SPARE a thought for the Mouse. Disney’s latest movie spectacular, John Carter, has lost the company $200m (£127m) after a disastrous opening. Meanwhile The Hunger Games opens at cinemas today (see p.32 for our review) on speculation that it will achieve a record-breaking run. Lionsgate, the studio responsible, has seen its stock rise some 75 per cent this year as the momentum has gathered.
If you ever needed a clear refutation of the idea that, as consumers, our purchases are controlled by marketeers, here it is. However much Disney spent to spin John Carter, it couldn’t send the Martian epic into orbit. Hoped to be the first of a lucrative franchise, it must now try to make up its mammoth budget on DVD sales. Hunger Games, on the other hand, looks to be the first of four massive hits, its marketing amplified by word of mouth and audience enthusiasm.
Is the difference between the two films one of luck or design? David Cameron thinks he knows the answer. As he remarked in January in relation to the British film industry, it’s simple. All you have to do to is support “commercially successful pictures”. Cameron never saw a race where he didn’t think he could pick the winner, but John Carter shows just how absurd his words were. No more commercial proposition than a big Disney film could be imagined. And it tanked.
In fact, the film industry is so unpredictable that it turns out a commercial proposition is almost impossible to identify. The economist Arthur De Vany, better-known today for his hunter-gatherer diet regime popularised by Bryan Appleyard and Nassim Taleb, also studied Hollywood economics in depth, concluding that the screenwriter William Goldman’s famous quip that “nobody knows anything” was literally true. According to the 1999 paper Uncertainty in the Movie Industry: Does Star Power Reduce the Terror of the Box Office? by De Vany and Walls, “the cascade of information among film-goers during the course of a film’s run can evolve along so many paths that it is impossible to attribute the success of a movie to individual causal factors.” In other words, there is no such thing as a bankable star. The film is always the star.
The economics of filmmaking is terrifying – 70 per cent of movies lose money and are paid for by the success of the other 30, but no one know what films will be the breakout hits. Who would have predicted that a black and white silent movie, The Artist, would be one of 2012’s success stories?
The lesson here, which politicians like Cameron show no sign of learning, is that picking winners can prove a disastrous strategy. And yet it is a message of hope as well – a sector as fruitful and innovative as the modern motion picture industry can thrive despite the total uncertainty as to whether any of its products will find an audience until they are released. The wit and invention of Pixar, the depth of The Man Who Shot Liberty Valance, the sour timelessness of Chinatown – all have been made possible by embracing uncertainty.
The planners are always seeking for the one perfect answer. They always want to tell us what Disney could have done better, why The Hunger Games was destined to succeed. The truth is we don’t know. By accepting that, by working with the power of decentralised markets instead of assuming that someone can know the future before it happens, utter uncertainty becomes no barrier to lasting achievement.
Marc Sidwell is City A.M.’s Business Features Editor.