Studio Math 101: $40 million is new budget ceiling for Hollywood dramas

Much has been written in recent weeks about the success of "The Social Network" and "The Town," not to mention the not-so-impressive launch of Disney's "Secretariat." But the three movies also have in common something beyond the fact that they are dramas driven by strong story lines, not by A-list actors. They are examples of the new Hollywood Economics: If you want to make a drama, whether it's a biopic or a crime thriller, your budget ceiling, with rare exception, is going to be $40 million.

Having seen too many star-studded dramas, all hoping for Oscar glory, take a dive at the box office in recent years (think: "Australia" or "Changeling"), the Big Six studios have been brutally cutting back on budgetary excess. They're saving some on talent, some on   shooting days, some on tax rebates. As one studio chief told me the other day: "All those movies you're talking about were made for far less than they would've been just two years ago. Almost by definition, dramas are aimed at older audiences, and you just can't count on getting enough of that audience to come see the film. So you have to make it for the right price."

The contrasts are striking. "The Social Network" cost $40 million, roughly $30 million less than what it cost David Fincher to make his serial killer drama "Zodiac" just three years ago. "Secretariat" cost $35 million while "Seabiscuit," a similar horse racing drama made in 2003, cost roughly $85 million. "The Town," which was directed by Ben Affleck, cost $37 million, roughly half of what it cost to make a similar crime drama such as "Man on Fire" back in 2004.

The Coen brothers' upcoming "True Grit" also adheres to this formula, with its budget coming in right around the $40 million mark. One of the few dramas to balloon out of this budget range was "Wall Street: Money Never Sleeps," which, according to various budget estimates, ended up in the $60- to $70-million range, giving that film a far steeper climb to profitable territory.

To hear studio bosses tell it, the problem only begins with the fact that dramas are such a hard sell at the multiplexes. The real driving force behind this budget deflation is the DVD slump, which has taken an especially big bite out of adult-oriented dramas. "Instead of buying these movies on DVD, older moviegoers are renting them now from Netflix," says one veteran studio executive. "People have decided they don't need to watch these movies multiple times, so they'll still buy an animated film for their kid, but they won't neccessarily buy a drama for themselves."

Still, the good news outweighs the bad. The studios, having seen films such as "The Town" and "Social Network" hit paydirt, are more eager than ever to make them, since they not only give the studio the kind of movie that could play in the Oscar game but help build relationships with gifted filmmakers who might lend their talents to even more commercial studio properties. Fincher, for example, after having a fruitful collaboration with Sony and Scott Rudin on "Social Network," is already back at work at the studio, starting to film "The Girl With the Dragon Tattoo." And after the success of "The Town," Warners' Jeff Robinov has made no secret of his desire to keep Affleck in the fold, having offered him several top studio projects to direct.

Hollywood money may not be flowing as freely as it once did, but the filmmakers who deliver the goods for the right price will never go hungry. There's a reason why the Coen brothers, for example, have been able to make a movie nearly every year for the past decade -- they keep budgets low and quality high, which is the kind of formula that always keeps you in demand.

Photo: David Fincher on the set of "The Social Network." Credit: Merrick Morton /Columbia TriStar Pictures

Comments

[Jack Binder]

Excellent article on the state of film budgets today and the economic frugality developing in the industry! Indie filmmakers have known this all along and it's good to see this trend toward financial sensibility. Filmbudget.com has been creating custom film budgets and schedules with highest production value for the lowest cost since 1997 and producing studio and indie films since 1986. www.filmbudget.com

[Mike]

Hopefully Hollywood will stop green-lighting all the crappy 80's reboots.

What Hollywood needs to realize that the reason some of those shows/movies did so well in the 80's was that...wait for it...they were original ideas.

Moviegoers are becoming more sophisticated and want to see more original ideas. Inception was the best recent example. It had a great, original story along with superb acting. Most people walked out after the movie and NEEDED to talk to someone about the movie. Those are the types of films we, the movie going public, will want to spend $10 to see: movies that advocate thought.

[Leonard Braddock]

The core shooting costs have remained pretty consistent. The decreases are mainly due to 2 things: lower above-the-line salaries and increased incentives competition. It makes a big difference to the bottom line when the lead castmember is paid $4mil instead of $15mil. And incentive rebates from 20% up to 42% all over the world are now pretty standard for most films (even for several shot in California).

[michael g]

Finally, some particle of sanity at the major studios! Now, if we can only get them to stop making super hero movies, turning crappy graphic novels into films, dumb remakes of t.v. shows and filthy teen comedies... Only then will Hollywood attract older paying adults. So many people that I know - college educated, income earning adults - just quit going to the movies years ago because the quality of the films has sunk so incredibly low. I've heard this over and over again. But, the "geniuses" at the studios just don't bother to listen. And this is truly tragic....

[fibber mcgee]

I don't suppose those munchkins in the ivory towers in Hollyweird are eve going to realize that most of what they spew out is K-R-A-P-O-L-A and only the demented and confused would pay to buy a DVD of any of them. They make a product and ship it out of town in cans, like sauerkraut juice. Kraut juice goes down better than most of their offerings, though.

[Tom Weber]

El Mariachi cost $7,000 to make; Paranormal Activities cost $15,000. Small-scale independent filmmakers turn out high-quality films by the dozen for what Hollywood spends on craft service. European filmmakers make great movies on small budgets, then watch as Hollywood remakes them into bad movies, generally spending tens of millions in the process.

Slowly, a new film industry is being born, with digital technology and social networking making it possible for filmmakers to reach audiences, and make a living, without relying on the monopolistic practices and antiquated distribution system of the traditional movie studios. Indie distribution gurus like Peter Broderick, Jon Reiss, Scott Kirsner and Ted Hope are showing the way to a new model of movie-making.

Look what's happened in the music business. Retail chains are a thing of the past, music sales are at their lowest point in 30 years, bands and artists are connecting with audiences outside the corporate world of the once-major labels. The same thing is happening with movies, and for my money, it can't happen fast enough.

[Angelo Bell]

The "Big Picture" thinking here is Hollywood's acceptance that lower budgeted films can be successful. I suspect that the $40 million ceiling for dramas reflects an overall understanding that there is a a place at the "financially profitable" table for genre films with lower budgets. Independent filmmakers have been doing more with less for a long time, now Hollywood understands that the indie philosophy can be profitable AND marketable.