Why Art is About to Make a Comeback in Hollywood…

“Quality is still considered a genre.” ~ New York Times.

Hollywood film executives are oftentimes berated for producing an extraordinary amount of awful and non-artistic films. In the ideal entertainment world, studios would serve as art houses that consistently pumped out content of higher quality. They would not be purely big banks. However, according Mark Gill, former President of Warner Independent Pictures and Miramax Films, “Art is about to make a comeback in Hollywood”.

According to Gill, Jaws ruined the movie business because it gave permission for entertainment executives to produce and market a bad movie very well. Unfortunately, Jaws happened to be a good movie that ushered in an era of poor movie making. What followed was a generation of movie producers who focused on film marketability first and then quality as an afterthought. It was considered too risky to try to produce an execution-dependent movie.

On April 12th, 2007, Mark Gill spoke to HBS students on why Hollywood has reached the end of a thirty-year era in the movie industry, where good marketing can no longer save bad films. When the industry truly figures that out–which it is just starting to do–the whole business of making movies will change for the better. Mark Gill provided fascinating industry insights for aspiring film producers:

1. On the script:
The script is the blueprint of the film. Do not be dumb. Always read the script before purchasing it! Gill is astounded whenever he learns of fellow producers purchasing scripts before reading them. Sadly, most scripts are bad. Mark receives approximately five thousand scripts per year. Of this amount, only five hundred are good. Gill has been instrumental in changing the quality of Hollywood films. When Gill served as the former President of Warner Independent Pictures, his studio was the first in film history to have an Oscar nomination in each “Best Picture” category: “Good Night, and Good Luck” for Best Picture, “March of the Penguins” for Best Documentary, and “Paradise Now” for Best Foreign Picture. Currently, Gill is CEO of The Film Department (TFD), a new $200 million company that will focus on star-driven feature films of quality content in the $10-35 million range. According to Gill, the only way to cut the movie budget to $10-$35 million and cutting the salaries of stars is by producing films from cream-of-the-crop scripts…films worthy of Oscar Nominations.

2. On increase in product variety:
According to Gill, an increase in product variety leads to an overall surge in consumer demand. The best business model is Netflix, an online DVD rental company that uses trusted filters that allows five million (mostly upscale) subscribers to weave through the diverse offerings to provide the viewer with more satisfaction. Netflix seems to consistently nail the tastes-no matter how eclectic-of its incredibly satisfied members. For example, Francis Ford Coppola’s obscure 1973 movie, which is nowhere to be found in video stores, The Conversation, is the most rented movie on Netflix. Thanks to Netflix’ trustworthy filter, Netflix audiences are thrilled to have discovered the movie and enthusiastically recommend it.

3. On distasteful behavior in Hollywood:
In Hollywood, distasteful behavior is fueled by two things: FEAR and GREED FOR MONEY. Hollywood careers are like baseball careers-oftentimes short-term. Fear ruins every part of life here. The average movie costs $130 million to produce. Studios have realized that they have entered the world of tent pole movies-movies that target the larger audience: men and women; children and adults, etc. The system is so terrified about taking the risks. Film Distribution, on the other hand, is much lower-risk business.

4. On stepping outside of Hollywood fantasy:
The music business is worth one-fifth of what it was worth seven years ago. Unfortunately, the music business moved away from quality. Film executives must be not be too na’ve or too optimistic. The same can happen in the movie industry.

5. On cultural biases:
Gill admits that he is sick of movies from Los Angeles and New York City. The problem with the audience in the USA is that foreign language films do not travel well. For example, Americans are not thrilled about period history; although the rest of the world is no scared: Perfume made $100 million in Western Europe and only $3 million in the USA. Although India produces more films than the rest of the Western world, Indian films do not suit the tastes of the American audience. Interestingly enough, English-language films travel well throughout the world. Fortunately, really dumb American comedies do not travel well. Additionally, Western and sports movies do not travel well internationally.

6. On thanking PDA devices and cell phone text messaging:
Word travels at lightning speed when a movie is terrible. The Queen was an example of a movie whose success depended on word-of-mouth. In contrast, Universal spent an outrageous $100 million on domestic marketing alone of Miami Vice. Yet, the movie still flopped. This failure was instigated by the power of the mobile device. On opening night, everyone received a message in their PDA devices: “Don’t go.” The Devil Wears Prada.

7. On the history of film financing:
Interestingly enough, the sources of film financing have changed throughout film history, ranging from insurance companies to the German Deutsche Bank. The last two years of film financing have been dominated by main-stream Wall Street.

8. On $$$:
Investors like to control where you go for lunch and like you to work for free. They also want to be involved with casting…and even want to green light movies! You must learn to be a good negotiator when dealing with investors who know nothing about the art of film production.

9. On independent production:
Studio-owned independent divisions such as Warner Independent Pictures, Focus Features, Paramount Vantage, and Focus Features are sometimes derisively labeled as “dependents”. Over the past couple years, studio-owned independent divisions have grown. This has produced a dent in the big-studio conduciveness towards pumping out awful films.

10. On the digital revolution:
The digital revolution in Hollywood has arrived. Technology brings both beauty and headaches to the film industry. The beauty is that technology has encouraged the growth of independent film production. Excellent independent films such as The Queen and Brokeback Mountain can reach the broader audience. Unfortunately, the majority of these independent films are truly terrible. In the past, the Sundance Film Festival typically received a couple hundred feature film submissions. This year, the festival received approximately four thousand.

With great relief, according to Gill, the days of a purely hit-driven popular culture are over, and success driven by marketing is coming to an end. The audience is certainly growing smarter. Five years ago, art films sold 5%-6% of the tickets; today, they sell 10%-12%. The audience no longer wishes to watch “the same old homogenized thing”. International distributors are also smarter. Before, international distributors would buy films based on the posters; today, people are getting smarter all over the world.