Hollywood accounting
Want to know a secret about Terminator 2’s $100 million budget? It was probably less than that by several million dollars. Still enough to warrant the “most expensive movie” tag, but not by as much. Every time you see a film budget in the news (and especially on Wikipedia) the figure is most likely inflated. Why are the actual budgets of studio films so hard to nail down? Because it’s not in the studios’ best interest to let the real figures get out. In the case of a misfire, they want to be able to write-off as much as possible, just like any other business. Likewise, in the case of a hit, they’ll want to minimize the profits they have to share with others. Here’s an extreme example of studio accounting in action: Back in the ‘90s, Winston Groom, author of the original Forrest Gump novel, had a deal with Paramount for 3 percent of all net profits of the film adaption of his book. Even after the film racked up nearly $700 million dollars in global ticket sales, though, Paramount still claimed the film hadn’t yet reached profitability. Groom had to take legal action, which resulted in an undisclosed settlement to resolve the matter out-of-court (so the actual accounting books would never be made public). The take-away from this? When making a deal with a studio, never settle for “net participation” when you can get gross.
It’s not all bad news
All the above isn’t to say that the last decade hasn’t been good for filmmakers interested in intimacy over spectacle. In many ways, it’s never been better. As big studios step away from smaller films, they leave a void that independent producers have been all-to-happy to fill. And it’s never been easier to produce and distribute a feature film completely outside the studio system, using newer, cheaper technologies that not only produce great images and sound, but also help keep crews smaller and more affordable. Sure, it’s harder than ever to get a major studio to back your passion project … but it’s easier than ever to make it yourself, for the price of a used car. Or less.