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or How to Make Money in Tinseltown

Something’s wrong with Hollywood. Ticket sales are down. DVD salesare down. Many blame high ticket prices. Others, the ever degrading quality of the movie-going experience I’ll posit another theory for the decline: an ever increasing stream of bad sequels and worse remakes. More explosions, more special effects, less clothes, and even less story. It’s getting worse. Dukes of Hazard comes to mind: that one earned a meta-critic rating of 16% at rotten tomatoes Less story.

Where does a good story come from? Hard work. In a 2001 interview with Pete Doctor and John Lasseter Film Monthly asked about the process of making a Pixar movie.

Paul Fischer: What’s the process of making these films?

Doctor: The process is more or less this: The story is all important, so we spend two or three years, before we do anything on computers, just drawing and writing. Just coming up with the characters.

Let’s just make sure we all heard that right. Two or three years. Working on story, character development and design. Pixar, a computer animation company spends two or three years in preproduction before they even touch a computer.

Excessive you say? We don’t have time for that, you say? It’s not worth it, you say?

Let’s play with numbers for a bit. I know you Hollywood types get a kick out of that.

If you were to average the domestic box office receipts for the top 25 grossing films of 2005 you’d land in the neighborhood of $160 million per film. Not too shabby. If a studio could consistently land itself in the top 25, they’d be in good shape. As long as the budgets for their movies weren’t excessive (more on this another time) they’d net a fair amount. Now let’s just assume for a second that Pixar was able to hit this $160 million average with each of its films. For six movies, the total gross comes out to $960 million. Again, not too bad, but over the course off a decade, most studios demand a bit more of a return

Now take a peek at the real numbers.

$1,457,476,297. Lot of commas. Pixar has only made six movies ever and their domestic box office gross comes to nearly 1.5 billion dollars. Domestic. As in, we didn’t include overseas grosses. Or DVD sales. Or merchandise licensing. Or cable TV. Or computer games. Or, or, or… During Pixar’s 3rd quarter 2005 earnings conference call, Pixar CFO Simon Bax stated that Pixar’s bank accounts include an amount of over 1 billion dollars. Cash. As in, they could write you a check with nine zeros. Well, so could I, but theirs would clear the bank. Need more? Disney just bought Pixar in a stock deal worth $7.5 billion dollars. If you figure that Disney spent the majority of that money to acquire Pixar’s movie library (they didn’t; Disney already owns those films), you could say that a single Pixar movie is worth 1.25 billion dollars.

Clearly, Pixar has figured something out. In an industry where misses occur with higher (ear piercing) frequency than hits, the little company from Emeryville seems to have discovered the alchemical secret of turning celluloid into gold. I suggest that it has everything to do with what Pete Doctor said. It bears repeating:

The story is all important, so we spend two or three years, before we do anything on computers, just drawing and writing.

There is money in good storytelling. Good money.

OK. Now I admit that Pixar is an extreme example. G-rated movies tend to make more money than others. Mom and Dad bring the kids along to see Finding Nemo, but not Silence of the Lambs, for obvious reasons. So the per-family take is larger. Then, because Junior won’t let up when the newest kid-flick arrives on DVD, the parents bring it home to pacify him. Same goes for move-related toys, clothes, breakfast cereals, toothpaste, etc. Animated films have better market for these kinds of secondary revenue streams, and Pixar has been able to capitalize on that.

I’m also not saying that a movie will become a money machine just because it’s G-rated or animated. Take Disney’s Home on the Range, for example. Only brought in $50 million domestically (and only $53 more from overseas). Or Valiant with $19 million. And I don’t recall seeing the valiant action figure at my local Wal-Mart. Nor would I suggest that story quality is the only thing that will determine a movie’s profitability. Plenty of great stories have flopped at the box office. The Iron Giant springs to mind. But if you bear with, I will be so bold as to suggest that good storytelling does get you something valuable, something you can convert into money.

Now I’ve gotta make a couple of qualifications.

It sounds as though I’m advocating a long, drawn-out process of story development as a way to get rich. That’s just not the case. It’s not even necessarily a surefire way create a great story. The reason I bring up the Pete Doctor quote so often, is that it illustrates Pixar’s commitment to the story. Their particular brand of commitment means spending years perfecting every nook and cranny of their characters. I don’t think it necessarily takes years to develop a great filmable story. It does take commitment, which plenty of people have.

And it takes talent, which is a bit less plentiful, and brings me to the real reason that Disney bought Pixar.

I mentioned earlier that it wasn’t Pixar’s movie library that Disney was after in the recent acquisition. Disney already owned the rights to those six flicks, including the right to make sequels. So why was the Mouse House willing to put up so much money in exchange for the creator of the CG animated feature?

One reason. Talent. Specifically, storytelling talent. The creative minds at Pixar are committed to one thing: telling a well-told tale. John Lasseter has been compared to Walt Disney himself for his ability to capture an audience’s attention. Descriptions of Ed Catmull stop just short of genius. The rest of the Pixar guys are no slouches. They do their work with astonishing, recognizable ability. Repeatedly. They have a reputation for putting out quality fare. I can walk into a Pixar screening confident that at the very least, the movie won’t suck. It will probably even be enjoyable, and there are really good odds that it will be fantastic. I can’t name many other institutions in Hollywood whose products provide that kind of pre-viewed assurance. Too often, the people making the creative decisions have absolutely no business doing so. The money guys call the shots, assuming that things like ‘P/E’, ‘Market Cap’, and ‘Earnings per Diluted Share,’ are more important. Or that marketing will help put shine on a turd. The results of those ventures are less than stellar.

This is my plea to the Hollywood decision makers: Get out of the way of your creative talent. Disney has managed to do that with Pixar for over a decade now and the results speak for themselves. I guarantee that when Pixar’s Cars comes out in June, I’ll cough the cash to see it opening weekend, despite the price, and near-certainty of an excited six-year-old kicking the back of my seat. I’ll go to the opening of their next film too.

And that’s what good storytelling gets you. A reputation for telling good stories. A reputation that almost ensures you’ll have a future audience. An investment in good storytelling is an investment in the long term.

Which in turn, gets you my money.

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