How much does the film industry spend

Nobody knows anything

Films are very expensive products, the success of which is completely unpredictable. A Hollywood studio is a manufacture that risks a two- to three-digit million amount around 20 times a year for a one-off piece that nobody knows whether it is for sale. From an economic point of view, the film industry is so risky that it is actually astonishing that it even exists. That is the fundamental problem in the film industry.

It is unsolvable.
End of text for readers in a hurry.

18 million lines left on the film industry. Nobody cares. People want to be entertained in the cinema, nobody wants to know what it cost or how it is financed. "Titanic" was the most successful and expensive film of all time, but these two facts are only vaguely related, if at all. People loved the movie, not the budget. And then the numbers. I don't know any numbers, I'm not interested in them either. I don't even know what "Titanic" cost. A lot anyway. More than I deserve.

Filmmaking is by far the most expensive way to create entertainment. The average cost of making a Hollywood movie in 1980 was around $ 20 million, and now it's around $ 50 to $ 60 million. Then there are the marketing costs, which have increased enormously in the past two decades: from 20 to 40 percent of the production budget in the past to up to 100 percent today. Okay, some of the technology has become cheaper, for example through digital cameras that save expensive celluloid. But that's part of the below-the-line costs: technology, wages (the biggest factor in this area), rents, equipment, administration and so on, the basic costs. More important, however, are the above-the-line costs: the salaries of the stars and the director, the price of the script and the special effects. These costs rise disproportionately in large-scale productions. And that is almost all films today.

It was different before television was invented. At that time the stars and technicians were permanently employed by the film studios because it was produced industrially. Cinema was a cheap popular amusement, almost every film made a profit, and if not, the loss disappeared in the crowd. Then television took over the basic supply of entertainment and the film industry was the first to enter the post-industrial age. In order to survive against the free TV competition, the studios returned to the origins of cinematography, which began with the presentation of moving images at fairs: the presentation of sensations. For some time this led to the forced introduction of new technologies that television could not offer, such as 3-D film. But technical gimmicks were (and still are) short-term stimuli, quite apart from the fact that some inventions were only fun to a limited extent. For example Percepto, for which small generators were installed under the seats in some cinemas in 1959 for the film "The Tingler". This gave viewers electric shocks during the film to increase the tension (welcome to the word game hell).

A more long-term perspective was the further development of the star system (it is no coincidence that idolized icons of the screen such as Marilyn Monroe or James Dean appeared or were made at this time) and the invention of overwhelming cinema or the set-up film (at the beginning they were primarily historical films with thousands of extras, the new large format 70 millimeter film went well with this). With these two innovations, Hollywood did quite well for a long time, but without solving a fundamental problem: All films are expensive, but not all are successful. Screenwriter William Goldman's phrase "Nobody knows anything" sums up the basic problem: There is no sure recipe for making a film a success.

So the successful films have to help finance the others. However, if an expensive film becomes a hop, it can mean the end of an entire studio. It was, for example, with the legendary flop "Heaven 's Gate", which was filmed in 1980 for an enormous 44 million dollars at the time and ruined the production company United Artists. You could say it was foreseeable: a three and a half hour long western! With the French intellectual icon Isabelle Huppert! And the director Michael Cimino spared nothing, 200 extras received three weeks of roller-skating lessons, paid for by the studio! On the other hand, James Cameron also broke all the rules on "Titanic": excess length (three hours), no stars (they weren't until afterwards) and shot on the water (that's particularly expensive). The director even had the china made by the same company that supplied the original china for the Titanic. There was just one big difference: James Cameron was successful, Michael Cimino was not. And that's all that matters.

I really have to see how expensive "Titanic" was. Preferably on the internet. As is well known, everything is in there that you don't want to know.

Today, the average studio track record looks something like this: 50 percent of films flop and lose, 30 percent are in refinancing, and 20 percent are making a profit. These are the blockbusters, and in an attempt to at least reduce their risk, a very expensive battle for stars and technology has developed in Hollywood in recent years. Supposedly safe cash register magnets like Julia Roberts or Mel Gibson can now charge 25 million dollars, a sum that was unimaginable at the end of the 1990s.

State-of-the-art digital technology is also not cheap, especially when the special effects are the focus of the film or even the main character is animated, like the eponymous monster of the failed superhero film "The Hulk". In addition, there is no end to the price spiral in sight for both the stars and the special effects: Tom Cruise and Tom Hanks are already getting more than 25 million dollars for a film. And the next technical innovation in Hollywood is imminent: the 3-D cinema. This is the third attempt after another failed introduction in the 1970s.

But upgrading with stars and technology is only part of minimizing risk. In addition, there is the continuation of successful films ("Matrix 3", "Terminator 3", "Lord of the Rings 3" etc.) and the orientation towards an increasingly younger target audience, which is considered to be particularly predictable and susceptible to marketing. This is especially important for the starting weekend of a film: A large-scale production is starting today in more than 3000 cinemas in the USA, ten years ago it was just 1800. Advertising fills these cinemas by promoting the teenage attitude (Me! Now ! Everything!) Appeals and ensures high audience numbers before word of a possible disappointment spreads (as with "The Hulk" or in Germany with "Matrix 2"). In addition, the kids buy merchandising and participate in cross-media: The book about the film, the soundtrack and the computer game wash money into the coffers of the studios and their parent companies, the entertainment multinationals. They also reduce marketing costs because everything can be advertised together.

The cross-media strategy in particular is often seen as the solution to the Hollywood dilemma, because supposedly the further processing of established brands is a sure thing - see Harry Potter. But apart from the fact that industry observers point out that excessive media presence can also destroy brands, the strategy basically requires higher investments, which of course have to be offset by higher income. You don't even have to go through the entire recycling chain for the infinite screw of the old in-out game. Jim Gianopulos, head of Fox Filmed Entertainment, calculated for L 'Express magazine that a film like "Men in Black", which cost $ 140 million, would make a loss of $ 80 million with a box office of $ 300 million. And as a rule, if there are other media releases attached to such a film, they will also fail after the film fails.

In view of the enormous costs, the Hollywood studios are massively cutting jobs; at least 5,000 jobs are to be saved this year. Large productions have been relocated to cheaper foreign countries as far as possible for some time. For example, the three parts of "Lord of the Rings" were made for around 300 million dollars in New Zealand. In the US, the series would have cost twice as much.

Small savings and greater flexibility could be achieved by digital projectors that are not played with expensive copied rolls of film, but with data from the cable or satellite. But apart from the fact that, firstly, the technology is still not fully developed years after it was announced and, secondly, the studios and cinemas cannot agree on who pays the costs for the projectors, thirdly, the technology will exacerbate a growing problem in the film industry: the digital data theft. Even today, the industry claims, billions are being lost because films are illegally downloaded from the Internet. If the films slide around the world as data from the start, the problem is unlikely to diminish.

There is no future perspective without problems for Hollywood. Whatever you add to the distribution chain, however films are funded, in the end the audience decides what will and will not be a success.

As for the music industry, it would be advisable for the film industry to make greater efforts to attract adult viewers: They have enough money to buy tickets, DVDs or possibly useful accompanying products and do not download films from the Internet as often - not for example because they have a better sense of justice, but also because real film fans like to indulge their hobby in real cinemas. Apart from that, it may help to create more space for auteur cinema. Some of the current box office hits come from film fans who have produced their debuts independently and often on a small scale. For example, director Robert Rodriguez only had one camera and $ 7,000 available for his debut "El Mariachi". In the meantime, Rodriguez has made two films about the child heroes Spy Kids, which cost around 40 million dollars each and grossed around 200 million dollars in the US alone. Peter Jackson, director of the global hit "Lord of the Rings", also started out very small: his first film "Bad Taste" cost around $ 150,000.

It has been proven that people who believe in conviction can produce very cheap works that bring in a lot of money, extreme examples are "The Blair Witch Project" (cost: $ 35,000, income: $ 140 million) or "My Big Fat Greek Wedding" (cost: $ 5 million , Revenue: $ 82 million). But it is difficult to train managers in Hollywood to rely on artists who are considered to be unreliable. They prefer to keep believing in marketing despite all the bad experience. A learning process would be helpful but is unlikely.

This naturally raises the question of why films are still being produced at all if it's such a risky and arduous business. Aside from the obvious answer that many people just learned this and now they have to because it is their job, there are two important reasons. On the one hand there is glamor: nowhere are the stars bigger and at the same time more tangible than in Hollywood. When you're making a film, you're constantly dealing with global icons - even the biggest producers like that. On the other hand, in addition to the business interests of many producers, there is also a real love for cinema, for great entertainment. Of course, the new generation of managers who are interested in nothing more than money and business plans has also found their way into Hollywood since the 1980s, but there is also a class of film fans that has grown over time. (That's why a distinction is made between executive producers, who are the money people, and producers, who are responsible for the artistic side of films in the credits.) These people have their roots in the old Jewish artistic milieu, and some people see this as another reason for that Hollywood success: The Jews have roamed the world as a nation without a land for so long that their humor and art are part of local culture in many parts of the world and are immediately understood.

End of text for readers only interested in Hollywood.

An average German film costs two to five million euros, which in Hollywood is not low budget, but no budget. In addition there is 10 to 20 percent marketing, politeness forbids a comparison with US budgets. The German cinema market is fiercely competitive: American studios used to make 75 percent of their income in the USA and 25 percent abroad, today the ratio is around 50:50, and by 2020 75 percent should be made abroad. And Germany is the USA's largest foreign sales market. That should actually lead to German films being marginalized, but on the weekend before this text was written, nine of the top 20 films in the cinema charts were German productions with a total of around 500,000 viewers. And the most successful film of the year so far is "Good Bye, Lenin!", With 6.5 million viewers.

People want something to happen, but best on their doorstep. The Berlin film "Herr Lehmann", the Christian drama "Luther", which had 250,000 viewers on the first weekend, the return of a target group believed to be lost,

(I saw two retirees in thick sweaters, they must have not been to the cinema for 20 years, hopefully they got home safe, it was already dark outside.)

the soccer film "The Miracle of Bern" or "Good Bye, Lenin!" show a clear tendency towards local color, i.e. stories that relate to their own life. This is also confirmed by Matthias Elwardt, head of the Hamburg Abaton, one of the oldest art house cinemas in Germany. European films, he is certain, are particularly convincing through their stories. Elwardt shows 70 percent European productions, but only ten percent US films. With this program, his house is doing better than a large part of the industry that whines about the cinema crisis. Elwardt thinks it is actually a film crisis, there was a lack of good films this year.

And I agree with him. Above all, I can no longer see the American mainstream constructs, the foreseeable conflicts, the main characters who are precisely tailored to different target groups, the exact rhythm in which dialogues, action and humor move, in every single scene as well as in the Totality, a carefully planned clockwork. If I were twelve I wouldn't complain, a few years ago they had twelve-year-olds read the scripts in some film studios, if they didn't understand them, they were too complicated and were rewritten. But I'm not twelve anymore, and when I see Pirates of the Caribbean I can think of a thousand better things to do instead. For example, sleep.

The cinema crisis hits the multiplexes in particular. Elwardt doesn't know an Arthaus cinema, i.e. an upscale art house cinema that has had to close in recent years. However, some cinema centers have already given up. (They are then often torn down because their special architecture cannot be rededicated, which also means that the landlords offer operators low rents in an emergency, which keeps such houses on the market longer and thus exacerbates the misery.) The multiplex construction boom ( around half of German cinemas were built in the past eight years) was based on optimistic, from today's perspective absurd estimates of audience numbers that were not achieved even in the record years of 2001 and 2002.

In addition, the main target group are young people, i.e. those who often get films illegally from the Internet. And the lack of it can only be compensated to a limited extent by higher admission prices, of which the film distributor receives 45 to 51 percent anyway. It can even be worthwhile to lower the entrance fee when the bar is full, because multiplexes have a mixed calculation in which gastronomy is very important: each guest should leave an additional two euros in sales in the cinema center, ideally for popcorn, that is a money printing machine with profit margins of up to 800 percent.

What, unfortunately, cannot be said about German film. There are many reasons for this, but maybe only one: There is a lack of money. Because everyone knows that wherever little is invested, much is rarely earned. There is enough money. German investors have put billions into the film industry - in Hollywood. Big names, fabulous budgets, the dream of lots of coal are alluring. Especially during the stock market boom, international film funds came into the market, producing a series of films that no one has ever heard of again. In Hollywood that was called: stupid German money. The model still exists, although the tax-privileged outflow has meanwhile been made more difficult and various bankruptcies should be a warning to investors. But here too: no learning process.

I'm kind of a movie star, by the way. At least that's what I look like. Well earlier anyway. Strangers came up to me and said: "You look like Woody Allen." Dozens! A girl once said I looked like Robert Redford. But I think she needed glasses.

Ralph Schwingel from the Hamburg film company Desert Film has an investor for his next production. That is rare in Germany. The man, he says enthusiastically, read the script, didn't get nervous when there were problems with the distribution, and firmly believes in the film. This is how, he thinks, an investor should be: He has to have a nose for good materials and be ready to take risks, then he could also become something in Germany. But, he admits: There are almost no connections between the film industry and investors. A gap in the market.

The 100 or so films that are made annually in Germany are still mainly supported by subsidies and hope: The most important thing is the money from federal and state film funding, which, according to current EU law, only accounts for 50 percent of the total budget may - a value that is usually fully exploited in low-cost productions. In addition, if you are lucky, there are guaranteed sums of a rental (if you have a rental, that is not a matter of course), own funds and funds from the television companies, for which you have to sell the broadcasting rights.

The television companies are a major brake on the development of the German film industry. They pay for the TV rights of international films appropriately, not only for US products: the first broadcast of the French hit "The fabulous world of Amelie" brought in a whopping five million euros. Unfortunately, that is exactly the same amount that the ZDF, after all the largest television company in Europe, spends annually on co-productions of German cinema films. Of course you can produce without a TV broadcaster, but there are two catches: On the one hand, some of the subsidies are linked to TV cooperations - without television there is no money. On the other hand, the broadcasters are nowhere near as willing to negotiate with local companies as they are with international competition. When, during the stock market boom, some companies were working without a broadcaster and selling their films on state television at market prices, they were left to fidget until they stopped moving. That was one reason for the cinema world bankruptcy. And the system keeps the production companies small to this day: The first broadcast of the film "Good Bye, Lenin!" brings in a million euros, a fraction of the market value.

The films lose their profits due to their financing structure, says Ralph Schwingel. DVDs are a ray of hope, the sale of rights brings money into the coffers in advance and, if successful, additional income. The DVDs are also useful in the cinemas, because without prior use on the screen, the films are difficult to sell on the home cinema market, and the price of the TV rights is lower. This can even lead to production companies offering their products to distributors free of charge in order to refine them through a cinema show. The wave of Japanese films that has sloshed through art cinemas in recent years is based on this system.

In view of the environment in which it is created, the German film is doing very well. One could write books about film funding alone: ​​It is, of course, above all a location support, regional funding demands 150 percent regional expenditure on the subsidy amount. At the same time, however, cultural policy is still being pursued, as in Bavaria, where a mainstream cinema à la "Rossini" is being promoted that no longer exists. In addition, there are many rules, laws and regulations, the media decree published two years ago, which was supposed to stop tax-privileged investments in Hollywood, produced several volumes of comments - the decree itself was just two pages long. It did little harm to the film fund, but made international co-productions more difficult. And so on. But of course there is also misery in the industry: Many producers live from the production of the films, whether and how they are then evaluated is not so important to them, because they already have the next funding from somewhere - and with it the next rent.

What if there was no film funding? Ralph Schwingel refers to Turkey, where he knows his way around, not least because he produces the wonderful films ("In July") by the German-Turkish Fatih Akin. There is no funding there, which means that all the large production companies live on commercials and more or less often treat themselves to a real film. He even knows a company that produces almost no money, he doesn't know how they do it, but in the past five years they have made some very successful films. Schwingel assumes that films would continue to be made even without funding.

Matthias Elwardt sees the future in better stories, the good German scriptwriters all work in television, the film industry lacks them. He points out the Danish Dogma films, in which everything could be saved during the shooting, among other things, because the scripts were worked intensively beforehand. Dogma is noteworthy in another respect as well: proclaiming a new movement is a brilliant marketing ploy. Finally, the movies were good too. You can see: everything is fine.

So that was the facts, facts, facts. But what do they tell us? I find it astonishing that, despite the huge sums of money that are constantly being risked, many unconventional, great films are still being produced, in Germany with less money, in the USA with more, including by large studios, in which individual producers are often responsible for Nice, good fight. Harvey Weinstein, for example, the choleric and feared Miramax boss, has just taken care of Quentin Tarantino's great new film, "Kill Bill". Yes, he's bringing it to theaters in two parts so that he can get double entry, Harvey Weinstein wants to make money - but is it a good film? Just! And I find something else reassuring: the audience is rarely wrong. More than a year after its release, Andreas Dresen's wonderful cheap film "Halbe Staircase" is still rolling through the cinemas, very quietly, without advertising, it has 5,000 to 7,000 viewers every week, and soon it will exceed the 500,000 mark. What did it cost? No idea. Do you know what "Titanic" cost?

End of text. You can now turn the page.

And say something nice to the people you love tonight.