Demands of top Hollywood stars responsible for blockbuster losses

November 14th, 2007 - 10:31 pm ICT by admin  

Washington, Nov 14 (ANI): Demands of top Hollywood stars have made movie business into a loss-making industry at the precise moment that it has lost its audience at the box office, according to a research.
The research by Global Media Intelligence (GMI), an offshoot of Screen Digest, a London-based research company, has revealed that the leading culprit behind the losses are the spiralling costs of “gross participation” deals, which can account for up to 100 million dollars on a single film.
Roger Smith, the author of the report and an industry veteran of more than 30 years, said that deals offering top actors, directors and producers a slice of the gross revenue from a film have increased steadily in recent years.
They are not included in budgets and are paid on top of the star’s official salary. GMI estimates that they cost Hollywood at least 3 billion dollars last year.
Smith said that stars such as Tom Cruise or Tom Hanks are usually guaranteed 20 million dollars for a role and they are also entitled to 20 per cent of the studio’s share of the worldwide gross, which can be up to 500 million dollars on a global hit such as ‘Pirates of the Caribbean: At World’s End’.
“A nine-figure payday is extremely rare, but the high eight figures is not unusual,” Times Online quoted Smith, as saying.
During the research, the company calculated that Cruise made 95 million dollars from ‘Mission: Impossible III,’ which he starred in and produced.
The film took just under 400 million dollars at the global box office.
Smith said that Paramount, the studio that had invested an estimated 150 million dollars in the film, “maybe got 10 million dollars as its share.”
He added that investing in films has always been a gamble, with studios traditionally relying on big hits to cover the losses on the rest of their slate.
“They make anything short of a wild hit not that profitable. One recently retired studio executive put it to me this way: ‘It isn’t that the losers lose so much; it’s that the winners don’t win enough’,” he said.
The details of individual packages are generally kept secret but Disney, the one studio that does declare the amount it pays out in participations and residuals, spent 554 million dollars on them in 2006, nearly four times more than in 2002.
At the same time the association between star power and box office success is becoming less reliable, he said.
“Here’s the new benchmark for predicting box office performance: if a movie star heads the cast, downgrade the forecasts. While movie stars today can help open a picture, they sure as hell can’t guarantee success. Some distributors inevitably ask, has the basic concept of a movie star become something of an anachronism?” Peter Bart, the editor of Variety, the industry newspaper, wrote last month.
He listed Clooney, Ben Stiller, Jodie Foster, Halle Berry, Brad Pitt, Mark Wahlberg, Joaquin Phoenix, Jude Law and Jamie Foxx as A-listers whose recent films have “either underperformed or tanked”.
Mike Gubbins, the editor of Screen International, said: “The studios have spent a fortune this summer and I’m not sure the box office justifies it. Their success has been unrealistically paid for, which is why there is a growing interest in backing smaller films which can offer good returns without the studio having to bet the bank.”
The results are based on evidence that revenue growth has stalled after a “golden age” between 2000 and 2004, while costs have ballooned.
The research company believes that most of the biggest box office hits of 2006 made an overall loss or failed to return significant profits to their investors. These films include ‘Mission: Impossible III,’ ‘Superman Returns,’ ‘Dreamgirls’ and ‘Miami Vice.’
Other factors responsible for the losses include falling DVD sales, increasingly ambitious marketing campaigns and demand for ever more spectacular special effects. (ANI)

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