Is the Film Budget Bubble About to Burst?
PUBLISHED: Monday, March 8, 2021

Is the Film Budget Bubble About to Burst?

In our last entries, we’ve looked at the state of the theater and movie industries as the world has started to lift coronavirus-related lockdowns—the streaming debuts that have been arranged (and may become commonplace), the plight of theater operators who have been hoping to reopen for months, and so on. What we haven’t considered is the impact that shifting business models and a forced gap year could have on films themselves. In an article for Metro published last October, Mel Evans wondered if the era of blockbuster movies—with huge production budgets and copious, expensive visual effects—might be coming to an end. It’s a sentiment that others have echoed. And, sure, it’s probably reasonable to expect that studios might be more budget-conscious for new productions, especially if direct-to-consumer releases become commonplace. But it’s also not fair to jump to the conclusion that effects-heavy films with all-star casts will go the way of the dinosaur.

Budgets Won’t Just Be Cut, They’ll Be Refocused

To reiterate, studios will, for the foreseeable future, almost certainly spend less money per picture than they did before the pandemic. But that doesn’t necessarily mean that the brunt of those cuts will come from the casting or post-production budgets, either. Marketing and advertising are more likely candidates for heavy cuts since reach in those areas can be maximized for much less money, especially through “nontraditional” channels like social media and Google Ads. Or, if streaming and/or direct-to-consumer releases become something of a norm, we may see the business of advertising shift from the studios to the streaming services that purchase movies (or the movies themselves becoming advertising tools or loss-leaders for studio owned streaming services). In any case, the folks who make and release movies will have a vested interest in keeping the overall quality high because hackneyed or amateur-looking productions don’t attract viewers to $10+ per month streaming services any more than they attract them to theaters.

More Revenue Will Be Kept In-House

If Hollywood really does move toward simultaneous or streaming-only debuts for movies, then it’s inevitable that overall revenue per picture will fall. But that decline might not impact studios as much as it might initially seem. A streaming future would spell the end for $1 billion box office takes, yes, but it would also spell the end of studios sharing revenue with movie theaters. Keeping all or most of that smaller revenue figure in-house probably won’t change the overall budgetary picture for studios, which means that whatever cuts are necessary could largely be covered by eliminating ancillary costs as discussed in the last paragraph. Rolling back the last 20 years of progress on production quality—the thing that audiences see and talk about—to preserve advertising budgets and Hollywood accounting practices that are hidden from public view makes no sense.

So, yes, it’s fair to assume that the first films finished after the pandemic will probably look and feel slightly different than the movies that were completed beforehand. But it’s entirely too early to declare big, effects-heavy blockbusters a thing of the past.