Ryan Kavanaugh: B.O. becoming ‘somewhat irrelevant’
Relativity Media has become a significant player in the Hollywood film business since its founding in 2005. You can check out the movies with which it has been associated — over 100 titles — here. So when the company’s head honcho Ryan Kavanaugh speaks, as he did recently at the Variety Future of Film summit, it’s interesting to see what he has to say. Two comments of special note per Variety:
Box office is no longer the single-most important factor in determining a film’s overall success, Relativity Media topper Ryan Kavanaugh told Variety’s Future of Film summit Tuesday.
“When studios were first created in the 1920s and ’30s, all you had was box office,” Kavanaugh said. “All you had to report on, and all you had to judge on was the box office. The practical reality is — box office is 20% of the pie and it’s somewhat irrelevant.”
— —
“It’s hard to say this without insulting the press a little bit,” Kavanaugh said cautiously, “but there’s a whole new world today of studios, ourselves being one of them, that look to cover most of our risk before we hit domestic box.”
Tax incentives and output deals — the latter of which Kavanaugh says Relativity has in all but three countries — help mitigate that risk.
Relativity tries to have three-quarters of a film’s risk covered before it goes into production, he said.
And this:
Kavanaugh also noted that paying creative talent scale — as opposed to gross participation — can help a lot. He noted that was the tack Relativity took with helmer Steven Soderbergh on the upcoming pic “Haywire.”
“Our motto from day one was always that the idea of gross participation don’t make sense,” Kavanaugh said. “And the reason they don’t make sense is that you’re basically saying, ‘Even if I lose money I’m going to pay you a bonus.’ And there’s really no other business that we could find that does that.”
Both of these reflect a sea change from Hollywood conventional wisdom from just a decade ago. Even with all the ancillary revenue streams (e.g., DVDs, cable, merchandise), studios have pretty much always started and ended discussions about movies with the subject of box office. Regarding gross participation: Studios have actually embraced them in the past in order to (A) procure top talent and (B) reduce their risk, swapping out percentage points based on film revenues for reduced upfront talent fees.
That’s not where Kavanaugh’s head is at.
It’s always interesting to track the actions of the larger independent film companies and mid-majors because they often cut trail for practices the major studios emulate later. For example billionaires Mark Cuban and Todd Wagner own 2929 Entertainment, a media company with holdings in film and television production, film distribution, theatrical exhibition, home entertainment, television, and syndication. Several years ago they started releasing movies in theaters (they owned), on cable networks (they owned), and as DVDs (then) and VOD (now). The major studios and exhibitors freaked out at the closure of that traditional window between theatrical release and all the other ancillary platforms. Yet here we are today with Universal floating the idea of making Tower Heist available on video on demand just three weeks after its theatrical debut. So similarly, is what Kavanaugh is espousing now going to become the conventional wisdom of the majors in a few years?
Of the two points in the Variety article, the one that could have an impact on screenwriters is the first. Just as the continuing growth of international revenues is causing projects like “I-95” to get shifted from the U.S. to Germany and renamed “Autobahn”, will a business approach like Kavanaugh promotes, heavily focused on output deals overseas, compel us to write stories that are even more focused on foreign markets?
For more of the Variety article, go here.
Comment Archive