The Hollywood Bubble: Time to Pop?

Films are awesome. Nobody can deny that. Whether you’re looking for action, horror, comedy, western, or drama, there is a movie for everybody. Films get announced, get vigorously marketed, and then get put out on the big screen for everybody to enjoy. However, only a select few of these thousands of movies actually become critically acclaimed, are embraced by the masses, and manage to turn a profit. In the last decade, most of these head-turning movies have been blockbuster sequels or remakes such as The Avengers, Transformers: Age of Extinction, Star Wars: The Force Awakens, Jurassic World, and so on. More recently, most of the movies predicted to be financial successes have been nothing more than severe flops.

Examples of this include Inferno, Ghost in the Shell, and Jupiter Ascending. After looking at all of these movies one must wonder, what happened to the middle class of movies? By this I mean films with smaller budgets and original ideas, not based off a line of toys or a comic series. One wonders what happened to the (500) Days of Summers, Slumdog Millionaires, and Rockys of the past.
Up until around 2008, the general trend in Hollywood was to make movies that had a small to middle budget and definitely provided a return in profits, albeit it was not that big of a return. The aforementioned middle-class movies fit said trend. This trend also included rare big budget movies, generally one or two movie per year, that garnered attention and provided a larger return. After 2008, however, this general trend in Hollywood started to change.

In 2013, Steven Spielberg claimed that with current production trends, a “Hollywood Bubble” had formed. He predicted that within the next decade it would implode, after too many big budget, expensive, blockbuster movies flopped, or in other words, failed to turn a profit.

How did this bubble form? The first issue at hand ıs that Hollywood studios view the film industry purely as a business. This means that they are trying to make the most money possible with little regard for the quality of the film itself, or the ideas and concepts that are being portrayed in the film. This is easily visible by the huge marketing campaigns that are led by movie studios in order to promote their movies. These marketing campaigns usually double the cost to make a movie. This business-mindedness is also seen by the toy lines, comics, and novels that spawn out of or are content sources for these movies. Hollywood executives look at their movies like 120-minute ads, and they see movie franchises as a possibility of continuing these ads over and over, making more money thanks to brand recognition.

This brand-driven approach has given rise to franchises such as Fast and Furious, Star Wars, the Marvel Cinematic Universe, the DC Extended Universe, and the recently initiated Monster Universe. Constant remakes, sequels and reimaginings allow movie studios to see huge profits from marketing, so even if a movie isn’t successful, profit from other products like toys and comics allows the movie studio to turn the loss into a win.

If business-mindedness forms the bubble, greed allows it to expand. In addition to branding, there’s an emphasis on star power. For example, Captain America: Civil War had a $250 million budget, and $40 million went to Robert Downey Jr.’s salary. In contrast to Captain America: Civil War, the movie (500) Days of Summer had a budget of $7.5 million, but it raked in $60 million worldwide.

This “maximum profit or nothing” tactic has worked pretty well for Hollywood executives until now. Like gambling addicts filled with hubris, they are starting to risk too much at once. Just for the year of 2018 there are more than thirty big-budget movies planned, ranging from Ready Player One to Fantastic Beasts and Where to Find Them 2. This many movies released wıthın a year poses the risk of these movies eating into each other’s profits and causing huge losses for the movie studios, resulting in a domıno effect that might affect the entire studio itself and its subsidiaries.

To demonstrate how this process might occur, let me give you a more specific example. Let’s say that the much anticipated Deadpool 2 releases around March and is met with positive reviews. Even though the movie is successful critically, Deadpool 2 might not be able to make a profit due to a combination of the movie’s enormous budget and inopportune timing, as the new Black Panther movie release is scheduled for just one week after and could potentially steal some of Deadpool 2’s audience. The same thing might happen with Black Panther a week later, in the end resulting in almost every single blockbuster movie receiving a loss.

One movie stealing another movie’s audience might absurd, but studies show that the average US citizen goes to the movies only 5 times a year, so movies’ contemporaries are there competitors.

From the current trends and the movies that are going to be released in the year 2018, it looks as if the father of Indiana Jones, E.T. and Jaws is right. There is a Hollywood bubble that exists and it is on the verge of popping. A pop could cause movie studios to go bankrupt, close down subsidiary studios, and grind Hollywood to a halt. What would prevent this pop? I’d like to say that the “put your money where your mouth is” philosophy would work, and if viewers stopped attending the movies that are clear cash grabs, the movie industry would fix itself. A new era would begin. But if other bubbles, like the housing bubble (as explained in The Big Short) and the tech bubble, have taught us anything, a bubble has to pop to provide clear grounds to rebuild.