What Did 1994 Actually Change in Hollywood? | QDaily Business History

Using what happened around 1994, we want to explain why people feel good stories are getting scarcer, and why popcorn movies fill the theaters.

Birdman opened in North America on October 17, 2014, and finished with $37.78 million at home and $38.8 million overseas. It cost only $18 million to make, and it is still one of the least profitable Best Picture winners in Oscar history. The same fate had befallen the previous year's winner, 12 Years a Slave. Meanwhile The Hunger Games, the top-grossing film in North America that year, left the Oscars with nothing.

A film that wins the industry's highest honor and then dies at the box office creates a mood that matches the film itself: a Hollywood star who once ran the town is old now, wants to prove he still matters, and keeps running into walls.

"Most of the [Oscar] categories nominated Birdman, and that may be very nice, but it means nothing for the Hollywood industry," said Edward Epstein, who has studied Hollywood and the American film business for more than 30 years. Books like his The Rules of Hollywood Money (《好莱坞金钱法则》) let ordinary readers see the interlocking commercial machinery behind this glamorous business. He said this before the Academy Awards were announced.

Setting a film's artistic value aside and talking only about its "industry significance" is a cold way to look at things. But Hollywood has never been a warm place. "A big studio like Time Warner has 1,200 permanent employees it has to pay salaries, pensions, and health insurance for. What they need are films that bring in huge profits," Epstein told QDaily. Many people care enormously about the Oscars because the Oscars are an honor, he said, but to a studio they are worth much less than that.

Reviewing the most profitable films in the North American market over the past 34 years is easy: go to boxofficemojo.com and you can see the box-office champion for every year since 1980. In recent years, 2011 belonged to Harry Potter and the Deathly Hallows and 2010 to Toy Story 3, with Avatar, the Batman films, and Pirates of the Caribbean turning up again and again — not to mention Titanic, which swept the world in 1997. But it has become an ever more obvious consensus that the Oscars do not love commercial blockbusters. Titanic did win Best Picture, and Best Animated Feature keeps going to films with Disney-Pixar genes like Toy Story 3, yet Best Picture has always kept a careful distance from big commercial films. Look at the recent winners: The Artist, Argo, 12 Years a Slave, Birdman. They either tell stories about Hollywood itself or lean toward politics and history. Christopher Nolan, who has proven he can make films that are both profitable and good, has been more or less ignored for years now.

We are revisiting all this because in 2014 we ran a story pegged to the 20th anniversary of Forrest Gump — the same year The Shawshank Redemption came out. Looking at 1994 again, we found that what made the year special was not that the Best Picture winner and the biggest North American box-office winner had merged for once, nor that it left behind an unusual number of lasting films. It was that around then, Hollywood — or the American film and entertainment business more broadly — split along a fairly clear line between genres. To some degree, that history decided what the movies you and I watch today look like.

Of course "it" does not mean 1994 alone, but the whole middle of the 1990s. Look back through history and you find that people's obsession with film runs in an unbroken line. We are always ready to accuse today's studios of chasing quick money — cranking out sequels to every superhero blockbuster, or throwing enormous sums at effects sequences in hope of a bigger return. "Bigger spending, bigger returns" has become the Hollywood standard, so much so that figures as well known as George Lucas and James Cameron have warned the industry about this almost deformed way of growing: if one hugely expensive film loses money, the whole company can take a severe loss or go under.

In fact, as Robert McKee, the father of Hollywood screenwriting, tells it, Hollywood's obsession with spectacle goes back to the silent era. It is only that the technology of the 1990s made everything faster and more vivid — for the first time, Hollywood could manufacture spectacle.

"Hollywood's ability to tell stories has never been very good," McKee told QDaily. "You could put it this way: new technology has made stories worse than they were. When people set their minds on creating spectacle, the stories become less creative."

Using what happened around 1994, we want to explain why what McKee calls "spectacle films" became the main force in the high-grossing market, and why people feel good stories are getting scarcer, to the point that popcorn movies fill the theaters.

In 1994, John Lasseter, one of Pixar's founders, and his colleague Pete Docter went to hear a Robert McKee lecture, then had a meal with him. The two brought along a two-and-a-half-minute animated short, Luxo Jr., to show him. Years later, by their own account, that 53-year-old lecturer had more or less decided the direction Pixar's storytelling would take.

Robert McKee has made his living teaching screenwriting since 1984, touring cities all over the world; he has been to China four times. Because he knew John Lasseter, he also offered notes on the film Lasseter was then preparing, Toy Story. "Sometimes they'd spend five years writing the script for one animated film," McKee told QDaily, recalling his impression of working with Pixar.

At the time, John Lasseter probably had not yet grasped what 1994 would mean for him. That year in Silicon Valley, Tim Berners-Lee invented the World Wide Web and what would become Yahoo appeared; on Wall Street, Netscape went public and its share price rose from $28 to $75 on the day; in Hollywood, the studios began a new round of mergers and acquisitions, and effects-technology companies began to rise.

To ordinary moviegoers, the strong films that year were The Shawshank Redemption, Forrest Gump, and The Lion King; Jiang Wen's In the Heat of the Sun even won a prize at Venice. Hollywood in the early 1990s left people with one impression: before that point films told stories with stories, and after it films told stories with special effects. That is a crude way of putting it, but as a turning point for the industry it is beyond doubt.

Toy Story, the film John Lasseter was then agonizing over, is the classic case of that turning point. Released in 1995, the first animated feature made on computers took $360 million worldwide, and John Lasseter won a Special Achievement Academy Award for it.

Animation may be the field that shows most clearly what happened to film technology in the 1990s and after. Computers became the main tool for making animation. What you used to watch was the 2D animation of Beauty and the Beast and The Lion King, and people liked to talk about drawing style and artistic temperament; what you watch now is the 3D animation of How to Train Your Dragon 2 and Brave, and people like to talk about fur, render farms, and technical difficulty.

You will find that a lot of things besides animation have turned into money pits. It is not that technology keeps getting more expensive — in fact, spreading it around has made it steadily cheaper. But the easier technology is to get, the more inclined people are to use it, and the more willing the industry becomes to spend. The Lion King changed the idea that animated films were cheap films: it cost $45 million and took three years to make. In the years after, you see numbers like these: Toy Story 3 cost $200 million to produce, Frozen $150 million.

"With new technology you need fewer people and you can shoot faster. Before, if there was something on someone's face you had to send in a makeup artist, change the glasses, whatever; now you just wipe it away on a computer," Epstein told QDaily. Scott Ross, then general manager of Industrial Light & Magic, was watching the same thing happen: the technical barrier was dropping, and technology companies were betting their survival on supplying services to big films.

"All of a sudden, small tech companies became very attractive on the stock market. A lot of mergers happened, and a lot of people became millionaires because of it," Scott Ross said. That possibility did not land only on the internet business, which was then booming its way toward a bubble; companies doing business in Hollywood had ideas of their own. In 1994, IMAX used the hot stock market to list on Nasdaq. The company, which until then had mostly supplied technology to expos and trade fairs, had begun to see Hollywood's market potential and meant to make something of the film industry. It has now built theaters in 36 countries and regions, and it hopes to reach 300 IMAX screens in mainland China by 2016.

Scott Ross's tragedy is that he wanted to build a production company on the strength of technology, and found in the end that the whole industry he was in had become one link on the big studios' assembly line.

In 1993, Scott Ross left Industrial Light & Magic and founded Digital Domain with director James Cameron and effects artist Stan Winston. The company became the benchmark in visual effects, delivering True Lies and Interview with the Vampire in 1994, Apollo 13 in 1995, and Titanic in 1997 — films that, seen from today, all pointed the way Hollywood would go. Scott Ross later realized that becoming a production company was not easy, because effects software is costly, the work is usually done by large companies, and even small and mid-sized effects houses need a large company to step in. Sony set up Sony Pictures Imageworks around 1993; a decade later it delivered Spider-Man, made with CG, which took $820 million worldwide and became the company's most important franchise.

"Effects companies are getting worse and worse. More people can do the work, so the price comes down." Scott Ross has not looked closely at Hollywood's effects business since 2006, but he still described the worries he can see. "At the same time, studios are green-lighting more people who don't know how to make movies. If you make a Transformers, you get more love from the audience; if you make a Driving Miss Daisy, you lose them."

Look at Driving Miss Daisy today and it is basically a low-budget art film. You would have a hard time finding it in a mainstream theater, but you would see it draped in honors in the Cannes Film Festival press releases — that is the usual marketing route for low-budget films. They go to festivals, sell pre-sale rights, and raise the cash to make the next one.

That is how independent film survives now. "For instance, you could go to Germany and someone would say, if you release this film, we can pay you $12 million." New Line Cinema did exactly that: production money can come from foreign markets and from pre-sales, and changes in the DVD market also changed how independent production companies make money. "Independent films earn less and less. Their reason for existing has become one thing only: to win an Oscar," Epstein said.

The DVD market decided another kind of life and death for the film business. That may sound abrupt, but consider the question: why did videotape not change how films were distributed, when DVDs did?

The reason is cost. A DVD is far cheaper to copy than a videotape. Videotapes became popular in the 1970s, and back then no one imagined there could be a rental market for them. People went to the store to pick out tapes at $100 each, paid a lot of money, and built their collections carefully. DVDs changed the whole industry: they could be sold through every kind of channel, even wholesaled at scale, and all sorts of new businesses grew out of that.

From the 1990s on, Hollywood studios were keen to buy or set up independent production labels. Besides Disney's Miramax, Fox had Fox Searchlight, Sony had Sony Pictures Classics, and Paramount had Paramount Vantage. The reason behind this was the spread of DVDs in the market starting in 1994. DVDs came about because big American studios like Warner Bros., Columbia, and Paramount pushed them: the studios could claim more shelf space at Walmart, and what filled those empty shelves fastest was the work of independent production companies. "By 2004 and 2005 the DVD market slowed down, they found they no longer needed that content as filler, and so Disney sold off Miramax," Epstein told QDaily.

A great many independent production companies vanished.

"The difference between an independent film and a studio film is that by the time a studio film is cleared for release, it already has a distribution plan on paper. But American theaters, which make their money on popcorn, are not buying the film itself — they are buying the marketing plan attached to the film, the thing that will bring the audience in. Theater chains like films such as Mission: Impossible: it might lock in a release date in January, have everything in place by July, and open smoothly," Epstein said.

As Scott Ross sees it, after 1994 making a film got easier and easier, while getting a film to see daylight got harder. A big part of the reason is that the major studios tilt their resources toward the super-projects with the greatest chance of profit. The cost of shooting a film may have dropped sharply, but spending on advertising and promotion has shot up. "The marketing budget for a James Bond film reaches $216 million," Epstein said, and he sounded as if he could hardly believe it.

Independent production companies obviously cannot pay for marketing at that price. "The independent production business is slowly losing its ability to make a profit. Its reason for existing is just to win an Oscar. Let me give you another example. Take short films: people make short films for the same reason, to win an Oscar. Those shorts never screen anywhere except at the Academy Awards ceremony."

Can you see the change in this? Many people believe there are fewer and fewer "good films," the kind built mainly on telling a story. Check the databases and you will find that neither Hollywood nor Europe has cut back on making them. They have disappeared from your view only because they cannot pay for expensive marketing. The independent production companies still standing rarely get a chance to sell you a ticket.

Remember 12 Years a Slave, the Best Picture winner just before Birdman? In people's minds its producer, The Weinstein Company, is the outfit the Oscars always seem to hand awards to.

In 1993, Miramax — the independent production company Harvey Weinstein and his brother Bob Weinstein founded in 1979 — was bought by Disney for $60 million. But the two sides clashed constantly. Miramax was obstructed by its parent company over Kids in 1995 and Dogma in 2000, and with Fahrenheit 9/11 in 2004 the discord peaked. When Disney CEO Michael Eisner learned Harvey Weinstein was making that film, he told him to stop. Weinstein did not listen. He went on making it himself and chose another independent company, Lionsgate, to distribute it. Made for $6 million, it took $220 million.

The conflict produced The Weinstein Company. In 2005 the Weinstein brothers left Miramax and founded it themselves, and its films became Oscar regulars — Crouching Tiger, Hidden Dragon, The King's Speech. But it is not the most profitable film company in the world, and in fact there are probably fewer than five companies like it anywhere.