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

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Earlier this year, John Waters — whose last movie, A Dirty Shame, was released a full decade ago — finally got the offer he’d been waiting for all this time. According to his hitchhiking chronicle Carsick, his very first driver was “Harris,” “an art school type” with a sideline in weed dealing who called himself a fan. They talked for a bit about movies before Harris asked the (five) million-dollar question: “How come you aren’t making a movie?”

“I explain that I had a development deal to make Fruitcake,” Waters writes, but on the eve of that dark holiday comedy’s production, “the recession happened, the independent film business as I knew it fell apart, and now all the distributors and film financiers want the budgets to be under $2 million, which I can’t do anymore.” His traveling companion told Waters, “I’ll back it,” pledging five million dollars cash. “You pay me back if it ever breaks even.”

There was only one problem with Harris’ offer: It was a total fantasy. There was no Harris, and there was no five million dollars. The scene was part of “The Best That Could Happen,” a novella of perfect, imaginary hitchhiking encounters, within Carsick. But it’s instructive, and sad, that when Waters — a well-dressed dandy of notorious sexual appetites — compiles his biggest fantasies, the very first one is of someone doing what people used to do all the time: giving him money to make a movie.

John Waters at Lincoln Center

And Waters isn’t the only beloved filmmaker harboring this fantasy. “It’s a strange time. There’s not a whole lot that any of us can do about it,” David Lynch, who hasn’t directed a feature since 2006’s Inland Empire, explained over the summer. “You’ve seen waves of things go up and down, but maybe the arthouse will be back in vogue, and they’ll reappear all over the place again. I don’t know. It would be beautiful.”

It wasn’t always this way. Back in the 1980s and 1990s, when Waters and Lynch were doing their most commercially successful work, it was possible to finance — either independently or via or the studio system — mid-budget films (anywhere from $5 million to $60 million) with an adult sensibility. But slowly, quietly, over roughly the decade and a half since the turn of the century, the paradigm shifted. Studios began to make fewer films, betting big on would-be blockbusters, operating under the assumption that large investments equal large returns. Movies that don’t fit into that box (thoughtful dramas, dark comedies, oddball thrillers, experimental efforts) were relegated to the indies, where freedom is greater, but resources are far more limited. As Mad Men’s Matthew Weiner put it, “Something happened that nobody can make a movie between $500,000 and $80 million. That can’t be possible.”

While we weren’t looking, the mid-budget adult-oriented motion picture has all but disappeared. And the gifted directors behind them are in danger of disappearing as well. Movie wonks and box-office watchers have written and talked about the death of mid-budget filmmaking, but mostly in business terms — as opposed to personal ones, contemplating the phenomenon’s effect on the individual artists it cripples. There’s an entire constellation of cult and indie stars, filmmakers who came of age in the ‘70s, ‘80s, and ‘90s, who have either vanished from the current scene or are struggling to maintain a place within it. How many of that generation’s auteurs have we lost? How many great movies — how many Blue Velvets and Hairsprays and Traffics and Do the Right Things and Godfathers — are they, thanks to the current myopic model, not making?

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Orson Welles

“I look back on my life and it’s 95 percent running around trying to raise money to make movies and five percent actually making them. It’s no way to live.” –Orson Welles

That quote appears in the recent documentary film Seduced and Abandoned, a combination love letter and wail of despair over the current state of filmmaking, written and directed by James Toback (who wrote Bugsy and directed Fingers, The Pick-Up Artist, Two Girls and a Guy, and others). In one of the film’s many candid conversations, an international financier tells Toback that the film he wants to make — a boundary-pushing political/sexual thriller starring Alec Baldwin and Neve Campbell — can’t get financed for the $25 million budget he has in mind. How much could he get? Toback asks. Four to five million, he’s told. Toback sighs. “I’m too old for that.”

The sentiment is not uncommon. “The film business has changed. They want you to make it for no money,” Waters has said, by way of explaining his self-imposed hiatus from filmmaking. “Early in my career, it was fine to have no money. Everyone starts out without money. But I have four employees today. I have no desire to be a faux-underground filmmaker at 68 years old. I don’t have any needlepoint pillows with slogans on them, but if I did, it would be ‘Don’t Go Backward.’”

Francis Ford Coppola made four of the finest films in motion picture history, but he can’t get a movie produced anymore; after a ten-year exile, he made three films between 2007 and 2011 that were basically self-financed (via his lucrative wine-making business). “You try to go to a producer today and say you want to make a film that hasn’t been made before; they will throw you out because they want the same film that works, that makes money,” he said at the Marrakech International Film Festival. “That tells me that although the cinema in the next 100 years is going to change a lot, it will slow down because they don’t want you to risk anymore.”

Steven Soderbergh saw the writing on the wall, telling an audience at the San Francisco International Film Festival, “The meetings have gotten pretty weird. There are fewer and fewer executives who are in the business because they love movies. There are fewer and fewer executives that know movies… You’ve got people who don’t know movies and don’t watch movies for pleasure deciding what movie you’re going to be allowed to make.” He made a well-publicized exit from feature filmmaking last year.

Spike Lee at the American Black Film Festival

“I’m not Steven Soderbergh, I’m not banishing myself,” insisted his contemporary Spike Lee recently. “I’m adaptable! So do not think this is a film saying, ‘Fuck Hollywood, I never wanna do another studio film.’ That is not the case at all. But, there’s some films the studio doesn’t wanna make.” Lately, that’s included more and more Spike Lee films; he made these statements at the festival premiere of Da Sweet Blood of Jesus, a film he had to go to Kickstarter to finance. “Malcolm X was a studio film,” he noted. “Do the Right Thing was a studio film.” And he’s right — but it’s hard to imagine a studio financing either of those films now.

So, what happened? What caused this elemental shift between the way filmmakers like Lee, Soderbergh, Lynch, Coppola, Toback, and Waters worked a mere ten or 20 years ago, and the climate today? How has the industry left so many of our most important and influential filmmakers out in the cold? Well, to answer that question, I’m afraid we’re going to have to do some math.

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?

Steven Soderbergh

More importantly, if the bottom has dropped out of the valley between big-budget and no-budget, where have those films — and the filmmakers behind them — gone? Two places. The first and most obvious is the increasingly crowded indie scene. (We’ll get to the second one a bit later.) Back to Professor Soderbergh:

In 2003, 455 films were released. 275 of those were independent, 180 were studio films. Last year 677 films were released. So you’re not imagining things, there are a lot of movies that open every weekend. 549 of those were independent, 128 were studio films. So, a 100% increase in independent films, and a 28% drop in studio films, and yet, ten years ago: Studio market share 69%, last year 76%. You’ve got fewer studio movies now taking up a bigger piece of the pie and you’ve got twice as many independent films scrambling for a smaller piece of the pie. That’s hard. That’s really hard. When I was coming up, making an independent film and trying to reach an audience I thought was like, trying to hit a thrown baseball. This is like trying to hit a thrown baseball – but with another thrown baseball.

The avalanche of product has been keenly felt across the indie scene. In earlier years, Hope tells me, “the financial model was relatively secure.” Thanks to the robust DVD market and other ancillary sources, “there was a predictive revenue stream, and that allowed us to take risks on directors — I think I produced 25 first features — and allowed us to break many stars’ careers, and introduce many actors early on.” Then, in the back half of the last decade, the bottom fell out of the DVD market, mostly due to the rise of cheap streaming and the general economic malaise of the recession.

“Cut to now,” Hope explains, “five years or so post- the effects of the world financial crisis, and the films that maybe once were made for $15 million are now being made for under five. The percentage of fees have all been cut in half, so everybody ends up having to make more movies to survive, which means that they can’t make quality, they can only make quantity.”

Whit Stillman on the set of "Damsels in Distress"

So even if a Lynch, a Waters, or a Soderbergh decided to suck it up and “go backward,” they’d face a variety of obstacles. First, the budgets might be even lower than they remember. Whit Stillman made three successful independent films in the early 1990s and then didn’t make a film for a decade and a half. Before shooting that film, he tells me, he had a conversation with another director, “one who had commercial hits in the ‘90s.” His colleague told Stillman “that to make films now, budgets had to be exceptionally, amazingly low. Then it turned out that he meant ‘under 200,000’ while I was thinking ‘under two million.’ These are the two ranges I think of when considering the viability of projects.”

But let’s assume they’re willing to take the cut (and for comparison’s sake: $200K would be less than Stillman’s ever worked with, even on his first film, Metropolitan — and those were 1989 dollars). Say they manage to scrounge together foreign dollars or equity financing or investments from friends and family or Kickstarter funds. They’ll still find themselves competing in a much more crowded indie landscape — and that’s operating off the presumption of easy distribution.

“Those filmmakers are now in their mid- to late 60s, and older,” says Susan Seidelman (herself on the eve of her 62nd birthday), and as a result, they might want to tell stories about older characters like themselves. It’s not always that easy. Her 2006 film Boynton Beach Club was “a kind of a date movie for people 60 and above.” After it was finished, “it got accepted to a lot of festivals, it got nice reviews, and still a lot of the traditional distribution companies said, ‘We don’t believe there’s a big enough audience out there.’ My producers and I disagreed, so we decided to start out self-distributing.” It was only after the film started doing good business in target markets (“South Florida, for example”) that it was picked up by Roadside Attractions and Samuel Goldwyn.

So even if, by some miracle, the film is produced, it still has to make its way in an increasingly competitive marketplace, often in the hands of independent distributors and art-house exhibitors who are nearly as risk-averse as their mainstream counterparts. Spend a bit of time considering the hoops they’d have to jump through, and it’s no wonder so many iconic filmmakers are bowing out; they’ve already got a legacy, so why bother with the extra aggravation? “John Waters doesn’t need much money for his films,” Hope told me, “but the fact is, he’s probably making more money, with his artwork and tours, than he would for his films. So why does he need to compromise in order to get a movie made? It’s only going to be suffering for him.”

And the filmmakers who don’t have that kind of financial security? Increasingly, they’re saying to hell with it and going to television.

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Cary Fukunaga with Matthew McConaughey on the set of "True Detective"

“I don’t think there’s a lot of deep philosophical debate,” Soderbergh told The Daily Beast during the run of The Knick, the ten-episode Cinemax series that he directed in full. “There are more possibilities in TV, in terms of storytelling, than there are in the movies… Movies don’t have time to find audiences anymore. With TV, it’s nice to feel like you’re part of a conversation that’s going on — as opposed to the movie business, which is only judged by one prism these days: economic.”

And so the movie makers who aren’t interested in tentpoles and don’t want to go back to financing films on their credit cards are following Soderbergh in a mass migration from the big screen to the small one. Cary Fukunaga (Sin Nombre, Jane Eyre) helmed the entire first season of True Detective. Jill Soloway followed up her art-house hit Afternoon Delight by directing the full first season of Amazon’s Transparent (and will reportedly do the same for its second). David Fincher directed the initial episodes of Netflix’s House of Cards; Jodie Foster, Joel Schumacher, James Foley (Glengarry Glen Ross), and Carl Franklin (Devil in a Blue Dress) have followed suit. Indie comedy and drama directors — including Lynn Shelton (New Girl, Mad Men, The Mindy Project), Nicole Holofcener (Parks and Recreation, Enlightened, Bored to Death), Rian Johnson (Breaking Bad, Terriers), and Todd Haynes (Enlightened) — are frequently squeezing in episodic gigs between films. And the freedom of pay cable was even enough to coax David Lynch back into the director’s chair, for Showtime’s upcoming Twin Peaks revival.

Seidelman was a bit of a groundbreaker here, helming the pilot episode of Sex and the City back in 1998. “What happened is, when the middle ground fell out in the movie industry, those projects or filmmakers that were more interested in character-oriented stuff, or in more complicated subject matter, suddenly started turning to television,” she says. “TV has really picked up the slack there, and I think it’s also gained a kind of respectability — there was a time before HBO and Showtime, where it was looked at as not as prestigious. And if you were a director, you didn’t really want to work in TV as much; you were selling your soul a little bit. But that isn’t the case at all these days.”

Still photo from Whit Stillman's "The Cosmopolitans"

Stillman agrees. After his long-awaited comeback film Damsels in Distress, he went over to Amazon to make The Cosmopolitans. “What has affected my thinking a lot is that people, especially younger people, are going to the cinema much less,” he explains. “There are few ‘event’ indies anymore. And it’s great to work in a medium in which a lot of people can see the show right away. So just as financing mid-budget films has become especially tough, there is a boom in financing of new media — but one can never assume how long such boomlets are going to last.”

Film’s loss is TV’s gain — for now. But is television an acceptable substitute for the scale and scope of a major motion picture? The budgets are often scarcely better than those low numbers on the indie model, and it’s a very different type of storytelling, open-ended, rarely working towards the kind of satisfying conclusions a great movie can offer. Plus, few get the kind of control over an entire series or season that Soderbergh, Lynch, Solloway, or Fukunaga do, making it much more difficult to establish an authorial voice and style. And filmmakers who don’t yet have Soderbergh and Lynch’s clout will most likely find network suits even less intellectually and experimentally accommodating than their film-exec counterparts. Even the warm embrace of HBO couldn’t keep Mike White’s Enlightened or Christopher Guest’s Family Tree on the air; ditto Frank Darabont’s Mob City on TNT.

How long, then, will the current filmmaking model hold? No less an authority than Steven Spielberg predicted last year, “There’s going to be an implosion where three or four or maybe even half a dozen of these mega-budgeted movies are going to go crashing into the ground, and that’s going to change the paradigm again.” Ted Hope agrees. “You look at the worst summer attendance [in 2014], box office dropped 15 percent, people like [DreamWorks Animation CEO and former Disney chief Jeffrey] Katzenberg saying that movies aren’t a growth industry, everything pointing toward the collapse of the foreign sales model.”

So, where does he think it’s going? “It feels incredibly vulnerable to me,” he says. “Look, I’m surprised the superhero stuff has the legs that it does, but you look at what Warner Brothers and Marvel have mapped out, you add into it all of the Universal monster movies and all these others platform plays, and you better hope that nobody’s taste changes for the next five years, you know? That’s not a diverse portfolio!”

This may not be the new normal — studio filmmaking may be on the verge of the point it reached in the mid-to-late 1960s, when a bad run of bloated, runaway productions, reflecting market calculation rather than vibrant storytelling, just about put the studios out of business. The movies only managed to save themselves because the suits handed over the car keys to young filmmakers with original stories to tell and a new way of telling them. That’s how the New Hollywood movement was born — less out of the inspiration of the new than the desperation of the old. And since it’s a cyclical business, that might be what saves the movies again: the urge to burn it all down and start over fresh. The question is, how many great films and great filmmakers will we lose in the meantime?

[*UPDATE 12/12: We were initially unable to pinpoint the budget for the film Night Falls on Manhattan. After this piece was published, we were contacted by a source who worked on that film and provided that number. The paragraph following the 1997 Paramount breakdown was adjusted accordingly.]