The following is part of a series of posts re-imagining the entertainment industry for a digital age. If it ever becomes a book, the title will be Hollywood 2.0.

The film business is a numbers game. A few profitable films support a lot of unprofitable ones. If you doubt that, there’s a new study by industry analysts SNL Kagan that will set you straight. They tried out all kinds of different slates, or groups of movies, to see which theoretical amount of movies from a studio per year is the most profitable:

The five-film slate had a net loss of $94 million. The 10-film slate had almost $140 million in profit, while the 15-film slate had $466.4 million in profit. The study, which used a time frame of 12 years to determine the results, assumed 8% in distribution costs and 10% profit-participation and also included video and television revenues.

What was that old wives wisdom about not putting all your eggs in one basket? The big studios know this, and follow it like religion. It’s part of the reason they make a lot of movies everyone knows are bad. They are filler. But they satisfy a shotgun method. The studios can’t predict what’s going to hit the clay pigeon of the zeitgeist, so they scatter-shoot.

Indie filmmakers don’t think like this. They spend years of their life and call in all their favors for one film. The odds are against them. Sure, some will win the lottery and have their film featured in a major festival, win limited distribution, see it catch on with audiences and get platformed out wider, maybe even win an Oscar. Many other excellent films will never get the attention (and dollars) they deserve.

Accept Failure

Once you embrace failure as a part of the business, a new perspective becomes available. One in ten movies being a hit actually sounds pretty high. What if you could be profitable with a ratio or 1/20 or even 1/100? What kind of movies would that studio make?

First of all, One-In-A-Hundred Studios wouldn’t have to worry so much about fitting movies to a particular genre mold or plot formula. It wouldn’t have to target the movies at broad demographics. Franchises would start to seem expensive and original screenplays a bargain. One-In-A-Hundred Studios wouldn’t have to fire executives every few years to look like it was doing something about a perceived string of failures. It could afford to keep them on, learning from their mistakes.

Of course, the type of movies I’ve just described is pretty much what already exists in the independent scene. Independent filmmakers every year generate a large amount of difficult-to-categorize movies. Except these movies are competing against each other in the marketplace, rather than working together as a broad slate.

What would happen if fifteen different independent film producers agreed to contribute an equal amount to a shared pool, creating a marketing department that would work for all of them, hiring a collective foreign sales agent and establishing a company that would own all the rights so they could be exploited collectively as a library. Think of it as insurance. The risk is shared.

Although it need not be as even-handed as insurance. You could arrange the profit-sharing formula in such a way that more profits go to more successful films. The profitable films wouldn’t make as much as they would have if they’d gone it alone; but everyone else overall would make more. I think there are enough indie producers out there who are more practical than greedy and could see the merits of banding together to create an ad-hoc slate of films.

FAIL displayed on parking meterWhat About Bob Filmmaker?

But what about the individual filmmmaker? Let’s call him Bob. Bob can’t make fifteen movies in a year. He’s lucky to make one in two years. If that movie’s a failure, that’s it for his career. If it’s a success, he still has the same worry for his second feature, and his third and so on.

Well, it’s foolish to kick Bob out of the industry just because one movie, which might even be good, failed to grab audiences. Bob just got a ton of experience making his first feature, and if he has any intelligence at all, he’s learned from his mistakes.

In fact, Bob or his producer could even build failure into the movie’s budget. Woody Allen always budgets for re-shoots. When you expect that some things won’t be as good as they can be after the first cut of the film, it’s nice to have some money set aside that can be used to fix those things. The common practice now is to plan that nothing will fail about the movie. Every movie should plan on re-shoots.

It’s a commonplace to say that failure is the ultimate learning experience. And in some ways, if Bob’s first feature was actually good and there’s just a problem with the feedback loop, he could be learning the wrong lessons. Woody Allen has made some bad films, especially late in his career. On the other hand, he made Match Point right when I was ready to write him off. The point is, we should try to make the feedback loop accurate.

Since Bob’s career hypothetical anyway, let’s assume that the feedback loop is in working order, and Bob is learning how to avoid failing the same way twice. Bob is like a virus, a virus that develops resistance to failure, even as his movies die off in the marketplace. How many movies will it take for Bob to become a superbug, immune to failure?

In a market where Bob gets very few shots at making movies, he never gets the chance to develop and grow into a great filmmaker. On the other hand, look at the filmmakers who came out of the Roger Corman B-movie factory, where low-budget schlock films were churned out one after the other. Francis Ford Coppola, Martin Scorsese, Ron Howard, Peter Bogdanovich, Jonathan Demme, James Cameron, John Sayles and Curtis Hanson all worked for Corman early in their careers, made mistakes, learned from them and went on to great critical and commercial success.

How Does Your Talent Grow?

The old studios used to lock in talent and farm it on the inside. This was great for the studios; not so great for the talent. In a lot of ways, the agency system has replaced this. The agencies control the talent. Great for the agencies, better (monetarily) for the talent. Great for movies? Well, that’s another topic for another time.

The point I’m trying to make is that taking the short view of a single movie or even five movies is foolish when you’re talking about the film industry, or probably any creative industry that relies on the whim of the culture at large. It doesn’t matter if you’re a studio or a single filmmaker — you have to think in terms of the long view.

Maybe this is what William Goldman meant when he famously said that, in the entertainment industry, “Nobody knows anything.” Until those first weekend grosses are counted up, people are on pins and needles. The gut may give an inkling, tracking may give hints, but gun-to-the-head, nobody knows what movies are going to succeed.

What they do know, is that odds are in favor of any given movie failing. But the failure of one movie doesn’t have to mean total failure. The sooner we start designing and restructuring the industry to take advantage of failures, the better off we’ll all be, filmmaker and filmgoer alike.

John Ott is a writer, filmmaker and futurist. Become a Facebook Fan here or follow him on Twitter here.

Image credits: Fail Rd. image by fireflythegreat. Used under Creative Commons Attribution 2.0 license. Fail parking meter by stringbot. Used under Creative Commons Attribution 2.0 license.