The Great Depression II will be good for Hollywood

In Hollywood, there has always been a huge battle between the artists and the entertainment companies. It is almost like the struggle between pitchers and batters in baseball, or offense and defense in football. This is the entire warp and woof of the game, from an insiders perspective.

Entertainment companies are run by businessmen. They want to make money. The best way to do that is to give the people what they want from a movie: Entertainment. Declinations from this stance are punishable by low profits and bad losses.

By the way, I should mention that the definition of hit has nothing to do with what the critics, the people, or the Oscars say about a film. A hit is defined as a 15% rate of internal studio return, within 12 calendar months, after all costs and payouts have been made. 15% pure cream makes a movie a hit. If you make this rate of return within 12 calendar months, you made a hit. It does not matter how the film is ultimately remembered or what people said about it. It made money. It was a hit.

Artists are manic, depressive, schizophrenic people with sexual and substance abuse problems. They are also extremely narcissistic. They think there can be nothing more important, or timely, or provocative, or artistic than stories about their personal problems. They think personal confessions are the stuff of art. Artists like money, but they like to tell their own personal stories about heroine addiction and homosexuality and life with AIDS much more.

Entertainment companies realize that grueling, punishing, depressing stories about actors and writers with heroine addiction, homosexual issues and AIDS related illnesses have zero commercial value at the box office. That's right, I said zero commercial value. When you toss in the manic, depressive, bipolar schizophrenia behavior, the screenplay really gets ugly beyond ugly.

These movies very seldom make a 15% rate of internal studio return within 12 months. Most of them loose money. 75% of the people in the United States of America have no interest buying a $10 ticket for a film about an actor who peddles his ass on the streets of West Hollywood whilst awaiting his break, only to become addicted to smack and infected with HIV. 50% of the people wouldn't watch that movie if you showed it to them for free. 25% wouldn't watch if you offered them free chicken and biscuts along with a free ticket.

Nevertheless, this doesn't prevent 20 such screenplays from being written each and every year. Go down to West Hollywood and stop at any Starbucks for a cup of coffee. You will see three guys, each with an Apple MacBook, writing just such a screenplay right now. I assure you, these three guys are each convinced that they are writing the most important literary work in the past 20 years. They know they are way beyond cool. They will all be shocked when doors get slammed in their faces. The corporate studios just can't recognize great art, or so they say.

Now how does this connect with the Great Depression II? Movies did well during the Great Depression I. It turns out that Hollywood is surging right now, but not everybody is doing equally well. It is said that Paramount may well fold in the year 2009. They are going to release just 18 new films this year. In the glory days, they tried to have 1 film ready to launch every single week. Not so now.

Everybody is keenly aware of Paramount's problems. The other four major studios are watching Paramount's dilemmas very closely. They know many of the material weaknesses in the Paramount system are evident in their own systems as well. They know they could suffer collapse unless they rid themselves of the problems Paramount is suffering from.

What are these problems? You might call it the Labor-Accord of the 1960s. I'm not talking about Unions or pay or benefits. I am talking about the balance of Art vs. Entertainment. You see, ever since the 1960s, there has been a clear understanding that goes a little something like this.

Artists have to work on a certain number of blockbuster A-pics each year for their respective studios. These are movies designed from jump street to make money. Hopefully they all make money. Some profits from these successful blockbusters are used to finance a limited number of art movies which the artists basically control. This is where you get strange movies like the ones made by Fox Searchlight, or Disney's Miramax. These movies contain a lot of drug addiction, insanity and homosexuality. Everybody understands that very few of these art films ever turn a profit. If you don't work on the blockbusters, you don't get to do an art film. If your blockbuster doesn't make money, you don't get to do a movie about your psychological train-wreck. You don't get any pudding until you finish your meat.

The only problem with this theory is that the blockbusters cost a ton of money, and they don't necessarily hit. When they fail, blockbusters loose a ton of money. Eddie Murphy's notorious Pluto Nash lost something like $90 million for Paramount. {This is an example of a worst case scenario.} The key point is that there are no sure-fire blockbusters. Some people in Hollywood say you need two good blockbusters just to cover the cost of one blockbuster failure. When you throw in the failures of the art films, you really start to encounter financial problems.

There were artists in Hollywood during the Great Depression I. They suffered the same insanity, drug addictions and homosexual issues current Hollywood artists do. There were also studio businessmen in Hollywood during the era of the Great Depression I. There was no Labor-Accord like the kind we have today. It was understood that money was too dear, failure too damaging, and studio-collapse too close to waste lots of capital on art films. The result was that very few art flicks got made during the Great Depression I. Thank God for that.

Rather, Hollywood constructed the Grindhouse system. A couple of film crews were formed at each major studio, and they were supposed to grind out 1 film every 2 weeks. Everybody had the same amount of time to write. Everybody had the same budget to shoot the pic. Some turned out. Some didn't. Any major actor under contract might shoot 10 or 15 movies per year. John Wayne did this during WWII. The objective was entertainment, always. The objective was to give the people a good show for their money, always. You were an entertainer, working for an entertainment company in those days, period. If you wanted to be an artist, you could get on a plane for Paris or Rome.

Most of the movies considered all-time classics were shot under this Grindhouse system. Casablanca was shot in this fashion. Casablanca is one of those films thought to be in top 5 all-time list.

Might this system return today? Might history repeat itself in Hollywood as the Great Depression II sets in?

Not exactly, but something like it is going to emerge. The model the Majors are studying very closely is Lion's Gate Entertainment. Lion's Gate has become little-big studio. It is the largest and most profitable of the minor studios in Hollywood, Pixar included. Right from its very inception, the guys driving the Lion's Gate project had a clear-cut objective of becoming a major studio. They didn't want to replace 1 of the big 5 studios, rather they wanted to become the 6th major studio. How do you do this?

Unless the studio execs can see a clear-cut path to profits, Lion's Gate will not finance a film. This means they make a lot of comic book films, action blockbusters, and horror movies. The objective is to give the people a good show for their money. The objective is to give the people what they want: Entertainment. If you work for Lion's Gate, you are a professional entertainer working for an entertainment company.

Lion's Gate is detested by the Hollywood art community. The members of SAG do not speak well of Lion's Gate. They are considered the ultimate corporate commercial studio in Hollywood. This means they don't finance art films. You don't see a lot of movies about heroine addiction, insanity and homosexuality coming from Lion's Gate. Despite their hard-hearted rejection of the art film, Lion's Gate is winning this game. They keep turning in one great winning season after another. SAG members often shake their heads in dismay that a studio can so brazenly disregard art and yet do so well financially.

If Paramount should fail, Lion's Gate will likely be the chief benefactor of this collapse. Lion's Gate will probably buy "I Love Lucy" and "Star Trek". Lion's gate will probably gain the Lion's share of the investor capital that Paramount once controlled. When the Hedge Funds return to the table, Lion's Gate will probably become the 5th major studio.

Moreover, the collapse of Paramount would send shock waves of fear through Warner Brothers, Universal and Fox. It is a copycat league. Teams emulate success and they anti-emulate failure. You can expect Warner, Universal and Fox to move away from their current systems {the Labor-Accord Paramount also practices} and move towards the model Lion's Gate manifests.

This would mean no finance for art films... At least from the major studios. This would mean artists would have to self-finance their movies about insanity, drug addiction and homosexuality. Most artists don't like that idea. They seem to be aware that they won't be able to punish society with very many films on this subject should these events come to pass.