THE NEW WORLD ORDER

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THE NEW WORLD ORDER

• THE PACKAGE-UNIT SYSTEM

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THE PRODUCER-UNIT SYSTEM OF PRODUCTION (1931-55)

• With expansion following sound, producer-unit
  system became an option
• Instead of central producer in charge of all
  films, number of producers supervised film units
  within studio
• Producers specialized in particular genres
• Not followed to same degree by all studios

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THE PACKAGE-UNIT SYSTEM

• Replaced earlier management systems in late 40s,
  early 50s
• Reasons
• Paramount Case
• Tax laws favoring independent production
• Changing demographics
• Advent of TV, etc.
• Production distribution now more flexible
  pragmatic, varying from film to film

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THE PACKAGE-UNIT SYSTEM

• DECREASE IN PRODUCTION
• REASONS
• Studios no longer had own theaters to supply
• Attendance decreasing
• Studios wanted fewer, more expensive films,
  making more money on each (through longer runs)
• THE DECREASE
• of films produced distributed by majors fell
  80 from late 1930s (50 films/year/studio) to
  1970s (10/year/studio)
• Increased in 80s to 18-25 films/year/studio

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THE PACKAGE-UNIT SYSTEM

• THE PRESENT STATUS OF THE MAJORS
• Majors have shrunk in both size operations
• Have lost their independence
• All parts of much larger conglomerates
• Contract system no longer in practice
• Films now the results of negotiations packaging
• Primary function of Majors today is distribution,
  most profitable phase of industry

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INDEPENDENT orPACKAGE-UNIT PRODUCTION

• Independent production does not refer to
  personal or avant-garde cinema
• Refers to productions made outside of major
  studios
• Typical of film production today
• Independent producer works in association with a
  studio, not under authority of studio
• No longer a contract system producers cant rely
  on profits from previous productions, so both the
  films creation financing must be packaged
  negotiated

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THE CREATION OF THE PACKAGE

• SCRIPT
• Commissioned by producer from professional
  scriptwriter
• Or provided by free-lance, well-known author
• PERSONNEL
• Contracts negotiated individually for cast
  director (AGENTS)
• Contracts negotiated for technical crew (UNIONS)
• Arrangements for feeding, transporting, etc.
• DISTRIBUTOR
• Usually, distributor must agree in advance to
  distribute film
• Should be 1 of Majors
• FACILITIES
• Sets, costumes, cameras, lights, etc. must be
  rented
• Usually rented from studio that agrees to
  distribute film

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FINANCING THE INDEPENDENT PRODUCTION

• Often, production corporation created for 1 movie
  then dissolved (tax reasons)
• Company must go into debt to finance its film
• SOURCES OF FINANCING
• 1ST MONEY
• 60 of the budget
• High-finance banks
• Producer must pay back the principal plus
  interest
• Interest usually 8-10 above standard rates, or
  20-22

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FINANCING THE INDEPENDENT PRODUCTION

• 2ND MONEY
• 40 of budget
• Sources
• Direct investment sale of stock in the prod.
  co.
• Outside investors
• Producer, director, etc.
• Distributing studio
• Deferred salaries of writers, actors, director,
  etc. for tax purposes, take POINTS of films
  gross income
• Unlike 1st money, 2nd money earns a share of the
  profits

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• American Graffiti (1973)
• Scriptwriters paid 5,200 for script
• Made 600,000 in points

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• Twins (Universal, 1988)
• Made for 15 million
• Instead of salary, director stars took points
• Arnold Schwartzenegger, 15
• Danny DeVito, 7½
• Ivan Reitman, 7½
• 112 million in domestic sales

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FINANCING THE INDEPENDENT PRODUCTION

• 3RD MONEY
• Completion guarantee covers costs over projected
  budget
• Provided by an insurance company, completion bond
  company, or producer himself
• Like 2nd money, 3rd money earns share of profits
• REMEMBER Terms 1st, 2nd, 3rd money refer to
  order in which money is PAID BACK, not order it
  is obtained!

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COMMERCIAL RELEASE

• Most movies must make back 2½-4 times initial
  investment to be profitable to producer

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DISTRIBUTION OF THE BOX-OFFICE DOLLAR
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COMMERCIAL RELEASE

• 70 of all films lose money in theatrical release
• May make money from TV, videocassettes, etc.
• Blockbusters may make up for losses on losers

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THE ROLE OF THE MAJORS

• FINANCE (2nd money)
• TECHNICAL FACILITIES
• DISTRIBUTION
• DISTRIBUTION SYSTEM
• ADMISSION CHECKS
• ADVERTISING CAMPAIGN
• DISTRIBUTION SCHEDULE

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DISTRIBUTION SCHEDULE

• SLEEPERS
• Booked in a few strategic theaters, later booked
  in more theaters as word-of-mouth spreads

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• The Full Monty (1997)
• Co-production of Channel Four Films (UK) Fox
  Searchlight Pictures (US) distributed by 20th
  Century Fox
• Budget 3.5 million
• Opening Weekend 244,375 (17 August 1997, 6
  screens)
• Wide release 2.9 million (14 September 1997,
  387 screens)
• Eventually grossed 46 million in US, 198
  million outside

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DISTRIBUTION SCHEDULE

• TURKEYS
• Booked into as many theaters as possible with
  much advance publicity in order to cash in before
  word-of-mouth spreads

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• Cutthroat Island (1995)
• Co-production of 10 companies, including Carolco
  Pictures, Le Studio Canal MGM
• Distributed by MGM
• Cost 92 million
• Grossed 11 million

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• Town and Country (2001)
• Produced by 5 companies, including New Line
  Cinema distributed by New Line
• Cost 90 million
• Opening Weekend 3 million (29 April 2001, 2222
  screens)
• Gross 6.7 million