Scraping by on 200 million

The LA Times recently ran an interesting article on attempts to reign in the costs of big budget movies:

Bruckheimer's next production, "Pirates of the Caribbean: On Stranger Tides" — his 26th film for Disney in 16 years — dramatically illustrates the new reality.

With the fourth installment of the swashbuckling tale poised to start shooting June 14, Bruckheimer and the filmmakers are scrambling to meet the more constrained budget that Disney is imposing. Although it's still large — north of $200 million — it is at least a third less than the last "Pirates" movie and includes far fewer shooting days and visual effects shots.

Ross said that Bruckheimer, known for spending lavishly, is working within the new constraints. Bruckheimer reassured him of that in Ross' first week as studio chief, Ross said: "He looked at me and said, 'I will work with you to figure out the economics of the movies going forward because I understand what we are all facing.' And I said two words: thank you."

Even before Ross took the studio reins last fall, Walt Disney Co. Chief Executive Bob Iger was mandating that executives ratchet down costs after underperforming movies — including Bruckheimer's expensive family film "G-Force" — triggered two quarterly losses at the studio last year.

It's a well-reported piece but it doesn't address the underlying question of why movie budgets have skyrocketed. Even if you adjust for inflation, 23 of the 25 most expensive films ever made were produced in the past fifteen years, and yet the same period was marked by economic and technical trends that should have made production less, not more expensive.


CGI and digital production

CGI has become so associated with big budgets that it's easy to forget that it is primarily a cost-saving measure. Ray Harryhausen used to tell directors that he could give them anything they wanted if they had the time and the money. That might not have been completely true but for the vast majority of the cases, CGI is used to replace the more expensive techniques of effects men like Harryhausen or to avoid costly reshoots (as in Disney's digital breast reduction of Lindsay Lohan in Herbie). Add to that the cost and time savings of innovations like nonlinear editing and you would expect film-making to get much cheaper.


Weakened unions

Hollywood is still a heavily unionized place but these unions have been steadily losing ground for at least the past quarter century. You would expect some of those losses to translate into lower production costs.


Competition from other states and countries

There have been many attempts to grab some of the business away from Southern California. Most of those attempts were sweetened with so many tax breaks and other incentives that these would-be competitors often lost money on the deals.


Off-Shoring

As a consequence of digital production, a great deal of work can now be done remotely.


Low inflation

Prices in general haven't exactly been shooting up over the past twenty years.


Obviously something caused the surge, but I suspect it has less to do with economic forces and more to do with studio politics.