What happened to Hollywood? (PART II): Marvel, Disney & Netflix

Desperately Seeking Franchises.

We continue telling the story of a Hollywood upside down. In our second post devoted to the very relevant book The Big Picture: The Fight for the Future of Movies  by  Ben Fritz, we will find out how Marvel, Disney, and Netflix changed the rules of the game.

Something to Marvel at

The rise of Marvel Studios over the past decade has been one of the most extraordinary stories in Hollywood history. Utilizing a crew of second-rate superheroes and run by a team of unproven executives, Marvel upended the industry’s conventional wisdom.

Marvel’s rise particularly stung Sony, which until 2008 could justifiably brag that with its first three Spider-Man movies, it was king of the superheroes. At that point, Spider-Man and its two sequels were the most successful superhero pictures of all time. By 2016, though, the original Spider-Man had been knocked down to number seven, and four of the top six spots were taken by films from Marvel Studios (the other two were held by the Dark Knight Batman films produced by Warner Bros.).

And Sony said no (the biggest mistake ever?)

Before becoming a player, Marvel was bankrupt. They needed money.

Looking to get as many movies going and as much cash in their account as quickly as possible, they (Marvel) offered (Sony) the rights to every single Marvel character (save for the X-Men, the Fantastic Four, and the Hulk, who were at other studios) for $25 million. That included Spider-Man, who would go on to gross $4 billion over five movies, plus virtually every character that now makes up the Marvel Studios cinematic universe—Iron Man and Captain America and Thor and Black Widow and Ant-Man and others, who through 2016 would gross $10 billion in one dozen films.

Landau brought the offer back to Calley and the heads of Sony’s motion picture business, a small group of executives that included Amy Pascal. It didn’t take long for them to quickly and decisively respond: no way. “Nobody gives a shit about any of the other Marvel characters, we don’t want to do that deal,” they told Landau, as if he were Jack coming home with a handful of magic beans. Their instructions to Landau, they thought, were quite simple: “Go back and do a deal for only Spider-Man.” It was the mistake of a lifetime, a deal that could have made Sony billions of dollars and potentially turned it into the juggernaut.

The MCU in all its glory

Why IRON MAN became Marvel’s first in-house production

When Marvel finally decided to produce films themselves, they were not sure where to start.

To decide which film to make first, Marvel convened focus groups. But they weren’t convened in order to ask a random cross-section of people which storylines and characters they would most like to see on screen. Instead, Marvel brought together groups of children, showed them pictures of its superheroes, and described their abilities and weapons. Then they asked the kids which ones they would most like to play with as a toy. The overwhelming answer, to the surprise of many at Marvel, was Iron Man. “That’s what brought Iron Man to the front of the line,” said a person who helped to decide which movie Marvel would self-produce first.

Iron Man flew much higher than ever expected.

Marvel’s instant success

The opening weekend ended up blowing away everyone at Marvel and throughout Hollywood. Its $99 million domestic debut was the second highest ever for a non-sequel, behind only Spider-Man. Its $97 million launch overseas was spectacular as well.

Marvel got

the most consistently successful live-action movie brand in Hollywood history. Post–Incredible Hulk, everything worked. Iron Man 2 grossed $624 million, and Iron Man 3 grossed $1.2 billion. Avengers, teaming all of Marvel’s superheroes together, grossed $1.5 billion. Guardians of the Galaxy grossed $773 million. Even the widely mocked Ant-Man sold $519 million in tickets. Maisel and Feige’s bet proved exactly correct: for fans, movies set in the same “cinematic universe” would feel like sequels, and they would show up for all of them if the films had the same lighthearted, fun tone.

According to this article by The Observer, written in September 2020,

the Marvel Cinematic Universe has become the single most consistently successful creation in Hollywood history. Over 23 total films, the MCU has grossed nearly $23 billion at the worldwide box office. 

Unhappy movie studios

In fact, movie studios were very envious of Marvel’s success.

Why, their corporate bosses wanted to know, couldn’t they be as successful as Marvel? Of course, other studios had hits, but nobody was pumping out two surefire blockbusters per year (soon to be three) like Marvel, with nary a flop in the bunch. Even the movies that clearly weren’t as good as the rest, like the second Avengers film, seemed to get a pass from audiences and critics, engendering no small amount of bitterness throughout the rest of Hollywood. “Marvel could have made a movie about someone picking his nose and it would have been 98 on Rotten Tomatoes,” complained Arad, who as a producer of Sony’s Spider-Man films now competed with his former employer.

The decline of Hollywood movie stars

Movie stars didn’t become irrelevant, but they became very inconsistent in attracting an audience. People used to go to almost any movie with Tom Cruise in it. Between 1992 and 2006, Cruise starred in twelve films that each grossed more than $100 million domestically. He was on an unparalleled streak, with virtually no flops. But in the decade since then, five of Cruise’s nine movies—Knight and Day, Rock of Ages, Oblivion, Edge of Tomorrow, and The Mummy—were box-office disappointments. This was an increasingly common occurrence for A-listers. 

(Left to right) Javier Bardem, Tom Cruise, Johnny Depp.

What happened? Audiences’ loyalties shifted. Not to other stars, but to franchises. Today, no person has the box-office track record that Cruise once did, and it’s hard to imagine that anyone will again. But Marvel Studios does. Harry Potter does. Fast & Furious does.

What Disney did, no one saw it coming

Under Bob Iger, who became CEO in 2005, Disney was focusing on brands and franchises above all else, and Marvel was fast becoming one of the most distinct in the entertainment business. Disney had paid a huge premium to acquire the biggest brand in animation, Pixar, in 2006.

On August 31, Disney announced it would buy Marvel for $4 billion.

But that was not what they didn’t see coming. For Disney, acquiring Marvel, Pixar, and National Geographic was not enough. If they wanted to be an actual player, they still need to gain strength, hence their next movement, a powerful statement from the home of Mickey Mouse:

Disney bought Star Wars.

Disney: Pixar + Marvel + Star Wars + National Geographic - The Big Picture - thescriptblog.com

Netflix, the unexpected guest who came to dinner and took the house

In the middle of this turmoil, another unexpected actor had gone into battle to upend the movie game: Ted Sarandos Netflix.

Sarandos saw the future and took action.

Motion pictures were made to be seen on the big screen. But Sarandos believed that except for the biggest-budget “event” movies like The Avengers, this view was elitist. Most film consumption takes place at home, whether on DVD or on TV. Thanks to rising ticket and popcorn prices and better television offerings on networks and Netflix, theater attendance had been falling for most of the twenty-first century, from 1.57 billion tickets sold in the United States and Canada in 2002 to 1.31 billion in 2016. When filmmakers complained that Sarandos was degrading their work, the Netflix executive liked to ask them a question: where had they, as children, watched the movies that inspired them to become directors? Most had to admit it was at home, on a VHS tape or a DVD that they played over and over again.

Netflix - The Big Picture - thescriptblog.com

Netflix measures success by how many people finish a movie and are satisfied enough to keep subscribing as a result, or who sign up just in order to watch it.

Broken bonds

These developments reveal one certainty: the bonds that movie studios had forged over decades with stars, directors, and other talent were now forever broken. Ted Sarandos had proved that even though he delivered films via Wi-Fi to devices that fit in a pocket, he could build a better home for movie stars than the movie studios themselves.

Plus Amazon’s role in saving indie movies, much more on China and its new financial power, and lots and lots of stuff in The Big Picture: The Fight for the Future of Movies  by  Ben Fritz.

Click here for this post’s follow-up: NEW DEVELOPMENT! What happened to HOLLYWOOD PART III: Amazon buys MGM.

Want to read Part I of this post? Click on What happened to Hollywood? (PART I): TV, China, & franchises.

More about Making Movies? Check Oliver Stone’s Great Autobiography is a Must, How Billy Wilder’s SOME LIKE IT HOT Was WrittenFilm Blocking, What is it?The 5 Best Books on Making Movies, by Darren AronofskyFirst Assistant Directors: Who Are They?The World of Movie Posters and Foley Artists: Who Are They?, amongst many others!

More on “Making Of” Books in Best “Making Of” Books: THE JAWS LOGBest “Making Of” Books: The Making of CITIZEN KANE,  Best “Making Of” Books: EASY RIDERS, RAGING BULLSBest “Making Of” Books: BLADE RUNNERS, DEER HUNTERS &…,, Best “Making Of” Books: KING KONG ’76 and Best Screenwriting Books: ADVENTURES IN THE SCREEN TRADE, amongst others.

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