Major Contraction in the Mid-Range Budget

Major film studio finances are currently in free-fall, as budgets shrink the number of films produced by studios is likely to fall by up to a third.

The way people currently consume films is undergoing a revolution and much like the music industry before it the movie studios have been slow to react the the changes and are starting to feel the effects on their bottom line.

When you combine this with the recent financial meltdown combined you can see that studios have taken a major hit on their returns, some irreparably so. Metro Goldwin Mayer, the biggest loser, released only one film last year and is currently in the process of being sold off for parts, and other studio are not far behind.

Paradoxically, despite the fall in the number of films, Box Office returns were up 5% in 2009 and the demand for high quality cinema entertainment remains high. If you make a good film, or market it well people will still flock to their local multiplex in droves. Recessions do not automatically mean a reduction in box office revenues, historically they have had the opposite effect.

Despite this studios are scaling back the volume of pictures they produce and the remaining output will inevitably become more conservative. It is not the major blockbuster pictures that we will be seeing less of in the future, Summer tent-pole productions will continue to have money thrown at them and they will become ever more generic and sequel based than they already are.

It will be innovative, medium budget films that will suffer. According to Peter Jensen, head on Zentropa "There is no money in medium budget films. They have become too expensive to be innovative and too cheap to be unique. Consequently, our strategy now is to make very inexpensive films or very expensive films".

If your budget is over $1 million or under $20 million you are dead in the water right now. To put that in perspective it means the next Memento or Juno or Little Miss Sunshine look like never seeing the light of day.

Russell Honeywell

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