“The Big Picture: The Fight For the Future of Movies” — Book Analysis

“The Big Picture: The Fight For the Future of Movies” — Book Analysis


The Big Picture: The Fight For the Future of Movies, by Wall Street Journal entertainment reporter Ben Fritz, is an breezy, scattershot, and sometimes enlightening portrayal of the movie business in the twenty-first century that focuses relentlessly — obsessively — on one central thesis: the so-called golden age of television, coupled with the increasing importance of the international box office, has made it impractical, if not impossible, for Hollywood studios to a eke out consistent profits producing mid-budget (i.e., $30–60 million) films for adults. This shift in the marketplace has served to make Disney the worldwide entertainment powerhouse, and has left less-franchise-driven studios like Sony Pictures (and its embattled former chieftain, Amy Pascal) wondering what the hell happened to the Hollywood they once knew.

The problem, asserts Fritz, is that adult dramas — even ones starring big stars, penned by award-winning screenwriters, and directed by acclaimed auteurs — are “execution dependent,” meaning that their success or failure depends on the competence of the talented people behind and in front of the camera. Even Tom Brady doesn’t win the Super Bowl every time…

However, Disney appears to have developed a new way of doing business that, near miraculously, allows for consistently huge profits. This new Disney/Marvel/Lucasfilm model banks on the following values: 1) make fewer films per year; 2) only make films that cost over $100 million; 3) only make “franchise films” based on already popular intellectual property.

Of these three variables, it’s the second — only make films that cost more than $100 million — that feels most paradoxical to me. After all, although the budget of films are widely reported in the industry press, the average movie-going teenager doesn’t really know or care how much a given blockbuster cost to produce. Moreover, anyone who’s seen the shoddy CGI in a rushed-to-theaters Marvel release knows that much of these films’ budgets goes to pumping the product out quickly — it isn’t necessarily reflected up on screen. So why is spending a lot on franchise films so important?

Well, with the global film production industry growing each year (China produced 797 feature films in 2017), Hollywood finds it easiest to sell abroad those types of films that foreign studios can’t produce themselves: big budget spectacles. These days, a “big budget spectacle” can mean one of two things: an expensive technological marvel like Avatar, or the newest entry in a so-called “cinematic universe”.

The Cinematic Universe Monopoly

Here is the key: it takes an unimaginable about of planning and manpower for, say, Marvel Studios to release three big-budget effects-laden interconnected superhero films each year. For now, foreign film industries simply don’t have the money, experience, or logistical wherewithal to produce these kind of films on such a protracted schedule. Thus, expensive “cinematic universe” films are a product only the American film industry can reliably produce; Hollywood holds a de facto monopoly over these kind of movies. And so Hollywood can still sell these unique films to foreign audiences.

This is my main takeaway from Fritz’s book: until the day foreign film industries are capable of producing franchise spectacles for themselves, it only makes sense for American studios to lean heavily on these types of films.

Some Interesting Tidbits From The Book

  • In the mid-2010s, Sony Pictures chief Amy Pascal was paying her assistant more than $250,000 per year — this, while her studio’s profits plummeted. Dude must have made a really good latte.
  • In the early 2010s, Sony Pictures CEO Michael Lynton’s wife noticed their daughter using a new app called “Snapchat,” so Lynton invited Snapchat CEO Evan Spiegel to drop by his house for a casual chat. Within an hour, Lynton agreed to make a personal investment in Snapchat. That investment is now worth over $500 million. The rich get richer…
  • Amy Pascal, portrayed in the book as one of the last remaining “old school” studio heads — the type who love to get their hands dirty developing new projects and nurturing rising talent — would obsess over prestige pictures like the Aaron Sorkin penned Steve Jobs, even while knowing such pictures had little chance of reaping substantial profits. Meanwhile, according to Fritz, Pascal neglected Sony franchises, such as Spider-Man, that held the potential to earn Disney-sized profits. This tendency, asserts Fritz, eventually led to Pascal’s downfall.
  • As franchises have taken over the film industry, the power of movie stars has fallen dramatically. In the 2000s, big stars like Will Smith and Tom Hanks would routinely be paid $20 million for a role, against gross points. Nowadays, writes Fritz, star salaries have fallen to $15 million, $10 million, even $5 million — and essentially no one is getting gross points.
  • The book has a great rundown of the fascinating loan that allowed a nascent Marvel Studies (pre-Disney takeover) to launch its film production unit. The deal looked like this:

Marvel secured a $525 million loan Merrill Lynch. Marvel could use the cash to make any movie it chose over the course of seven years, provided such films (i) each cost less than $165 million, and (ii) were rated PG-13. The cash would cover the cost of the film productions (including increased staffing costs for parent company Marvel) and Marvel would also take a 5% “producing fee” off-the-top of each film’s revenue.

Incredibly, Merrill Lynch’s dealmakers were apparently unaware of the industry standard “home video” rate for profit participations (generally, those holding points in a film only collect their contingent compensation from 20% of home video profits, with the studio keeping the other 80%), and thus never requested such a provision in the loan agreement. (Personally, I believe the “home video” rate for profit participations is and always has been bullshit. Nevertheless, Merrill obviously should have realized they were giving away non-standard terms in their loan).

By the numbers, Merrill’s loan would allow Marvel Studios to produce at least four films before the well ran dry. If all the films bombed and Marvel was unable to pay back the loan, Merrill’s only recourse would be to take the rights to produce films starring ten Marvel characters listed in the deal. But Marvel would retain the comic rights, toy rights, etc. for these characters. From Marvel’s point-of-view, the “collateral” they were offering Merrill was nearly worthless: after all, if Marvel produced four films starring four Marvel characters and all bombed, the movie rights for the six remaining Marvel characters would pretty much be worth zilch.

Paramount then agreed to distribute the Marvel films in exchange for 10% of the revenue.

Bottom line: Marvel pretty much orchestrated a “no-risk” deal to launch their film production studio. Incredible.


Here’s a final lesson from Fritz’s book: as “cinematic universes” continue to dominate the multiplex, and as “television” (e.g., cable, premium cable, and subscription streaming) overtakes the film industry in terms of profit and cultural cachet, movies are bound to shift to a production model more akin to television. And that portends big changes in terms of power dynamics.

Directors and big stars have long held the power in the movie business. In television, on the other hand, writer-producers have always ruled the roost — with directors and even most stars serving as interchangeable cogs in the producers’ grand creative visions. Now, this “television framework” has taken hold in one big Hollywood studio. At Marvel, the I.P. is the star (the comic book characters; the universe; etc.); the movie directors, and even the actors (hello, Terrance Howard), are completely expendable. We should expect the power of film directors and stars to further diminish as the lines separating movies, steaming and television blur and eventually fade away.

Joe Peicott is an entertainment lawyer in Los Angeles.