posted 12-01-2001 10:04 AM                    

Get the picture?
Economics professor says Hollywood doesn't.
"Star Wars" was turned down by several movie studios because executives said viewers weren't interested in a war movie. It is now the highest-grossing film of all time.
Similarly, had it not been for the perseverance of producer David O. Selznick, "Gone With the Wind" might never have been made.
Then there are box office fiascoes like "The Cable Guy" and "Last Action Hero." These movies were predicted to be fail-proof by virtue of their high-voltage star power, but negative audience reactions proved otherwise.
What's wrong with this picture?
Plenty, says Arthur De Vany, a UCI economics professor who has conducted the most comprehensive study to date of the dynamic relationship between audience reactions to films and box office hits or bombs. Motion picture executives won't find much comfort in what he has to say.
"Surveys, pre-release hype, 'bankable' star power, formulaic screenwriting and other models studios use to predict or guarantee a movie's success -- they provide no insurance for a hit film," said De Vany, whose study was published by the Royal Economic Society in Oxford.
"Unlike any other industry, there's a profound and pervasive uncertainty in the film industry," he said. "Nobody knows anything. That's the one rule the industry can count on."
Through his research, the professor for the first time documented in hard mathematical formulas the complex nature of film industry revenues. Specifically, he detailed the ways studios structure flexible contracts with distributors and exhibitors to either capitalize on hit films or minimize the damage from those that go south at the box office.
In the process, De Vany also confirmed a long-held but never-before documented suspicion. Namely, there is but one way to discover how good a film is: Put it on screens and let audiences decide.
"There's an adage in Hollywood that says films are like a parachute jump. If they don't open well, they're dead."
At first blush, putting a film before audiences seems like an obvious litmus test of its popularity. But De Vany's research shows that as viewers discover their film preferences and spread their opinions, they set in motion complex revenue dynamics.
Word-of-mouth information, or "information cascades," can quickly carry a film to explosive growth or swift failure, said De Vany, who is using his research as the basis of a book, tentatively titled "Chaos in Hollywood."
Public reactions to movies, and how they determine hits or failures, are highly unpredictable and complex. So complex, in fact, that De Vany describes audience reactions using a statistical distribution model.
The Bose-Einstein model, developed by Albert Einstein and fellow scientist Satyendra Nath Bose, describes the random clustering of gas molecules. It's a chaotic and unpredictable process, but the molecules have to end up somewhere.
De Vany said this scientific process is the best model for describing how filmgoers choose which movies to see.
"Over the course of a film's run, audiences tend to behave like particles falling into urns in the Bose-Einstein statistical physics model," De Vany explained. "It is equally likely that the particles (audiences) will fall into a few urns (the movies) as it is for them to be distributed in any other way."
In conducting his research, De Vany studied box office revenues of all the motion pictures that appeared in Variety's "Top 50" list between May 8, 1985 and Jan. 29, 1986 -- approximately 300 films in total.
De Vany tracked the revenues of each film for the duration of its run, starting with its opening and progressing weekly throughout its run, or until it dropped from Variety's "Top 50" list.
De Vany said his research supports two main contentions, neither of which Hollywood is apt to greet with open arms.
First, conventional thinking about movie revenue expectations is misleading, he said. Film revenues don't follow so-called bell curves or other typical economic models that allow other industries to predict profits on their investments.
"Big stars and budgets affect the number of opening engagements, but after a film opens, it has to make it on its own, and all the hype and star power won't save it if the audiences don't like it," said De Vany, who as a boy watched Westerns being filmed near his Mojave Desert home.
De Vany's second contention is that efforts to guarantee or predict a film's success -- be it by loading it with "bankable" star power, surveys or hype -- are expensive and many times futile exercises.
He offers as examples big-star or big-budget flops like "Last Action Hero," "The Cable Guy," "Howard the Duck" and more recently "The People vs. Larry Flynt," a box office disappointment despite rave reviews and major pre-release hype.
All of which leads to De Vany's suggestion that film studios should reconsider the long-practiced business models they use to decide which and what types of films to make.
"I'm calling my research the paper that agents fear, because it exposes as off-base Hollywood's deal-making models, including the concept of bankable star power," he said.
Other flawed notions, according to the professor's research, are that studios should only make a certain genre of films, and that screenwriters shouldn't deviate from formulaic plots involving an initial hook, followed by a plot twist or two, followed by a resolution.
Film studios, De Vany said, should take a lesson from the phenomenally successful "Forrest Gump," a film that defied both genre classification and formula -- but which was made only after Tom Hanks agreed to share the risk with producers by agreeing to a percentage of the film's gross revenue instead of receiving his normal $10 million fee.
De Vany's research is intended to foster new ways of thinking, he said, because hard-and-fast recommendations aren't easily drawn from the "stark uncertainty" that permeates the motion picture industry.
From what De Vany has learned, however, he offers the following common-sense, but too often overlooked, advice that should have a familiar ring:
"Make good movies, and they will come."

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posted 12-01-2001 10:10 AM                    

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posted 12-01-2001 10:30 AM                    

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