal and Warner Bros. I recall one of the senior analysts talking about the reports she slaved away on day-in and day-out. "I don't know why we bother. They never pay."

We were talking about tent pole films, so I asked, "What about the low-budget ones?"

"Oh, yeah, they pay."

Why would a smaller film that fewer people have heard of pay out more money than the household name, summer blockbuster? Lots of reasons.

The easiest to wrap your head around this is that they cost less to make. The film industry is a funny business. The price of the product is in no way related to the cost for the consumer. It costs you the same amount of money to see Harry Potter as is does The Hang Over. Participants – people who participate in the sharing of the profit of a film – don't see any money until there is a profit.

The more difficult reasons smaller movies pay out before larger ones has to do with the fact that the above sentence isn't entirely true.

Some participants – usually big stars – can negotiate a deal where they are paid based on gross income, not net. So their money is deducted from the pool before the other participants get to share. This makes the math really difficult.

Add to this, the initial investors are also participants. Different from the writer, director, hired producers, talent, etc. who are paid a salary to make the movie, the investors are the ones who paid these people. They must get that money, and the rest of the cost of production, back first, with interest, since they've taken the biggest financial risk. As an indie filmmaker, you want these people make money because you've probably got another project you'd like them to invest in.

All of this who-gets-paid-back-when stuff is called "the waterfall." Ideally, the people who took the most risks are at the top of the waterfall taking their fair share first. The people at the bottom may never see a drop. They are the ones you usually hear complaining about there not being backend money in the movie business.

But keep this in mind. The people at the bottom of the waterfall have already been paid. Sometimes they've made six or seven figures before there was any water in the stream. The people who paid them are at the top hoping against hope that there will be enough water to refill their reservoirs.

I've seen so many speakers at seminars wearing designer clothes, expensive jewelry, and driving fancy cars complaining that they never see any money from their movies. It's made me conclude that there are two types of people making this claim: those that have already been paid, and those that are making so much money that they don't want anyone else to know about it.

I also mentioned at the seminar that close to 50% of low-budget films turn a profit. In part two of this segment, I'll show you how I got to that number.

Until then, thanks for reading.

The Journey of a Thousand Filmmakers

For those who couldn't make the festival, or who didn't get around to reading this year's awesome program, here's a re-print of my article.

Enjoy.

Ever since Sex, Lies and Videotape, scored a big distribution deal at Robert Redford's little pet project in Park City in 1989, the term "Industry," when related to film festivals, has come to mean one thing – distribution. Yes, there is currently an argument that distributors aren't as important as they used to be, given online video on demand, etc. etc., blah, blah, blah.

I would never make that argument. One need only see the thousands of unfiltered submissions to Dances With Films to know that gatekeepers play a vital role in the arts. You as the audience do not want to be exposed to the dirt from which the gems are uncovered, believe me!

But something is lost when "The Industry" only includes distributors. At Dances With Films we know that not every movie screened here is ready for a wide, commercial distribution, but there is something about each movie – be it the direction, the cast, the photography, the script, the production value, something about each of these films that stands out above the rest.

When you watch Less and you realize that actors Zak Barnett and Rebecca Noon have you believing in an impossible love, and that Gabriel Diamond's words are pitch-perfect, then you'll know what I'm talking about. When you discover Jeff Gill, Adam Soule and actor-techie Gary Henoch in The Aristocrat – which also as fantastic dialogue – then you'll feel pride in the discovery you made.

When you see Charlie Anderson's photography in Close-Up you'll want to hire him for your next film. When you see the kids Caitlin Kinnunen and Joseph Montes in Sweet Little Lies, you won't be able to stop grinning. Evald Johnson's agile comedy in Stan will have you pulling for the everyman.

The cast and script of The Corridor. The comedy of Hopelessly in June. The smokin' hot intellectual erotica of Mortem, along with the talent of their cast. The "OMG, I just saw what kids'll be into in the next two years" feeling of Night of the Alien.

Rachel Boston.

Zack Parker's twists and turns in Scalene. Jamie Greenberg's mastery of comedy in Stags. The warmth of Love's Kitchen. The camp of Millennium Bug.

And that's just SOME of the features. Never mind the heart wrenching importance of docs like Certain Proof, or the cavalcade of talent in the shorts programs. I could go on and on.

For those of us in this business, the point is not so much to hit it big with one movie, but to keep working. In order for that to happen, casting directors, development executives, below-the-line agents, production houses, production executives, and yes, distributors of narratives and documentaries need to see our work. A discovery festival like DWF is a great place for that to happen. So, let's get away from this idea that The Industry means distributors alone. Let's remember; success can be a Director of Photography getting a job that pays, or a writer being hired to punch up some dialogue, or an actor that gets a more visible role.

Giant steps are great, but they come once a decade or so. If we take human-sized steps, we can cover that ground just as fast.

Post Production Stress Syndrome

When I got PPSS I thought I was the only one, but in talking with other filmmakers I've learned two things: First, it's common, and second, everyone thinks they are the only one.

A couple of days after we wrapped Jacks Or Better, I had to fly back east for a family matter. The shoot had gone great, thanks mostly to a well-rehearsed, disciplined cast and top notch department heads. Like many uber-indie productions, I, as writer/director, was the most inexperienced person on the set. My background was theatre, so I made sure the actors were honest moment-to-moment and kept my mouth shut about the film side except to constantly say, "I'm so glad Dave [my Director of Photography] and I are making the same movie."

So for the 12 days of shooting, I was calm.

A day after we wrapped I woke up in North Carolina in a panic. "What are we shooting?"

"I don't have a crew."

"I don't have any equipment."

"What scenes do I have to get in North Carolina?"

This went on for nearly a minute. Anyone who has experienced the "where am I and what am I doing here?" wake up moment knows that a minute is a long, long time. And it wasn't just once. The first night I woke up a couple of times like that. Over the next few days, panic became my morning routine.

Eventually, it passed of course, and I had seen enough TV psychiatrists to know what delayed stress was, so no harm done.

Flash forward a few years later and I'm acting in a student film. The director was a sweetheart, and cool as I remember myself being, though she faced insane challenges. Over the few days of the shoot, the weather had to be perfect, the actors were on horseback, and there was a period gun duel that had crazy-difficult coverage issues. She handled every bit of it without a problem and the days past without any major issues.

This sounded familiar to me, so I told her, "Don't be surprised if you have Post Production Stress Syndrome."

She laughed and said that wasn't like her. I told her my story, which she appreciated but didn't think it was a cause of concern.

A couple of days after we wrapped I got a call from her. Sure enough, she'd been waking up in a panic, freaking out, not knowing what was happening. She thanked me for the heads up and I thanked her for verifying that I wasn't the only one to go through this.

At the closing night party for this year's festival, I asked one of the 2-Step filmmakers – who was directing for the first time – if she had post production stress. She said yes and we shared stories.

So I'm not the only one. If you've had this, you're not either. If you're about to shoot, don't worry if you're calmer than you think you should be – your nerves will catch up to you and kick your ass as soon as they know you can handle it.

Thanks for reading.

And the winner is...

As you might recall, this year's 2-Minute 2-Step featured a new twist – Adobe Premiere Pro CS 5.5 editing software instead of the default Final Cut we'd been using for the past four years.

I say "default" because when talking about editing in the independent film world people practically assume you'll be on Final Cut. That's the system everyone knows. They've cornered the market, right? They certainly act like they have, as they pretty much ignore you once you've bought their hardware.

Since year one of the 2-step, I've been saying that Final Cut is vulnerable to a takedown by a company that evolves the software, provides cross-platform capability, and understands the needs of production. Has Adobe done that?

Judging from the spontaneous cheers that broke out when I mentioned their name at the closing night party, I'd say yes.

From Left to Right: 2-Step Winners Jon Hill, Tommy Smeltzer; DWF's Robert Mellette; from Adobe, Michael Kanfer; from Canon, Tim Smith

During the 2-step, we had a couple of Final Cut editors hit the ground running on Premiere Pro and finish our high-pressure competition without a hitch. Not only does Premiere Pro provide options for Final Cut users to automatically set the keyboard to FC standards, but their best technicians were sitting in the chair next to the editor answering every question. Not that there were many, but try getting that kind of support from Apple. You won't. I know, because we tried for four years.

And I haven't even talked about native editing of Canon 5D files, aka, no conversion time. Cards were flying out of the camera, over to the editors, and back to the set before the crew finished the new set-up. In most cases, editors were twiddling their thumbs waiting on new footage. Compare that to last year when we had to wait, and wait, and wait for the time-and-a-half conversion of the 5D footage. As I told the audiences when introducing the 2-steps, I got a lot more sleep because of Adobe.

Thanks, guys.

On another topic. We had some films, including the 2-steps, screen off of Blue Ray DVDs, even though we strongly, to the point of pretty much require, films to screen from HD-Cam tape. Why? Because Blue Ray is still a DVD, and homemade/semipro made DVD's fail at an extraordinarily high rate. For the purposes of a live audience screening, they are pretty much one-and-done, and even then run a high risk of failure, as one film experienced.

I know a lot of smaller festivals around the country only screen off DVD or Blue Ray, so as a word of warning, I suggest only do this as a last resort, definitely have a back-up in the booth, and make sure it is a brand new disc.

That's it for now. This year's festival was logistically the biggest we've ever had, so thanks so much to everyone for your patience and understanding. I hope it was as fun and informative for you as it was for us.

If you weren't in this year's fest, but are thinking about making a film, I hope you will read through past posts on this blog. They are written with you in mind. Please share them with your friends before you make your movie – so I won't have to see the same kind of mistakes over and over next year.

Posts here will slow down during the off-season, but keep checking in as you never know.

Thanks for reading.

Breaking News

Cinematographer extraordinare, Russell Carpenter, (Titantic, True Lies, and more) will be dropping by the filmmaker's lounge at 4:30 for a chat with this year's DWF class. Our little lounge is becoming the place to be in LA. Like, kewl, ya kno?

I just came from the screening of one of the best little movies you'll ever want to see called, modestly, Less. Casting directors, filmmakers, and anyone who want's to follow talented actors take note of this cast. There's so much honesty on that screen that it makes you forget you're in a movie theatre - especially if you got rained on while waiting in line.

I was reminded by this film about the difference between trendy and quality.

The trendy people in Los Angeles cling to the stereotype of what they think this town is supposed to be. Oddly, they are usually the ones who haven't been here very long or are just visiting. Sure, they may be the beautiful people, but are they the attractive ones? If they stood next to a full length mirror - as they often do - could you tell the difference between the reflection and the real person?

This is not to say that people chasing the lastest and greatest aren't good people, or even quality people - but they are so busy chasing the spotlight that they can't see the lives they are running away from in order to get there.

The quality artists careless about the light shining on them, and more about it shining from them. During this festival it gives us all great joy to give these people their time in the light. To thank them for guidance their work has given us all.