According to The Wall Street Journal, [via IMDB] Hollywood's budgets continue to escalate. The movies listed in the blurb cost between $210 to $300 million. The gist of the article is that visual effects (VFX) costs are skyrocketing, pushing up the cost of a finished film. I don't understand this. Robert Rodriguez made Sin City for $40 million, Peter Jackson made each installment of the LOTR trilogy for $94 million. Why are these movies costing 2-7.5 times this much? Even if these movies are smash hits (Anyone else sick being disappointed after paying $8+ for a dog of a flick?) they'll only make the studios a meager profit.
Lucas is right. The barrier to entry into filmmaking has typically been cost. Now, on a quick desktop computer, you can create special effects, produce 3D animation, edit your flick, and master a DVD. Applications that make this possible can be bought for under $10,000. In the fall, you'll be able to buy a new video camera that can meet (or even beat) film quality for a fraction of the price of current offerings. With the cost of entry so low, more movies will be produced, catering to a greater array of niche interests. So many in fact, that you'll have to take a trip down the Long Tail to find stuff that you'd actually be willing to pay for. After all, having more movies doesn't exactly mean more quality movies, or more interesting movies.
As the number of movies increases, the potential audience for any single one splinters, along with its potential profits. Film producers will have no choice but to reduce their budgets in order to justify their existence.
Oh, there will still be blockbusters. There will still be unfathomable budgets. There will just be less of them.
The biggest single problem that these hordes of independents will face, is marketing their finished pieces. The average Hollywood marketing budget is $30 million. Without that $30 million, you don't bring in $40 million the first weekend. When no one knows about your film, sorry, but they just can't give you their money, no matter how much they'd love to. The hurdle for indies will be to generate the same kind of buzz as a $30 million campaign, without spending the $30 million. I've got a few ideas regarding this, but we'll see whether or not they can work. The person that will be able to pull that off will be the new force in moviemaking.
I guarantee it won't be one of Hollywood's studios.