HOLLYWOOD 101: Downfall of the Film Industry

HOLLYWOOD 101: Downfall of the Film Industry

Date

Since its inception, the film industry has stubbornly stayed true to its business practices adopted after the Paramount vs. United Stats trial in 1948. Beyond the family of creatives, together to produce a unique story, is a refined business model that keeps the same studios during that trial almost 100 years ago in power today. 

Before moving forward, you need to know that the Film Industry and the Movie Business are two completely different things. Here’s a fun riddle for you. See if you can guess the answer before reading further: “How are Films like Donuts and Movies like Steaks?” 


Films (Donuts) vs. Movies (Steaks)


Films


Filmmakers make Films any old way they wish, just like Donut-makers who bake up or fry their daily batch of donuts. Often Donuts don’t have customers or buyers before they are made, just as Films don’t have distribution or buyers before production. After the Films premier, they struggle to gain Major Hollywood Studio distribution. Like donuts, they get stale and forgotten.


Movies


Chefs cook steak made to customer satisfaction. 

Like Steak chefs, Movie-makers make their Movies precisely the way the Studio (buyer) orders them. First, before the steak off the grill, it ALREADY has a buyer. Movies secure Major Hollywood Studio distribution via Universal, Paramount, Warner Bros., Sony, Fox, MGM, or Disney… before the movie is complete. In the Movie Biz, Steak chefs are the Production Company (Vendor).  

“Films” and “Movies” are two distinct business models. Yet they are sold in the same restaurant and function side by side. They are parallel models. Since they can utilize much of the same crew & cast, Films and Movies seem identical, yet they are as different as night & day. The resources and funding are equivalent to major league baseball vs. Tee Ball. 

Indie Filmmakers are like bakers who may work hard but personally decide how they will make their donuts—large or small, baked or fried, with or without a hole, plain or glazed or filled with jelly. After all that work, he proudly puts the donut in the window case and hopes to sell it. If not, the donut is for sale again the next day—but a day old and half-priced. The donut is pulled from the case, ground up, and repurposed as pet treats on the third day.[M]

In the Major Hollywood Studio model, Vendor Production companies are like a steak chef preparing a steak. The meat remains in the refrigerator until the customer (Studio) orders it. Only then is the steak taken out and designed precisely to the customer’s specific requirements—chopped up as tartar, charred-rare, or butterflied well done, with salt or without salt, with butter or no butter, flavored with gravy or garlic with onions and peppers and even with eggs, scrambled, over-easy, or sunny-side-up. 


MOVIE BUSINESS 101


The ROI for vendors occurs when completing the movie instead of the success—the success results in further compensation and leverage on additional projects. Meaning the focus for film industry directors connected to the movie business is delivering the movie on time, with no legal attachments, within budget. 

Once complete, vendor and investors enjoy a tremendous ROI as a dividend for the original investors and in a short time, plus a 25% share of all revenue for the life of the movie’s Intellectual Property Copyright—even from subsequent movies within the movie franchise. 

In the Major Hollywood Studio model, the MovieMaker’s product generates revenue. Every year there are just 350 movies made.


FILM BUSINESS 101


You make your film. Then try to tour it to the festival circuit displaying and promoting your work—that is, if it’s even selected to be in a film festival. Submission is very costly because you must pay a fee to submit your film (the incentive for most festivals is the submission fee). Sadly, your film’s life cycle in the film festival circuit is only two years. After that, you’re out of profitable options. There’s little to no revenue generated from all your effort unless sold to third-party streaming or vendor for less than initially invested. 

There is only one income stream in the Indie Film industry model—if it sells at all. Last year there were 5,000 indie films made, and only a few of those films received distribution.

  • In November 2013, John Cooper of the Sundance Film Festival reported there were 12,000 films submitted, and only 113 films were selected for the lineup.
  • In 2011 there were 3,812 films submitted to Sundance, but only 118 were selected.
  • 8,000 films were submitted to Sundance, but only 113 films were selected in 2012.
  • In 2013 a whopping 12,146 films were submitted, but still, only 113 were selected[1]

    And the number of film submissions just keeps increasing. 


Hollywood Gatekeeping


Similar to the Fraternity & Sorority bidding process. Therefore, many are not invited into the members-only group of Vendors at Hollywood Studios, even if they are in the DGA (Directors Guild of America).

There are 13 revenue streams on each of the 350 Major Hollywood Studio model movies prepared each year in the Major Hollywood Studio model. All of them are incredibly profitable, as they already have secured paid distribution even before the movies finish production. The 7 Major Hollywood Movie Studios (Universal, Paramount, Warner Bros., Sony, Fox, MGM, and Disney) pay an MG (Minimum Guarantee) upon delivery of the completed movie.

Therefore, vendors ask studios to avoid purchasing productions from other sources (filmmakers, film festivals, etc.) outside their partnered vendors.


What’s a DGA?


DGA Movie Directors run Hollywood. In other words, if you want to break in as an Actor, Writer, Producer, Director, or Investor, it’s essential to understand that participation in the Movie business ONLY happens through invitation. One must be invited into this members-only Hollywood Studio Movie Biz by leveraging finances, and connections.

Meaning if you are not one of the 250 movie-makers selected from a pool of over 6,000 filmmakers in the DGA, you will have to revert to the film industry business model. Film Directors ARE NOT Vendors. Their distribution does NOT include an MG, minimum guarantee paid upon delivery of the completed movie. So they can get only Profit share from the retail exploitation of their films, and there has not yet ever been a film that has made a Profit. Suppose the film doesn’t return enough Profit to cover the cost of distribution, $1M per 100 screens. In that case, there is no Profit to share with the original investors.[M]


Paramount vs. the United States


Please understand that in the last +65 years—since the breakup of the monopoly Hollywood Studio model (United States vs. Paramount Pictures)—the new “Vendor” model of the movie Biz has remained regulation proof, exempt, and free from SEC Registration.[3]


Most importantly


The Studio (distribution company) cannot pay for the production of a movie. They are legally prohibited from making movies, funding/financing movies, or even exhibiting movies. They are only allowed to pay for a movie upon delivery and then move that movie to the exhibitors (Theaters, Retail, TV Broadcast)…. Any evidence that proves otherwise would simply violate Anti-Trust Laws, as those capital assets would constitute an unlawful merger.

So in conclusion, while everything is agreed upon to Fund the movie, movie vendors only receive a signed contract after the delivery of the first movie—thus the start of a new Franchise. Subsequent movies of the Franchise are then simply Financed by a leveraged line of credit secured against the box office performance of the previous movie. 

This results in the current gap of funding between the Movie industry and the Film Industry. One is just not profitable and the latter isn’t accessible. Accessible paths to the big leagues are nonexistent and therefore making it impossible for true creative talent to surface.


VENDORS & STUDIO CREDITS


This list represents Hollywood Movie Studio Housekeeping deals. The top 7 Major Studios pay an MG (minimum guarantee upon delivery): Universal, Paramount, Warner Bros., Fox, Sony, MGM, and Disney

The rest of the indie studios (mini-majors) DO NOT pay an MG: New Line, Miramax, Lionsgate & Weinstein Co., though the Weinstein’s have nine deals, including helmers such as Quentin Tarantino, Oliver Stone, Robert Rodriguez.

Vendors are affiliates umbrellaed under red.[M]


UNIVERSAL


Amblin Entertainment (Steven Spielberg)

Angelic Pictures (Mark Maine)

Imagine (Brian Grazer, Ron Howard)

Playtone (Tom Hanks, Gary Goetzman)

Arroyo (Scott Frank)

Black and White (Jack Black, Mike White)

Class 5 (Edward Norton, Stuart Blumberg)

Depth of Field (Chris & Paul Weitz)

Double Feature (Michael Shamberg, Stacey Sher)

Everyman (Jay Roach)

Film 44 (Peter Berg, John Cameron, Sarah Aubrey)

Gold Circle (Paul Brooks) distribution only

Identity (Seann William Scott, Graham Larson)

Incognito (Daniel Bobker, Ehren Kruger)

Kennedy/Marshall (Kathleen Kennedy, Frank Marshall)

Larger Than Life (Gary Ross)

Mandalay (Peter Guber) co-financer

Barry Mendel

Morgan Creek (Jim Robinson) distribution only

Mary Parent & Scott Stuber

Marc Platt

Shady Acres (Tom Shadyac, Michael Bostick)

Sommers (Stephen Sommers, Bob Ducsay)

Stratus (Bob Yari, Mark Gordon) co-financer

Strike (Marc Abraham) cofinanced

Terra Firma (Adam Herz)

Tribeca (Robert De Niro, Jane Rosenthal)

Vertigo (Roy Lee, Doug Davidson)

Working Title (Tim Bevan, Eric Fellner)

FOCUS FEATURES

Completion (Kisha Imani Cameron)

Deacon (Damon Lee)

Liaisons (Stephane Sperry)

Primary (Amy Kaufman)

Priority (Colin Leventhal, Marion Pilowsky, Trea Hoving)

This Is That (Ted Hope, Anthony Bregman, Anne Carey)


PARAMOUNT


Alphaville (Sean Daniel, Jim Jacks)

Platinum Dunes (Michael Bay)

Blumhouse (Jason Blum)

Bona Fide (Ron Yerxa, Albert Berger)

Broadway Video (Lorne Michaels)

Carsey-Werner (Marcy Carsey, Tom Werner)

Bob Cort

C/W (Tom Cruise, Paula Wagner)

Darkwoods (Frank Darabont)

Deep River (David Friendly, Marc Turtletaub)

Detour (Richard Linklater)

Di Bonaventura (Lorenzo di Bonaventura)

Evans (Robert Evans)

Jamie Foxx

John Goldwyn

Guy Walks Into a Bar (Todd Komarnicki, Jon Berg)

Tom Jacobson

Jimmy Iovine & Paul Rosenberg

Kerner (Jordan Kerner)

Klasky Csupo (Arlene Klasky, Gabor Csupo)

Lakeshore (Tom Rosenberg, Gary Lucchesi)

Michael London

LRO (Lynda Obst)

Manhattan Project (David Brown)

Kevin Misher

MM (Michelle Manning)

Skydance Pictures (David Ellison)


DREAMWORKS

Aardman (Nick Park)

Apostle (Denis Leary)

Bonnie Curtis

Jason Hoffs

ImageMovers (Robert Zemeckis)

Jinks-Cohen (Dan Jinks, Bruce Cohen)

Kurtzman/Orci (Alex Kurtzman, Roberto Orci)

Sam Mendes

Montecito (Tom Pollock, Ivan Reitman)

Eddie Murphy

Red Hour (Ben Stiller)

Remote Control (Hans Zimmer)

Shauna Robertson

Walter Parkes/Laurie MacDonald

Aron Warner

Zanuck (Richard Zanuck, Lili Zanuck)


MTV

Nickelodeon

Plan B (Brad Pitt)

Revelations (Morgan Freeman)

Southern Cross the Dog (Stephanie Allaine, Craig Brewer)

Watermark (Jessica Tuchinsky, Mark Waters)


WARNER BROS.


1492 (Chris Columbus)

Accomplice (Hilary Swank, Chad Lowe)

Alcon (Andrew Kosove, Broderick Johnson) distribution only

Bedford Falls (Ed Zwick, Marshall Herskovitz)

Broken Lizard (Jay Chandrasekhar)

Castle Rock (Martin Shafer)

Donald De Line

Esperanto (Alfonso Cuaron)

Flower (Drew Barrymore, Nancy Juvonen)

Fortis (Sandra Bullock)

Gambit (George Nolfi, Michael Hackett)

Gerber (Bill Gerber)

Heyday (David Heyman)

Initial (Graham King)

  Infinitum Nihil (Johnny Depp)

  Appian Way (Leonardo DiCaprio)

Legendary (Tom Tull)

Macro (Charles D. King)

Malpaso (Clint Eastwood)

Management 360 (Guymon Casady)

Maple Shade (Ed McDonnell)

Phantom Four (David Goyer)

Radiant (Wolfgang Petersen)

Section Eight (Steven Soderbergh, George Clooney)

Dylan Sellers

Jon Shestack

Silver (Joel Silver)

Bryan Singer

Spring Creek (Paula Weinstein)

Charlize Theron

Thunder Road (Basil Iwanyk)

Village Roadshow (Bruce Berman)

WBEZ Alliance (Ira Glass)

Weed Road (Akiva Goldsman)

Nick Wechsler

Jerry Weintraub

John Wells

NEWLINE

Benderspink (Chris Bender, JC Spink)

Chick Flicks (Sara Risher)

Contrafilm (Beau Flynn, Tripp Vinson)

Film Engine (AJ Dix)

Karz (Mike Karz)

Landscape (Bob Cooper)

Rat (Brett Ratner, Jay Stern)

Stokely Chaffin

Storyline (Neil Meron, Craig Zadan) 


MIRAMAX

Craven/Maddalena (Wes Craven, Marianne Maddalena)

Neo Art & Logic (Joel Soisson, Keith Border, Mike Leahy)


 20th Century FOX


Bazmark (Baz Luhrmann)

Conundrum (Peter & Bobby Farrelly, Bradley Thomas)

Davis (John Davis)

Dominant (Betty Thomas)

Firm (Julie Yorn)

Hyde Park (Ashok Armitraj, Jon Jashni) co-financier

Barry Josephson

Shawn Levy

Lightstorm (James Cameron)

John Moore

New Regency (Arnon Milchan) equity partner with all Fox divisions

Penn Station (Michael Aguilar, Dean Georgaris)

Real (Zak Penn)

Karen Rosenfelt

Seed (Hugh Jackman, John Palermo)

Scott Free (Ridley & Tony Scott)

Ralph Winter joint deal with Fox 2000


FOX 2000

Gil Netter

State Street (George Tillman, Bob Teitel)


FOX SEARCHLIGHT

DNA joint venture/equity partnership

Alexander Payne & Jim Taylor

Uberto Pasolini

FOX ANIMATION

Lori Forte


SONY


John Calley

Centropolis (Roland Emmerich, Michael Wimer)

Corduroy (Michael Costigan)

Michael De Luca

Escape Artists (Jason Blumenthal, Todd Black,

Steve Tisch, Patrick Wachsberger,

Bob Hayward, David Alper) equity partners

Wendy Finerman (Wendy Finerman, David Blackman)

Leonard Goldberg

Gold/Miller (Eric Gold, Jimmy Miller)

Mark Gordon

Gracie (James L. Brooks)

Happy Madison (Adam Sandler)

Heartburn (Nora Ephron)

Hal Lieberman

Tobey Maguire

Laurence Mark

Nancy Meyers

Michael Nathanson

Nuyorican (Jennifer Lopez)

Original (Neal Moritz)

Out of the Blue (Sid Ganis)

Overbrook (Will Smith, James Lassiter)

Pariah (Gavin Polone)

Sam Raimi and Josh Donen

Red Wagon (Lucy Fisher, Doug Wick)

Paul Schiff

Spyglass (Gary Barber, Roger Birnbaum) equity partners

Tehani (John Baldecchi)

Irwin Winkler

Wonderland (McG, Stephanie Savage)

Laura Ziskin

Revolution Studios (Joe Roth, Tom Sherak,

Elaine Goldsmith-Thomas)

  Blue Star (William Sherak, Jason Shuman)

  Broken Road (Todd Garner)

  Cablevision (Ice Cube, Matt Alvarez)

  Red Om (Julia Roberts)

  Team Todd (Jennifer Todd, Suzanne Todd)


MGM


Danjaq (Michael Wilson, David Pope, Barbara Broccoli)

Hyde Park (Ashok Amritraj, Jon Jashni) co-financer

Irish DreamTime (Pierce Brosnan, Beau St. Clair)

Overt (Steve Golin)

Side Street (Michael Gruber)

Robert Simonds

Winkler (Irwin Winkler, Rob Cowan) second-look deal


UNITED ARTISTS

Cruise/Wagner Productions (Tom Cruise)

Atlantic Streamline (Marco Weber)

Banyan Tree (Matt Dillon)

Crossroads (Dan Lindau, Cami Taylor)

Fusion Filmworks (Jonathan Taplin, Richard Kletter)

Mission Control (Marcus Morton)

Mr. Mudd (John Malkovich, Lianne Halfon, Russ Smith)

Potboiler (Simon Channing Williams, Gail Egan)

Revolution Films (Michael Winterbottom, Andrew Eaton)

Single Cell (Michael Stipe, Sandy Stern)


DISNEY


Julie Andrews

Beacon (Armyan Bernstein)

Boxing Cat (Tim Allen)

Jerry Bruckheimer

FP Ventures (Joe Farrell, Catherine Paura)

Frontier (Ed Decter, John Strauss)

Alfred Gough/Miles Millar

Gunn (Andrew Gunn)

Hampstead Heath(Debra Martin Chase)

Harbour (Nick Barton, Suzanne Mackie)

Hyde Park (Ashok Amritraj, Jon Jashni) second-look deal, co-financer

Junction (Jon Turteltaub)

Callie Khouri

Live Planet (Sean Bailey, Ben Affleck, Matt Damon)

Mandeville (David Hoberman, Todd Leiberman)

Mayhem (Mark Ciardi, Gordon Gray)

Offspring (Adam Shankman)

Pandemonium (Bill Mechanic)

Pfeffer (Rachel Pfeffer)

Rocket (Elton John)

Scott Rudin

Tollin/Robbins (Mike Tollin, Brian Robbins)

Vanguard (John Williams) animation



Sources

Mark Maine: https://www.dga.org/The-Guild/Members/Profile.aspx?mid=NwYXSqu/kBZcfVHLIMpdgw== [M]

http://www.hollywoodreporter.com/news/sundance-film-festival-unveils-2013-394874 [1]

http://www.hollywoodreporter.com/news/steven-spielbergs-dreamworks-finds-a-792036 [2]

https://en.wikipedia.org/wiki/United_States_v._Paramount_Pictures,_Inc. [3]

https://stephenfollows.com/how-many-films-does-the-average-director-make/ [4]