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Digital Hollywood Panel Debates the Risks and Rewards of the Tentpole

“We tend to minimize and share the risk, though that is not ideal if you have a film that you think is going to be a hit,” says a Sony Pictures exec.

Leonardo DiCaprio, Carey Mulligan, Joel Edgerton
"Gatsby" was among the films discussed.

The risks and rewards of the tentpole strategy were debated Tuesday at Digital Hollywood, held at the Ritz Carlton in Marina del Rey.

Moderator Marty Shindler, CEO, The Shindler Perspective, noted that tentpoles can cost upward of $200 million -- more than $300 up front with marketing costs -- creating a risky venture when 60 to 75 percent of these releases lose money for their investors. “No one sets out to make a bad movie, but it happens,” he said, noting that studios take on partners to lower the risk though that also reduces the upside.

“We tend is to minimize and share the risk, though that is not ideal if you have a film that you think is going to be a hit,” said Ralph Alexander, senior executive vp, international operations & distribution at Sony Pictures Entertainment. “But it is necessary because it is very risky. I think this is going to continue.”

Chris Edwards, CEO and creative director of previz company The Third Floor, proposed creating a previz of a tentpole before production begins. “At a fraction of the cost, you can preview the entire movie and show it to test audiences. Then you get to decide which movies get made. You can tell if the character is likeable and if the story is satisfying.”

Alexander noted that studios are trying to make production more efficient by reducing production and talent costs.

But the visual effects industry -- representing a big portion of a tentpole budget -- is struggling to keep companies open, with the Rhythm & Hues bankruptcy being a recent example.

“My understanding is there was a lot of turmoil at Rhythm & Hues with delays at the story level [on a feature], and R&H counted on keeping their team on [during the delay],” Edwards responded when asked about the state of affairs. “But if a date shifts, what do you do with the gap of time? I think the solution might [involve planning more closely] with filmmakers so we have clearer orders.”

But moderator Schindler added that “the problems are really deep, and there is more to it than meets the eye.”

On the international box office, Schindler reported that as much as 70 percent of worldwide gross for many Hollywood films is generated outside North America. “And the BRIC nations are really taking off, so that number is going to go to 80 percent at some point.”

Asserted Alexander: “No expensive blockbuster would be made if we couldn’t justify the international box office.”

On 3D, Alexander admitted: “Now, we think twice; we have seen a decline. In animation, parents don't want to spend the extra money. We are still in the 3D business… But outside of Imax, theaters need to work on the quality of the image. I don't think 3D is a fad, but it has declined.”

Several speakers noted that productions needs to create quality 3D.

Robert Lenihan, president of programming at AMC Theatres, pointed out that The Great Gatsby was tracking well, and Life of Pi was successful in 3D, while other productions are “cheaters" [in the way that they implement 3D].

He was optimistic about the potential of developing laser light projectors to create a brighter picture. (A system from Christie was recently tested at AMC in Burbank.)

On mobile technology, Lenihan reported that AMC had considered dedicating one auditorium in a multiplex to creating an environment where movie goers could text “but that didn’t seem like it really resonated.”

Phil Groves, senior vp, Imax Corp. and executive vp of global distribution for Imax Entertainment, added that Imax is exploring the concept of engaging consumers on their mobile devices to create a more interactive experience, possibly with learning applications attached to its documentaries.