How Hollywood Studios Predict Themselves to Fail

Due to the combined effect of the cheap movie prices and quite limited indie movie selection in Singapore, I have watched way more Hollywood movies during last year than I should. Based on that empirical research, I have to say that the overall quality of Hollywood films is currently really horrible.

The main reason for that is that studios have never played so safe as now. They have not necessarily been pushing the envelope before, but the shift even from “Spec-script”-era to current “Script Doctors” has been radical and unfortunately radically to worse. Still we see almost the same rate of failures as ever before, even though we are bombarded with lame-ass attempts of creating franchises. At the same time, HBO has proved that you can have compelling and challenging quality content and great revenues at the same time.

Why movie studios are missing the beat?

1. Past success does not necessarily predict future success
We tend to believe that our success is about our own achievement and failures are just a bad luck. In reality, it is mostly about luck. Many people claim to find formula for success, but actually they just extracted the similarities in successful projects and draw correlation from individual instances. That is easy. What is difficult is to find the actual combination and correlation of those extracted elements. This is especially true for surprise successes. The sequel for Blair Witch Project scored way worse in the box office than the original (although still profitable). Things tend to regress towards mean, so after abnormal success you are more likely to have normal success. In relation to abnormal success, anything closer to the average is regarded as failure.

2. Finding correlations where there is none
We correlate high education level with high productivity. According to many experts (such as Alison Wolf), this correlation is not true. It goes other way around: countries with high productivity tend to gain high education levels during time. According to the “script doctor” in the article you should not have bowling scenes in your script as on average they do not score that well. I have only one thing to say for the script doctor: Big Lebowski.

3. Everything unfamiliar scores bad in the tests
Would you have predicted the success of Indonesian Raid:The Redemption or Beasts of The Southern Wild? Fight Club scored really badly in opinion surveys but was highly successful in the box office. People tend to resist everything unfamiliar until they start to like it (case in point: Outkast-Hey Ya). I am not huge fan of tests, surveys and research, because at best they are just a poor reflection of reality. You can predict and test your movie as much as you want, but at the end-of-the-day the box-office is all that matters. Tests do not reduce risk, they just reduce your awareness of risk.

4. When playing safe, you will have only negative surprises.
Every major movie could not be prepared better: they are script-tested, based on existing franchise, have massive social media campaigns and start on more theatres simultaneously than ever before. Still many of the estimated blockbusters fail. They are predicted to be too big to fail, so they can only provide negative surprises.
The abovementioned small budget movies (Raid & The Beasts) have better ROI% than the biggest movie last year (The Avengers). And in the terms of pure cash, they got almost the same profit as the epic John Carter. That movie was considered as the biggest flop last year, although it was eventually profitable (globalization plays in favor of big movies, at least for the moment).
The main catch is that with the budget of John Carter, you could have produced over 200 Beasts of Southern Wild -movies. There are opportunities for 200 positive surprises.

The last point is really important in modern day marketing. We spend too much time predicting on the outcomes instead of actually doing things. As the potential outcomes are unknown in reality, the goal to succeed is the following:

1) Increase the amount of tries: There are no clutch players, just those who keep on shooting.
2) Limit the potential loss: Think like venture capitalist: the probability of success is relatively low, so you do not want to put your eggs in one basket.
3) Make it flexible: When you struck the goldmine, invest more. When it fails, kill it quick.

This is the “Anti John Carter” –approach. You will try more, fail more but win more on the long run.

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One thought on “How Hollywood Studios Predict Themselves to Fail

  1. Brandon says:

    Good stuff, Riku!

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