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Does Hollywood need its own brand of moneyball?

Making more movies for less could be new industry model

- The Washington Times - Thursday, September 22, 2011

Facing runaway production budgets, shrinking audiences and undependable revenue streams, Hollywood is at a financial crossroads.

Is it time for the movie industry to adopt its own version of "moneyball"?

In the new film "Moneyball," actor Brad Pitt plays Billy Beane, the real-life general manager of baseball's Oakland Athletics and a man with a problem: His star slugger, Jason Giambi, is a free agent. The cash-strapped Athletics can't afford to match a mammoth contract offer from the rival New York Yankees.

To compensate, the GM hires Ivy League math whiz Peter Brand (played by Jonah Hill) to identify and acquire an "island of misfit toys," a group of cheaper, less-talented players whose undervalued ability to get on base collectively can replace the slugger's home run hitting. The bargain-basement A's don't win the World Series — but they do make the playoffs, ripping off a record 20-game winning streak en route.

Could a similar strategy — making less expensive movies, and more of them — be the answer to Hollywood's own fragile business model?

"This is a fear-based industry," said Los Angeles-based independent producer and distribution consultant Jerome Courshon. "Nobody wants to upset the apple cart and look for ways to do things significantly differently."

Of bombs and Bombers

Today's film industry is like the free-spending Yankees, wedded to a blockbuster-oriented business model in which studios expend ever-increasing sums on a smaller number of star-studded, special effects-driven productions in the hope of spawning mega-hits like "Avatar" and "Titanic" — two movies that cost about $280 million and $200 million to make, respectively, but earned a combined $4.6 billion in worldwide box office gross.

As a result, the major studios reportedly have trimmed the annual number of films they release by nearly a third over the last five years, while the average cost of their movies has jumped from $42 million in 1995 to $78 million this year.

Yet, as with baseball, bigger costs mean bigger risks: When the Yankees spent almost $40 million to sign Carl Pavano to a four-year contract before the 2005 season, the oft-injured pitcher's lack of production was a big reason the team failed to win the World Series for four consecutive years.

The cinematic equivalent? This summer's "Cowboys & Aliens," a film that cost an estimated $163 million to produce but only earned $129 million in worldwide ticket sales. It's only the latest in a long line of high-priced, effects-laden bombs, including 2010's "Prince of Persia" — which had a $200 million budget and earned $90 million — and 2009's "Land of the Lost," a $100 million film that made just $30 million.

"Limiting the risk of box office bombs has for some time centered on choice of product — superhero spectacles are targeted at the younger folks who are inclined go to the multiplex," said Christopher Sharrett, a professor of communications and film studies at Seton Hall University. "But the move to new technologies like CGI and 3-D tends to emphasize the maxim that it takes money to make money."

With the above squeeze in mind, some in Hollywood believe their industry needs a Beane-like approach — call it movieball.

Movieball?

In a recent interview, former Disney CEO Michael Eisner suggested that studios should try to string together small hits instead of always swinging for home runs, because the growing riskiness of the blockbuster model means that "you can make a small fortune, but you better come with a large fortune."

While running Paramount in the mid-1970s and early-1980s, Mr. Eisner championed the concept of "the box" — that is, a fixed scope for any given project that could not be exceeded. He also decreed that no film could cost more than $10 million to produce, a low number even at the time.

Despite paltry budgets, films including "Grease," "Saturday Night Fever" and "Terms of Endearment" became cost-effective hits for the studio; at Disney, Eisner-shepherded movies such as "Ruthless People" and "Down and Out in Beverly Hills" provided low-risk bang for the buck.

Similarly, Los Angeles-based film producer and financier Ryan Kavanaugh claimed in a pair of magazine interviews that his company, Relativity Media, has developed a proprietary quantitative computer model that predicts the likely box office success of potential projects based on the past performance of similar movies.

Like "Moneyball's" fictional Peter Brand evaluating baseball free agents and potential draft picks, Relativity's number crunchers reportedly evaluate possible movies by feeding dozens of variables — director, genre, release date, and so on — into their computers, which then predict the likelihood of profitability and average profits for each title. Relativity reportedly won't invest in a project if the probability of turning a profit doesn't reach around 70 percent.

Film economics expert Arthur De Vany cautioned that a "Moneyball" approach to moviemaking has inherent limitations.

"[Relativity] has one thing right, which is to look at the external odds instead of the scouting report," said Mr. De Vany, a University of California-Irvine professor and author of "Hollywood Economics: How Extreme Uncertainty Shapes the Film Industry."

Recalling that 'Moneyball's' fictional baseball scouts evaluate body types instead of relevant stats, Mr. De Vany said, "Kavanaugh is looking at the stats instead of asking what looks like a good movie.

"However, [evaluating] a baseball player with known stats and attributes against others is different than predicting how well he would perform having never seen him play. That is the movie problem. Each movie is unique — and as [film producer] Robert Evans said, only goes around once."

Cases in point? Relativity-backed films "Paul Blart: Mall Cop" and "The Fighter" were hits, while "Season of the Witch" and "Land of the Lost" — both of which scored well in computer simulations — were not.

According to Mr. Courshon, such box office unpredictability can paradoxically make Hollywood less likely to adopt a singles-hitting approach.

To illustrate, Mr. Courshon cited Paramount, which reacted to the success of low-budget 2009 hit "Paranormal Activity" by creating a new division, Insurge Pictures, that was supposed to produce 10 films a year at a cost of $100,000 per project.

"Where is Insurge today?" Mr. Courshon said via email. "They look to be nowhere. Their web site is one page that shows nothing. …

"Making 10 movies per year for $100,000 each is too outside the box for a Hollywood studio. They'd rather spend $150 million on a movie with the right box office stars, because they know how to work that business model and usually not lose money."

Hollywood haircuts

Confronted with declining audience sizes and shrinking DVD revenues, however, there are signs that Hollywood is changing. In July, Disney stopped production on "The Lone Ranger," starring Johnny Depp, because a desired $200 million budget was climbing into the $250 million range. Cost concerns led Universal to back out of a sprawling movie-and-television-series project based on "The Dark Tower" novels by Stephen King. And Warner Bros. reportedly may abandon plans for a sequel to "Green Lantern," a $200 million would-be blockbuster that grossed just $116 million.

Meanwhile, films such as this summer's story-driven, effects-free "The Help" — which cost $25 million and has so far earned $139 million — and 2009's surprise hit "The Blind Side" ($29 million budget; $229 million box office) suggest the wisdom of a more frugal, get-on-base, Beane-like approach.

In a way, so does "Moneyball" itself. Originally optioned in 2003, the story went through a series of rewrites before director Steven Soderbergh joined the project. Just days before shooting was set to commence in 2009, however, Sony pulled the plug on the film — reportedly because Mr. Soderbergh's vision included a wonkish exploration of baseball math, documentary-style interviews and a total price tag of $57 million.

By contrast, the Bennett Miller-directed version of "Moneyball" now in theaters tells a far more conventional underdog story, with Mr. Beane a sympathetic single father on the brink of losing his job, leading the downtrodden A's against long financial odds and conventional baseball thinking.

Better yet, the revamped film only cost a reported $50 million.

The Associated Press contributed to this report.

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