SEISMIC SHIFTS IN THE AMERICAN FILM INDUSTRY

Transcription

1 67 SEISMIC SHIFTS IN THE AMERICAN FILM INDUSTRY Thomas Schatz The commonplace assumption that the American film industry entered a new era in the mid-1970s, a period generally referred to as the New Hollywood, has given way more recently to the view that the industry entered yet another phase in the 1990s and 2000s variously termed Conglomerate Hollywood, Convergent Hollywood, and Global Hollywood, epithets that well indicate the dominant forces at work in contemporary cinema. These views are quite compatible and in fact are crucially interrelated, in that the trends toward conglomeration, convergence, and globalization and other key trends as well took root in the burgeoning New Hollywood, as the industry reversed three decades of deep decline and entered a period of sustained growth, economic resurgence, and structural transformation that continues to this day. This recovery has involved an array of social, economic, technological, and aesthetic forces that have evolved and interacted in different ways over time, resulting in three distinct phases of industry development since the late 1970s phases that are implicit in the organization of this volume, with separate sections focusing on the late 1970s and 1980s, the 1990s, and the 2000s. To cite a few salient examples: Consider the explosive growth of home video, which came out of nowhere in the late 1970s with the introduction of the VCR (videocassette recorder) and by the late 1980s surpassed the box office as a revenue source for the film industry, then surged to far greater heights with the introduction of the DVD (digital video disc) in the late 1990s. Consider the impact of the Reagan-era media deregulation campaign and free-market economic policies of the 1980s, which led to a series of media merger-andacquisition waves, beginning with the Time Warner and Sony Columbia mergers of 1989, that reconfigured the industry. Consider the plight of the The Wiley-Blackwell History of American Film, First Edition. Edited by Cynthia Lucia, Roy Grundmann, and Art Simon Blackwell Publishing Ltd. Published 2012 by Blackwell Publishing Ltd.

2 2 major Hollywood studios, which foundered through the early recovery of the late 1970s and 1980s, regained their bearings in the 1990s as conglomeration took hold, and in the 2000s reclaimed virtually complete control of the American film industry albeit as subsidiaries of a half-dozen global media giants. Consider the digital revolution, which swept through the United States in the 1980s with the introduction of the PC (personal computer) but did not significantly impact the film industry until the 1990s, when it rapidly transformed the production and delivery of movies, giving rise to a distinctly digital cinema during the 2000s as was emphatically underscored with the release of Avatar in late And consider the movies themselves, particularly the new breed of blockbusters that emerged in the late 1970s with films like Jaws (1975), Rocky (1976), and Star Wars (1977), which sparked Hollywood s economic recovery and have dominated and defined its filmmaking trajectory ever since. The blockbuster syndrome went into another register in the burgeoning conglomerate era with films like Batman (1989), Beauty and the Beast (1991), and Jurassic Park (1993), megahits geared to both the expanding movie marketplace and the far-flung media and entertainment operations of the studio s parent company. The blockbuster ethos intensified even further in the new millennium, as a spate of fantasy and superhero franchises the Matrix, Harry Potter, Lord of the Rings, Spider-Man, Shrek, Batman, and Iron Man series, et al. became the coin of the global entertainment realm. Countering this blockbuster syndrome, however, has been a trend toward low-budget independent, art-cinema, and specialty films a distinctly off-hollywood trend in the 1980s that steadily went mainstream in the wake of breakthrough 1989 hits like sex, lies, and videotape, Roger & Me, and Do the Right Thing. As the independent sector flourished and an indie-film movement coalesced in the 1990s, the conglomerates inevitably stepped in, launching their own indie-film divisions and buying up successful independents. That seemed to signal a new golden age in American film, as the studios, the indie-film divisions, and the genuine independents flourished. But in the course of the 2000s, as conglomerate control intensified and the studios blockbuster franchises generated record revenues year after year, even in the face of a global economic crisis, the indie-film movement waned and the independent sector all but collapsed. As even this brief rehearsal suggests, the American film industry has undergone profound and fundamental changes since the late 1970s, a reversal of fortunes as acute and significant as its sudden collapse in the late 1940s. Not since that earlier collapse, in fact, has such a range of social, political, economic, and technological forces assailed the industry, and not since the postwar collapse of the studio system has Hollywood seen such a wholesale transformation. The aim of this essay is to chart those forces and to gauge their impact on the industry and on Hollywood films and filmmaking through the successive phases of Hollywood s long and quite remarkable resurgence.

3 3 Recovery ( ) The late 1970s saw three developments that fundamentally transformed the American film industry in the ensuing decade. The first was a new breed of blockbuster that signaled key changes in the aesthetics, the marketing and distribution, and the sheer commercial impact of top box-office hits. The second was the introduction of the VCR, which sparked the steady if highly conflicted emergence of home video as a new delivery system and an increasingly important revenue source for Hollywood. The third was cable television, whose explosive growth through the late 1970s and 1980s created a huge demand for filmed entertainment not only movies but Hollywood-produced television series as well. Of these three developments, the new breed of blockbusters had the most immediate and significant impact on the struggling movie industry. Several films in the early 1970s like The Godfather (1972) and The Exorcist (1973) anticipated this trend, but the real game-changer came in 1975 with Jaws, a genuine breakthrough on multiple fronts. In terms of story and style, Jaws was a high-speed, high- concept, male action-adventure film that melded elements of the disaster, horror, and buddy-comedy genres into a hyper-efficient entertainment machine. It was propelled by a nationwide saturation release campaign, opening in a then-record 400-plus theaters and supported by an unprecedented TV network ad blitz. An event film and prototype summer blockbuster, Jaws redefined the profit potential of a major movie hit and spawned a multimedia franchise via sequels, reissues, licensed merchandise, theme-park rides, and myriad other tie-ins. This blockbuster trend continued with megahits including Rocky (1976), Star Wars (1977), Close Encounters of the Third Kind (1977), Saturday Night Fever (1977), Animal House (1978), Grease (1978), Superman (1978), Star Trek (1979), and Raiders of the Lost Ark (1980). The most important of these was Star Wars, which like Jaws was a high-speed, genre-blending, male-action film but proved to be even more popular with audiences and more strategically open to reiteration, licensing, and serialization. An early template for what Henry Jenkins has termed transmedia storytelling, Star Wars was quickly and strategically expanded through blockbuster sequels (The Empire Strikes Back, 1980, The Return of the Jedi, 1983) and a far wider array of media iterations than Jaws that steadily expanded and exploited the narrative world conjured up in the original film (Jenkins 2006). Steven Spielberg and George Lucas, who directed Jaws and Star Wars, respectively, quickly emerged as the chief architects of what Variety s A. D. Murphy called the modern era of the superblockbuster films (1989, 26). Not only were they the dominant filmmakers of the era (including their collaboration on Raiders of the Lost Ark and the ensuing Indiana Jones series, which Lucas produced and Spielberg directed), but also production executives and emergent moguls with highly successful companies: Lucasfilm Limited and its industry leading special effects counterpart, ILM (Industrial Light and Magic); and Spielberg s Amblin Entertainment, which produced scores of

4 4 films and television shows in the 1980s, including top movie hits like Back to the Future (1985) and Who Framed Roger Rabbit (1988). Lucas and Spielberg were charter members of the movie brat generation of the early 1970s a group of maverick filmmakers that included Francis Ford Coppola, Dennis Hopper, Hal Ashby, William Friedkin, Peter Bogdanovich, Martin Scorsese, Brian DePalma, and Paul Schrader. But the American New Wave generated by these headstrong auteurs had ebbed by the late 1970s, swamped by the blockbusters of Lucas, Spielberg, et al., and undercut by their own self-indulgence and overreaching. The last gasp came with films like Coppola s Apocalypse Now (1979), Bob Fosse s All That Jazz (1979), Scorsese s Raging Bull (1980), and Michael Cimino s Heaven s Gate (1980). While Lucas and Spielberg charged to the top of the industry in the 1980s, the other movie brats found it increasingly difficult to find work, and the art-cinema ethos they had shaped all but disappeared from mainstream Hollywood. That alternative art-cinema impulse did survive, although primarily off- Hollywood in an independent film movement centered in New York during the 1980s and spearheaded by a new generation of writer-directors out of the NYU (New York University) film school including Jim Jarmusch (Stranger Than Paradise, 1984), Joel and Ethan Coen (Blood Simple, 1984), Oliver Stone (El Salvador, 1986), and Spike Lee (She s Gotta Have It, 1986). Also on the margins were exploitation filmmakers working in a tradition that extended back for decades but enjoyed a significant surge in the late 1970s and the 1980s, thanks largely to the success of writer-director John Carpenter s Halloween (1978), which spurred a significant trend in low-budget teen horror and slasher films (Nightmare on Elm Street and Friday the 13 th series, et al.) during the 1980s. Another crucial factor in Hollywood s economic recovery involved radical changes in moviegoing and film consumption, which quickly transformed both the theatrical and ancillary markets. The traditional exhibition sector underwent a sea-change in the late 1970s and 1980s with the proliferation of mall-based multiplex theaters, a development geared both to changing social conditions (suburban migration, shopping centers, and so on) and also to the studios escalating wide-release strategies in marketing blockbuster films. During the 1980s, the number of indoor movie screens in the US and Canada increased from 14,000 to 22,000 as the multiplex became the predominant theatrical venue (MPAA 1990). Meanwhile the ancillary (secondary or subsequent) markets of home video and cable television simply exploded. Ironically enough, the early VCR systems Betamax (introduced by Sony in late 1975) and VHS (introduced in 1977 by JVC, et al.) caught on with American consumers as a means to record and time shift television programs. Meanwhile, the Hollywood studios, several of which were developing video-disc systems of their own, tried to keep the VCR out of the US. In 1978, Universal and Disney filed a copyright infringement suit against Sony that went all the way to the US Supreme Court. Sony ultimately prevailed after a six-year legal battle, although by then Hollywood welcomed the outcome, since

5 the VCR had become a standard home appliance and the home video industry had become a crucial revenue source for the studio-distributors. Home viewing of movies on broadcast and cable television also grew at unprecedented rates, with the TV networks paying record fees for Hollywood films, especially blockbuster hits, while the cable market developed a voracious appetite for filmed entertainment. Another key innovation during that era was the pay-cable movie channel, which was pioneered by HBO in 1975 and in the course of the 1980s became a vital revenue source with the emergence of new cable networks like Showtime, Cinemax, and The Movie Channel. Another new technology and nascent media industry in the 1980s was the personal computer industry, propelled primarily by the introduction of the IBM PC in 1981 and the Apple Macintosh in The potential import of the PC industry and of digital technology generally to the film industry was not readily evident. Warner s ill-fated decision to buy Atari during the first rush of videogame fever in the early 1980s signaled the movie industry s interest in digital technology but also its uncertainty about how to utilize or exploit it. LucasFilm also developed a computer-based nonlinear editing system in the 1980s that would revolutionize postproduction over the next decade. But LucasFilm s uncertainties about digital media also were evident in its decision to unload an internal startup, Pixar, which was experimenting with computer animation. (More on this below.) On another front, the impact on the music industry of the CD (compact disc) a technology that actually spun off the video laserdisc in the late 1970s convinced many in Hollywood that digital video would be the next generation of home movie viewing. The intensifying blockbuster syndrome and emerging video markets resulted in record movie revenues in the 1980s, as the industry entered a full-blown recovery mode after three decades of deep economic decline. The domestic box office steadily climbed from $2.75 billion in 1980 to a record $5 billion in 1989, driven not only by inflation but also the first real uptick in movie attendance since the mid-1940s (MPAA 1990). The ancillary markets had a massive and steadily increasing effect on the studios bottom line as well, and home video s impact was simply staggering. During the 1980s, a revenue source that was nonexistent a decade earlier became the studio-distributors single largest revenue source, surpassing the surging theatrical market. Hollywood s overseas revenues also began to climb in the late 1980s, with foreign income beginning to eclipse the domestic box office on a number of top hits. Moreover, Hollywood s intensifying blockbuster syndrome was further provoked by the fact that the home video, television, and foreign markets all proved to be as blockbuster-driven as the theatrical market. When all of these revenue streams were taken into account, the full extent of Hollywood s recovery was starkly evident. According to a Goldman Sachs study, the studios movie-related income from all sources climbed from $2.9 billion in 1981 to $10.25 billion in 1989 (Goldman Sachs 1995). Despite this economic recovery, however, the major Hollywood studios were in relative disarray in the 1980s, and their control over the production process was 5

6 6 uneven at best. The big three talent agencies Creative Artists (CAA), William Morris, and International Creative Management (ICM) wielded enormous authority over project development, especially the high-stakes, talent-heavy blockbusters that were generating huge paydays for top stars and filmmakers, along with hefty commissions for their agents. In fact, the agencies packaging of movie projects particularly the key elements of star, director, and script gave them more power over the development of many of the top films than the studios that financed and released them. Meanwhile, instant majors like Orion, TriStar, Cannon, and Vestron continually sprang up, fragmenting the market and further undercutting the major studios once hegemonic control. Thus, the studios remained remarkably undervalued and ripe for acquisition even as the industry recovery took hold. In 1981, Kirk Kerkorian snatched up United Artists for $380 million and merged it with MGM. A year later Coca-Cola bought the relatively healthy Columbia Pictures for $750 million. And in a two-stage deal in , Rupert Murdoch s Australian company News Corp bought Twentieth Century- Fox for $575 million (Prince 2000; Schatz 2008). The News Corp deal was engineered by Barry Diller, the Fox studio head who already had run the ABC network and Paramount Pictures. Diller convinced Murdoch not only to buy Fox but also to launch a fourth US television network, Fox Broadcasting a huge risk but also an indication that the US broadcast television system itself was in disarray due to the onslaught of cable and home video. In fact, all three of the traditional TV networks ABC, CBS, and NBC changed hands in the mid-1980s, and like the movie studios were picked up at bargain basement prices (Auletta 1991). None of those network TV deals involved an alliance with a movie studio, since the Federal Communications Commission prohibited joint ownership of a broadcast network and a movie studio. The Fox television venture both skirted and directly challenged these FCC regulations, and Murdoch and Diller were willing to risk federal interference or a Justice Department lawsuit because their efforts were very much in line with the Reagan administration s deregulation campaign and particularly the rollback in media constraints under FCC chairman (and Reagan appointee) Mark Fowler (Holt ). Since its emergence in the 1910s and 1920s, the Hollywood film industry had undergone alternating waves of merger-and-acquisition on the one hand, and government efforts to restrict ownership and control (usually in the form of antitrust prosecution) on the other. The most significant government intervention was, of course, the Supreme Court s historic Paramount decree of 1948, which forced the studios to sell their theater chains and to discontinue the unfair trade practices that had given them a lock on the American movie marketplace. In the wake of that ruling, the FCC restricted the film studios participation in the emerging television industry, relegating them in effect to subcontractor status as the networks took command. But network power over the booming TV industry became so intense (and monopolistic) during the 1960s that the FCC, in an effort to curb that control, restricted network ownership and distribution of primetime

7 programming via the so-called Fin-Syn ( financial interest and syndication ) rules. This was actually a boon to the movie studios, which produced most of the networks primetime fictional series, since it ensured the studios exclusive ownership of their series and control of the lucrative syndication markets. But now the Reagan-era media deregulation campaign, which would continue under Presidents George H. W. Bush and Bill Clinton, was gradually rolling back these restrictions. In the process, the federal government fostered a new mode and a new age of media integration wherein film studios, TV broadcast networks, cable networks, and other media entities (publishing, music, and so on) could coexist within the same corporation. This radical shift in media regulation was tied to the Reagan administration s free-market economic policies, which allowed major industries to self-regulate in response to market forces and to compete more openly in the increasingly competitive international marketplace. This coincided with another crucial Reagan-era policy strategy, the escalation of the Cold War throughout the 1980s, which was conducted on both a military front (via an arms buildup) and an economic front (via pressure on the Soviet Union and Chinese bloc countries to move toward a competitive, capitalist system). By 1989, as Bush took office, it was clear that this strategy was succeeding as the Soviet Union was in a state of collapse and as economic reforms were enacted by communist countries throughout Europe and Asia, including China. It was not yet clear how extensively these developments would impact the movie industry, although in light of the already improving foreign markets, the studio powers had reason to be optimistic about the expanding global marketplace. 7 Resurgence ( ) The year 1989 was a watershed in American film history. It was the year of Batman and sex, lies, and videotape the first modern blockbuster and seminal indie film, respectively, that established a dual filmmaking agenda that still prevails. It was also the year of the Time Warner and Sony Columbia alliances, which set off a merger-and-acquisition frenzy that quickly transformed the industry. Variety dubbed 1989 the year of the Bat, due to Batman s runaway hit status in both the theatrical and home video markets, where it trounced the high- profile sequels to the Indiana Jones, Ghostbusters, Back to the Future, James Bond, Star Trek, and Lethal Weapon series (Putzer 1990). Director Tim Burton s off beat style, production designer Anton Furst s nightmare vision, Jack Nicholson s wackedout villain, and Warner Bros. savvy marketing campaign all distinguished Batman from the competition and from earlier blockbusters as well. Equally distinctive were Warner Bros. ownership and control of the Batman property and Time-Warner s capacity to parlay the film s success into a global marketing

8 James Spader and Andie MacDowell in sex, lies, and videotape (1989), which sparked the indie film movement of the 1990s (writer-director-editor Steven Soderbergh; producers Robert F. Newmyer and John Hardy). bonanza, as the licensing and merchandising revenues quickly surpassed the box-office returns (Pendleton 1992). While Batman marked a significant advance in blockbuster filmmaking, for independent film impresario John Pierson, 1989 was the year it all changed due to the momentous impact of sex, lies, and videotape (Pierson 1995). 1 An edgy, erotic, highly personal debut film from writer-director Steven Soderbergh, shot in his home town of Baton Rouge for just over $1 million (versus Batman s $51 million budget), sex, lies, and videotape made its mark on the festival circuit initially at the US Film Festival (later renamed Sundance) and then at Cannes, where it won the Palme d Or prior to its summer release. It grossed just under $25 million, only one-tenth of Batman s industry-leading box-office take but an unprecedented achievement for an art film and also a huge leap for its then obscure distributor, Miramax Films. Sex, lies, and videotape gave Miramax a foothold in the industry, which was further secured in late 1989 with the release of My Left Foot and Cinema Paradiso, both of which were solid hits as well. Thus, while Peter Biskind in his chronicle of Miramax and Sundance in the 1990s aptly describes sex, lies, and videotape as the big bang of the modern indie film movement (2004, 26), it was scarcely an isolated phenomenon in the independent realm. In fact, the studios in 1989 were moving into the independent sector as well via negative pickup deals Warner Bros. release of Michael Moore s first feature, Roger & Me, for instance, and Universal s decision to finance and distribute Spike Lee s breakout film (and third feature), Do the Right Thing.

9 While Batman and sex, lies, and videotape signaled a sharp division on the filmmaking front, the Time Warner and Sony Columbia mergers marked an epochal rift in the structure and operations of the film industry. Hollywood from its very beginnings had been shaped by merger-and-acquisition waves, but this one was different from any in industry history in that it involved a cadre of global media giants moving aggressively into Hollywood and into other US media industries as well. A key antecedent here was the News Corp Fox alliance and the launch of Fox Broadcasting, which augured a new species of media conglomerate. The gradual evolution and eventual success of that venture, along with the explosive growth of cable and home video, the government s media deregulation campaign, and Hollywood s steady economic recovery, combined to induce other media giants to go after major film studios. The first to take the plunge was Time, Inc., which announced in early 1989 that it was merging with Warner Communications to create the world s largest media corporation (valued at about $15 billion), combining not only film and publishing interests but also Time s considerable video assets that included HBO and a massive cable system. Shortly after that announcement, Paramount s parent company, Gulf + Western, changed its name to Paramount Communications (having sold off its nonmedia assets) and launched a hostile takeover bid of Time, Inc. (Saporito 1989). As Time successfully fended off that assault in the courts in July, the Japanese electronics giant Sony announced that it was acquiring Columbia Pictures and its sister studio, TriStar, for $4.8 billion. These deals dwarfed the News Corp Fox deal of just five years earlier, clearly indicating how much the stakes had risen in the resurgent movie industry. In fact Sony closed out that turbulent year by hiring producers Peter Guber and Jon Peters, whose recent hits included Rain Man (1988) and Batman, to run Columbia, with the Guber Peter deal alone costing Sony as much as Murdoch had paid for the entire Twentieth Century Fox Studio in (Griffin & Masters 1996). The Time Warner and Sony Columbia deals initiated a merger-and-acquisition wave that crested in , with several major transactions: the acquisition of Paramount Pictures and the Blockbuster home video by global syndication giant Viacom; the acquisition of Universal Pictures by Seagram; Time Warner s purchase of Turner Broadcasting (TBS), a major media conglomerate in its own right; and Disney s purchase (for $18.3 billion) of the ABC television network, its parent company Cap Cities, and various cable holdings including ESPN. These deals coincided with the FCC s final phase-out of the Fin-Syn restrictions in 1995 and Congressional passage of the US Telecommunications Act of 1996, culminating the media deregulation crusade begun by Reagan and officially sanctioning the integration of once-distinct media industries into a vast entertainment empire ruled by a cadre of media conglomerates (Schatz 2008). Disney s acquisition of Cap Cities/ABC was perhaps the most crucial of these deals for several reasons. By 1995, Disney was the only Hollywood-based company still in control of its own destiny, and one that avoided being swallowed up by 9

10 10 another media conglomerate by becoming one. Moreover, Disney s rise from perennial mini-major to major studio status in the late 1980s and then to conglomerate status in the 1990s speaks volumes about the seismic shifts in the film industry over the previous decade. Disney in the early 1980s was a foundering studio with a minuscule market share when founder Walt Disney s nephew Roy seized control of the company in an internal power struggle and brought in new management Michael Eisner as CEO, Frank Wells as president, and Jeffrey Katzenberg as head of production. The studio soon rose to the top of the movie industry via two very different strategies. One was the systematic reissue of its animated classics (Snow White and the Seven Dwarfs, Peter Pan, et al.) in theaters and then as sell-through VHS cassettes, an innovative and enormously profitable enterprise. The other was the production of modestly budgeted, slightly risqué, live-action comedies and comedy-dramas like Ruthless People and Down and Out in Beverly Hills in 1986; Three Men and a Baby and Good Morning Vietnam in 1987; Cocktail and Beaches in 1988; Dead Poets Society and Turner & Hooch in 1989 all under its Touchstone label (as was the PG-rated Who Framed Roger Rabbit in 1988) to avoid sullying the Disney brand. Meanwhile Eisner oversaw the upgrading and expansion (on a global scale) of Disney s theme park and resort operations, while Katzenberg focused on the studio s once vital but now moribund animation division, which had not produced a hit since the early 1960s (Stewart 2005). The first animated feature created under Katzenberg was The Little Mermaid, which was Disney s third-biggest hit in 1989 (after Dead Poets Society and Honey, I Shrunk the Kids) but without question its most important film in decades and, along with Batman, a defining hit of the burgeoning conglomerate era. The Little Mermaid reasserted the venerable Disney brand and spurred an animation renaissance that included Beauty and the Beast (1991), Aladdin (1992), and The Lion King (1994), which took the company s five-year resurgence to another level. The Little Mermaid set the tone, style, and the narrative thrust of Disney s new run of animated films, which wed its traditional fairy-tale impulse to something quite new: a full-blown Broadway musical treatment. It also created a new template for Disney s global entertainment franchises. The Little Mermaid soundtrack sold three million copies (on Disney s label) while the film itself was a massive sell-through hit on VHS. Disney followed it with both prequels and sequels that went straight to VHS and to its cable channel, and the company also produced a Broadway musical version the first of several stage hits that helped rehabilitate New York s theater district in the 1990s. Disney also had started a chain of retail stores in 1987, where The Little Mermaid became a merchandising bonanza. The film was further reworked for Disney s theme parks, resorts, and hotels, which under Eisner focused more heavily on the family market. This latter point was crucial to Disney s enormous success in the contemporary era. In that watershed year of 1989, despite the number of top hits with a strong family focus (including Honey, I Shrunk the Kids, Look Who s Talking, and Parenthood), The Little Mermaid was the only G-rated film (general audiences, suitable for all ages) among the

11 top 40 box-office releases. Somehow Hollywood had lost contact with the core family audience, and Disney reversed that trend with a steady output of franchisespawning animated hits. Other companies followed suit, as the G-rated family film once again became an industry staple. Disney s expansion also included the acquisition of Miramax Films in 1993 one of several key moves by Hollywood s major powers into the independent film realm as the indie film movement quickly coalesced. In late 1991, Sony became the first conglomerate to launch an indie film division, Sony Pictures Classics, which enjoyed immediate success with Howard s End (1992); News Corp followed suit with Fox Searchlight in 1995, and eventually all of the majors launched divisions geared to the independent sector. The conglomerates also began buying up successful independents, usually allowing them to operate autonomously from the major studio as was the case with Miramax, whose founders Harvey and Bob Weinstein continued to control the company after the Disney buyout. Miramax was riding high at the time, thanks to 1993 hits like The Crying Game and The Piano, and among its first releases after the buyout was Pulp Fiction (1994). Another key acquisition at the time involved New Line, which with Miramax was the top independent in the early 1990s. Founded in the late 1960s by Robert (Bob) Shaye, New Line rose to prominence in the 1980s via low-end genre films, most notably its Nightmare on Elm Street teen horror series and off beat comedies like John Waters Polyester (1981) and Hairspray (1988). New Line s Teenage Mutant Ninja Turtles grossed over $125 million in the US in 1990 to become the most successful independent release ever. In a move to counter Miramax in 1991, New Line created an art-film division, Fine Line Features, which enjoyed immediate success with The Player. Miramax in turn created Dimension, a genre film subsidiary to counter New Line, which cranked out horror, action, and teen fare à la its Hellraiser and Halloween series. New Line was purchased by TBS in 1993, which in turn was bought by Time Warner, bringing New Line and Fine Line into the conglomerate s filmed entertainment division, with the fiercely independent Bob Shaye maintaining control of both subsidiaries and operating in complete autonomy from Warner Bros. (Connolly 1998; Mehler 1992; Stevenson 1992; Wyatt 1998). Thus, by the mid-1990s, a new class of Hollywood studio had emerged, the conglomerate-owned indie-film division, signaling one of the most significant developments in recent industry history. Indie divisions like Sony Classics, Fox Searchlight, Miramax, and New Line occupied an aesthetic and commercial space that was fundamentally distinct from both the major studios and the scores of true independents, whose numbers and output steadily increased as well. These indie subsidiaries had a huge advantage over true independents due to the resources of their parent companies, particularly in terms of production and marketing budgets and assured access to distribution in both the theatrical and crucial ancillary markets. This new Indiewood sector, as it came to be termed, blurred the distinctions between studio and independent filmmaking, particularly as Miramax and New Line began producing more expensive and blatantly commercial fare 11

12 12 designed to compete with the major studio releases. Miramax, in particular, steadily raised the bar after its acquisition by Disney with indie blockbuster hits like The English Patient (1996), Good Will Hunting (1997), and Shakespeare in Love (1998) (Perren ). Another clear indication of the indie film boom was the 1995 launch of DreamWorks SKG, a purportedly independent studio created by consummate Hollywood insiders Steven Spielberg, Jeffrey Katzenberg (who left Disney after the death of Frank Wells and a falling out with Eisner), and media mogul David Geffen. By 1997, DreamWorks was turning out its own brand of high-end indie films, and the 1998 Oscar race was dominated by a much publicized battle of the indies that centered on Miramax s Shakespeare in Love and DreamWorks Saving Private Ryan for best picture (which went to Miramax) (LaPorte 2010). DreamWorks 1998 slate also included Antz, an initial foray into animation in a plan to compete with Disney and another indication of a major shift in 1990s filmmaking. Antz was Hollywood s second computer-animated feature, employing the same new imaging technology as Toy Story, the 1995 hit produced by the upstart Pixar, a company owned by Steve Jobs whose films were financed and distributed by Disney. Although Katzenberg had been dismissive of computer animation before Toy Story, he was now convinced it would revolutionize animated filmmaking. Eisner was dubious as well, but Disney continued to support Pixar s efforts as it developed several new computer-generated features, including A Bug s Life a film whose similarities to Antz was no coincidence, according to personnel at Pixar who accused Katzenberg of stealing the idea which was in development when he left Disney. Pixar also was developing Toy Story 2, which began as a directto-video project but was upgraded and successfully released theatrically in 1999 (Price 2008). These computer-animated films were early harbingers of digital cinema as films fully created with digital technology. Cinema was still a film-based medium, of course, in that the vast majority of feature films were still being shot and released (and thus projected) on celluloid. But Hollywood filmmaking had already entered the digital age in several key areas, particularly the use of computer-generated (CG) special effects, computer-based postproduction (digital editing), and digital sound. CG effects were vital to Hollywood s blockbuster ethos, of course, whether to create photo-realistic imagery in films like Jurassic Park (1993) and Titanic (1997), or blatantly outrageous spectacle in films like Independence Day (1996), Men in Black (1997), and Armageddon (1998). Online delivery of filmed content was widely anticipated in light of the explosive growth of the internet and the world wide web in the 1990s, as was the convergence of the PC, video game, and movie industries. While these developments remained tantalizing prospects just out of reach, one new digital delivery technology did arrive in 1997 that wielded an enormous impact on the film industry. This was DVD, a new home-video format that enjoyed the most rapid diffusion of innovation of any technology in history due to the unprecedented cooperation of the film, PC, and consumer electronics industries

13 in its development and rollout, and due also to new technology s clear superiority over VHS in terms of quality, cost, and convenience. Hollywood also used the DVD rollout as the opportunity to shift from a rental to a sell-through strategy, which returned a larger portion of home-video revenues to the distributor (Taylor 2006; Sebok 2007). The impact of DVD on the home-video market was complemented by the phenomenal growth of Hollywood s foreign markets in the late 1990s, as the market reach of the global media conglomerates paid dividends, literally and figuratively especially for the studios high-stakes blockbusters, which performed extremely well in the international marketplace. Titanic, to take the most obvious and striking example, became the most successful film to date after its December 1997 release, generating $600 million in its domestic theatrical release, $1.25 billion in foreign theatrical, $55 million in US television rights, and steadily ascending home-video returns through a succession of reissues. Titanic was the first film to generate over one million DVD units (in its initial home-video release), and a decade later one reliable source put its worldwide home video revenues at well over $1 billion Reintegration and Retrenchment (1999 ) The new millennium brought a number of key changes to the film industry, most notably the consolidation of conglomerate control, the tremendous acceleration of both the home video and international markets, the rapid rise of a new class of blockbuster film franchises, and the gradual, seemingly inevitable collapse of both the indie film and independent sectors while the major studios enjoyed record revenues. The era began with another merger-and-acquisition wave and a brief period of intense upheaval, due largely to the collapse of the digital economy. In 1999, Viacom acquired CBS (its former parent company) for $35.6 billion, twice what it had paid five years earlier for Paramount and Blockbuster combined. This old media (film and television) deal was soon overshadowed by two massive new media deals spurred by the astounding growth of the internet and the web and by the assumption that online moviegoing was finally at hand. In early 2000, the internet giant AOL (formerly America Online) announced that it was acquiring Time Warner in a stock deal for over $150 billion roughly 10 times the value of the Time Warner merger a decade earlier and a clear indication of both the extravagance and the unbridled optimism of media corporations at the height of the dot-com boom. Months later the French water-and-power giant Vivendi, which had been moving aggressively into telecommunications and media, announced that it was buying an 80 percent stake in Universal Pictures from Seagram for $34 billion. By the time these two deals were finalized in 2001, however, the dotcom bubble had burst, the digital economy was in free fall, and both mergers were doomed. In 2003, AOL-Time Warner reverted to Time Warner, with AOL as a mere subsidiary (which Time Warner eventually sold). In 2004, Vivendi sold its

14 14 stake in Universal to General Electric, owner of NBC, which promptly launched NBC Universal (Schatz 2009). With those three deals the Big Six media conglomerates consolidated their control of the film and television industries in the United States, by far the world s richest media market, as well as their collective domination of the global movie marketplace. Their Hollywood studios were the conglomerates crown jewels, even though movie revenues comprise a relatively modest portion of the conglomerates media-related income generally less than 20 percent. Those revenues are substantial, however, and are continually rising as the global mediaand-entertainment industry steadily expands, driven largely by the home video and foreign markets. While domestic box-office grosses remained fairly steady in the $9 10 billion range from 2002 to 2009, foreign box office surged from $9 billion to over $19 billion with no end in sight, given the growth of overseas markets, the studios coordination of domestic and foreign release campaigns, and the worldwide appetite for Hollywood blockbusters. The studios home video revenues surged as well, thanks to the massive impact of DVD technology. In 2002, home video revenues reached a record $20.3 billion (versus worldwide theatrical revenues of $19.8 billion), with DVD surpassing VHS for the first time and sell-through surpassing rental (Hettrick 2003). Home video hit $24 billion in 2004 and then began to level off, with the studios capturing the lion s share of the market and relying on DVD returns for nearly one-half of their movie-related income. This includes revenues not only from current releases but their film and television libraries as well, marking another key distinction between the VHS and DVD eras. And as in the VHS era, Disney far surpassed its competitors in the triangulation of its theatrical, television, and home video operations and in the transmedia franchising of its products spinning off DVD and cable sequels to its animated classics, for instance, or parlaying High School Musical (which began as a 2006 Disney Channel movie) into a worldwide theatrical film, television, home video, concert, stage, and recording industry phenomenon. One key to conglomerate control over the US market has been ownership of multiple delivery pipelines, particularly television networks and cable channels. At the time of this writing, four of the Big Six own the four US broadcast TV networks, and together with a fifth conglomerate they dominate and effectively control the US cable network system as well. The only media conglomerate without significant television holdings, Sony, has focused instead on hardware-software synergy, relying on its filmed entertainment division to help move its consumer electronics hardware. This includes Sony s Blu-Ray system, the HD (high definition) DVD home video format that Sony owns and controls, as well as its HD and 3-D televisions and videogame systems. Sony is the only conglomerate with both a computer entertainment and a consumer electronics division, which puts it in a class by itself among the Big Six. Moreover, the Sony PlayStation game console has the capacity to play and stream high-definition movies, thus creating both a delivery pipeline and a potential site of convergence between movies and gaming.

15 The eponymous hero (Daniel Radcliffe) and his relentless antagonist, Lord Voldemort (Ralph Fiennes) in Harry Potter and the Order of the Phoenix (2007), the fifth installment of Hollywood s consummate conglomerate-era franchise (director David Yates, producers David Heyman and David Barron). Sony s dearth of traditional television pipelines curbed its investment in TV series production, where the other conglomerates remain very productive. In its feature filmmaking operations, however, Sony has been quite consistent with the rest of the Big Six. By the 2000s, all of the conglomerates had developed a dual approach, with their major studios focusing on high-end films for worldwide release, while their indie divisions turn out low- to mid-range films for more specialized audiences. In the early 2000s, Miramax and New Line continued to dominate the indie-division ranks and push into the high-stakes realm of the major studios, most notably with New Line s decision to finance and distribute the Lord of the Rings trilogy ( ), a blockbuster franchise developed alongside and in direct competition with another Time Warner franchise, Warner Bros. Harry Potter series. Meanwhile the growing ranks of genuine independents consistently secured about 15 percent of the domestic movie market, turning out successful niche market films as well as occasional breakout hits like The Blair Witch Project (Artisan, 1999), Traffic (USA Films, 2000), Memento (Newmarket, 2001), My Big Fat Greek Wedding (IFC Films, 2002), The Passion of the Christ (Newmarket, 2004), and Fahrenheit 9/11 (Lionsgate, 2004). In fact, the independent market was sufficiently robust that the conglomerates continued to expand their indie-film divisions and to acquire successful independents as when Universal absorbed USA and Good Machine into its newly launched Focus Features subsidiary in Thus, the film industry had reached an equilibrium of sorts in the early 2000s, with the three-tiered system of major Hollywood studios, conglomerate-owned indie subsidiaries, and genuine independents operating in relative harmony. But this balance began to shift rather severely in 2006 in two significant ways. First, the major studios were doing so well financially that it became difficult for the conglomerates to rationalize the costs and relatively higher risks of their indie

16 16 subsidiaries. As recently as 2005, these subsidiaries comprised 13 of the top 25 distributors in the US and enjoyed a market share of over 15 percent. But in 2007, due to pressure from Wall Street and stockholders, as well as the box-office performance of their top studio releases, the conglomerates began selling off or shutting down their indie subsidiaries, or folding them into their major studios. By 2009 only three indie divisions Sony Classics, Focus, and Searchlight were still operating on anywhere near the same level they had been a few years earlier, as the output of indie division films fell sharply along with their market share. 3 A second aspect of this shifting balance has been the collapse of the independent sector. With the notable exception of just two companies, Lionsgate Films and Summit Entertainment, the hundred-plus independent producer-distributors found it difficult if not impossible to turn a profit after Those two successful independents relied on genre franchises to keep them afloat Summit with Twilight (2008) and the series it spawned, and Lionsgate with its torture-horror Saw and Hostel series, its Transporter action franchise, and the remarkable run of the Tyler Perry urban (African-American) comedies. In 2009, Summit and Lionsgate earned more than all of the conglomerate-owned indie divisions combined, and more than all of the genuine independents combined as well. 4 In a sense, Lionsgate and Summit had become the Miramax and New Line of the new millennium, but without succumbing (as of 2010) to conglomerate acquisition and without the overreaching and executive hubris that doomed both Miramax and New Line. Commercial and structural forces have induced other successful independents (and quasi-independents like DreamWorks and Pixar) to submit to conglomerate acquisition, however, and it may only be a matter of time until Lionsgate and Summit join them. It is important to note that neither Lionsgate nor Summit specializes in art films, which remain the domain of the surviving indie subsidiaries where the Coen brothers, Wes Anderson, Ang Lee, Danny Boyle, Alexander Payne, et al., continue to find safe haven. But the ranks of indie auteurs have steadily dwindled, due not only to the diminishing number of indie division releases (and indie subsidiaries) but also the studios penchant for recruiting name-brand indie filmmakers to direct franchise blockbusters a trend anticipated by Tim Burton on Batman that coalesced in the new millennium as filmmakers with independent credentials like Peter Jackson, Bryan Singer, Sam Raimi, Christopher Nolan, Jon Favreau, David Yates, Guy Ritchie, Marc Forster, Michel Gondry, and Kenneth Branagh signed on to direct studio franchise films. These assignments have a certain artistic cachet, thanks especially to Jackson s work on the Lord of the Rings trilogy and Nolan s on the rebooted Batman franchise. But the primary impulse clearly is professional and commercial more than anything else; franchise blockbusters are increasingly the only game in town for top filmmaking talent and thus represent the proverbial offer that simply cannot be refused. Which is to say that the fate of top filmmaking talent in the new millennium, like that of the independent sector and the indie film movement generally, has been shaped by (and at the mercy of ) the studios growing preoccupation with

17 franchise filmmaking. Hollywood s blockbuster mentality intensified in 1999 with The Matrix, The Phantom Menace (the first Star Wars film after a 16-year hiatus), and Toy Story 2, and then went into another register altogether with a veritable onslaught of new blockbuster franchises: Harry Potter, Lord of the Rings, and Shrek in 2001; Spider-Man and Ice Age in 2002; Pirates of the Caribbean in 2003; and Pixar s remarkable run of single-film franchises (Monster s Inc., 2001; Finding Nemo, 2003; et al.). As these high-stakes, high-profile series blitzed the global movie marketplace and were parlayed by the conglomerates into global entertainment brands and veritable subindustries unto themselves, the franchise became Hollywood s prime objective and its consummate renewable resource a product line that could increase its yield over time, not despite but precisely because of its predictable and formulaic nature and thus its capacity for systematic reformulation. And as the franchise mentality coalesced, so did a range of formal, stylistic, and aesthetic protocols. The Matrix, as Henry Jenkins notes, was a breakthrough in transmedia storytelling (2006, ), a narrative designed to expand through multiple iterations on an array of media platforms. The expansion of both the narrative world and the story itself speaks to the serial (versus series) nature of these franchises, as well as their strategic migration into other media formats. Digital technology is a key factor here, particularly in terms of the computer-generated effects and spectacular fantasy worlds created in the films and in their other media incarnations. Indeed, something of a seismic shift aesthetically in these new blockbuster franchises has been the prevalence of fantasy by no means a strong tradition in Hollywood filmmaking, but a governing narrative paradigm in the new millennium. A number of other rules are worth mentioning as well: the reliance on a presold story property, the male protagonist and frequent coming-ofage motif, the Manichean moral universe of absolute good versus evil, the hero s alternating struggles with external foes and his own internal darker side, the chaste love story, the stylized violence and PG-13 rating (parents strongly cautioned for children under 13), the mythic quest and inevitable happy ending (tentatively in the individual installments, and then decisively when and if the serial story is concluded). The revived Star Wars series was a breakthrough in digital cinema as well, with Lucas touting Episode I: The Phantom Menace in 1999 as Hollywood s first completely digital motion picture. The Pixar films shared this distinction, and along with DreamWorks Shrek franchise proved to be far more influential in the animated realm than the Star Wars films in the live-action arena, as one studio after another entered the computer-animation fray during the 2000s. In terms of live-action production, in fact, digital filmmaking was far more pronounced outside the studio blockbuster realm, ranging from low-budget DV (digital video) projects like The Blair Witch Project and Frozen River (2008), to mid-range features involving top directors who veered into digital cinema as the high-end, highquality HD technology rapidly evolved. These included Robert Rodriguez, an early adopter whose Sin City (2005), which he shot, edited, and codirected with 17