Comment by beatle | Hacker News Reader

Comment by beatle | Hacker News Reader

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Dreamworks SKG tried this a few years ago. it was founded by 3 of the most highly experienced, connected and talented industry visionaries in Hollywood. Steven Spielberg, Jeffrey Katzenberg and David Geffen. 2 of them are billionaires and 1 is worth over $700M.

DreamWorks had come close to bankruptcy twice.the studio suffered a $125 million loss on Sinbad: Legend of the Seven Seas, and also overestimated the DVD demand for Shrek 2.In 2005, out of their two large budget pictures, The Island bombed at the domestic box office, while War of the Worlds was produced as a joint effort with Paramount. They eventually ran out of money. DreamWorks scaled back, stopped plans to build a high-tech studio, sold its music division and got out of the distribution business. They eventually ran out of money and sold the company to Paramount pictures. The deal was valued at approximately $1.6 billion, an amount that included about $400 million in debt assumptions. it's a lot harder to start a studio than you guys think.

Of course, there's Pixar. but you need a SJ and a John Lassetter to create something like Pixar.

Dreamworks and Corman's AIP/NWP both produced films, but that's where their similarities end. The differences between the two can be summarized by "scale" and "intent."

In terms of scale, Dreamworks was designed to compete directly with the majors. They focused on tentpole pictures produced at Big Six scale. Even with their substantial financial backing, this meant that a single flop could (and did) jeopardize their company. Corman's films, on the other hand, with their minuscule budgets needed only draw a fraction of the business of a Dreamworks release to make a profit and so very rarely (if ever) showed up as a "loss" on his books. Corman's films rarely hit it big, but because of their relative costs, they never had to. Modest returns were sufficient for him to draw profit margins astronomically beyond those of the majors.

In terms of intent, Dreamworks was set up primarily to produce and release the films of its founders, who tended to trade in prestige films, and their desire to produce only Oscar-level films tended to paralyze their production ability; excessively high standards ruined them. When they did get a film off the ground, they tended to bet too large (out of desperation) and lost as frequently as they won. The exact same thing happened to Coppola's Zoetrope when he let himself run amok on One From the Heart.

The lesson from Dreamworks (and Zoetrope) is to manage your risk. Never put yourself in a position where a single failed project can ruin you. Similarly, never produce a film that requires broad mass market success to avoid total financial failure.

American Zoetrope failed because Coppola was self-financing movies people didn't want to watch. Dreamworks failed because they had too many big-budget box office failures AND, because they were a new studio, they did not have a library of old movies that can support their business.

>never produce a film that requires broad mass market success to avoid total financial failure.

You'll avoid financial disaster but you'll never "destroy" Hollywood with this mindset. Copolla and Roger Corman disrupted the movie industry but they did not "destroy" Hollywood.

"For Apple to win, Microsoft doesn't have to lose." - Steve Jobs.

You won't destroy Hollywood by creating a few new studios. But you might change it. That's really what people want to achieve.

your new studio will not disrupt Hollywood if it runs out of money. that is my point. your new studio has to be able to compete with the existing studios. You have to compete with Dark Knight Rising, Harry Potter, Star Wars, Twilight, Pirates of the Carribean, Spiderman, etc. and you have to do it every week, every month, every year for as long as you can.

No, you'll compete with Quentin Tarantino, and the Cohen Brothers, and they don't put out a film every week.

Anyway, you've named some of the best high-budget movies over the last 10 years. They don't release an Avatar every month.

How was Dreamworks anything like what he described? His proposal sounds closer to Asylum or UFO to me.

Its never THAT simple. Harvey Weinstein did the same thing. Still costs him millions to produce a movie and had to strike distribution deals with major hollywood studios. He eventually ran out of money and almost went bankrupt.

Question is whether it used to be harder. The story you tell are all big operations requiring lots of cash to keep afloat. New studios can run at fairly low cost especially with the post production power we have today.

Is there any actual evidence of this? I'd be really eager to refute this, but I'd be more interested in learning it was true. Most "New Studios" I know fall into the exact same trap that their predecessors have fallen into because none of the major players in this new breed of studios are doing anything different. You can streamline things as much as you want but you still run into the same systemic issues that plague the whole industry.

That because they are playing the big studios game. They shouldn't, they should play their own and find their own market.

Post production cost may be cheaper, but then you have to deal with distribution , marketing, PR, salaries for your cast ($20M per picture for a big movie star), crew, script, Etc.

And then you have to convince millions of moviegoers NOT to watch high budget competition such as Dark Knight Rising, Transformers, Twilight, Spiderman, etc.

Then you need to have something Millions of people want to watch this is the hard part :)

And then you'll kill Hollywood.

Sure you have to deal with those things, but the point was more that big studios have big cost and need high returns to be satisfied. (Everything from property, salaries to paying star actors)

Small studios don't need as high a return.

This is in many ways a Clayton Christensen (The Innovators Dilemma) opportunity.

Producing high quality movies as ultimately a question of people and skills. There are plenty of both that can't get work anywhere else.

I don't understand why I would have to convince people to not watch those movies? They are still being sold today and people are still watching non-hollywood movies.

If it becomes impossible to be profitable with big productions then hollywood will kill itself soon enough.

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