Price Point 017: Babylon, Elvis and the Future of Prestige Films
What films should be made at what price?
This is a great time to be making movies. Why, you say? When everything is failing — and not just failing but failing to indefensible and ridiculous degrees — and people in Beverly Hills can barely afford to pay the gardener and the valet?
It is a great time exactly because everything is afire. That’s when new ideas have a chance. Think of 1917 in Russia. It was an awful time — but not for Vladimir Lenin! The emperor has no clothes. Shoot your shot.
The last time Hollywood was so at a loss was 1969 with the end of the musical. And the 70s weren’t too bad for film, right? Hollywood has wrapped its Porsche around a palm tree in Beverly Hills. Time for something new.
I saw Babylon. It is an over-or-at-the-top, fantastical, charismatic, sometimes grotesque, R rated, early Hollywood (silent era) historical baroque romp. It should be seen in a theater to be fully appreciated. It will give you a plentiful supply of champagne, snakes, circus freaks, flapper costumes, cool shots of LA, elephants, orgies, driving at 80 miles per hour, fisticuffs, beauty, despair, and high emotion. So, a pretty typical Golden Globes afterparty.
Babylon cost $80MM and grossed $5.3MM. It got a 59 on Metacritic.
Bummer. Big fan of Damien Chazelle and everyone in the movie but that’s the truth.
Shall we take a glance at the business side of prestige films in general and at budgeting? My argument is that $80MM is not a safe place for this sort of film, but there remains, in the category, a significant opportunity.
In my view, this visually stunning film with some truly unique and incredible sequences and a legendary cast primarily didn’t work because of story. It would have been a winner if one character had truly been the lead, and that character had a mission and a banger of a third act out. Or if there had been a powerful romance. Or, ideally, both. No such luck.
What is a prestige or special film? I am thinking of original films trying to tell original stories about people with an original voice. These films often become culturally significant and move the art form forward. These films should be unique, memorable, free of restrictions, often cool. I use special, specialty, prestige and indie fairly interchangeably and I hope that’s ok.
So many indies completely bombed this year. It was a disaster of a year. Every exec and producer is blaming COVID.
When you’re looking at green lighting a film, one typically comes up with some comps. Here are some relevant films for context. They aren’t all direct “green light comps” for Babylon, but they’re relevant to our broader discussion. I have excluded horror movies as their own category for another day even though there are prestige horror films. This list is sorted by the ratio between box office to budget. Generally, you want to be at or above 1.4. More if you’re planning on dropping $10MM-$20MM on the awards campaign.
General remarks looking at this table — 2022 revealed an unprecedented discordance between Hollywood and the audience. And especially in 2022, fun movies are doing better than nostalgic and/or hard drama or political movies.
It seems that people just don’t want to hear your tendentious political lecture. And nostalgia doesn’t work because people aren’t all nostalgic for the same era, so it becomes narrow.
What exactly do I mean by “fun”? Fun to me means inventive, groundbreaking, now, bold, points for being funny, and it’s great if it has some genre elements. The more fun a movie is, the more inclined you will be to put its poster on your wall.
To budget Babylon at $80MM, you need box office of $100MM+, 25% more than the English Patient. 35% more than No Country, The Big Short or Everything Everywhere. You are counting on this picture being American Hustle, Great Gatsby, or Once Upon a Time in Hollywood and not Boogie Nights, The Insider, or There Will Be Blood (even though the latter group are extremely well regarded). What are the odds of that happening? They aren’t high.
Hustle, No Country, and Once Upon a Time were crime pictures. That’s a commercial genre. Boogie Nights, The English Patient, and There Will Be Blood are great character stories but they aren’t genre stories. They’re “special films.” You have to decide — do you have a special film or a genre picture? Do not budget a special film like a genre picture.
What about Wolf of Wall St or Gatsby?
Wolf was a contemporary crime film based on a famous case with Leo DiCaprio and was also very glamorous and fun. Gatsby is maybe the outlier. Technically a crime story, it was mostly sold as a musical w Leo and Jay Z’s music. Also, it was fun. If you want to count on your movie being Gatsby, go ahead. But it’s a longshot. And I hope you have Jay Z.
The point is, if what you have is a special film, the market is saying that, even if you have a star, 80 is not the right budget. I think if you have the right elements in step with the contemporary moment, you can make the case for numbers up to about 25 or 30. At 30, you’re counting on getting a box office of $42MM (Birdman, Manchester, There Will Be Blood territory). That’s a pretty strong outcome you are betting on. In 2022/23 I’d be more comfortable seeing what we can do at $15MM with a promising director. Then you’re saying that you think you can do about as well as Her or Hurt Locker. With almost any script, I would be more comfortable with that.
But a budget of $15MM still would not have saved Babylon, Amsterdam, The Fabelmans, Tar, Armageddon Time or some of these other special films that have been coldly rejected by the market. Indeed, recent results have more to tell us.
WON’T THE TROUBLES MAGICALLY CEASE?
COVID is part of the problem but only part. Gallup indicates that pre-COVID, 1/3 Americans would see no movies in a year but in 2021 that went up to 61% (to be clear that means that in 2021 about half of people who used to go to theaters had stopped). And those who did go to the movies saw fewer: 3.6 per year vs 6.9 pre-COVID.
Good news — with a few days left in 2022, US Box Office is up 71% vs last year.
But it is still down 33% vs 2019.
After SARS, Hong Kong theatrical completely recovered. It is reasonable to anticipate further box office recovery toward 2019 and there are many high profile pictures coming out next year.
A total recovery for indie may be too much to ask, however —
Some key theaters have shut down for good
Indie films attract older (40+) viewers who might be the slowest group to return
Theatrical exclusive windows have shortened
Another challenge for indie films is that awards do not help like they used to. Big loss. People just don’t watch the awards shows anymore. Or at least they are down by ~70% from peak. And the Globes was completely eliminated for a while. Awards shows were a significant promotional platform. This feels like a massive own goal for Hollywood. Will they come back? A question for another day — but there is no quick fix.
Let’s guess that a good 2023 might be 20% up from 2022, a 2/3 recovery of the remaining gap vs 2019.
But a +20% bump on box office would not have saved the latest films. Going from 5 to 6 doesn’t solve the problem. We need 5 to 25 or 50.
COVID does not explain the magnitude and frequency of these recent failures. The box office is not down 95%. Hollywood must blame itself for these total rejections.
What we need is — different movies.
A NEW SLATE FOR A NEW TIME
Let’s learn from what is working.
Elvis grossed $151MM. Huge. It had no stars and was period.
Everything Everywhere grossed $70MM. Came out of nowhere.
Not to mention Top Gun and Avatar
People are in fact going to the movies and they are seeing indie films … indie films that they like, that is. The audience is inviting a new kind of film.
If we were setting up an indie studio today, what guidelines should it have? Assume we want to focus on special films. I think we could clearly make an argument that the audience wants non-nostalgic, non-political, fun movies with strong stories. But it does reward substance and originality.
What about Spotlight ($45MM USBO)? Or Manchester? Manchester wasn’t that “fun!”
Firstly, times change and I think the market is calling for more fun now. But also, Manchester was a truly brilliant script. Any rule can be overcome with enough brilliance. And there is something fun about that.
I think we can feel good about the $3MM to $15MM range, with the ability to go to $30MM, if the movies are fun, cinematic films. So this could be our set of guidelines—
Story works
Fun
Cinematic
It has some edge. It culturally feels now.
Genre elements welcome
Not political
Original
Budget: $3MM to $15MM but, rarely, can go to $30MM. (80% will be $10MM to $15MM.) Higher for special genre films.
For any endeavor, the right team is essential. The team would be smart to assume that none of Hollywood’s widely held assumptions about culture, talent, and the audience are in any way correct. Suffice to say, it would be necessary to recruit a team of non-conformists.
We will look back and think that there were obvious culture issues in Hollywood. There are exceptions to every generalization, but I have opined that times have radically changed but Hollywood has not changed with them. Oddly, a very low percent of senior execs and veteran filmmakers are in touch with cutting edge tech and culture. And is it me or aren’t there an awful lot of political science and communications types at the top? Seems strange. Like — except for Kevin Feige — where did all the film school people go … in the film business? Finally, I would say that stories that take a position, that get to the truth of people and that live in the world we live in have been avoided in favor of surface level spectacle and a sort of fake Hollywood world. These are all opportunities for improvement.
What would get made under our rubric, looking backwards?
Everything Everywhere
Cocaine Bear
The Blackkklansman
Black Swan
Moonlight
Love & Friendship
Drive
Licorice Pizza (but at $10MM)
Her (but at $15MM)
Swiss Army Man
Boogie Nights
Hurt Locker
Mid90s
Birdman
Maybe La La Land, but it’s on the line
What would we miss out on? Little Women at $40MM if the budget can’t come down. Maybe La La Land, but hopefully we would see the vision and stretch for it.
But of course the more interesting thing is — what will be made looking forward? The opportunity is for a new aesthetic, new talent, and new ideas. I have found that the best place to be is to have something that the people are ready for but Hollywood is not. That gap is wide today.
There is a place for indie film and there is a viable model. However, budgets need to be realistic and, no matter how special the film, the audience needs to get what it wants — a fun night at the movies.
Embrace fun. A new era is coming.
I appreciate the optimism coupled with data (that also has a wide net to be inclusive of voice and creativity).
Great analysis! Agree with everything you said going forward and of course “luck is when opportunity meet preparation”.