We thought it would be interesting to conclude our Film Industry Implosion series on LIH, with George Clooney ‘s recent statement about the difficulties of getting Oscar winning films like Argo made today. Clooney stated the reason is due to studios being pressured by hedge fund investors like Daniel Loeb to only make tent-poles films in-order to manipulate the market for their own interest. He went as far as to call him a carpetbagger. In this article we will discuss how tent-pole movies became the preferred choice for movie studios and investors and what does this say about our cultural future?
As tent-poles continue to crash and burn at the box office, one could assume maybe Steven Spielberg and George Lucas might know what they were talking about regarding this film industry implosion thingy? What are tent-poles exactly? In short, tent-poles are films that rely on formulaic plots and visuals to attract a wide mainstream audience, which can be a big payout for investors in a short period of time. From an article called Investing in The Big Screen Can be A Profitable Story by Shelly Kay Schwartz she interviewed Andrew Rudd who developed a software program to help private equity investors select what films to invest in, according to Schwartz,
“Because independents so often fail, he says, he focuses exclusively on those produced by the major Hollywood studios.
His analysis includes such factors as genre, the caliber of the director, budget, whether the lead actor is a male or female, and the type of contract actors are granted—factors that influence a film’s profitability. (Big name actors help draw an audience, but they also might demand that they get paid first out of the box office receipts, which limits the ROI opportunity for investors.)[1]”
Based on this formulaic analysis no wonder films from Hollywood often feel like assembly line crap geared to take your money without any emotional or social conscience or consequences, very much like carpetbaggers. Is it possible to have cookie cutter movies be satisfying during economically harsh times when people use them to grow culturally and socially? Tent poles are very expensive and moviegoers are paying higher ticket prices for these big budget extravaganzas. Is this practical? Are film studios aware there is a recession going on and people might need to be empowered? During the 1930’s depression era films were affordable, entertained as well as comforted audiences and Hollywood saw huge profits because of it. It would seem tent-poles would be few and films like Argo and Lincoln would be the majority? Perhaps, Hal Vogel who teaches “media investing and economics” at Columbia University makes a valid point he states,
“You should never invest in just one film, but rather a portfolio of films,” says Vogel, who is set to release the 8th edition of his Entertainment Industry Economics textbook this fall. “Odds are that you’re going to fail on some of them.”
Also, there is something to be said in staying emotionally connected to your audience. Take for example Denzel Washington, who hasn’t done any superhero films, franchises or sequels. That means his films are totally driven by his fanbase according to an article Why Denzel Washington Is Hollywood’s Most Bankable Star it states,
“No, he hasn’t headlined giant blockbusters like Tom Cruise or Robert Downey Jr., and his biggest career weekend opening remains 2007’s American Gangster, with $43 million. But he’s managed a peerless consistency: Fourteen of his last 15 movies have opened wide to more than $20 million, stretching well over a decade. That includes dramas (Flight, Remember the Titans), crime tales (American Gangster), action flicks (Déjà vu, Man on Fire), and a Spike Lee joint (Inside Man, which at $28.9 million is still Lee’s best opening to date).[2]”
There is something to be learned and gained from diversity.
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Hi Everyone,
I’m here a little early. Welcome to our discussion tonight new and returning visitors.
I must say I’m not against tentpoles. In fact I saw Pacific Rim last week and loved it.
What do u think of tentpoles? Do u like tentpoles, independent films or both?
If they’re done to a high standard they’re great but if not, they’re just awful! So I have no problem with them, just bad scripts, bad actors, bad directors etc, that make films that are tacky and cliched. I like both block busters and independent films!
I completely agree. Basically it doesn’t matter what package it comes in, if the contents of the package is crap, it’s crap. Correct?
I just think given the harsh economic climate of the country u would think tentpoles would be few. Especially if studios need to charge such high ticket prices just to recoup their investment. If they made smaller budget films they wouldn’t need to raise tickets prices. I’m sure they would have more people in theaters willing to take a chance on a risky film because they could afford it than not.
Here’s what I think about the entire debate about tentpoles vs indies. The truth is I want a film that’s going to move me emotionally and culturally. It really doesn’t matter if its a tentpole or not. The only problem too many tentpoles can be in-human, formulaic and not relatable or empowering. Also, during a time when people are strapped for cash. Paying for a 3-D film is a bit much.
Spot on, OB! That’s what I think too.
Do u think artist or bean counters are better with determining moviegoers social entertainment interest and concerns?
That’s a tough one! My automatic answer would be artists but thinking about it, that may not be true. Artists push the boat when it comes to ideas, which gives a wider range for audiences to like. Sometimes they can go to far and end up with a bizarre film no one understands. Bean counters know the figures and can see what audiences like. However, they can be too focused on just the money makers and ignore new trends, so they don’t fund anything outside their comfort zone. They kind of need each other in a way! The bean counters can reign in the bizarreness and the artist can open minds.
What a great observation and explanation. This is so true. IMO they need to respect each other too. Not all bean counters are bad. Its just that many don’t respect or understand what artist do and think they can be easily replaced by computerized formulas.
Sorry I’m late! I thought it was Wednesday again. Doh!
Catching up right now!
Sorry Oz. I posted this article on Thursday instead of our normal Wednesday time schedule which probably through u off.
Ok, all caught up! Great article OB! I finance topic I can understand, lol. I guess it was always in the back of my mind that hedge funders may have their hands in the film business. I didn’t think it was a common thing though.
Oh! Great!!! Although, Lurker would have done a much better job with this topic. Hi Lurker!!!
Anyway, from what I’ve read hedge investors mainly hover around the big 5 studios because of the big budget tentpoles that can give them a big payout in a short period of time. According to the article I referenced above the reason they dislike indie films because they take so long to make and may not even get into theaters to earn them their ROI.