How the Death of Mid-Budget Cinema Left a Generation of Iconic Filmmakers MIA

David Lynch

It’s important to understand what we’re talking about when we talk about movie budgets. The numbers you hear about are the costs of making the film, and only those: pre-production, cast and crew salaries, sets and equipment and props and costumes, special effects and post-production. What it doesn’t include is the cost of marketing the movie. And hashtags on posters aside, studios are still remarkably old-fashioned when it comes to marketing, relying primarily on print and television ad buys. But in the modern, crowded multimedia landscape, the kind of saturation that makes them feel comfortable — even when it’s promoting a giant tentpole blockbuster that everyone is fully aware of — is very, very expensive. Sometimes it’s 50 percent of the production budget, and sometimes it’s even more.

And that high price tag — which, unlike a production budget, doesn’t have much wiggle room on a major release — is why, counter-intuitive though it might seem, a studio would rather make a $60 million movie than, say, a $10 million one. Studios are no longer interested in small investments with small return, which aren’t worth the time or the money. They want the big enchilada.

Ted Hope, author of Hope for Film, CEO of the VOD site Fandor, and producer of such films as The Ice Storm, Happiness, American Splendor, and Waters’ A Dirty Shame, tells me, “We had a deal at Universal, and finally our executive got fed up with us, and said ‘Ted, you need to give me movies that are theme park rides.’ We laugh, but I think now you see that more than ever, right? The business of Hollywood isn’t getting people to see movies. It’s [creating] these platforms that can exist as Broadway plays, as theme park rides, as a series of young adult novels, that can be across all different verticals. And we are ignoring so many other people.”

The groundbreaking director Susan Seidelman worked her way up the way you’re supposed to: she made a successful low-budget debut feature, 1982’s Smithereens, then graduated to Desperately Seeking Susan, a $4.5 million-budgeted sleeper hit that grossed $27 million in 1985. She made Susan, and her subsequent films of the decade, for Warner Brothers and the now-defunct Orion, which she calls “a looser sort of studio.” Seidelman says that the New York-based outfit “strongly supported directors, which is why Woody Allen made a lot of his movies for Orion, and Jonathan Demme too.”

Susan Seidelman and Madonna on the set of "Desperately Seeking Susan"

“You could make movies in the ten-to-20-million-dollar budget range,” she tells me, almost wistfully. “They didn’t have to be huge blockbusters. They could be more adult-oriented, they didn’t have to appeal to absolutely everyone in the world, and if it’s good work then the studio was happy with making a good profit, but it was a different model… And I think over the years, what happened is that things have gotten really polarized. To studios now, to make a million dollars isn’t a big deal — you have to make a billion dollars, right?” She laughs. “They have to appeal to every demographic in every part of the world, so to make a $20 million movie that makes $60 million, why put their money there?”

This explosion of budgets occurred slowly but surely over the course of the last two decades. Back in 1997, the cost of an average studio film was $60 million — and the New York Times ran a now-hilarious report on that utterly preposterous figure, one studio heads at the time classified as “upsetting,” and “disturbing.” Sherry Lansing, then head of Paramount, told the Times, “I’m horrified at these numbers. They don’t make sense. We’re killing ourselves.”

What’s striking about that figure now is that, for most studios, a major $60 million release would be a bargain. That number has gone up (and, up, and up) in the years since; in 2007, the last year the MPAA compiled an average studio budget, it was up to $106.6 million. As the average has ticked up, the middle ground has fallen out, and the output of the major studios has gotten both riskier and safer — more expensive, but with less variety. Sherry Lansing’s “They don’t make sense” quote in that Times piece stuck with me, so as an experiment, I looked up her studio’s slate for the year of its publication, 1997 — and then compared it with their output for this year. And the results of that comparison go a long way toward telling the story of the direction mainstream moviemaking has taken in those 17 years.

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Leonardo DiCaprio (L) and Kate Winslet (R) in a scene from the movie "Titanic"

Paramount’s 1997 slate included a robust 19 films, counting co-productions and pick-ups. These are what their budgets and grosses looked like:

The Relic: $40 million budget, $34 million domestic gross
The Beautician and the Beast: $16 million budget, $11 million domestic gross
Private Parts: $20 million budget, $41 million domestic gross
The Saint: $68 million budget, $118 million worldwide gross
Breakdown: $36 million budget, $50 million domestic gross
Night Falls on Manhattan: $22 million budget*, $9 million domestic gross
‘Til There Was You: $10 million budget, $3.5 million domestic gross
Face/Off: $80 million budget, $245 million worldwide gross
Kiss Me, Guido: $740K budget, $1.9 million domestic gross
Good Burger: $9 million budget, $23.7 million domestic gross
Event Horizon: $60 million budget, $26 million domestic gross
A Smile Like Yours: $18 million budget, $3.3 million domestic gross
In & Out: $35 million budget, $64 million domestic gross
Kiss the Girls: $27 million budget, $61 million domestic gross
FairyTale: A True Story: n/a budget, $14 million domestic gross
Switchback: $38 million budget, $6 million domestic gross
The Rainmaker: $40 million budget, $46 million domestic gross
Titanic: $200 million budget, $2.187 billion worldwide gross
The Education of Little Tree: n/a budget, $323K gross

Budget figures are unavailable for two of those films, but based on the final product, they seem to have been pretty low-budget efforts. And even leaving out that pair, the variety among these budgets is striking; the studio was releasing everything from micro-budget pick-ups like Kiss Me, Guido to low-budget, tween-centric comedies like the $9 million Good Burger to the $27 million thriller Kiss the Girls to the $35 million comedy In and Out to $60 million genre films like Event Horizon. The numbers are all over the map, and while Paramount took a few hits, they also did well enough on other titles to offset the difference.

Of course, the outlier in both the budget and gross columns is Titanic, and that entry is the one that shook the business to its foundation, and pointed the way towards its future. You can see the pre-Titanic path for the blockbuster elsewhere on the list, in the form of The Saint and Face/Off. The latter was fairly expensive, did solid business domestically ($112 million), and fared even better overseas ($133 million). The Saint barely earned back its budget here ($61 million), but got into the clear thanks to foreign box office ($56 million) that was respectable enough. (Interestingly, these were the only titles with worldwide box office numbers currently available.)

The modest profits of those films, or Kiss the Girls or In & Out, more then cover the losses of the lesser titles. But Titanic was the game-changer, a wildly expensive (and, lest we forget, over-budget) production that became a worldwide megahit.

Promo image from "Transformers: Age of Extinction"

With that in mind, let’s have a look at Paramount’s slate for this year. The first divergence of note is the decrease in output: only 11 films, three of them not yet released (so earnings figures are not yet available). They are:

Paranormal Activity: The Marked Ones: $5 million budget, $90.9 million worldwide gross
Jack Ryan: Shadow Recruit: $60 million budget, $135.5 million worldwide gross
Noah: $125 million budget, $362 million worldwide gross
Transformers: Age of Extinction: $210 million budget, $1.08 billion worldwide gross
Hercules: $100 million budget, $242 million worldwide gross
Teenage Mutant Ninja Turtles: $125 million budget, $474 million worldwide gross
Men, Women, and Children: $16 million budget, $705K domestic gross
Interstellar: $165 million budget, $593 million worldwide gross (and counting)
Top Five: $6 million budget, n/a gross
Selma: $20 million budget, n/a gross
The Gambler: n/a budget, n/a gross

And thus you have a snapshot of how the studio system has evolved over this relatively short period of time. Taking The Gambler out of the mix (its budget has not yet been reported — aside from being comparatively low), you have a horror sequel and a comedy made for $6 million or less, five blockbusters made for over $100 million, and only three more in between. Jack Ryan checks in at that 1997 average of $60 million, and appears to have barely eked out its costs overseas, while Men, Women, and Children tanked (to be fair, it was also terrible). Selma’s fate remains to be seen.

There’s no question that this model is profitable, more so than what we see in 1997. But it’s also resulting in multiplex monotony — and frankly, if studios are printing money with these tentpole movies, why not siphon off some of those mega-profits to a few filmmakers who actually have something to say?