Block­buster eco­nom­ics: big­ger budget, more sales

The Weekend Australian - Review - - Books - Drew Tur­ney

Block­busters: Hit-Mak­ing, Risk-Tak­ing and the Big Busi­ness of En­ter­tain­ment

By Anita El­berse Scribe Pub­li­ca­tions, 320pp, $32.95 IN 2013 Steven Spiel­berg and Ge­orge Lu­cas, speak­ing to stu­dents at the Univer­sity of South­ern Cal­i­for­nia, warned Hol­ly­wood was headed for an “im­plo­sion’’. If even a hand­ful of “mega-budget” block­buster movies failed, the in­dus­try par­a­digm would col­lapse. “The path­way to get into the­atres is re­ally get­ting smaller and smaller,” Lu­cas said.

US aca­demic Anita El­berse begs to dif­fer and in Block­busters she makes a strong case that, in en­ter­tain­ment at least, big­ger is bet­ter.

A pro­fes­sor at Har­vard Busi­ness School, El­berse has spent years em­bed­ded in en­ter­tain­ment, sports, pub­lish­ing and sim­i­lar in­dus­tries, talk­ing to in­sid­ers and col­lect­ing the facts and fig­ures that un­der­pin her ar­gu­ment.

She con­tends the in­creas­ingly out­ra­geous sums of money spent on to­day’s mas­sive me­dia ven­tures makes sense. Us­ing ex­am­ples such as bas­ket­baller Lebron James, en­ter­tainer Lady Gaga and The Dark Knight film tril­ogy, she de­con­structs the eco­nom­ics of ‘‘block­buster strat­egy’’. Her con­clu­sion: make as big a splash as pos­si­ble.

Block­busters opens in the late 1990s and looks at the dif­fer­ent strate­gies pur­sued by two me­dia ex­ec­u­tives, Jeff Zucker of NBC TV, the top-rat­ing US free-to-air-net­work and Alan Horn of Warner Bros. While Zucker went small, sav­ing money and hop­ing that qual­ity pro­gram­ming would shine through, Horn gam­bled on ex­pen­sive mar­quee names and highly vis­i­ble pre-known brands. A dozen years later, Warner Bros was at the top of the Hol­ly­wood tree, thanks to films fran­chises such as The Dark Knight, Harry Pot­ter and The Hang­over, while NBC’s rat­ings had tanked.

It’s the first piece of ac­cepted wis­dom El­berse con­tests. You of­ten hear Hol­ly­wood people com­plain about ris­ing costs and the need to avoid risk, but each year the stu­dio bosses seem to spend hun­dreds of mil­lions of dol­lars on big movies. What no­body seems to ad­mit out loud is that, quite sim­ply, spend­ing more money works. “Block­busters will be­come more — not less — rel­e­vant to pop­u­lar cul­ture,’’ El­berse writes, “and block­buster strate­gies will thrive.’’

She goes on to ex­plain why the big­ger-is­bet­ter strat­egy en­dures, dis­cussing ba­sics such as how to launch a block­buster, the mer­its of us­ing big name stars in movies — and prod­uct en­dorse­ments — and the ben­e­fits and chal­lenges of tech­no­log­i­cal change in me­dia.

This is a timely sub­ject, not just be­cause en­ter­tain­ment prop­er­ties are grow­ing larger, but be­cause the me­dia land­scape is mor­ph­ing. While many have de­clared the end of big me­dia be­cause of di­rect-to-con­sumer mod­els and the new chan­nels that can mar­ket them, Al­berse’s find­ings sug­gest an al­ter­na­tive out­come.

As she points out, there have cer­tainly been YouTube and Twit­ter stars, but the play­ing field is still far from level. Driven by ex­pe­ri­enced prac­ti­tion­ers and es­tab­lished sup­ply chains, the me­dia in­dus­try of­fers a prod­uct ‘‘pipe­line’’ the likes of which artists (or in­ven­tors, en­gi­neers or sports­peo­ple) strug­gling on their own sim­ply can’t wield, no mat­ter how many Twit­ter fol­low­ers they have.

Though not quite as sim­ple, the take­away from this book might be that you have to spend money to make money. With Horn’s strat­egy still in place at Warner Bros as re­cently as 2010, “al­though the top three big­gest bets only ac­counted for a third of the to­tal pro­duc­tion budget, they were re­spon­si­ble for ... 50 per cent of the world­wide box-of­fice rev­enues gen­er­ated that year’’.

In­deed, 70 per cent of the stu­dio’s prof­its came from its four most ex­pen­sive movies: Harry Pot­ter and the Deathly Hal­lows: Part 1 (budget $250 mil­lion), In­cep­tion ($ 175m), Clash of the Ti­tans ($125m) and Sex and the City ($100m). In con­trast, its four least ex­pen­sive movies con­trib­uted “next to noth­ing’’.

Al­berse ex­plores a fas­ci­nat­ing world where busi­ness is de­cou­pled from the artis­tic per­for­mance or prod­uct achieve­ment. Af­ter the huge sums of money Span­ish foot­ball club Real Madrid paid for star play­ers such as David Beck­ham, it didn’t win many more tro­phies than it ever had, but it en­joyed un­heard-of rev­enue growth thanks to prod­uct en­dorse­ments and mer­chan­dise sales.

The block­buster strat­egy it­self has also evolved. You may have read sto­ries about how A-list salaries grew to ridicu­lous pro­por­tions in the late 1990s, but just be­cause Hol­ly­wood’s fallen out of love with movie stars doesn’t mean it’s not still bet­ting big. Hun­dreds of mil­lions were spent on Harry Pot­ter and Spi­der­Man movies be­cause the brand is the star. The sell­ing point, not the strat­egy, has changed.

Those ex­pect­ing the piz­zazz the ti­tle prom­ises may be dis­ap­pointed. Block­busters is a busi­ness book (with bar graphs to prove it) and El­berse is an aca­demic, not a poet. And if you love film, sport or lit­er­a­ture but think big busi­ness is suck­ing the cre­ative lifeblood out of them, her con­clu­sions may de­press you.

It comes down to a para­dox: the spec­tre of ex­pen­sive fail­ure is coun­tered by spend­ing more. As El­berse writes, “con­tent pro­duc­ers can’t af­ford to walk away from big bets ... (they) re­act to this new re­al­ity by doubling down on block­buster in­vest­ments and fo­cus­ing even less on smaller bets’’.

Drew Tur­ney is a free­lance writer.

April 5-6, 2014

Daniel Rad­cliffe as Harry Pot­ter in the block­buster movie of one of the books

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