Hollywood sequels: the cultural accounting


Hollywood is a tough business. Each “product” costs around $100 million to make and market. It is created by a director over whom the studio has imperfect control. It will be “on the shelf” for a brief period. Good films can be swamped by popular ones. Bad films die early, killed by almost instantaneous word of mouth.

Were it not for foreign markets, TV and cable distribution and DVD sales, the industry would be a complete crap shoot.

We would expect an industry of this kind to be highly risk adverse. Go with what you know: bankable stars, familiar themes, genre film making. And indeed this has been the slam that intellectuals bring against Hollywood: that it turns out goo.

The trouble is that goo doesn’t sell the way it used to. Smash hits, the real revenue spinners in Hollywood, are often departures. They have been exercises not in risk management, but in risk taking.

Here are some recent winners. These figures show the film’s budget (in millions), the US gross, the worldwide gross, and, finally, where the picture stands in the Internet Movie Database “All Time Box Office” list.

Forrest Gump (1994): 55-330-679-13

The Sixth Sense (1999): 55-294-661-21

Home Alone (1990): 15-286-533-23

Shrek (2001): 60-268-455-25

We can only imagine the pitch that had to be made to the studio.

Forrest Gump:
“You’re going to love this. It’s about this guy who is, well, he’s a little simple. And at one point, this is so great, he runs across the country for no reason at all. And…”

The Sixth Sense:
“What a story! This guy is dead, right. What? Yes, the hero. He’s dead, but, like, he doesn’t know it, so anyhow…”

Home Alone was about a kid locked in his house and Shrek is about a big, green ogre and a donkey! At the moment of commissioning, these projects did not have “hit” written all over them. Nervous studio executives must have been thinking, “What are we doing here? How about a car chase? Maybe, a hero with a brain or just a pulse.” The first miracle is that these films got made. The second is that they grossed $2.2 billion.

$2.2 billion, that’s the kind of number that gets Hollywood’s attention. The trouble is that it’s hard to pick ’em. Consumers are hard to anticipate. Tastes change. You just never know. In this marketplace, risk aversion often gets you goo. Risk can get you riches.

The sequel franchise has the advantage of an installed base of consumer familiarity and support. It allows the studio to maximize the up front investment. It gives an additional reward for the initial risk. [Shrek 2 (2004) is 3rd on the “all time box office list” (75-436-837). Spider Man 2 (2004) is 9th (200-404-806).]

But there’s more. From the intersection of anthropology and economics, we may see sequels as a strategy for dealing with dynamism. For they solve a larger problem. They create a continuity of consumer taste and preference. The world may be bucking and weaving. Tastes may be changing at a furious pace, but this little world, for the moment, belongs to the studio. For a moment, they have a place in the eye of the hurricane of contemporary culture.

Without the Shrek franchise, Hollywood would have had to turn out 4 new distinct movies, each of them an uncomfortable combination of risk and risk aversion (“what if we are risking too much” now accompanied by “what if we are risking too little?”). With each decision, Hollywood has to be right in touch with consumer taste. If they had the bad fortune to produce Troy ($200 m.), Van Helsin ($140 m.) and King Arthur, they would be well out of touch.

But with a sequel, studios pave their own way. They actually create the taste and preference to which they then speak. (We could think of this as a kind of Bernoulli model of cultural engagement. They create the world into which they effortlessly enter.) One moment of risk (Shrek I) becomes, potentially, 3 moments of safety (Shrek II, III, IV). Where does this safety come from? Not just from cynical repetition, but the fact that the studio has fashioned consumer tastes and preferences instead of merely chasing them.

It is customary to think of sequels as dreary affairs in which the studio tries, cynically, to cash in on their initial success. Certainly, this reading fits and Hollywood, as always, looks good in it. But what is more interesting is that the sequel represents an adaptive response in a dynamic culture.

One last point: I wonder if Hollywood is factoring this in. Do they say to themselves, ‘to get a 4 picture franchise, and the diminished risk of the last three pictures, we will have to take more risk with picture 1”. Probably. They may sometimes act like idiots, but that doesn’t mean they think like Gump.


Waxman, Sharon. 2004. Summer box Office Hits a High, Despite Lows. New York Times. September 7, 2004. here subscription required.

all movie numbers from http://www.imdbpro.com. subscription required.

7 thoughts on “Hollywood sequels: the cultural accounting

  1. Gabriel Rossman

    The interesting thing about your examples is not that they’re unusual but that they’re all high-concept. The premises are unusual enough to be adequately described in a sentence. It’s a lot easier to pitch Forrest Gump (holy fool baby boomer Zelig) than to pitch Harry Met Sally (long dormant romance, but with really good writing). In certain ways it’s easier to get both studio execs and audiences to buy into the reality of a catchy concept than the promise of a good execution.

  2. Grant

    Gabriel, I take your point, but I believe we can take the “high concept” concept as a measure of risk taking. For executives raised on genre, Forrest Gump must have seemed kinda nuts and I am betting it was tough to pitch. I guess I’m saying that the Forrest Gump concept probably wasn’t, on first hearing, catchey at all. That it made it through the 2 minute pitch procedure is a miracle. But I’m repeating myself. Thanks. Grant

  3. pops

    Once again we come back to Michael Eisner. There is an undercurrent of thought that says there were several promising young turks in the late 70’s who could rescue the film business from its coked-out funk. Out of the pack Eisner was the only one who didn’t die of an overdose or some other drug-related death.

    Eisner brought the MBA mentality into play and reduced loss by micro management. Success followed. The upshot 20 years later is risk aversion. This is only one subtext that was being played out last spring in the Comcast bid for Disney.

    But *stuff* happens. Pulp Fiction and Farenheit 911 escaped the corral. I have been at no more than an arm’s length from a couple of development types and both coughed up your $100 million risk scenario as if they were facing east towards Mecca.

  4. Ennis

    Have you read Michael Chwe’s book rational ritual?
    First chapter on-line here:
    It’s about the use of public rituals to solve coordination games and generate common knowledge.

    There are movies you see b/c you want to consume them, there are other movies you see b/c you know everybody else will, and you want to be able to discuss it. That second class of movies are a social good, even if they’re not an individual good.

    You’re positing that movies succeed or fail based on their appeal to individuals. I suspect, instead, that many hits happen b/c they can generate self-fulfilling expectations — people go b/c they think everybody else will.

    Why some movies succeed in this and others fail is something I don’t have an angle on. But (and this is a funny thing to say to an anthropologist) instead of looking at individuals’ tastes, I would look at their expectations about each other, at the webs that connect them.

  5. kevrob

    Both Shrek and Gump were based on books. The former a well-loved children’s tale and the latter a novel that, published a dozen years before the film’s release, was a New York Times #1 bestseller. The studios weren’t exactly buying pigs in pokes. Sure, Hollywood has made good “properties” into pigs’ breakfasts on more than one occassion, but can you imagine how these stories would have flopped if they’d been pitched as original screenplays? Just the fact that rights fees had been paid, and needed to be justified to the CFO would keep these projects moving, however slowly, through the circles of development hell.

  6. Grant

    Pops, thanks, it’s funny how often Hollywood needs to get rescued, it’s like it “locks on” to something and this is the place of safety till the young turks rescue popular culture from their grasp. But maybe this buys the “native point of view.” Maybe we need to resort to a wider frame and see an inevitable cycle of insiders and outsiders. And I believe, as I was arguing here, that eventually the insiders find themselves having to live with so much dynamism they begin to act like outsiders to, at least in so far as they cast the innovation net widely and take new risks. Thanks. Which scenario exactly did they embrace? Grant

    Ennis, thanks for the book title, its now on my must read list. Your penultimate paragraph turns us all into social scientists making bets on where other will put their entertainment dollar. In order to be corrected briefed for the next cocktail party. Interesting! Thanks, Grant

    Kevrob, point well taken, there was some “product testing” here, but even a NYT bestseller makes pretty smaller numbers compared to what Hollywood requires to recover the investment, let alone make some dough. But point well taken. This raises the question why more best sellers dont make it to the screen, and why some of those who do do badly. But good spot. Thanks, Grant

  7. LK

    re ennis’ reference to chwe’s book, please note, that while ennis is rocking the blog with both style and aplomb, old school blog props on this account must go to “miguel” who made a cameo here back in june, during the tidal wave that was the economics of the bare midriff post. he referenced chwe’s ‘rational ritual’ in the following post:

    I would like to point you to a book called “Rational Ritual” by a guy in NYU, Dr. CHWE. In it, he argues that there is something called “metaknowledge”. This means that for “coordination good problems” (these are goods that I only want to buy if and only if other people have them too) to be solved, there must be different levels of knowledge. For example, he argues that the single most important TV event that creates this metakonwledge is the super bowl. Apple faces a coordination good problem; i only want to buy an Apple computer if it is compatible with my friend’s computers. So, Apple advertises in the superbowl. Why? Because when i watch the Super Bowl, i know i’m watching it, but, and this is the crucial “but”, i know that millions of people are watching it, and, millions of people know that millions of other people are watching it. Hence, I am more likely to buy an Apple computer.
    This fits with the Madonna fact you mentioned. Women saw Madonna, and they took that as a cue; but they also knew that other women were watching here, so metaknowledge was created. This is one way to view Madonna, as a catalyst of metaknowledge.

    I am a Mexican student who just graduated from Boston University, and has plans to go to graduate school in economics at NYU.
    Best regards,
    Miguel Z.
    Posted by: Miguel Zabludovsky on June 14, 2004 10:12 AM

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